Investing my first $1500

[J&M]

Update:
I chose to change over some of my AUT and EKA for TXN in my own investment account so Ithought I may as well do the same with this exercise. So;

15/11/2010 WB5487**** Buy TXN 1,715 1,715 0.585
15/11/2010 WB5487**** Sell EKA 3,170 3,170 0.335 .

So now we have:

4000 EKA @ 0.335 $1340 plus 1715 TXN @ 0.585 $1003 = $2343.
It may have been a proposition to change all the EKA for TXN because the brokerage on these small trades is high in proportion with the size of the trade. However this spreads the risk now over two businesses.

Hello Nioka
this is an interesting thread
Why did you choose TXN is it because
They are also a player in Eagle Ford Shale
Just expanded its holdings acreage
Already have wells producing and bringing in funds to drill more wells

Did you look at other companies in the same area

Have a nice day
James

 

[luke256]

I think if you are planning to trade frequently then $5000 to $10,000 is a good amount to begin with. Minimum brokers commisions for trading stocks will eat up a lot of the profits on a small account if you trade a lot.

Best thing i can think of is to learn as much as you can about the market from websites (i.e. ASX is good for the basics) and books (a few good ones are recomended in other posts). Then you will know what is best for you to do with the $1,500. Knowledge is power....and hopefully profits too!

 

[nioka]

Hello Nioka
this is an interesting thread
Why did you choose TXN is it because
They are also a player in Eagle Ford Shale
Just expanded its holdings acreage
Already have wells producing and bringing in funds to drill more wells

Did you look at other companies in the same area

Have a nice day
James

I compared the charts of similar companies over the last 2 years. EKA, AUT and TXN were moving at the same pace for most of the time until recently when AUT and EKA shot ahead. I noticed that the drilling progran at TXN is behind that of the other two but now well under way. TXN also has a higher percentage interest in each of its wells. In my opinion it has room for more of an upward movement that the others. Just my opinion.

 

[nioka]

I think if you are planning to trade frequently then $5000 to $10,000 is a good amount to begin with. Minimum brokers commisions for trading stocks will eat up a lot of the profits on a small account if you trade a lot.

You could also say that $50,000 to $100,000 is a better too. or $1,000,000 better still. This exercise was to answer the question " Is it worth starting with only $1,500". It is no good saying that it is better to start with $10,000 to someone that only has $1,500.

The answer I am attempting to show is that "yes it is". The object with the investment into TXN is also to show that it is worthwhile starting with only $1,000 as well as spreading the risk a little. Brokers charges do eat away at the profits. (So do the extreme payments to directors etc.) A cost we have to bear I'm afraid.

 

[johenmo]

You could also say that $50,000 to $100,000 is a better too. or $1,000,000 better still. This exercise was to answer the question " Is it worth starting with only $1,500". It is no good saying that it is better to start with $10,000 to someone that only has $1,500.

The answer I am attempting to show is that "yes it is". The object with the investment into TXN is also to show that it is worthwhile starting with only $1,000 as well as spreading the risk a little. Brokers charges do eat away at the profits. (So do the extreme payments to directors etc.) A cost we have to bear I'm afraid.

It's hard starting with little because of the comms. I'd recommend to anyone who can to save enough and shift to someone like IB (which I did). You get two effects - 1) you have a bigger bankroll so you can spread the trades and make each position slightly larger and 2) the % comm is lower.

If I take 1K positions then having only one means I need nearly 100% win rate. Personally I don't like that sort of pressure.

 

[nioka]

It's hard starting with little because of the comms. I'd recommend to anyone who can to save enough and shift to someone like IB (which I did). You get two effects - 1) you have a bigger bankroll so you can spread the trades and make each position slightly larger and 2) the % comm is lower.

If I take 1K positions then having only one means I need nearly 100% win rate. Personally I don't like that sort of pressure.

You also multiply the risk. If things go pear shaped you could end up in debt.

 

[burglar]

I'm hugely impressed nioka
All and sundry try to change the topic but you keep bringing them back.
Can I start with $1500?

I agree with some here, that learning is important.
I also agree that if it is a bad time in the market,
the mattress solution may be advisable.
But:
We all learn from our mistakes, I learn faster than most.
Skim reading:
http://www.scottberkun.com/essays/44-how-to-learn-from-your-mistakes/
Make interesting mistakes ... you learn a better lesson!
Trading does not preclude learning.
I waded into my first trade at the same time as I was wading into the library.
If the library doesn't have the title you want, you ask nicely with smile and manners.
They may get it from another library, they may even buy it in especially for you!

 

[Lukytom92]

If my capital was only 1500$, and i wanted to spread it over a few companies. Does that mean i pay separate brokerage for each trade?

 

[prawn_86]

If my capital was only 1500$, and i wanted to spread it over a few companies. Does that mean i pay separate brokerage for each trade?

Yes

 

[burglar]

If my capital was only 1500$, and i wanted to spread it over a few companies. Does that mean i pay separate brokerage for each trade?

Yes, one brokerage to buy; one brokerage to sell; and separate for each company. If you sell some and keep some; more brokerage!
*sigh* I so wanna be a broker

It is a nice luxury if you don't have to put all your eggs in one basket!

1. The Global Financial Crisis (GFC) caused many, many baskets to fall.
2. Brokerage will make it increasingly harder to profit as the size of the trade decreases.

Update.
Value today.$2509. Indications are that there will still be improvement in this stock. I am now looking for an opportunity to sell down half the holding to spread the risk over two stocks and take some profit from this one. Brokerage on this size holding is a problem that has to be taken into account.

Read through the thread again, you will see nioka's point.
Turn one egg into two eggs first.
then put new egg into new basket.
continue with the exercise.

 

[burglar]

........................Trade.. Broker x2....%
One company.. $1,500 $35.98 2.40%
Two companies. $750 $35.98 4.80%
Three companies $500 $35.98 7.20%

Is that right?
I thought it would be worse than that!

 

[johenmo]

You also multiply the risk. If things go pear shaped you could end up in debt.

I'd say yes and no, because it depends on a number of factors - money management, % risk, one's trading plan/system etc etc.. But I don't get the point re getting in debt - I said save, not borrow. And stocks only. Therefore you can lose only what you put in. And I speak from (in)experience. So I only make available what I can afford to lose.

My current plan has a certain amount of capital, and only a set % gets invested at any one time - portfolio heat.The best single thing I have learned from people like you on ASF is to understand what I'm doing and how to manage risk.

If one has no plan other than buy what seems right then they may very well lose money.

So I'd go for a bigger capital base than 1500, especially if I was young (time is on my side), use a lower fee broker and and determine my portfolio heat ( both number of positions and $ amount) and risk/trade. Which is what I have done. My stepped plan had been Y1 - break even (didn't quite get there) , Y2 - do better than the bank (done that quite well after paying some subscription service fees), Y3 - better of Y2 goals or XJO performance - don't want to match the XJO if it is a negative year!

 

[burglar]

UXC back on down trend as the exuberance buyers bail out and the faith players cling on in hope ...

The burglar is the faith player who clings on in hope
I want to break this habit (apologies to Nunthewiser) but first must find a better way! Profiteer has a nice ring to it, don't you think?

 

[IB12]

I think you should just keep that 1.5 in the bank and practice somewhere on a paper account or try something like this:
http://vse.marketwatch.com/Game/GameOverview.aspx?id=VSE_Challenge2012

Found a trading game for you to practice on.

 

[nioka]

So I'd go for a bigger capital base than 1500, especially if I was young (time is on my side), use a lower fee broker and and determine my portfolio heat ( both number of positions and $ amount) and risk/trade. Which is what I have done. My stepped plan had been Y1 - break even (didn't quite get there) , Y2 - do better than the bank (done that quite well after paying some subscription service fees), Y3 - better of Y2 goals or XJO performance - don't want to match the XJO if it is a negative year!

The original question was " IS IT WORTH INVESTING AS LITTLE AS $1500"

My example answered THAT question.

My answer is "YES"

My example proved that, yes it is.

Surely it is better to have more capital. Sure you can save more to add to it.

BUT... What do you do with the $1,500 while you save up more?

Answer, Invest wisely and accumulate.

My first share buy cost me 10 Pounds. I doubled it in a month. I could see a fundamentally sound way of doing it with very little risk. That was all the spare cash I could find at the time that I could afford to lose.

There has to be some risk to get better than bank interest but you can reduce the risk by doing sound fundamental research.

Stocks to research in my view are;

EKA. Should become cash flow positive. Takeover potential.
AUT. Emerging shale oil producer.
SDL. Develloping iron ore miner.
CFE. Has assets for sale far in excess of its MC
CER. Has an NTA twice its SP.
NTU. Uranium and rare earth prospects
LYC. Develloping producer of rare earths. Leading the field towards production.
TXN. Great oil shale prospects in Texas.
BUL. Coal seam gas potential.
EDE. Holds patent for Hythane (currently being trialled) and a few interesting irons in the fire.

Then with more risk specs. BLG, TEY, TAS, VPG. All possible for excellent returns.

I hold all of these in reasonable numbers. The fact that I hold is definitely no guarantee on success as I'm often wrong. My recommendation is that they are all worth researching. The above is only information related to "Is it worth investing a small amount of money like $1,500. The best of these stocks attract negative criticism so DYOR.

 

[Assasin]

Well done Noika,

Fully respect all of your posts and your willingness to assist others.

 

[IB12]

The original question was " IS IT WORTH INVESTING AS LITTLE AS $1500"

My example answered THAT question.

My answer is "YES"

My example proved that, yes it is.

Surely it is better to have more capital. Sure you can save more to add to it.

BUT... What do you do with the $1,500 while you save up more?

Answer, Invest wisely and accumulate.

My first share buy cost me 10 Pounds. I doubled it in a month. I could see a fundamentally sound way of doing it with very little risk. That was all the spare cash I could find at the time that I could afford to lose.

There has to be some risk to get better than bank interest but you can reduce the risk by doing sound fundamental research.

Stocks to research in my view are;

EKA. Should become cash flow positive. Takeover potential.
AUT. Emerging shale oil producer.
SDL. Develloping iron ore miner.
CFE. Has assets for sale far in excess of its MC
CER. Has an NTA twice its SP.
NTU. Uranium and rare earth prospects
LYC. Develloping producer of rare earths. Leading the field towards production.
TXN. Great oil shale prospects in Texas.
BUL. Coal seam gas potential.
EDE. Holds patent for Hythane (currently being trialled) and a few interesting irons in the fire.

Then with more risk specs. BLG, TEY, TAS, VPG. All possible for excellent returns.

I hold all of these in reasonable numbers. The fact that I hold is definitely no guarantee on success as I'm often wrong. My recommendation is that they are all worth researching. The above is only information related to "Is it worth investing a small amount of money like $1,500. The best of these stocks attract negative criticism so DYOR.

Well there are 10 stocks there you recommended.
Now on commissions alone if someone were to trade that and own it, that would cost about $100. Double that if you trade with Comsec.
Now on the return leg that would be another $100.

So before you've even done anything, and before you've even made your gains (or losses!) you're already down about 6-12%. This excludes any setup costs or bank fees as well.


It's nice to have people try and help you, but sometimes financial advice from a position of kindness may be more harm than good.

 

[ParleVouFrancois]

I'm pretty sure Nioka just offered a list of shares that someone could feasibly make a decent return with little risk, with the intention that you'd only choose one, obviously the brokerage would be too large a percentage to feasibly invest into 10 shares.

 

[prawn_86]

Well done on this thread Nioka.

In fact when i first started i started with 1k and 1 stock. Just something to give myself 'skin in the game' as you learn a lot faster when your own cash is on the line.

Its amazing how many posters still seem to think that 1k is not enough to start with. Of course it is, but it is only a start, your not going to get rich from it obviously.

 

[nioka]

I'm pretty sure Nioka just offered a list of shares that someone could feasibly make a decent return with little risk, with the intention that you'd only choose one, obviously the brokerage would be too large a percentage to feasibly invest into 10 shares.

Definitely.

Well there are 10 stocks there you recommended.
Now on commissions alone if someone were to trade that and own it, that would cost about $100. Double that if you trade with Comsec.
Now on the return leg that would be another $100.

So before you've even done anything, and before you've even made your gains (or losses!) you're already down about 6-12%. This excludes any setup costs or bank fees as well.

A brokerage normally does not accept an order for less than $500 value so it would be hard to invest in 10 stocks with only $1,500. Any stock I pick to invest in I expect to make an average of 50% profit in the first year so brokerage, while expensive would not eat all the profit. As the portfolio builds brokerage becomes less and less important. Capital gains tax takes over that role. My project for this exercise will use/ has used a minimum of $1000 per stock. I plan to sell half of any stock that gets to a point over $2,000 and use the funds to get into a new stock until I hold around five individual stocks. That is to spread the risk, demonstrate that $1,000 is a good starting fund and make investing more interesting.I'd prefer to have $1,000 invested in each of five stocks than $5,000 in only one.

Even this exercise is interesting me as much as my normal investments.