Minimum investment in any one stock?

[cutz]

Yes, long term investment - initial capital of say 15-20k

G'Day,

If that’s the case i see nothing wrong with it (small amounts), it's probably a good way to build a portfolio over the next few years. And there’s nothing wrong with building it in lots of 2K, or whatever you’re comfortable with.

Short term trading on the other hand is a different kettle of fish; you need to start with a big account, 2K lots is asking for trouble.

 

[jono1887]

G'Day,

If that’s the case i see nothing wrong with it (small amounts), it's probably a good way to build a portfolio over the next few years. And there’s nothing wrong with building it in lots of 2K, or whatever you’re comfortable with.

Short term trading on the other hand is a different kettle of fish; you need to start with a big account, 2K lots is asking for trouble.

The problem with dealing with 2k lots is that $20 brokerage each way is already 2% of your capital. So if you sold at a 5% profit, you're practically giving your broker 40% of your profits!!

 

[cutz]

The problem with dealing with 2k lots is that $20 brokerage each way is already 2% of your capital. So if you sold at a 5% profit, you're practically giving your broker 40% of your profits!!

Yeah but we have established that Semillon is building a portfolio for the long term, refer post #20, so in that case $20 brokerage isn't a big deal.

 

[kam75]

How much stock to buy is called Position Sizing. Correctly sizing your positions is one of the most important areas of trading as it affects both diversification and money management.

You also have to work out your breakeven level to ascertain whether your trade is even viable. The less you buy, the more the stock will have to rise in price in order for your trade to b/even. And likewise as has already been said, the more brokerage you pay (each way remember), the more that stock will have to move.

Some factors that determine how much stock to buy include -

1. the ratio of risk to reward for the trade
2. risk tolerance of the trader
3. trading account size
4. current market exposure
5. free equity

 

[cutz]

I thought Semillon was asking about minimum size on each position for a long term portfolio. So what has the ratio of risk to reward for the trade, the risk tolerance of the trader, trading account size, current market exposure, free equity position sizing, and brokerage got to do with it.

So he/she can set up a commsec account fund it with 15-20K then spread it around on some top 10 stocks, then set a stop loss on each at 1% or 2% of portfolio (if he/she is that way inclined).

I don’t think we’re talking about intraday trading or weekly swing trading here. Refer to post #20.

 

[Semillon]

Cutz has pretty much hit the nail on the head, I am planning to start out later this year with around 15-20k looking to invest for the long term. The capital I have available is likely to grow by around 15-20k each year thereafter, plus any dividends from the existing portfolio.

You have to start somewhere, and sinking the first years capital into a single company seems foolish, so I was wondering how many companies I should look at based on what is a feasible minimum you could invest in a single trade.

At this stage I feel that around $2500 is a feasible minimum for my circumstances, though I may bump it up to $4000 and look at 5 companies from different sectors for year 1.

 

[snowking]

Semillon,

I recently invested just under $15000 in the stock market. My minimum investments were all above $2000 except for the $900 i got from Kevin which i bought some penny stocks with.

I intend on holding for the long term, I would say 5 years minimum and i will look to add to my current portfolio when the circumstances allow. I have some spare cash now that I can use for further investments if the market corrects again.

snowking

 

[Semillon]

Thanks Snowking, nice to hear from somebody in a similar situation

Have you found any useful resources online for long-term investment strategies? Much of the discussion on this forum appears to lean toward short term trading rather than long term investing...

 

[snowking]

unfortunately most of the internet discussion forums like this one seem to focus on trading short term from what i have found. i guess talking about long term share holdings isnt that exciting

 

[RamonR]

Thanks Snowking, nice to hear from somebody in a similar situation

Have you found any useful resources online for long-term investment strategies? Much of the discussion on this forum appears to lean toward short term trading rather than long term investing...

It will probably be bagged as a strategy because it is so simple but my long term investing approach is to build a portfolio which is positively geared.

I only buy stocks which pay good dividends, including all recent dividend downgrades my over all portfolio is returning 8.3%

Borrowing costs are running around 5.2%

 

[Semillon]

It will probably be bagged as a strategy because it is so simple but my long term investing approach is to build a portfolio which is positively geared.

I only buy stocks which pay good dividends, including all recent dividend downgrades my over all portfolio is returning 8.3%

Borrowing costs are running around 5.2%

Makes perfect sense to me, you must be very happy to be getting such a return in the current climate.

 

[jono1887]

It will probably be bagged as a strategy because it is so simple but my long term investing approach is to build a portfolio which is positively geared.

I only buy stocks which pay good dividends, including all recent dividend downgrades my over all portfolio is returning 8.3%

Borrowing costs are running around 5.2%

How do you find out the dividend returns for companies?? Alot of companies have significantly reduced their dividends this year because of reduced profits, so which companies are currently still relatively high yielding?

 

[RamonR]

, so which companies are currently still relatively high yielding

Telstra seems to be currently.

My overall return is nicely skewed by CCV and FXL which I bought at prices which represent a 10.7% and 13% return

 

[jono1887]

, so which companies are currently still relatively high yielding

Telstra seems to be currently.

My overall return is nicely skewed by CCV and FXL which I bought at prices which represent a 10.7% and 13% return

but how do you get this information?? is there any website that has all the dividend returns for asx companies?

 

[SoBadAtTrading]

For me, the minimum investment amount depends on the brokerage fees/%. The cheapest here is $30 and I would try not to pay more than 1.5% brokerage so min investment would preferably be >$2000. Through IB, the brokerage is $12 so, min investment is considerably lesser, i.e. <1000.

US stocks are relatively cheaper to invest in though. For a USD 500 investment, the brokerage is only USD 2 which is 0.4%.

 

[SoBadAtTrading]

but how do you get this information?? is there any website that has all the dividend returns for asx companies?

It's in the AFR under dividend yield column.

 

[RamonR]

but how do you get this information?? is there any website that has all the dividend returns for asx companies?

I use etrade, so within etrade i have created a custom view and this contains div yield.

 

[Uncertain Times]

This has turned into an interesting discussion about the medium to long term investment. I don't think you can lock away all stocks for a period of time and expect the dividends to roll in. You still need to keep an eye on them to see what the market thinks of certain things happening within the company, local economy, world economy, etc. Sure the dividends might pay your interest on your loan but if you don't keep an eye on things you could have half of what you started with due to the price falling.
For example this time lat year you bought RIO at $149.52 per share. Dividends are good and looking good going forward. However current price a year later is $64.44 and you would be down $85 per share. How long will it take to get back to that level?
Hopefully this is the low point in the market and they are undervalued and you are getting in at the right time but short, medium or long term needs constant attention.
I am no expert and would probably be considered quite a noob. This is however something that I am very interested in and I am prepared to turn this interest into a passion. Without the passion you will not give it the attention that it deserves.
For me the ASX website has the required FA info that you need. RSS can be used to track news on the stocks you are interested in. Chat forums like this one and another one talk about the TA and the sentiment. You do however have to wade through all the posts to come to your own conclusions about the posters. Google finance, yahoo finance, big charts, quotetracker are all free resources that you can use. I have just finished reading Roger Kinsky's Teach Yourself About Shares and plan to get his Online Investing book. The Snowball: Warren Buffett is my bible so to speak. I have also begun to read WB's mentors book from the 1940's Security Analysis - Graham and Dodd.
At the end of the day I will only risk money I can afford to lose. The market goes both up and down. There are winners and losers. There is no sure thing.

 

[Nero64]

so which companies are currently still relatively high yielding

Telstra seems to be currently

Telstra payout 1.8 Billion in dividends.

Now lets put this into perspective.

Its after tax profit was 1.9 Billion/half year

Its dividend cover is x 1.1

Something is not quite right there

It means it has to probably borrow more money to keep paying its current dividend of 14c.

What will happen is the following:

It will decrease its dividend and this may help its share price or keep it and its share price will drift lower.

Make no bones about it, Telstra is a great company with great assets and market monopoly but it has always had debt. It's plain as mud on its balance sheet. It can't be ignored especially now as funding is drying up.

but how do you get this information?? is there any website that has all the dividend returns for asx companies?

I use commsec which has access to company financial reports and announcments etc.

 

[Shrewd Crude]

You cal customise the size of your orders to the amount of leverage you have....
If you are buying options you can afford to put less money on them, so that a larger up swing wont damage your profits on brokerage (had you put the same amount on a blue chip)...

.^sc