Newbie question

[CCCP]

Hi guys and girls,

Im new to investing. Ive opened up my first index fund with vanguard last week to use as my retirement fund.

Now I also want to do some active envesting myself. I have just opened up my CommSec account and want to buy some shares. I do not have too much money to play with, maybe around 200-300 AUD. I would like to buy some BHP, CBA or RIO Tinto shares... now Do I just simply log on to CommSec, then find the CBA shares (which are around 60 bucks a share) but around 4-5 of them and thats it? I want to hold onto them for a bit so when I sell them I want them to cover my brokerage fee (19 bucks I think from CommSec) and also make some money back.

Is this how it pretty much works out?

Also are the broker fees upfront and deducted from your streamline account or do you pay them after you sell the shares back?


Once again sorry for this newbie thread but any help would be greatly appreciated.

 

[mayk]

That is pretty much it. I will suggest have a good read of ASX tutorials on how stock market works. Also search some more on this website.

ASX also suggests to start with a bit more money like 2K-3K. The thing is if you buy 6 BHP and it gives you 10% monthly profit it will only give you back 30 (for $300 worth of investment). But if you would have invested 3K it will give you back 300. I am sure for 300 worth of investment it will be very hard for you to cover the trading fees. unless you make investment in some speculative stock and it *may * trun it into 900...


G/l with and happy trading in a bull market.

 

[nizar]

Hi guys and girls,

Im new to investing. Ive opened up my first index fund with vanguard last week to use as my retirement fund.

Now I also want to do some active envesting myself. I have just opened up my CommSec account and want to buy some shares. I do not have too much money to play with, maybe around 200-300 AUD. I would like to buy some BHP, CBA or RIO Tinto shares... now Do I just simply log on to CommSec, then find the CBA shares (which are around 60 bucks a share) but around 4-5 of them and thats it? I want to hold onto them for a bit so when I sell them I want them to cover my brokerage fee (19 bucks I think from CommSec) and also make some money back.

Is this how it pretty much works out?

Also are the broker fees upfront and deducted from your streamline account or do you pay them after you sell the shares back?


Once again sorry for this newbie thread but any help would be greatly appreciated.

First of all, before you buy anything, you have to understand a few things:

*Risk. How much will you risk per trade?
Use a stop loss.
When will you close out your winning trades?
After how long?
After how much profit?

Most of the stockmarket traders/investors LOSE, because they lock in profits too quickly and don't take losses. They wait for them to recover and they never do. This is the ideal recipe for disaster because you never have big winners but instead have big losses.

If you avoid this trap from the beginning, you are doing better than most.

*Money management. How will you divide your money up?
How much do you invest from your total trading capital, into each trade?

*Time-frame. Are you a short term or long term investor?
Do you want to see returns in 12 months? 5 years? 1 week?

Also, the minimum initial investment into any listed company as per ASX rules is au$500.

And a few books to get you started.

Van Tharp - Trade your way to financial freedom.

OR, alternatively,

Alexander Elder - Trading for a living (superceded by Come into my trading room).

The first one is better IMO but they roughly cover the same topics.

My blog also has some good information on there.

**DON'T BE IN A HURRY TO GET STARTED. MAKE SURE YOU KNOW WHAT YOU ARE DOING FIRST. THE MARKETS, AND THE OPPORTUNITY, WILL ALWAYS BE THERE**

Hope that helps.

All the best with your trading.

Nizar.

PS. And just to add, try to develop some sort of trading plan. The most scariest thing is to be in a volatile market and have no idea what to do.

"Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there" - William Eckhardt.

Know when to buy, when to sell, and how many shares to buy or sell. That way, you can remain confident and in control, knowing exactly what you are doing regardless of what the market does.

And one more thing. Stick to the plan. What's even better than a trading plan, is a methodology that has been quantified and proven to work. But that's another topic. PM me if interested in this aspect.

 

[xtanda]

Yeah, pretty much that's the big story...

however, there are some items you need to be aware with commsec:
1. Minimum transaction is $500 (if you buy share that you don't have)
Say RIO $100 each, you need to buy at least 5. But later on if you want to
buy more RIO you can buy 1 only if you want

2. Brokerage of 19.95 is only applied if you open Commonwealth Direct Investment Account (CDIA) or margin loan (and you have to be CHESS sponsored as well)

3. To open CDIA, there are minimum $5000 account opening although you can withdraw or deposit any amount later

To read further detail go to:
http://www.comsec.com.au/Public/JoinNow/FormsAndBrochures.aspx
Read especially the 'Client Guide' and all other relevant document

If you use Streamline account, say you buy $500 (example:5 x $100), they will charge $529.95 ($500 share + 29.95 brokerage) directly from your account 3 working days after transaction.

Later when you sell, say you sell $600 (example:5 x $120), they will give you
$570.05 ($600 share less $29.95 brokerage).... So, although you make gross profit of $100 ($20x5), you only enjoy $40.1 ($100-29.95-29.95)... Later on you still need to declare this income and pay the tax (say if on 30% bracket, you need to pay $13.23 - 50% discount if you sell after 12 month ) to ATO.

 

[CCCP]

Thanks guys, a lot of useful info there!

Ill save up more money and get into it later when I have done more research.

Currently need to buy my first home too, so juggling an index fund, a home loan and active trading will be tricky... but can be done

 

[trinity]

hi,

I've only started in shares just a few months back. This forum has been quite informative, and, points you to the right resources as well (websites, blogs, books).

Continue on the habit of savings and soon enough, we will achieve the first home and a good portfolio of shares.

Also, when I first signed up with Commsec, I got A$550 worth of free brokerage, might be worth a mention because that goes a long way for newbies like us...

 

[CCCP]

hi,

I've only started in shares just a few months back. This forum has been quite informative, and, points you to the right resources as well (websites, blogs, books).

Continue on the habit of savings and soon enough, we will achieve the first home and a good portfolio of shares.

Also, when I first signed up with Commsec, I got A$550 worth of free brokerage, might be worth a mention because that goes a long way for newbies like us...

How did you get free brokerage mate?

 

[brilliantmichael]

$550 free brokerage?!! And $19.95 trades??

B Westpac charges us $29.95 or $24.95 + $5.00 withdrawal fee if we sign up to the "integrated cash facility"!

Arrggghh!! The injustice!.... * * :bricks1:

 

[black_bird2]

Nizar - a little off topic - but nice post. Thank you for sharing your knowledge again!!

 

[trinity]

How did you get free brokerage mate?

I remember seeing it in either a magazine or a website, and when hubby and i were setting the commsec account, i specifically asked hubby to mention the said advertisement on the 550 free brokerage. And, commsec gave it to us, but it is only valid for ... i think 3 months? But still, free is free.



Well, for an even smaller brokerage fee, have a search on the forum, I think the title is " brokerage terrible in Oz"? It is with a company called IB, but I personally haven't setup an account with them. Its a no frills brokerage I reckon, which is why they could charge small.