Ideas for establishing a capital base to begin investing - getting past first base

[Trembling Hand]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I later found out it was more like $500+ as many paid much more than $1 for a better Odds opportunity.Particularly those who had won the raffle.

George introduced me to "Out of the Square thinking".

Love it!! That's a classic. And exactly the thinking needed.

 

[numbercruncher]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Cool story Tech.


Id ask, why did management sanction this ? George must of been well connected or something ? kickbacks perhaps ....


Did you ever win his wages ?

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

When I was 18 I had 2 jobs like most did then.Worked Saturday mornings pumping gas as well.

A Latvian guy GEORGE who I never had a conversation with taught me some extremely valuable lessons.

I'll tell his story then would be interested in what others get from it.

My second job was in a machine shop working the 6-10pm shift.Knocked of my main job at 5 then straight to the 2nd.
On my first day a Wednesday---my supervisor asked do you have a dollar.
He had a plastic bag filling with dollars.
"What for?"
"There is a tradition here which has been going on for 10 yrs.Pay day is Friday and each Friday GEORGES wages are raffled off,his pay is $120/week (At the time my total earnings----all jobs---- were $45)."

"Who gets the $s I asked"
"GEORGE---its OK even management get involved--and yes they did!"

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I later found out it was more like $500+ as many paid much more than $1 for a better Odds opportunity.Particularly those who had won the raffle.

I learnt a lot from George.
Interested in what others gain from this true story.
It was stopped I heard about 10 yrs later by the UNIONS---so much for entrepeneurship!
George introduced me to "Out of the Square thinking".

LOL what a legend!!

I will be telling this story to my mates.

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Ok this post may seem off-topic but its not really.

Isn't it interesting how most established traders seem to say that having an adequate capital base is so important -- and i dont disagree -- but then you go and read about some trading legends, and they built their fortunes having started with so little?

Take Richard Dennis for example. He started with $400, but yeh it was in the late 60s so now maybe its a few thousand. Still not much.

Now did these guys (Market Wizards contains a fair few of their stories) do so well from such a small capital base solely because they were at the extreme epitome of trading excellence??

Or does it have to do with luck/chance and the effects of randomness?

Is it possible that someone starting with $400 trading futures in the late 1960s with the same strategy as Dennis ended up with much less.

So why is it that we require decent capital when they didn't?

And what is a decent capital base for investing/trading?
Is it $30k? Or $50k?
(When my friends ask me I tell them $10k.)

Some discussion here would be much appreciated -- maybe this requires a new thread.

 

[wayneL]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Now did these guys (Market Wizards contains a fair few of their stories) do so well from such a small capital base solely because they were at the extreme epitome of trading excellence??

Or does it have to do with luck/chance and the effects of randomness?

From such a small base, a bit of both I reckon. One early hit and their capital would have been down the toilet.

A bit of luck goes a long way, as the famous casino example shows.

 

[Tysonboss1]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Contentment, happiness, family, friends, well being, creativity, contemplation, inner satisfaction, achievement.

.

It's true that having wealth doesn't guarantee the above, Being poor doesn't either.

All te tings listed above are easier to get when you have wealth.

 

[prawn_86]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Im not quite sure if im at base one yet or not...

I would lean towards not, although for a person of my age i think i am doing better than the vast majority.

I have always been clever in an academic sense and was lucky enough to gain some scholarships for my studies. I also worked flat out in my gap year to save a decent capital base for uni.

I study a degree full time and am also just about to begin a full time diploma also, as i feel that for my desired job, education is of vital importance, and i enjoy learning. I also work part time 2 days a week.

Having said that though, putting money into the market has taught me much more than i could hope to learn in my time at uni.

i am lucky enough to have been taught sound financial management by my father, and am really thankful for that.

Whenever I am worried about my small capital base i think to myself:
"How many people my age who are studying full time, can travel overseas at least once a year, enjoy their life, and still SAVE 3 - 5k per year?"

Most people my age are busy trying to survive due to the fact they lack good financial management and would rather spend it all at once on weekends.

So my plan now is to continue chipping away at building a capital base and when my studies are complete i will re-evaluate and set a new direction.

 

[julius]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

It's so tiring listening to the same people harp on about the evils of money...move on

You can demonise 'wealth' all you want but the fact is that $money$ makes life easy in a market economy. It's simply a means to an ends.

Back on topic... investing in stocks comparitively requires very little capital, which is the real beauty of the share market. If you were going to look at launching a serious start up, which is not the same as buying yourself a job, I'd say you're looking at $200K+ minimum.

Almost all of the financially successful people I've spoken to who have made it in business agree that accumulating a meaningful capital base is the biggest obstacle. The same people will also tell you that todays environment is much more competitive than the one that gave them their 'break', this mostly from people who made it with very little capital base.

To start with you need 1. cash flow, 2. experience, 3. contacts, which all lend itself toward a salary position. These days this generally requires some kind of education to get you a place in the job queue...be it uni, apprentice, etc. - then you also have something to fall back on. That's my plan for the time being

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

It's true that having wealth doesn't guarantee the above, Being poor doesn't either.

All te tings listed above are easier to get when you have wealth.

True that.

 

[nizar]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Whenever I am worried about my small capital base i think to myself:
"How many people my age who are studying full time, can travel overseas at least once a year, enjoy their life, and still SAVE 3 - 5k per year?"

LOL have you heard of YT?

 

[Wysiwyg]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

I don`t see many other ideas apart from working for a wage to establish a capital base.It is good for self esteem and learning how the system functions. One could thieve but this would be detrimental to ones health and freedom.My personal experience was to deposit money into a bank and when it reached 2 thousand put that into a term deposit.This is a painstakingly slow process because after one year there was $160 more.I read that fixed interest, shares and property were the go and bought my first shares in CBA at 300 for $11 in `97.(sold 6 months later in desperation, dohhh)

For me, building a capital base in a permanent 5 day week job was slow and my bro. told me he was making more working heaps of o.t. through contract companies.I resigned from the slow, boring permanent, getting nowhere job and signed up with some contracting companies.Nothing secure or pretty about this type of work, it is long days and you get to meet some of the worlds nastiest people.
It was the o.t. i worked that gave me a capital base to invest and now trade the markets.

 

[MRC & Co]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

I am only 25 but have a decent capital base 100k due to some inheritance and some "lucky" investing! Traded my first stock when I was 12 (Gold Mining Australia) and lost everything. Used money received from presents to stay in News Corp which did very well in that time. This was my first entry into the stockmarket all those years ago and has continued and grown ever since.

I plan to take out a loan when I go back to work (curently trading full-time). Also, this should coincide with the bottom off all this mess. Use some dividends and leftover disposable income to help pay off the loan and keep any capital gains I make. Basic wealth creation strategy.

Sell covered calls against my "value stocks" to generate income, setting strike price around "fair value". Trade the current trends, anything inflationary at the moment, namely base and precious metals.

I have 2 degrees in economics/management which help investing and have worked as an economist and financial analyst recently for about 2 1/2 years. Currently studying my DFP just for further credentials to move into funds management, which I then plan to help me further develop my capital base. Though, obviously, recognise the power of compounding rates of return and plan to use this as my easiest way to increase my capital base over the long-term.

Good topic Tech.

Cheers guys and good luck!

 

[julius]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Nizar how old is YT ? Same age as prawn ?

 

[ormond]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

My capital base came via taking a redundancy package 10 years ago which gave me enough money for a house deposit and was lucky enough to be re employed 3weeks laterby the same company.
Four years later used equity in home to take out an intrest only loan with dividend payments more than covering intrest payments.
Since then i've built sufficient equity in my shares to easily meet intrest payments and have sufficient equity to take some additional risks with some spec stocks
The moral of the story is i was prepared to take a risk in life otherwise i would have no assets and no prospect of acclumating any on a crappy wage.

 

[tech/a]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

There is some great stuff here already

(1) Trade the current trends, anything inflationary at the moment, namely base and precious metals.

(2) It was the o.t. i worked that gave me a capital base to invest and now trade the markets.

(3) investing in stocks comparitively requires very little capital, which is the real beauty of the share market.(I'll add that you can buy and sell at the click of a mouse).

(4) To start with you need 1. cash flow, 2. experience, 3. contacts, (Ill add Initial Capital base---in business there is much more)
I have always been clever in an academic sense and was lucky enough to gain some scholarships for my studies. I also worked flat out in my gap year to save a decent capital base for uni.(Become an expert in something doesnt matter much what it is but when your an expert then people will beat a path to your door for YOUR expertise---you found a way to make the income required).

Sorry Ive probably missed some.

I have more to offer if only people would lay off this crap about chest beating.What I offer up are life experiences---snippets from all walks of life that have placed me in a position to enjoy what life has to offer---I make no apologies for making my life as enjoyable as I can. I sincerely want people to go beyond their fears---I have failed twice and finally succeeded. Its damned fun.

I'm hopeful that here some ideas may well fast track this situation.

So my plan now is to continue chipping away at building a capital base and when my studies are complete i will re-evaluate and set a new direction.

I don`t see many other ideas apart from working for a wage to establish a capital base.

To the quote above.
The story above taught me a great deal about the mindset above---which was of course mine at the time.It appears that it hasnt taught or indicated anything to anyone other than it was clever.

Any comments before I bore you all with what I learnt from it?

So why is it that we require decent capital when they didn't?

Because its far far easier,it took me a while to understand the much touted
"Money makes Money" adage,but it is very true.
Without it you cant gain leverage and without leverage you cant turbo charge return--on anything,business,property,trading,collectables--you name it.More on this topic later.

Nizar how old is YT ? Same age as prawn ?

Personally I think YT is a very clever cookie who may not know what it is that makes him so clever---other than his copious amounts of dedicated research into a company
Hint
Its the end of town he works in.---well in my view.
I think he and people who make a success of trading in the pennies are right out of the square many without knowing why---again in my view.

 

[MRC & Co]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Who is YT?

Interesting to hear some of the opinions and life experiences of some of the real experienced and astute traders/investors here, such as wayneL, Tech, number etc.

Keep it up guys. Im enjoying this thread!

My success so far has been to take a little of everybodies trading strategies and put the best together to form my own. So far, appears to be working nicely and without this site, I would be way behind the 8 ball! Great book recommendations and advice, and most importantly, the continued quote of DYOR!

Up about 25% so far this year in a time when the market has moved down. Thanks fellas!

 

[disarray]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

there is also intellectual capital. opportunities begin to present themselves as your education base expands, the more skills you learn and concepts you grasp, the more areas you can enter and try and profit from.

it is especially important when you are working for a company because you are being financed to improve - if any new tasks come along you should get involved in it and learn what you can about it, then stick it on your resume. once you have a new skill/concept, take it for a ride somewhere interesting. playing games taught me pc's which let me learn windows which gave me an opportunity to learn unix which led me to linux and following this path has made me very employable while just riding the trend. currently i prefer to work for myself because i'm lazy, but whenever a door opens for me, i take it.

formal education is all well and good but i think best results come from chucking yourself into the deep end with a bunch of books and google. in my experience you don't need to be a guru in any particular field, and memorising all sorts of arcane stuff to pass exams for courses is not really the best "education". imo best education comes from an understanding of broad concepts (most easily obtained on the job) which makes it easier to study more in depth components if required.

so recently i was thinking that the world is modernising, its going to need a ton of resources, australia has heaps of them, so how could i get involved? that led to stocks, which led to this board, which led me to FX which will lead me elsewhere. i read what people here say about things that interest me and i take their ideas and add them to my thoughts - just being present on this message board provided the opportunity to make real money while showing me the doors to a dozen different vehicles (and even make me consider property).

with just a bit of discipline i reckon the system will give anyone the opportunity to make their own success.

 

[julius]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

"no one ever got rich working a job; they only got time poor"

just a stepping stone

 

[MRC & Co]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

Disarray, I completely agree with your statements.

I have been thinking the same things lately.

No need for me to say more.

 

[BBand]

Re: Ideas for establishing a capital base to begin investing - getting past first bas

For what its worth - here is my experience -----

If you want to build capital, I believe its possible to do for anyone who is willing to do what it takes.

Sometimes having an understanding wife helps

I do not understand people who say - they can't save money (probably have a job with a fancy title and little else) or they can't get a suitable job locally that pays well.

Well the job market is much the same as the stock market! your return to a large extent is determined by the effort you put in and the risk you are willing to accept.

Initially in my early years as a qualified engineer, I went from company to company - primarily just to gain experience in different aspects of the profession ie maintenance, sales, design, contruction and commissioning of new plant, primarily in the petro chem business. I travelled the length and breadth of the UK to get it

Once I had the experience, the steady 9 - 5 job became meaningless and I ventured into the world of contracting - being my own man and hiring my services (experience) for $$$$$

I was willing (with my wifes approval) to go where the money was - within reason.

I am retired now, but in my contracting days I was willing to accept risk, because I had belief in my capabilities. - and I was always employed, even during the time of the 3 day working week (in the UK when there was not much work around). In fact this was some of my clondyke years. I was working contract offshore in the North Sea working all hours god sent to help construct/commission oil platforms.

So the moral to my story is - do not be afraid to accept risk - nobody knows everything, you will never learn if you do not put yourself in the position to learn something new
Have a positive outlook in life - have a plan

Money is the natural end product

Peter