Long Term Trading?

Plutonic · 17 January 2011

I have no idea what I'm doing, this all confuses me so much.

Basically, I want to invest in companies for the long-term. Short-term investments seem less stable to me, plus seem to involve more work. I want to be able to invest in something and just sit back and let my money slowly increase over time. Is that even possible?

How do I find a good company to invest in long-term?

ROE · 17 January 2011

Plutonic said:
I have no idea what I'm doing, this all confuses me so much.

Basically, I want to invest in companies for the long-term. Short-term investments seem less stable to me, plus seem to involve more work. I want to be able to invest in something and just sit back and let my money slowly increase over time. Is that even possible?

How do I find a good company to invest in long-term?

Only sure thing is term deposit, company price can go up and down and without much understanding it could be scary for you...

Invest in equity you got to have a mind set where you could lose money
but with proper research and careful planning you can reduce this risk and
enhance your return.

so it requires some work, you cant just sit back and put money into stocks and hope it goes up over time...

start reading some good investment books and principles , once you understand that read paper source like AFR and Freebie site like the age business etc...

over time you collect a lot of knowledge and maybe after 5-10 years it will become fairly standard and easy ... you get to understand all the stock market jargon, you be able to spot when someone is spinning it or tell half truth story etc...

I cant see an easier road, all your hard work will be paid for from making good investments that generate high earning and dividend each year....

WaveSurfer · 17 January 2011

Try an index fund to start with Plutonic. You must contribute regular amounts each month (regardless of market conditions) for it to work. It's a long term plan too (20+ years).

I know a few people doing it and despite the GFC, they're doing ok.

So_Cynical · 17 January 2011

Plutonic said:
I have no idea what I'm doing, this all confuses me so much.

Prob best if you come back when you have some idea and are not as confused.

Julia · 17 January 2011

Plutonic, go into the Beginners' Lounge and read through the multiple threads there.
See in particular a sticky thread by Sir Osisflover.

Read the daily financial press. Absorb what is going on in the world at large. All these factors will influence the profitability of most of the companies in the ASX.

Work through the education section on the ASX website: www.asx.com.au. These are simple, easy to understand modules which you can repeat if you don't 'get it' first time round.

Don't take a simplistic view and expect that you should be able to buy a dozen companies and they will automatically be safe and profitable investments. You need to educate yourself and then learn how to make good choices.

There is a wealth of information on this site if you are prepared to take the trouble to read it.

Tysonboss1 · 17 January 2011

Plutonic said:
I have no idea what I'm doing, this all confuses me so much.

Basically, I want to invest in companies for the long-term. Short-term investments seem less stable to me, plus seem to involve more work. I want to be able to invest in something and just sit back and let my money slowly increase over time. Is that even possible?

How do I find a good company to invest in long-term?

Dollar cost average into an all ordinaries index fund.

Tysonboss1 · 17 January 2011

WaveSurfer said:
Try an index fund to start with Plutonic. You must contribute regular amounts each month (regardless of market conditions) for it to work. It's a long term plan too (20+ years).

I know a few people doing it and despite the GFC, they're doing ok.

Great advice,

Never increase your monthly contributions because the market appears to be booming, and never decrease because it has crashed.

Just every month spend less than you earn and contribute to an index fund.

The only time you should think of not doing this is if you intend on spending the time and effort to learn the art of investing, and put in the weeks and years of work.

Alot of people try and do smart things and fail to beat the market index funds.

Plutonic · 18 January 2011

Tysonboss1 said:
Great advice,

Never increase your monthly contributions because the market appears to be booming, and never decrease because it has crashed.

Just every month spend less than you earn and contribute to an index fund.

The only time you should think of not doing this is if you intend on spending the time and effort to learn the art of investing, and put in the weeks and years of work.

Alot of people try and do smart things and fail to beat the market index funds.

Where would I find an index fund? I've had a quick look but can't find much.

burglar · 18 January 2011

Plutonic said:
Where would I find an index fund? I've had a quick look but can't find much.

This thread starts out well, I had to stop reading when it became unnecessarily complex.
Anyway, it's a good place to start, in my opinion.

https://www.aussiestockforums.com/forums/showthread.php?t=14461&highlight=index+fund

ASX
http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=STW

Plutonic · 18 January 2011

burglar said:
This thread starts out well, I had to stop reading when it became unnecessarily complex.
Anyway, it's a good place to start, in my opinion.

https://www.aussiestockforums.com/forums/showthread.php?t=14461&highlight=index+fund

That's great, really helpful, thanks.

So, you invest in an index fund just like you would normal shares? I can't find a broker that lets you trade under $200 at a time. I'd like to be able to invest $50-$100 a week, is that possible?

KurwaJegoMac · 18 January 2011

Plutonic said:
That's great, really helpful, thanks.

So, you invest in an index fund just like you would normal shares? I can't find a broker that lets you trade under $200 at a time. I'd like to be able to invest $50-$100 a week, is that possible?

Most brokers won't allow a parcel size less than $500.

Either way, you wouldn't want to be making trades at around $200 because you'll be eaten alive by brokerage (meaning if you buy a $200 parcel you're already down 10%!)

That being said, you have a couple of options:

- Put your $50-100 of weekly savings into an interest bearing account until you have saved up $500 for the minimum parcel size.

- Use a product such as the ANZ OIA. It's like an online savings account except that it's linked to the ASX200 (essentially they invest your money in an index fund on your behalf). The benefit being that you can deposit smaller amounts of cash into the account and they only charge you a small percentage for brokerage (0.25% or something). So you can invest in an index fund that way.

From the website:

As the first investment of its kind, the ANZ Online Investment Account offers some unique benefits:
Convenience and control

An investment with 24/7 access. Using ANZ Internet Banking you can now manage and monitor your ANZ Online Investment Account any time.

Your money is not locked away – you can access it when you like, all you need to do is make a withdrawal request via ANZ Internet Banking.
Low fees

ANZ does not employ highly paid investment managers or financial analysts to make decisions about where to invest your money.

This generally means your investment is subject to lower transaction and management costs. So, more of what you earn stays yours.
Flexibility

Invest according to your budget. Any ongoing deposits you make can be from as little as $100 - meaning a little bit each time may add up to a whole lot more down the track.
Diversification

The ANZ Online Investment Account spreads your investment across the 200 biggest publicly-listed companies on the Australian share market.

Exposure to such a wide portfolio of investments can greatly reduce the risk of one under-performing company affecting your returns

Link to the product: http://www.anz.com/personal/investments-advice/products-services/online-investment-account/

Plutonic · 18 January 2011

KurwaJegoMac said:
Most brokers won't allow a parcel size less than $500.

Either way, you wouldn't want to be making trades at around $200 because you'll be eaten alive by brokerage (meaning if you buy a $200 parcel you're already down 10%!)

That being said, you have a couple of options:

- Put your $50-100 of weekly savings into an interest bearing account until you have saved up $500 for the minimum parcel size.

- Use a product such as the ANZ OIA. It's like an online savings account except that it's linked to the ASX200 (essentially they invest your money in an index fund on your behalf). The benefit being that you can deposit smaller amounts of cash into the account and they only charge you a small percentage for brokerage (0.25% or something). So you can invest in an index fund that way.

From the website:

Link to the product: http://www.anz.com/personal/investments-advice/products-services/online-investment-account/

This whole thing reminds me so much of Superannuation, it's basically the same thing right?

I was planning on investing $200 tonight, so I should wait until I have $500?

The ANZ account seems great, but it doesn't feel right. I want to invest in the stock market and choose what I invest in. With ANZ do you just put money into your account and they invest it in whatever they choose for you?

Tysonboss1 · 18 January 2011

Plutonic said:
That's great, really helpful, thanks.

So, you invest in an index fund just like you would normal shares? I can't find a broker that lets you trade under $200 at a time. I'd like to be able to invest $50-$100 a week, is that possible?

If you can find a low cost managed fund that allows you to make regular contributions it would probably work best.

the idea is to put a regular amount in on a fortnighlty or monthly basis, no matter what happens to the market.

If the market goes down, just feel comfortable that each contribution you make is buying a large piece of the pie.

you can invest in index funds therough all the major banks, collect some info on the different offerings and compare fees,

Plutonic · 18 January 2011

Tysonboss1 said:
If you can find a low cost managed fund that allows you to make regular contributions it would probably work best.

the idea is to put a regular amount in on a fortnighlty or monthly basis, no matter what happens to the market.

If the market goes down, just feel comfortable that each contribution you make is buying a large piece of the pie.

I'll have to have a look, but does that mean I still shouldn't invest less than $500 at a time?

I would love to start one of the ANZ investing accounts, but after reading the ANZ website, you need to make a lump sum payment of $1000. I'm a full time students earning $300/week and saving for an international holiday in December. I don't think I could justify spending $1000 all at once like that haha.

Tysonboss1 · 18 January 2011

Plutonic said:
The ANZ account seems great, but it doesn't feel right. I want to invest in the stock market and choose what I invest in. With ANZ do you just put money into your account and they invest it in whatever they choose for you?

Please do not kid yourself, you are not ready to invest on your own.

By dollarcost averaging into a cross section of the economy through an index fund you will over time earn a credible market return with safty and freedom from bother. The only reason you would attempt to invest on your own is if you believe you can beat the average market return over time. This is no easy feat and requires much knowledge, experiance and hours of practicle application, Many people try and end up doing worse.

There are 2 types of investor, "defensive" and "enterpriseing" you are not ready to be an enterprising investor. Stick to an index fund while you build your knowledge.

Buy the book "the intelligent investor" by benjiman graham, and read it before you think about investing on your own.

With an asx 200 index fund you basically own shares in the top 200 companies, they are not choosing where to invest the money for you, they are just automatically buying weighted holdings in the top 200 companies.

With an all ordinaries index fund you are buying a holding in every listed share.

http://www.youtube.com/watch?v=mmz3ble5bqE

burglar · 18 January 2011

Plutonic said:
That's great, really helpful, thanks.

So, you invest in an index fund just like you would normal shares? I can't find a broker that lets you trade under $200 at a time. I'd like to be able to invest $50-$100 a week, is that possible?

Yes, you invest in an index fund just like you would normal shares.

$50-$100 a week ... the brokerage will kill you!
$1000 per Quarter is possible.
$2000 Half Yearly is manageable.

Two ways to go.

1. Index Fund.
Save for a few weeks in a bank account.
If it was me, I would withdraw Quarterly or Half Yearly.
Reinvest the dividends,
they compound and do all the hard work for you.

Learn more stuff as you wait.

2. Managed Fund
They have selected groups of companies in asset classes,
you just buy units in an asset class (or two) .
They have conditions you need to meet.
Again, you will need to save a lump sum to join.

Whether one or the other,
you will need to save and you will need to learn.

I see you have managed quite some learning already.
Keep it up.

kermit345 · 18 January 2011

I know on Etrade you can buy managed funds, although not exactly sure what ones are available. However you sound like your after something that you can put money into over time in small amounts and let it go. People are talking about STW and index funds however for the small amount your investing, something like the Vanguard Australian Shares Index Fund would be a good idea. I think with vanguard you can even go direct with them through their website and it is relatively cheap (from memory) however that may be for a minimum investment of $5,000 which doesn't sound like its in your range.

Managed funds have codes just like the ASX stocks, the code for the vanguard fund is VAN0002AU if your interested, google it and see what you find out.

Unfortunately investing with a small start of less than $1,000 is pretty hard to achieve, as others have mentioned, maybe build up some cash in a normal cash account and at the same time research to find exactly what your after. Once you hit that $1,000 you'll be ready to invest and have a bit of knowledge about what your actually getting yourself into.

burglar · 18 January 2011

My typing is so slow, everyone beats me.
Sorry to repeat other posting but hey ... worth reading twice!

Plutonic · 18 January 2011

burglar said:
Yes, you invest in an index fund just like you would normal shares.

$50-$100 a week ... the brokerage will kill you!
$1000 per Quarter is possible.
$2000 Half Yearly is manageable.

Two ways to go.

1. Index Fund.
Save for a few weeks in a bank account.
If it was me, I would withdraw Quarterly or Half Yearly.
Reinvest the dividends,
they compound and do all the hard work for you.

Learn more stuff as you wait.

2. Managed Fund
They have selected groups of companies in asset classes,
you just buy units in an asset class (or two) .
They have conditions you need to meet.
Again, you will need to save a lump sum to join.

Whether one or the other,
you will need to save and you will need to learn.

I see you have managed quite some learning already.
Keep it up.

So what about http://nakedfunds.com.au? It's the same as the ANZ account right? But the minimum investment is only $100. With managed funds should you only invest $500+ or is it okay to invest $100 per week?

motorway · 18 January 2011

Plutonic said:
That's great, really helpful, thanks.

So, you invest in an index fund just like you would normal shares? I can't find a broker that lets you trade under $200 at a time. I'd like to be able to invest $50-$100 a week, is that possible?

http://www.vanguard.com.au/

These are the guys who started the whole Indexing phenomena.

They did not invent the concept
But pretty close.

For you

http://www.vanguard.com.au/personal_investors/investment/managed-funds-up-to-$500000/en/managed-funds-up-to-$500000_home.cfm

John Boggle is an indexing super star.

Have one of his books very worth while read to understand the why of INDEXING.

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor.

Highly recommend.

Motorway

Long Term Trading?

Plutonic

ROE

WaveSurfer

Manic

So_Cynical

The Contrarian Averager

Julia

In Memoriam

Tysonboss1

Tysonboss1

Plutonic

burglar

Attachments

Plutonic

KurwaJegoMac

Plutonic

Tysonboss1

Plutonic

Tysonboss1

burglar

kermit345

burglar

Plutonic

motorway

Similar threads

Long Term Trading?

Manic

The Contrarian Averager

In Memoriam

Attachments

Similar threads

Privacy & Transparency

Privacy & Transparency