Questions for Investing in shares

Flathead Flick · 16 April 2007

Realist said:
Well no-one is perfect, he is as close as you can get to the perfect investor though.

But is he only "perfect" because when he trades, so many trade with him that it is self-fulfilling?

acooper · 7 July 2007

Harro said:
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

You might like to try Netwealth Trading on line Brokers they only charge 17.99 per trade and they send you a newsletter update every day also there are some good programs agound that help you pick the shares that most likely to go up
Adrianna

Spaghetti · 7 July 2007

Hello Harro

I find ComSec slow at times and when you are trading a few seconds or a few minutes can lose you a lot of money. It never seems to work the other way.

But for investments should be fine. Though I would recommend learning some basic trading to find a good entry price. My very first trade was a great long term stock pick, but if I had even looked at the chart I would have seen it had just had a good run and was headed south. No technical analysis ability was required, just having two eyeballs would have told me that. If I had looked.

So please be aware that at the time you have accumulated $5,000 for a trade it may not be the best time to buy the stock you have chosen. It may have been a better time when you only had $4,000 or perhaps when you have accumulated $7,000. Better in the bank earning 5% than watching a share nosedive 12%.

Difficult to find the best time but sometimes easy to see it isn't the best time.

Struzball · 10 July 2007

My advice is to get an margin loan, borrow money now and buy all the shares you want now, then pay the loan off $250/wk.

Assuming all up you put in $12,000 over the year ($1000 every month), brokerage makes up a 3.3% loss already, buying just a few stocks right now worth $12,000 would be more like 1% into brokerage.
Then you make the 10%-20% pa capital gains you would miss out on if you buy at the end of the year rather than now. Plus 4% from dividends, minus the 9% for interest (which is actually reverse compounded.. if there's such a word, if you're paying off the loan gradually), plus tax deductable interest payments (3%ish).

So you're pretty much 15%/$1800 better off with the margin loan.. according to my dodgy assumptions and calculations.

This is my opinion and what I do, and probably won't work very well when the market goes down... but with enough of a buffer you could survive a fall anyway.

rowes · 10 July 2007

Harro said:
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

Hmmm,

This is in response to the question only...
If you want to invest in one company cool, if you want to diversify into 10 companies thats cool to. Do what is best suited to you taking into consideration how simple you want to keep it.

You could bank the money and purchase one set of shares per year but depending on what company you are buying into you could miss out on some great profits, alot can happen in 1 year.

I get analyst reports regulary regarding the mining sectors and read one a little while ago that expected a particular stock which i wont mention that is expected to gain upwards of 500% over the next 4 years. i know i'd rather my money in that stock than it sitting in the bank while they give me a piddly interest rate.

I think It all comes down to research if you are in it for the long term, do your homework well, find a good company that has a great product, good management and a bright future with ongoing demand for whatever they are doing and your heading in the right direction.

This is only my opinion and i should also point out that i have no long term interest holding in anything. i certainly plan to in the near future but i dont have any at the moment, thought i outa point that out.

Questions for Investing in shares

Flathead Flick

acooper

Spaghetti

Struzball

rowes

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