What can I do with $2000?

[mogley]

Ok my first post guys.

I'm 22 and been pretty irresponsible with my finances so far. I drive a car that costs me way too much insurance and petrol, I spent $10 000 on my credit card buying things, travelling to Europe, pissing away money on piss and girls. I'm your average Gen-Y'er and I am going to piss away my money on such frivolous things as long as I practically can cause you only young once right? Anyway, that aside...

Basically, i'm in a lot of debt but I work enough to keep me afloat. As a result of my indiscriminate ways I can only manage to save up about $2000 in capital and am really keen on getting started. I think I could whinge my way into a $3k loan from my parents to help me sign up a CFD account with Comsec and then cash out the $3k and return it to them.

Unfortunately, $2000 isn't a whole lot of capital and even with Comsec's $19.95 brokerage, the brokerage is quite hefty.

I have no experience trading although I studied Finance and have a pretty good grasp of all the concepts I wanted some more practical advice.

Is it even worth my while? I am thinking of having a portfolio comprised mostly of blue-chips and am focused on capital gains rather than income.
I'm willing to lose all the $2000, since I'm in this for more of a learning experience and getting my feet wet VS trying to turn $2000 into $20 000.

Given the proportionate cost of brokerage, a buy and hold strategy seems to be the most profitable yet given the performance of the market lately, I'm not sure if there is anymore room to give. Plus, i'm not in it for the returns as much as I am in it for the learning experience. Making money wouldn't hurt of course , but i'd rather take risks and learn rather than buy, hold and forget for the sake of return.

 

[Pommiegranite]

Do as your namesake out of the Jungle Book....and go without creature comforts.

Pay off your credit card - expensive debt.

Only then, look at trading/investing.

 

[disarray]

^^ best advice. clear your debt and learn to manage your finances instead of gambling money on the hopes a stock will take off and do all the hard work for you. i'm constantly attempting to beat money management and debt aversion into my gen-y younger brother and he is only just starting to get the hint now he has a baby on the horizon.

if you are dead set on playing the market then try paper trading and research (first good move is coming here) fundamental and technical analysis or you will just be pissing more of your money against the wall.

 

[prawn_86]

Alternatively you could give it to me

Seriously, pay off you debts first as others have mentioned

 

[sam76]

put a turbo on your car.

 

[mogley]

Wow such quick responses.
I'm glad i stumbled on this site somehow.

Nevertheless, I realise my debt situation could be improved but long story short I have got it under control.

I don't want to sit around for a year doing nothing because I've got debt to pay off. In this case, i'm willing to make a little loss if it means I get to play the market sooner and learn sooner.

I'm eager to learn and am not worried about my 'overall' financial position.
To me, losnig a year of potential trading experience is not worth paying my debt off a month sooner.

$2000 isn't going to make a dent in my debt really, but will go a long way in encouraging me to get my feet wet and start paying attention to the market.

I've looked into paper trading but hasn't the ASX game already started?

 

[alankew]

Whatever you decide,I dont think learning via CFDs is the way to learn.All that will teach you is whilst things are doing great everythings rosy,but get it wrong and the debt is called in pretty quickly.Too easy too make a few $ but when the trading halt etc comes,watchout

 

[disarray]

this is personal opinion for a do-it-yourself toe into the marketplace so take the following advice with a grain of salt.

if you want to trade a good idea is to first pick a sector you are comfortable with - resources for example. then register with the ASX and create a watchlist of a few large, mid and speccy cap stocks within that sector (eg. BHP, RIO, Oxiana, AED, Zinifex, Westside, AAR etc.) and monitor it daily so you get a feel for the ebb and flow of money.

then decide your level of risk / reward and choose a stock based on that - generally the larger the company the less risky the investment.

next is to scan various internet sites like this and read others opinions about the stock - you get an idea of how people are valuing it, you get their insights into what the market says about it and you learn other methods of managing your portfolio.

finally learn some technical analysis. stan weinsteins "secrets for profiting in bull and bear markets" is a great noob book that is easy to understand and introduces you to the basic principles of technical analysis (moving averages, entry points, stops, stages and so on).

armed with some fundamental research on a stock and a basic understanding of how to read a chart then take the plunge and enjoy your foray into the market.

alternatively you can pay for an advice site like fat prophets (pretty crappy imo) or the chartist or hartleys and invest in the sectors you like based on their buy recommendations. i went with fp when i started and bought stocks in sectors i liked the feel of - gold, wine, oil, telecomms and so on.

but seriously, taking a year clearing your debt will not be "wasted time". debt is the root of all financial evil so a good idea would be to consolidate your debt and clear it with a bank loan at the lowest interest rate you can find. then in a year from now when you are debt free, more knowledgable about the market and more familiar with its chaotic behaviour, you can put real money up and be in a much stronger financial position.

 

[new_trader1984]

hi mogley,

I was in a similar situation to you a couple years back, i used to go out spend a lot of money every weekend. I decided after doing that for a while to give trading/investing a go. I started with a 1000 and then added another 1000 not long after i started, its not much but since we are young we can afford to lose the money in stocks, i would have gone through that amount of money in 2-3 weeks at clubs and thought to invest it into a stock. I looked at high risk stocks under a dollar, a 20 cent stock that moves 2 cents is a 10% gain so a 100-200 profit if can manage to pick one that could go up. The experience of using only a small amount of money can still teach you how to make good choices then just putting your money on one stock and hoping to go up you do need to look at a lot of stocks and try and find a good one with good chances of success. It does take a lot of time, not sure how much time you have to spend on looking at different shares but at night i used to go through a lot of different shares looking at ones under a dollar but closer to 20-50 cents.

A couple of things i looked for when i first started was aiming for a profit of a 140 that gave a 100 dollars profit after the 2 brokerages, thats about a 7% increase in a stock before selling, so on a 20 cent stock you could sell at 21.5 cents to make a profit depending on your brokerage costs.

I never used charting at the start but that can also help pick shares once you looked into companies projects, im still learning about them but if you got a basic understanding of the main charting indicators that might also help when selecting a stock before buying.

One thing i have learnt recently is if you do find a stock and it does have a good run dont get greedy and keep holding, its good to take profits and if you can make a 100% gain and stock still going up take some profits incase it falls back again. Runs like that i dont think happen too often but it did for gdn and i was holding for test results and looking at the share there was a lot of profit that could be made but now a paper loss currently.

Investing into stocks that are explorers under a dollar is high risk but sometimes can be profitable.

Just thought to share, since i started with a small amount of money too.

 

[stoxclimber]

Paying your debt off would be your best investment from a dollar return point of view.

 

[Trader Paul]

Ok my first post guys.

I'm 22 and been pretty irresponsible with my finances so far. I drive a car that costs me way too much insurance and petrol, I spent $10 000 on my credit card buying things, travelling to Europe, pissing away money on piss and girls. I'm your average Gen-Y'er and I am going to piss away my money on such frivolous things as long as I practically can cause you only young once right? Anyway, that aside...

Basically, i'm in a lot of debt but I work enough to keep me afloat. As a result of my indiscriminate ways I can only manage to save up about $2000 in capital and am really keen on getting started. I think I could whinge my way into a $3k loan from my parents to help me sign up a CFD account with Comsec and then cash out the $3k and return it to them.

Unfortunately, $2000 isn't a whole lot of capital and even with Comsec's $19.95 brokerage, the brokerage is quite hefty.

I have no experience trading although I studied Finance and have a pretty good grasp of all the concepts I wanted some more practical advice.

Is it even worth my while? I am thinking of having a portfolio comprised mostly of blue-chips and am focused on capital gains rather than income.
I'm willing to lose all the $2000, since I'm in this for more of a learning experience and getting my feet wet VS trying to turn $2000 into $20 000.

Given the proportionate cost of brokerage, a buy and hold strategy seems to be the most profitable yet given the performance of the market lately, I'm not sure if there is anymore room to give. Plus, i'm not in it for the returns as much as I am in it for the learning experience. Making money wouldn't hurt of course , but i'd rather take risks and learn rather than buy, hold and forget for the sake of return.

Hi mogley,

..... here's some free stuff to consider, BEFORE you even
THINK about making your first trade ...

http://www.authorsden.com/SampleWorksPDF/10134.pdf

have a great day

paul

 

[Mouse]

Hi,

You're too late for the ASX game, but Etrade has a trading game that starts soon here
http://128.121.254.21/cnbc/www/cnbc/md/home/home.page.php

Cheers
Mouse

 

[theasxgorilla]

Paying your debt off would be your best investment from a dollar return point of view.

Totally agree.

And in the process of doing so you'll prove to yourself that you're worth trusting with $5,000 and a CFD account...if you get my meaning.

 

[ROE]

Apart from paying down your debt like many here suggest and I agree with them 100%...

First thing about investing is learning the foundation. Same rule apply to everything in life, you cant do complicated maths if you dont know the foundation like addition, subtraction and algebra etc.

So I would suggest you don't jump into CFDs.. it's a quick way for someone like you to lose all your money..

you got to filter the fabs from the facts .. all CFDs ads look easy and it look like a tools that can make you a lot of money what they don't tell you is what happen when you get it wrong... or CFDs that go against your short/long position.

Get some books on finance and stock market. Spend a few months reading it and understand it ....then paper trade....then you maybe ready to play with your real capital. There is NO WAY to get rich quick on the stock market. The quickest way on the stock market is to lose money

I can recommend a few books out of hundred that I have read, spend a few hundred out of your $2000 in a book store and educate yourself, probably the best investment your may make yet.

The Wealthy Barber (teach you how to save and manage your finance and then briefly tell u what u do with the saving)
The intelligent investor (tell you how to evaluate stocks and buy it with a margin of safety)
Common stock, uncommon profit. (show you what quality you look for before you invest in a company)

 

[DionM]

You will be doing well to consistently pick stocks that give a higher return than the interest rate on your c/card

If you want experience, play a share trading game, as others have suggested.

I'm only new at this game and my "play money" is about $10,000 (the rest is invested in bluechips etc). And with that play money, I had one stock go up $3000 ... and a couple of others go down by the same amount in total.

Hit n miss ...

 

[nizar]

Ok my first post guys.

I'm 22 and been pretty irresponsible with my finances so far. I drive a car that costs me way too much insurance and petrol, I spent $10 000 on my credit card buying things, travelling to Europe, pissing away money on piss and girls. I'm your average Gen-Y'er and I am going to piss away my money on such frivolous things as long as I practically can cause you only young once right? Anyway, that aside...

Basically, i'm in a lot of debt but I work enough to keep me afloat. As a result of my indiscriminate ways I can only manage to save up about $2000 in capital and am really keen on getting started. I think I could whinge my way into a $3k loan from my parents to help me sign up a CFD account with Comsec and then cash out the $3k and return it to them.

Unfortunately, $2000 isn't a whole lot of capital and even with Comsec's $19.95 brokerage, the brokerage is quite hefty.

I have no experience trading although I studied Finance and have a pretty good grasp of all the concepts I wanted some more practical advice.

Is it even worth my while? I am thinking of having a portfolio comprised mostly of blue-chips and am focused on capital gains rather than income.
I'm willing to lose all the $2000, since I'm in this for more of a learning experience and getting my feet wet VS trying to turn $2000 into $20 000.

Given the proportionate cost of brokerage, a buy and hold strategy seems to be the most profitable yet given the performance of the market lately, I'm not sure if there is anymore room to give. Plus, i'm not in it for the returns as much as I am in it for the learning experience. Making money wouldn't hurt of course , but i'd rather take risks and learn rather than buy, hold and forget for the sake of return.

Buy, hold and forget is the most riskiest strategy that I know of (seriously).

If you don't learn to chop your dogs and let your champions run, then you're going to find it very difficult.

I agree with the others to pay the debt.

NOT paying off the debt is only worthwhile if what you are going to otherwise do with the money will give a greater rate of return than what you are getting charged for your debts.

I agree with ROE on educating yourself. Van Tharp's Trade your way to Financial freedom I think would be a great book to get you started. He explains money management and expectancy quite succintly.

$2k is not really enough to start with in my opinion.
Just keep saving and learning until you have maybe $5-10k. I started with $7k.

 

[Aussiejeff]

Donate the lot to your favorite political party!!

You will reap a huge "social dividend". Now that's got to be your Best Value For Money bet ever.....



Cheers,


AJ

 

[Awesomandy]

I would repay the debts, and start paper trading until you have enough capital again. You benefit in the dollar point of view, and also learn about trading.

 

[mogley]

Totally agree.

And in the process of doing so you'll prove to yourself that you're worth trusting with $5,000 and a CFD account...if you get my meaning.

Thanks for all the replies guys.
Very helpful.
Sorry I made a mistake, CDIA not CFD.
CDIA accounts from Comsec, just cheaper brokerage with minimum $5k opening balance.
I'm not game with CFD's yet. Still grappling with basic stocks.

I also picked up a book called Intelligent Investor by Graham which is more about value investing, not really speculating and trading but I do want to comprise my portfolio with some good value investments and leave a little for trading and charting.

 

[mogley]

I would repay the debts, and start paper trading until you have enough capital again. You benefit in the dollar point of view, and also learn about trading.

Sounds like a good idea.
I was up sh*t creek because I thought the ASX game was over but the E-Trade game looks promising.

This site is great!