Investing $3000 - thoughts pls...

[pharaoh]

Morning all.

Look at all this wonderful advice, you guys are great.
Firstly, bullmarket and others that said it, imo I think I will tell him to formalise a financial goal.

Atm, it will be like this;
1. Goal based on med-high risk stocks in the 1st 12 months with existing cashflow and regular monthly input - in order to grow base capital to use for future investments
2. Top up each month
3. As this money grows, either stay in and top up or sell and buy new

The ING account saving for a while would be sensible, but he is impatient.

Maybe 1, poss 2 stocks the way to go. Eggs have to really go into the one basket when you don't have much to invest. But, with strict management of course.

money tree, what is a risk-free dividend strip? And how does it work?

 

[OzFrisky]

with $3k you could do a risk-free dividend strip.

This will give you a $5k profit every year till you die. And its risk-free.

Risk Free ? There is such a thing ?

 

[bullmarket]

Hi ozfrisky

I must admit I had a little chuckle as well when I saw that 'risk free' claim

But don't worry, I doubt anyone takes the risk free part seriously and anyone that does probably still believes in the tooth fairy

ooooooooops....sorry if I just shattered anyone's belief in fairies

If that claim was true then I suppose he would also say that $300k would give you $500k a year risk free until he dies.........yeah right

Dividend stripping is just one of many strategies people can use but to say it is risk free is simply not a true statement imo.

cheers

bullmarket

 

[nizar]

I doubt anyone takes the risk free part seriously

Tend to agree, i certainly didnt...

THe way i see things, the risk-free rate is what the official interest rates stand at and this is what most banks would give which is 5.50%... (or some banks may give 50pts higher)

ANything higher than this is either not true, or requires some degree of risk...

But, still, im curious, maybe moneytree can elaborate...?

 

[IGO4IT]

its amazing that everyone is assuming that $3k will be put into 1 stock & automatically that 1 stock may give a small return (god forbid that the chosen stock could dive in 5 minutes after buying the first lot!! which we all know happens!!), choice of stock, entry & exit point should be the question not the amount!

given that the controller of the cash & stocks bought is expereinced enough to know their entry & exit points & their right selection of stocks....assuming all that...I think that person who has all that experience shouldn't really care about the amount as it will grow sooner or later.

small amounts for someone who knows the roles is exactly the same as big amount, the difference is the time frame taken until you start making real money!! with small amount, you have to be patient ....with big amount, you can get real money sooner assuming that you have enough experience but of course your risk is higher.

imo, $3k should be invested on big potential starter company that can provide a few bagger on med - long term (1 - 3 years term), if you decide to trade on short term basis, then time taken on research to maintain short term trading on many stocks will be worth MORE than the average 10-30% short term return on $3k.

Commsec packages are useless, return is low & a bit safe but realistically how will you feel with $600 return from your $3k after 1 year. You defenitely need a small company that will hit it big on the long term.

cheers,

 

[tech/a]

its amazing that everyone is assuming that $3k will be put into 1 stock & automatically that 1 stock may give a small return (god forbid that the chosen stock could dive in 5 minutes after buying the first lot!! which we all know happens!!), choice of stock, entry & exit point should be the question not the amount!

Nobody has assumed that at all.The question was investing $3000,consensus is best return would be from 1 stock selection not multiple.Other than that youve stated the obvious for any trade.

given that the controller of the cash & stocks bought is expereinced enough to know their entry & exit points & their right selection of stocks....assuming all that...I think that person who has all that experience shouldn't really care about the amount as it will grow sooner or later.

Traders should always be intersted in best use of funds,rate of growth or lack there of.Experienced or novice.

small amounts for someone who knows the roles is exactly the same as big amount, the difference is the time frame taken until you start making real money!! with small amount, you have to be patient ....with big amount, you can get real money sooner assuming that you have enough experience but of course your risk is higher.

Well I dont agree I trade large amounts (Your idea of a large amount and mine maybe different) totally differently to smaller amounts.
Risk is no different a 10% loss is a 10% loss wether that be $1000 or $10000.

imo, $3k should be invested on big potential starter company that can provide a few bagger on med - long term (1 - 3 years term), if you decide to trade on short term basis, then time taken on research to maintain short term trading on many stocks will be worth MORE than the average 10-30% short term return on $3k

.

Dont agree or disagree either,with the right software and knowledge you could double the $3k in a week.No not every week but many here have done just that.The trader needs a trending stock,how long that trend lasts and its speed will determine rate of growth.

Commsec packages are useless, return is low & a bit safe but realistically how will you feel with $600 return from your $3k after 1 year. You defenitely need a small company that will hit it big on the long term.

Id feel bloody good with a 20% return on $3k or $300k its 20%

 

[ghotib]

Hi guys

Tell me what you think.
A mate of mine has 2 stocks bought in the last 3 months.

One now worth $2,700 and the other $800
He can only contribute $700 each month into buying stocks, and these existing two are on the up.

He doesn't want to take a marginal loan, in case the market turns down the track, but he wants to maximise his exposure and use this foundation plus the monthly extra, to build a pool that he can then use to expand his portfolio.

Things like, should he top up the $500 into both these each month, at good buy points of course, or save this until he can buy a $2000 parcel eg, or buy new low spec parcels hoping on growth (i.e. aex etc).

I'm confused.

The thread title says "Investing $3000", but that's not really what your mate has right now (maybe that's where he started?). He's got a portfolio of 2 stocks worth $3,500 at market close last Thursday, plus $700 per month discretionary cash that he is willing to invest on the stock market.

The only way he'll have $3000 to invest is to wait a few months for the $700 amounts to accumulate, or to sell some of his existing holdings. It doesn't sound like he wants to sell what he's got at the moment, seeing as they're both on the up, so the choices come down to what he can do with $700.

I ain't offering advice here, but I'd like to point out that even $20 brokerage is really $40 if he sells because the sp dives immediately, which means $60 if he wants to reinvest the balance quickly, which means that his remaining $640 needs to make $63.15 in 4 weeks to do better than if he'd left the money in an at call bank account.

Whether or not that's significant depends on a whole lot of other factors, but nobody else has mentioned it so I thought I would

Good luck to your friend

Ghoti

 

[money tree]

Hi ozfrisky

I must admit I had a little chuckle as well when I saw that 'risk free' claim

But don't worry, I doubt anyone takes the risk free part seriously and anyone that does probably still believes in the tooth fairy

ooooooooops....sorry if I just shattered anyone's belief in fairies

If that claim was true then I suppose he would also say that $300k would give you $500k a year risk free until he dies.........yeah right

Dividend stripping is just one of many strategies people can use but to say it is risk free is simply not a true statement imo.

cheers

bullmarket

Its quite funny when I see someone acting in a condescending know-it-all arrogant manner when they clearly dont have a clue what they are on about.

Some time ago there was a thread where we discussed risk-free strategies. They do exist. Ignorance costs. Ever heard of hedging? You cant get $500k p.a from $300k because the limit on franking credits is $5k.

 

[bullmarket]

no problem money tree

I assume you are talking about the 45 day rule for dividends and claiming franking credits on tax returns when you mention the $5000 limit.

In your earlier post you made a statement that effectively said that dividend stripping on its own is risk free. I don't believe it is and unless you post some verifiable numbers that there is absolutely 0 risk in dividend stripping on its own I will continue to believe there is some element of risk in it.

I'm sure most if not all are aware that hedging can be used to reduce and sometimes eliminate risks in all sorts of investments but that is not what you said in your original statement

see you in the swamp

bullmarket

 

[money tree]

with $3k you could do a: "risk-free dividend strip".

edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.

 

[bullmarket]

ok no problem money tree

edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.

Good to see you at least corrected the error in your original post.

cheers

bullmarket

 

[tech/a]

Its quite funny when I see someone acting in a condescending know-it-all arrogant manner when they clearly dont have a clue what they are on about.

Yeh I hate it as well but you better get your facts/terminology accurate.

Some time ago there was a thread where we discussed risk-free strategies. They do exist. Ignorance costs. Ever heard of hedging? You cant get $500k p.a from $300k because the limit on franking credits is $5k.

edited above quote to clarify. "risk-free dividend strip" is the NAME of a strategy. It does not mean div stripping is risk-free.

Youre a financial planner tree and your statement is obviously misleading and designed to attract those who dont know better.
You wonder why people hate financial advisers.

 

[bullmarket]

Hi tech/a

.........Youre a financial planner tree and your statement is obviously misleading and designed to attract those who dont know better.........

I agree with you on this one tech/a and geeeez...I see you agreed with me earlier in another thread ..............I guess hell must have finally frozen over

If we start agreeing then there is still hope for the Middle East I guess

cheers

bullmarket

 

[OzFrisky]

You have to question the ethics of someone peddling a strategy as 'Risk Free Dividend Stripping' when they acknowledge that div stripping is not risk-free. The name is very deceptive, nothing is ever truely 'Risk Free'.

 

[tech/a]

Just to clarify My feelings with Tree.

Basically I think the guy has something to add.I also think he has the perfect vehicle to gain clients through here.

The only thing is he seems to keep shooting himself in the foot.

If you set yourself apart and let your course do the spruking then clients will beat a path to your door if it exceeds expectations.

 

[money tree]

You have to question the ethics of someone peddling a strategy as 'Risk Free Dividend Stripping' when they acknowledge that div stripping is not risk-free.

You have to question the I.Q of someone who posts such a statement. "Dividend stripping" as a strategy is not risk free. However, "Risk-free dividend stripping" as a strategy is risk free.

The name is very deceptive, nothing is ever truely 'Risk Free'.

And you know this......HOW !?

Ever gotten off your bum to see if E = mc2 is actually true?

Or are you just another parrot regurgitating what some other parrot once said?

People like you argued with the likes of Capurnicus and Columbus. "your wrong mate......the earth is flat and the sun revolves around it!"

Unless you have actually bothered to do your own research, ie testing a few hundred strategies and building computer simulations....please dont make statements of fact without evidence to back them up.

 

[tech/a]

You have to question the I.Q of someone who posts such a statement. "Dividend stripping" as a strategy is not risk free. However, "Risk-free dividend stripping" as a strategy is risk free.



And you know this......HOW !?

Ever gotten off your bum to see if E = mc2 is actually true?

Or are you just another parrot regurgitating what some other parrot once said?

People like you argued with the likes of Capurnicus and Columbus. "your wrong mate......the earth is flat and the sun revolves around it!"

Unless you have actually bothered to do your own research, ie testing a few hundred strategies and building computer simulations....please dont make statements of fact without evidence to back them up.

But clearly client liason isnt a strong point.

 

[bullmarket]

oh dear moneytree

Why have a go at ozfrsky in a condescending way especially when you posted earlier you don't like it done to you.

You chose to make the earlier statement which said that dividend stripping is risk free - no-one forced you to post it and then you only corrected it when I and a couple of others pointed out the innacuracy in your post.

I bet that if I post the screen dump of your original post on other sites that most of the people that read it will also believe that you said that dividend stripping on its own is risk free.

Imo you've only got yourself to blame for the reaction you got to your original post


cheers

bullmarket

 

[Happy]

With so little amount it almost makes sense to invest in wholesale managed fund, with no entry and exit fees if there is one like that.

But this is whole New World and I have no idea how to find good managed fund.
But it rings the bell that you can add 100 a week, so you could build up some size before dipping toe in yourself.

 

[doctorj]

Wow. I've been absent for nearing 3 months and it looks like nothing's changed...

Anyway, on topic.

First and foremost, $3000 isn't going to make him rich over night. It sounds obvious, but it needs to be said. $3000 isn't going to buy you a balanced portfolio either. If you start actively trading with only a $3k line you're very going to find that transaction fees are whittling away any profits that you're lucky enough to make. It seems the most reasonable way to approach the markets with this amount of money would be to trade a single stock (as someone suggested) with stops wide enough that you're not going to be in an out very often. A fundamental understanding of the company you're trading in this manner would be helpful.

The other approach to take is that $3k isn't a sheep station and its a relatively cheap education into the world of trading/investing. He may make money, he probably won't, but if he applies some of the information on this board and elsewhere he's likely to learn some invaluable gems that will help him for the time will eventually come when he has a big enough line or is willing to invest on margin.