Questions for Investing in shares

[Harro]

Hi all, new to this website/forum and hoping I could get some questions answered for starting out in Trading (buy and selling shares) in the stockmarket.

Before I start with my questions, I feel it is important to convey where im coming from and my investment goals.
I wish to start with $5000.00 to invest in one stock with a long term out look,
and continuing to purchase new shares either once a month or yearly. I can buy $1000.00 worth of shares per month or $12000.00 per year.
Assuming the cost of buying and selling shares (brockerage cost) is $30 per transaction (trade) my initial entry would be $30 and 12 transactions(trade) a year would be $390 ($360/yr).

So my initial question is
Would I be better of buying $1000.00 worth of shares per month at a cost of $390 or banking $1000.00/mth and making one purchase per year of $12000.00/yr at a cost of $60.
I know the answer would depend on what shares I buy and weather of not they go up or down in price but im looking at long term (say 10 years+) historically share prices go up over the long term so Id say its pretty low risk.
The difficulty is how much would they have to go up averaged out over 10years to cover the brockerage costs of buying monthy and the same of buying yearly and determining what would give me the better return.

Any advise would be greatfull

Once I figure out my best option I will be asking even more newbie questions for getting started at the begining. Questions like, opening a trading account, how to open a brocking account and who with. Heck im so newbie I dont even know the questions to ask yet..lol

 

[Knobby22]

Sounds good to me Harro.

I agree with your thinking so far.
Buy one stock worth $5000, then I would continue to buy a stock at a time for $4000 to $5000 as you save up the money.

If you feel that you are able to choose what stock to buy then buy through comsec or similiar. If not then I would go through a broker who can teach and guide you over time.

When you get the annual reports study them and learn to understand them so you can further build up your knowledge base so you can become a more aggressive investor over time.

Knob

 

[Harro]

thanks Knobby22.. I will probably do just that , make less trades but with larger amounts, probably in 5k lots as I save from my income.

so far ive looked at westpac and etrade..for opening a brockering account ill have alook at comsec...any others I should have alook at before I get in (start trading)

 

[Bobby]

Hey Harro,

Before you risk one dollar in the market, you need to learn how it all works.
Then you need to learn how you can go broke !.

After that if your still keen to place your money in stocks, you need to learn how to play the game to survive.

Get some books first, read & understand them before you trade.
Its a cheap education, that will save you heaps.

Bob.

 

[Realist]

Would I be better of buying $1000.00 worth of shares per month at a cost of $390 or banking $1000.00/mth and making one purchase per year of $12000.00/yr at a cost of $60.

Despite the higher brokerage fees which you should always look to reduce.

Buying 12 different shares each month for 12 months in a row is better than waiting 12 months and buying 1 share.

Because you are diversifying - protecting yourself by investing in different sectors. Your one share may die in the ass, the chances of 12 shares all dying in the ass is much smaller. The chances of you picking a real winner that triples is low if you have 1 share, if you have 12 you've got a much better chance of picking a real winner.

You are also buying more shares when the ASX is lower, and less when it is higher which is great - because say the ASX roars up 30% in 12 months then you buy and it drops 15% you're probably down 15%. But had you bought at regular intervals over the year you'd have got shares before they went up 30%, then some others before they went up 25%, then some others before they went up 20% etc. And only some that dropped 15%.

It is hard to pick highs and lows, infact almost impossible to get it perfect, regularly buying a small amount of shares means you are guaranteed to get some when it is at a low, and you only buy some (not all) when it is dangerously high.

 

[Harro]

thanks guys and gals, I really appreciate the input..and yes im not jumping into it but we all gotta start some where. (reading heaps)
Im definatly not after a quick profit but still want to make sound desisions.
So far all the advise has been very helpfull in making an informed decision on my investment.

I have chosen to start with $5000.00 and taking some of every ones advise, so far I have chosen to bank $1000/mth and when it reaches $5000 invest that.

Moving along
I need advise for selecting an online brocker
What are other poeples experience when opening an account?
what are the pit falls to look out for? (are there hidden costs)

Here is a list Im finding usfull in my research, I hope it helps others
http://moneymanager.smh.com.au/tools/compare/fee_and_services.html

 

[Bobby]

Despite the higher brokerage fees which you should always look to reduce.

Buying 12 different shares each month for 12 months in a row is better than waiting 12 months and buying 1 share.

Because you are diversifying - protecting yourself by investing in different sectors. Your one share may die in the ass, the chances of 12 shares all dying in the ass is much smaller. The chances of you picking a real winner that triples is low if you have 1 share, if you have 12 you've got a much better chance of picking a real winner.

You are also buying more shares when the ASX is lower, and less when it is higher which is great - because say the ASX roars up 30% in 12 months then you buy and it drops 15% you're probably down 15%. But had you bought at regular intervals over the year you'd have got shares before they went up 30%, then some others before they went up 25%, then some others before they went up 20% etc. And only some that dropped 15%.

It is hard to pick highs and lows, infact almost impossible to get it perfect, regularly buying a small amount of shares means you are guaranteed to get some when it is at a low, and you only buy some (not all) when it is dangerously high.

SHeeze Realist,

You know little about trading stocks yet your advising ?
You only joined this site in June this year.
You have over a 1000 posts so now your title is Veteran member.
You must understand that new members will just look at your rank & may well do what you recommend,.

Please consider this.

Bob.

 

[Julia]

SHeeze Realist,

You know little about trading stocks yet your advising ?
You only joined this site in June this year.
You have over a 1000 posts so now your title is Veteran member.
You must understand that new members will just look at your rank & may well do what you recommend,.

Please consider this.

Bob.

Hello Bob,

What is about Realist's suggestions that you disagree with?

Julia

 

[watsonc]

Just save every cent you make! A recession is on the cards! lol

 

[Bobby]

Hello Bob,

What is about Realist's suggestions that you disagree with?

Julia

Hi Julia,

Diversification without directive for one.

Bob.

 

[nizar]

Hi Julia,

Diversification without directive for one.

Bob.

I second that Bob,

Diversification for the sake of it is something to AVOID and i certainly would not be advising a beginner on that...

Realist wat were u thinking...

Even your idol Warren Buffet is against diversification

 

[It's Snake Pliskin]

Hi all, new to this website/forum and hoping I could get some questions answered for starting out in Trading (buy and selling shares) in the stockmarket.

Before I start with my questions, I feel it is important to convey where im coming from and my investment goals.
I wish to start with $5000.00 to invest in one stock with a long term out look,
and continuing to purchase new shares either once a month or yearly. I can buy $1000.00 worth of shares per month or $12000.00 per year.
Assuming the cost of buying and selling shares (brockerage cost) is $30 per transaction (trade) my initial entry would be $30 and 12 transactions(trade) a year would be $390 ($360/yr).

So my initial question is
Would I be better of buying $1000.00 worth of shares per month at a cost of $390 or banking $1000.00/mth and making one purchase per year of $12000.00/yr at a cost of $60.
I know the answer would depend on what shares I buy and weather of not they go up or down in price but im looking at long term (say 10 years+) historically share prices go up over the long term so Id say its pretty low risk.
The difficulty is how much would they have to go up averaged out over 10years to cover the brockerage costs of buying monthy and the same of buying yearly and determining what would give me the better return.

Any advise would be greatfull
Once I figure out my best option I will be asking even more newbie questions for getting started at the begining. Questions like, opening a trading account, how to open a brocking account and who with. Heck im so newbie I dont even know the questions to ask yet..lol

Harro,

Full of great or grateful?

Above you mention trading first, then investing. Which is it and why? answering that question may involve some reading.

Bobby`s comments are apt; confirmed by Nizar.

Realist is not one to be trusted over trading, though Ben Graham rubbish he does tout.

Snake

 

[Realist]

Realist wat were u thinking...

Even your idol Warren Buffet is against diversification

Oh dear, oh dear, I'll repeat myself.

Buffet does not diversify, however Buffet is a genius, he does not get things wrong. He lives to study annual reports and companies, and he only buys when he is absolutely certain of his investments.

Buffet recommends diversification, infact he recommends people just buy an index fund because picking winners is impossible. Buffet never picks winners, he picks great stocks that others think are losers - big difference.

If he owns 1 share or 10 shares you can be certain they are good investments.

The rest of us mere mortals need to follow Buffet's mentor Ben Graham who advises diversification across sectors and markets.

Anyone who had ALL their money in tech stocks in 2000, or all their money in mining stocks now is asking for trouble.


You guys do not even understand the mere basics of investing. Quite sad.

 

[Realist]

Realist is not one to be trusted over trading, though Ben Graham rubbish he does tout.

Snake

I am no trader, but this thread did say investing.

Snake, do you think buying 1 share for $12,000 is better than 12 diversified sahres for $1000 when investing? And why?

 

[Realist]

Hi Julia,

Diversification without directive for one.

Bob.

Diversification without directive is alot safer than trading without directive.

Topic closed. I win!!

 

[It's Snake Pliskin]

You guys do not even understand the mere basics of investing. Quite sad.

Is it true the P/E ratio is a ratio of not much value? :burn:

 

[Bobby]

Harro,

Full of great or grateful?

Above you mention trading first, then investing. Which is it and why? answering that question may involve some reading.

Bobby`s comments are apt; confirmed by Nizar.

Realist is not one to be trusted over trading, though Ben Graham rubbish he does tout.

Snake

Greetings Snake,

Yep Nizar is on track ~

Off topic: Our talk on the third way will continue, my turn soon.

Have fun Bob.

 

[It's Snake Pliskin]

I am no trader, but this thread did say investing.

Snake, do you think buying 1 share for $12,000 is better than 12 diversified sahres for $1000 when investing? And why?

Actually it said both.

Well if I were buying Sahres then I would need to find out what they were first. I may need to get back to you. :bekloppt:

But simply $1000 for a few shares will take a lot of movement just to get back to its original value of $1000 due to brokerage - x 12. Something you have blurted about is taxes and brokerage

I don`t condone buying anything and only comment.

Yep Nizar is on track ~

Off topic: Our talk on the third way will continue, my turn soon.

No worries Bob.

Snake out.

 

[It's Snake Pliskin]

Diversification without directive is alot safer than trading without directive.

Topic closed. I win!!

Actuallly I`m interested in your comments here Reallo!

 

[Bobby]

Diversification without directive is alot safer than trading without directive.

Topic closed. I win!!

Yep you sure win the ( top rabbit ) award for that statment !

Realist please stop Standing Up Whilst You Read My Posts its OK now to stay seated

regards Bob.