Bought my first shares: Am I doing OK?

[midou7172]

Hi everybody,

After some disappointments with different financial advisers, I am now on the way of “self-taught” investor.

At the beginning of March this year, I bought my first shares.
As I am a debutant, my starting fund was set to 5000$. I followed ASX share game and opened an online trading account with 15$ trading fee.

My strategy is mainly “buy & hold” until I really need that money or until my retirement (20 to 25 years to go).
I receive about 1000$ every 9 months from one of my savings. So I am planning to buy more shares with that money while I am still learning.

Below are my first shares.
My choices were made from Top ASX 100. At lease I know what they are doing to make money. Also, I did some researches and these researches were combined with my gut feeling as well.
1. Wesfarmers (wes) – total about 1200$
2. Vangaurd High Yield EFT (vhy) – about 1600$
3. Crown (cwn) – about 500$
4. ANZ (anz) – about 1200$
5. Santos (sto) –about 500$

Since, I even received 20$ dividend (Yeeeeeah~~) from VHY & CWN.
On the paper, I recovered all the trading fees and unrealised profit is about 50$ (which will be consumed by trading fees if I sell them now).

As I am doing this all by myself, some feedback from experts will be appreciated. I’d like to know if I am doing ok, or doing something obviously stupid.

Also, I am not sure about Capital gain tax. I now have DRP in place for WES,STO and VHY but each dividend will be only a small amount. Does this mean nightmares for CGT later?

Cheers,

 

[merlinnn]

I am the opposite to an expert, however I am curious as to your decision making process, particularly as you mentioned gut feeling. The only thing my gut feeling has done for me in the past was cause me to lose money. The only un-mentored success I've had in the market both in securities and FX has been support and resistance.

 

[G Gekko]

Hi,

I am a newbie as well. All seem ok in my personal opinion for a buy and long term hold strategy. I feel that especially with ANZ and CWN as they are both businesses almost with a license to print money, as long as our banks don't become exposed to any major credit risks like a mass default on mortgages.

I couldn't find STO so I can't comment on that, and I haven't got a lot of knowledge about VHY. Just wondering how you came across them and decided to pick them over another bank or something?

WES is a little overpriced for my liking but I'm almost certain that over the longer term when you go to cash out you'll have more money than what you put in regardless. It could be one of those stocks just remain overpriced while the market does well overall.

 

[midou7172]

I am the opposite to an expert, however I am curious as to your decision making process, particularly as you mentioned gut feeling. The only thing my gut feeling has done for me in the past was cause me to lose money. only un-mentored success I've had in the market both in securities and FX has been support and resistance.

When you have different companies choose from and they have similar charactors and you know that you will never get confirmation about their future performaces, that's when my gut feeling kicks in.

 

[midou7172]

Hi,

I couldn't find STO so I can't comment on that, and I haven't got a lot of knowledge about VHY. Just wondering how you came across them and decided to pick them over another bank or something?

Thank you for your input.
As I didn’t have a lot of money to diversify my portfolio, I was looking into an index fund or EFT. Vangaurd seems to have a good track record in this area and I was willing to take a bit more risk by going with high yield fund. I thought for a long term, I will be able to recover that risk.

For Santos, there is Santos building in Brisbane CBD (it helps to know that they are physically somewhere). But also, Santos is one of the big oil/gas company in Australia. If my memory serves me correct they are also expending in south-east Asia. My understanding about this business is, once the structure is built, you collect money from your customer. So they will make money until the day we don’t need gas/oil anymore. After few research, it seems to me that gas consumption will grow in Australia… That means more money for the people who built the structure. BHP is the big company in this kind but was too expensive for me. Hence I went for smaller guy.
These were my 10cents worth of analysis… I hope this might help others.

 

[burglar]

...
1. Wesfarmers (wes) – total about 1200$
2. Vangaurd High Yield EFT (vhy) – about 1600$
3. Crown (cwn) – about 500$
4. ANZ (anz) – about 1200$
5. Santos (sto) –about 500$
...

Coles or Woolies.
Dividends aplenty.
Gambling.
One of the big four banks.
Energy!

Yeah! FWIW I think you are doing Ok.

Brokerage may kill you with parcels so small.
I assume you will buy more of these.

 

[midou7172]

Brokerage may kill you with parcels so small.
I assume you will buy more of these.

Yeah... will buy more of these. I am just concerned about CGT. If I build a quantity of my holding little by little, how do I caculate CGT later? Anybody has an idea?

 

[burglar]

Yeah... will buy more of these. I am just concerned about CGT. If I build a quantity of my holding little by little, how do I caculate CGT later? Anybody has an idea?

Profit is more important than CGT.
You will pay CGT on profit at your marginal tax rate (less discount if you hold for longer than 1 year).
Plenty has been posted on ASF regarding CGT.
There is info in the Supplementary Tax Pack.
Also the Austalian Tax Office website, or you can phone them.

 

[midou7172]

Profit is more important than CGT.
You will pay CGT on profit at your marginal tax rate (less discount if you hold for longer than 1 year).
Plenty has been posted on ASF regarding CGT.
There is info in the Supplementary Tax Pack.
Also the Austalian Tax Office website, or you can phone them.

Thank you for your info. There are so many things in this forum! This is a great forum but I am still trying to get my head around.

 

[McLovin]

Yeah... will buy more of these. I am just concerned about CGT. If I build a quantity of my holding little by little, how do I caculate CGT later? Anybody has an idea?

Just record the purchase prices in Excel or something. Not too hard. When you sell you just record the sale price against each parcel and sum the totals.

 

[midou7172]

Just record the purchase prices in Excel or something. Not too hard. When you sell you just record the sale price against each parcel and sum the totals.

Thanks. You saved me a lot of time!!! I can definitly do that.

 

[sydboy007]

Thank you for your input.
As I didn’t have a lot of money to diversify my portfolio, I was looking into an index fund or EFT. Vangaurd seems to have a good track record in this area and I was willing to take a bit more risk by going with high yield fund. I thought for a long term, I will be able to recover that risk.

For Santos, there is Santos building in Brisbane CBD (it helps to know that they are physically somewhere). But also, Santos is one of the big oil/gas company in Australia. If my memory serves me correct they are also expending in south-east Asia. My understanding about this business is, once the structure is built, you collect money from your customer. So they will make money until the day we don’t need gas/oil anymore. After few research, it seems to me that gas consumption will grow in Australia… That means more money for the people who built the structure. BHP is the big company in this kind but was too expensive for me. Hence I went for smaller guy.
These were my 10cents worth of analysis… I hope this might help others.

An option to the vanguard ETF is the ishares IHD.

Similar goals but I do like they limit sector weighting to a max of 20% and a single share to 4% so they can't go quite so all in on the financial stocks as some of the high yield funds have.

Maybe cost you a bit in yield, but will provide better protection should something scare the punters away from the bank stocks.

I have it in my SMSF and happy with the performance and yield is pretty good - 10K parcel has provided $433 in grossed up dividends over the last 2 qtr ie 8.66% annualised. Throw in the 15% capital gain on top and gotta love the run up in the market since lat elst year.

 

[sydboy007]

Yeah... will buy more of these. I am just concerned about CGT. If I build a quantity of my holding little by little, how do I caculate CGT later? Anybody has an idea?

Your broker should also give you an annual statement each year. Hopefully they will keep a track of the CGT as well.

But yeah as has been suggested excel is probably the easiest way to go

 

[midou7172]

An option to the vanguard ETF is the ishares IHD.

Similar goals but I do like they limit sector weighting to a max of 20% and a single share to 4% so they can't go quite so all in on the financial stocks as some of the high yield funds have.

Maybe cost you a bit in yield, but will provide better protection should something scare the punters away from the bank stocks.

I have it in my SMSF and happy with the performance and yield is pretty good - 10K parcel has provided $433 in grossed up dividends over the last 2 qtr ie 8.66% annualised. Throw in the 15% capital gain on top and gotta love the run up in the market since lat elst year.

It sounds certainly interesting. When I picked Vanguard, I realised that they had a big part in bank stocks which I am not that keen after all. Thanks for your tips. Something that I will definitly consider.

 

[burglar]

It sounds certainly interesting. When I picked Vanguard, I realised that they had a big part in bank stocks which I am not that keen after all. Thanks for your tips. Something that I will definitly consider.

WESFARMERS

How do you establish that it is a good company?

One good sign is that they have been around a while (have survived hard times).

The ten year graph shows they have been around for longer than 10 years!
It shows they survived the GFC in 2008.

WES did not always own Coles.
I can't remember when it was acquired.
The graph shows that they have rebuilt Coles.

Now the entire group is moving to new highs.





If you go to the Annual Report you will find the key statistics.
Alternatively, Key Statistics for WES.AX

 

[midou7172]

How do you establish that it is a good company?

Well, you can safely say that I was gambling. My choice was based on;

1. Wesfarmer is one of the ASX 100 company which I know of.
2. Most of us go to their business on weekly basis.
3. I like Coles, Target, Bunnings better than Woolies, Masters.

All, about my personal choices rather than analysis.

Yes, the graph looks good! Good news for me but for how long...

Key Statistics for WES.AX

There is nothing I can see as significant on their Key Statistics. It looks like a ‘boring’, ‘safe’ company to bet for a long term which I was looking for.

I read that Coles goes into joint venture with ISPT. No idea whether that is good or bad idea.

What I really like to know is what do you see in Wesfarmers... please~~? *^.^*

 

[burglar]

... What I really like to know is what do you see in Wesfarmers... please~~? *^.^*

Hi midou,

An interesting response!
Shall I be honest?
I hate the Coles, Woolies duopoly!
They are not good for Australia.
They make heaps from their customers
but do not pass it back to their suppliers.
I could go on and on but no ....

I shop at Foodland. End of rant!


Back to WESFARMERS.

As a gambler, I see them as safe and boring.
As an investor, I see them as a good company.
They won't go broke!!
I don't think they are cheap, I have not checked the metrics.
But we have not yet discussed why they need to be cheap.
Long term investors don't sell except in extreme circumstances.
So does it matter?

 

[waimate01]

Are you doing ok? You're doing GREAT.

The reason lies is not so much which stocks you have chosen, but in the fact you have started investing and plan to continue doing so. It's a life-changing, prosperity-inducing step, and one which very few people actually make.

You'll make some mis-steps along the way, but the important thing is to read lots, think lots, and to make a start. The starting bit is the hardest and rarest, and you've already achieved it. You're doing great.

 

[burglar]

... I read that Coles goes into joint venture with ISPT. No idea whether that is good or bad idea ...

$AUD532Million cash to play with?!

 

[midou7172]

Are you doing ok? You're doing GREAT.

The reason lies is not so much which stocks you have chosen, but in the fact you have started investing and plan to continue doing so. It's a life-changing, prosperity-inducing step, and one which very few people actually make.

You'll make some mis-steps along the way, but the important thing is to read lots, think lots, and to make a start. The starting bit is the hardest and rarest, and you've already achieved it. You're doing great.

Thanks you waimate!

Your "Encouragement" is like a pain relief to all these brick walls of jargon and stuffs which I am going thought!