All on one share or spread out the risk a bit?

[Julia]

I know it has been mentioned that diversification reduces risk as you spead your portfolio of shares across more than one industry and multiple companies. However, since I am still not confident, would investing small in a single blue chip company that taps into everything (ie- Wesfarmers owns coles, bunnings etc etc) be a good move as the company itself is quite diversified in what it does and therefore less likely to be affected by downturns in an particular area?

So for a beginner, would this be an okay move according to the more advanced members?

thank you

Lammy, I understand your reasoning about the diversification within WES but that alone doesn't necessarily make it a good share to own. (I'm not saying it is or isn't). More important is (a) how well run the company is, and (b) how the market perceives the company, i.e. what the share price is doing.

One piece of advice that Warren Buffet (I think) offered is "only invest in what you understand". e.g. you know what is involved in, say, Woolworths because you probably shop there, buy liquor from their grog shops, petrol from their petrol outlets and maybe even gamble at their gaming venues.
So maybe that would be one to consider.

I'd agree with your suggestion that with $5000 you only want to be buying one stock. I'd strongly suggest you go to the ASX website www.asx.com.au
and read through their Education section.
Then, for an understanding of how price action works, spend around $35 and acquire "Secrets for Profiting in Bull and Bear Markets" by Stan Weinstein, available through the ASF bookshop, I think.

use diversification for a reason, not because a book, magazine, someone on TV or someone on a stock forum told you to. invest for the same reason.

Great advice.

My share portfolio is for a SMSF so I have to be conservative and look for a reasonable to good dividend.

I don't understand why you need to focus on dividends just because the shares are contained within a SMSF. Why not equally focus on growth?

I have chosen the 4 major banks plus Bendigo Bank and for a good dividend (If they continue) Telstra. The percentage of shares are Financial 85.55% and Telecommunications 14.45%. I currently have some extra money to invest and am looking at other shares outside the ones I currently have. What is the thought of other people-should I stay with the banks or look at others. If I should look at others please advise which companies you feel could fit my needs. I understand any replies that I receive are not financial advice but only an opinion.

As Gooner has said, you've weighted very heavily into the finance sector.
I'd never do that for obvious reasons.
Why not some good quality industrials, or consumer staples, healthcare companies? There's a huge variety of companies out there in different sectors, so maybe you could consider reducing your financial bias.

Are you intending to keep TLS because it has a reasonable dividend, regardless of what the SP does? Will the "good dividend" still feel good if your capital value falls significantly? I'm not suggesting it will (I haven't looked at TLS for years) but you need to think about this.
Ditto any stock that you buy "for the dividend and franking".

I have thought of contacting a broker but am unable to research brokers that would suit-If someone knows of a good broker in the Sydney area I would be grateful for their name. Thank you in advance for any advice.

Do you mean you are considering using a full service broker so you can access their advice? Do you realise what they charge in comparison with online brokers? There is a heap of research available on the internet for free.
Don't get sucked into going to a full service broker where on a purchase of say $10,000 worth of shares you can pay up to $400 in brokerage.

 

[Lammy]

Thanks Julia for the tips
will take your advice to heart
cheers

 

[drsmith]

lol

Yes, the black swan annihilates shares like MOS.

Have a look at the MOS thread mate. Buy at 8 and sell at 24 is the way to go with MOS. In between shows it can go fro 3 to 30, but its a matter of tolerance and you are depending on kind people donating through placements to pay the staff.

Money Management and Diversification are the two most important elements in both investing and relationships with women.

gg

With regard to the corporate dependence of kind people donating through placements, such mining of shareholders pockets does have its advantages.

The geologist can always be sacked to save costs and there's no expensive mining infrastructure to build/maintain.