Feedback/Reccomendations for me starting out my investments.

Hello pplz,

Im relatively new the whole investing game and came across this site while I was searching for some stuff on google. I've only started making my first investments in June this year, so I was hoping to get some feedback / advice from some more experienced investors, who might be able to point me in the right direction.

Im basically starting from scratch here, so you could say im a bit of a noob. I've chosen to start off in shares. I set up a Commsec + CDIA account and have bought some shares.

I decided to start off with some low risk, long-term blue-chips, just to get a nice foundation for my portfolio, so I put basically all the money I had into CBA and SGB, which was only about 10k, so 5k in each. And just recently I put 3k into BQT, which amazingly hasn't gone up after all the announcements.

My plan was to get a margin loan, and to put some more money into CBA and SGB. They seem to be good regular growing securities, and should hopefully go up about 15% pa + dividends. Now I know that one rule with shares is that you shouldn't go off previous performance, but I think its safe to with steady companies like banks.

Do you guys think this would be a good plan? Any feedback / reccomendations would be great.

Thx guys.

 

Welcome to the forums. I dont have experience with direct shares as yet, but plenty of others on the forums do, and should be able to provide plenty of hints and tips.

Cheers
Simon

 

Welcome and good on you for starting your investment life.

I'm a big fan of bank shares - I have said here before that they are the bedrock of any Australian share portfolio (big four banks make up >20% of the ASX).

SGB can be a bit more volatile than the others, but SGB shows a higher dividend growth rate than the big four (this may not extend too far into the future, as dividend payout ration is pushing 80%). As for CBA, it is simply a great first share to own, good choice.

The recent market dip may prove to be a smart time to buy into these, but forecasting 15% pa growth in the next few years is optimistic beyond (I expect all!) expectations. But earnings growth should still be in the 10% range for the next 1-2 years, but beyond that it's hard to know.

Do you have an investment strategy/plan/concept in place? Meaning, do you plan to just buy lots of Australian shares, gear them up with a margin loan and hope for the best, or are you, eg saving for a deposit on a home? A few paragraphs on your personal situation can be helpful.

 

Sounds like a plan to me.

Just remember it is a long term plan and don't go switching stuff every year when you get frustrated if nothing happens one year.

A dead year then switching to a new stock (that did well that year) is a recipe for mediocre performance.

Good on you for getting the ball rolling - you will look back in 10 years and be grateful you did start!!

 

Agreed... well done.

The only thing I would suggest is diversifying a bit when you have funds for new acquisitions.

Plenty of time to study up what to get into as you build up funds.

Cheers,

Rob

 

Hi, congratulations on taking action..

your first starting steps in share investing reminds me a lot of when I first started in direct shares.

After some time of owning bank stocks and also losing some "play money" on few "gut feeling" IPO, I decided I needed a phylosophy to follow....I didn't want to "play" the stock market, I wanted to invest..

After some reading and listening to a lot wiser people than myself ..I decided that Value Investing was for me, I came across "The Intelligent Investor " news letter (at the time). It matched my new phylosophy and risk profile, I subscibed and monitored its performance for about 3 years before trusting it...

Now I have the confidence of having about 350k in 14 direct shares, and(because I am lazy) I do follow the opinions of The Intelligent Investor publication and its been working well for me.

I don't have anything to do with the above publication except for being a long term subscriber...all said above applies to my situation and not meant as financial advice...

cheers

Paul

 

I thought Big 4 was in terms of accounting? (pwc,kpmg,ey,dt) And for banks it was Big 5 (cba,nab,wbc,nab,sgb) or is SGB a litte player in the game, and Big 4 can also refer to banks too?

Yeah, I looked over all the banks past performances over the last 10 years, and came to the conclusion that CBA and SGB had some of the best return. And I sort of wanted something a little volatile for the possibility of more growth. And I think i worked our that dividends pa were roughly almost 4% of the value of the each share.

I have everything planned out, but see the thing is, i'd like to know what a more experienced person thinks of my plans. Basically in a nut shell, I want to gear my portfolio as much as possible with margin lending, to a point where im satisfied, and think I have a nice foundation, which will give me the oppurtunity to start playing around a little bit, with things like IPO's and high volatile shares, like BQT which I recently got in on.

My current goal is to get $21k of my own capital invested in steady growing, blue-chip shares, which return good dividend payouts. Thus the reason I opted for bank shares. With that I should be able to get a $49k margin loan, geared at 70%, basically giving me a $70k portfolio. To date im about halfway there.

I've chosen to opt for shares, over MF's because to my knowledge alot of the high return MF's are ones involved souly with the ASX. Many of which a simple invester like myself could replicate. Meaning that not only could I bring back the same return, but have dividends on top.

By all means please correct me if im wrong, and let me know if you guys think this would be the best starting point for a beginner like myself.

 

I see, I might have a look at this newsletter, does it cost any money to subscribe?

I found something similar called 'the rivken report' which at first I was interested in, but when I told my mate about it, he said that alot of the newsletters like that are rubbish.

He basically said "Yeah they bring back returns, but thats only because they suck people into thinking they're more valuable than they really are, and then everyone reading the newsletters buys in. It only works out for the people who read, and get in first, i.e. the people making the newsletter."

Basically meaning, that the writers hype up the share and get all the readers to think its valuable, and buy in. Thus making it go up in value.

This was just what he told me, I wouldn't have a clue, but I do trust his judgement, and it does seem to make alot of sense.

 

This is a common perception, and there is some truth to it, especially with regard to small cap stocks, eg the Bulletin's Speculator's portfolio has done very well, since people follow his recommendations, and the turnover gets a sudden boost, eg some share might trade < $20k a day, and then suddenly a thousand people want in.
But for large cap, high liquidity stocks, the vast majority of shares are traded by large institutions who couldn't care what the newsletters say, and so the influence is very small.
A lot of people subscribe to and trust The Intelligent Investor, and their stock recommendations are usually well grounded in value investing methodology. Personally, I prefer The Eureka Report, which gives a broader view, taking in the economy, various asset classes, investing strategy, etc, rather than recommending a specific portfolio (although when they comment on particular stocks, they do so with conviction, and I like that.

 

how would you rate fat prophets?

 

sorry, I can't comment on fat prophets, as I believe more than the various publications its more important to choose the investment philosophy which is for you, and then taylor the research you do..

FP did not enter my Radar, but it may 100% suit another persons' investing style...

most of these publications offer free trial periods ...if interested

cheers
p

 

Well for now im just trying to get a good reliable foundation in my portfolio. Mainly comprising of stocks that have a good steady growing rate, and that give a nice return in dividends.

Do you guys think the way im starting out is good? Should I start out in the stock market, or should I try other things first? If so what else would you guys reccommend, im relatively new to the whole thing, but to my knowledge I think im doing the best thing, it'd be nice to hear from others with more knowledge than I.. hehe

 

Hi Paul,

You have a fairly concentrated portfolio! What sort of shares do you own? How long do you own them? What sort of returns have you got compared to the rest of the market? Do you sell, or are you just buy and hold?

Cheers,

Tom