21 and wondering what to do

[odds-on]

Hey everyone, thanks very much for the replies.

Ideally, from what I can see the only options open to me are to go with a low/no risk bond/banking scheme. Obviously, while this does appeal on a certain level I have always had an interest in Share trading and would prefer to do that over leaving my money in a bank for 5 years at 4% interest.

With that in mind, my $10k investment is not going into penny stocks, as appealing as the potential return is I have seen a few of my friends and co workers look into these stocks and invest big thinking they are going to retire at the age of 25, only to lose most of the money they saved over the past 4-5 years.

Ideally I'd like a simple portfolio of 3 major blue chip stocks, each with ~$2k each invested in them, another 3 mid-range shares with ~$1k each invested and 3-4 "penny" stocks with a total of $1k between them.

This is just my initial thoughts, is there anything that immediately stands out as wrong about this? I do know that with a higher number of stocks the brokerage is going to add up, but I probably wont be trading more that once a year so this should keep the cost down. Thoughts?

Welcome to ASF,

You have a serious competitive advantage at 21yo - time is on your side! Let the compounding take effect.

Agree with sinner, the "Permanent Portfolio" is worth thinking about...also check out the High Yield Portfolio, for an easy to manage and low cost portfolio strategy.

http://www.fool.co.uk/Investing/guides/The-High-Yield-Portfolio.aspx

Cheers

 

[Julia]

I put everything into a house until I owned it.
But back then, the interest rate was 17%

I did the same at a similar time. It's not realistic, however, to just quote the interest rate (which seems so extraordinary today) without noting that inflation was huge, and capital gains on property exponential.
Ditto high rents. It was a great time to churn property over. I doubt we'll ever see such conditions again.

Hey everyone, thanks very much for the replies.

Ideally, from what I can see the only options open to me are to go with a low/no risk bond/banking scheme. Obviously, while this does appeal on a certain level I have always had an interest in Share trading and would prefer to do that over leaving my money in a bank for 5 years at 4% interest.

Congratulations on the amount of capital you have amassed at this early stage of your career.
If it were me, I wouldn't be committing funds to any five year investment at such a low interest rate.
Imo, and I could be quite wrong, I don't think we're far from the bottom of the interest rate cycle.
Perhaps instead have a look at the at call rates which are often higher than longer term deposits and allow you much more flexibility. See http://www.infochoice.com.au/?pid=infochoice

With that in mind, my $10k investment is not going into penny stocks, as appealing as the potential return is I have seen a few of my friends and co workers look into these stocks and invest big thinking they are going to retire at the age of 25, only to lose most of the money they saved over the past 4-5 years.

Ideally I'd like a simple portfolio of 3 major blue chip stocks, each with ~$2k each invested in them, another 3 mid-range shares with ~$1k each invested and 3-4 "penny" stocks with a total of $1k between them.

This is just my initial thoughts, is there anything that immediately stands out as wrong about this? I do know that with a higher number of stocks the brokerage is going to add up, but I probably wont be trading more that once a year so this should keep the cost down. Thoughts?

Seems sensible to me.

The markets won't always be so expensive and you will be best positioned to enter when they are.

Agree 100%. Don't rush in.

 

[ROE]

I put everything into a house until I owned it.
But back then, the interest rate was 17%

17% was overrated it ...it only lasted for a year 89-90 and by end of 96 it dropped more than 50% back to around 8% ...compared to what the people pay in term of housing price and repayment today...17% isn't that more expensive....

 

[ROE]

CBA goalsaver offer fairly decent rate 4.4% at call ....provided you put in a min $200 a month and make no more than 1 withdraw ... you blow those conditions 0.75% .....

probably best if you start reading some books on investment and learn a bit while you pill up your cash and earn interest...

Mark Twain: "There are two times in a man's life when he should not speculate--when he can't afford to and when he can."

this is a well rounded book that quote taken from the book

http://www.amazon.com/Margin-Safety-Risk-Averse-Strategies-Thoughtful/dp/0887305105

you can get them in some library...

 

[Letts]

I made my first buy today, decided to start small on blue chip stocks to get used to it.
Bought two stocks, ~$1000 of each. Hopefully all goes well!