Getting Started - Trading Platforms

Hi all, apologies if this is in the wrong section.

I'm a manager (not owner) within a small business and under a new agreed contract, due to commence receiving financial bonuses based on company performance, which is currently doing well.

I'd like to set these amounts aside and invest for the future, but am a complete investment amateur and am a little unsure where to start. My limited research has lead me to want to explore ETF's. I understand the risks with liquidity etc, but don't have much time so like the idea of having something well diversified (like an EFT which invests in the top 300 Aussie companies or something along those lines).

Could someone please give me a breakdown of how best to invest in these ETF's? Is there a certain brokerage platform that would be suitable? I'd ideally like to keep it out of the big banks if possible.

Thanks in advance.

 

welcome to InvestChat

this will help you find a broker

Find a stockbroker

i chose Commsec and Bell Potter ( for the budget online selection ) but that choice was made in 2010 there are other choices now and the services offered are different ( sometimes good sometimes not )

i STRONGLY recommend you learn about shares ( and share trading/investing )

think of investing in ETFs without prior knowledge as owning a car but having no understanding of the machinery underneath

while i hold several ETFs i use them as an insurance strategy NOT as my main investment plan

Financial Dictionary | Investopedia

this a US site but will give you a lot of useful basics , which often ( but not always ) translate to Australia .

ETF & LIC GUIDE - ETF

an Australian site which might be useful

passive index ETFs rely on some facts like S&P will evict badly performing shares from the index and the computers will smooth out the nastiest of the bumps ( and the fees are fairly low

i hold VAS ( bought in 2011 ) but please be aware when the index goes down so will your index fund value almost instantly ( but please consider other alternatives top 50 , top 100 and top 200 options each have their merits )

the choice that suits you best is the correct one ( my strategies probably won't suit you )

one lesson i did learn early was to find ( and keep close by ) a reliable calculator ( crunch the numbers for yourself , don't trust glossy presentations )

 

Hey welcome to forums.

I use selfwealth to buy shares, its all done online and only cosr 9.50 to either buy or sell shares.

Im also a passive investor and only have a few thousand invested currently in ETFs and LICs to get a feel for how i will react to market highs and lows, before i have the mortgage paid off and start redirecting that money towarss shares.

 

Sign up for an online broker and away you go, you could go full service at a much higher cost.

For simple low trade buy and hold they area all much of a muchness IMO. Some are slightly cheaper, but the savings are relatively small if you at buying monthly or less.

Why do you want to avoid big 4? They work fine.

Are you sure? Depending on the product IMO there is relatively no liquidity risk. More a scare tactic

 

regarding the ETFs ( top 300/top 200 ) .. liquidity SHOULD be fine ( there is no absolute guarantee of course ) but the conventional passive ETFs hold a basket of shares ( and sometimes a tiny percentage of derivatives on that index or underlying shares )

it will be a shocker of a day if the BIG 4 banks TLS , BHP and RIO don't trade that day ( say all 4 go into a trading halt ) those 7 stocks are a big percentage of the total ASX market cap .

the risk of course is those share prices drop VERY rapidly , but the 'sweepers' should be able to cope with most downturns , unless something very unusual happens , however the event is likely to be very stressful on the ETF holder ( do i dump and hide , cry in the corner , etc etc. )

i do agree with Luke83 on the mortgage front , nervous bankers are very quick to protect the banks interests ( interest rates could rocket , or credit could suddenly freeze )

 

Thanks for the responses all. I think it's likely I'll go to see a financial adviser, however I'm just super sceptical about that whole process. It's so difficult to find someone that you trust and know has your best interests at heart. I appreciate everyone's assistance.

 

Yeah well maybe not. But as a new investor, I guess I feel more comfortable acknowledging that liquidity might be a risk, rather than assuming it's not.

I'd like to avoid the big 4 banks for personal reasons, but not super important.

 

super skeptical is a fine attitude to have ,

but having some idea of the outcome you need is better


if you need liquidity make sure that is near the top of the list

and the recent Royal Commission highlighted the trust issue brilliantly , but the investor must have some idea of what is investment grade and what is a trap ( and the GFC highlighted plenty of folks trapped and broken , playing for they shouldn't have been playing )

in a major downturn the exit is usually VERY crowded ( on most assets even on term deposits )

i think the trick is NOT to sell in difficult times ( and absolutely not be forced to sell in such times )

but finding survivors in such a wreck will be difficult as well

good luck i am hopeful ( rather than confident ) on my strategy as well

 

I can do some research and get back to you on this one.

 

Which Bank do you use? Most banks have an associated online broker which you can use initially if you are new to investments. For example with you are with CBA, you can use the Commsec online broking. Once you have one set up its quite easy to buy and sell ETFs and the settlement funds can come straight from your linked bank accounts.

I invest in the Betashares A200 ETF which tracks the ASX200 share index. Its done quite well this year as the ASX has been rising. Its really a buy and hold strategy. However, you might have left your investing a bit late as the market is at 11 or 12 year highs right now so you might want to wait for a pullback in the markets. I am looking to 'short' the market or sell the market soon though, and to do that I would buy a Betashares BBOZ ETF that trades inverse to the ASX200, ie goes up when the market goes down.

The ETFs don't move a great deal in a short period of time, so it's unlikely you will lose your money overnight. It's best for a timeline of 6 months or more. If you bought it in Dec 2018 at $91, your investment would be worth $112 today. Not a bad 23% return on the investment! Better than cash in the bank! However, the opposite can happen, if you invested in the A200 ETF in Sept 2018 and looked at it in Dec 2018, you would be down 16%!

But if you invested in the BBOZ ETF that trades inverse ie. goes up when the market goes down, you would have made 30%, as the price increased from $13 to $17 in Dec 2018. This ETF has gone back down since then as the market has gone up.

These ETFS do have a 0.007% pa fee or $7 per $10,000 investment. They do pay quarterly distributions and franking credits as well as part of the investment.

As you are new to investing, I would invest only a small amount at a time to see how the investment goes and to gain some confidence in investing.

Otherwise, you 'paper trade' by following a particular share of investment without putting any money in it. For example, you might want to buy the A200 ETF. To paper trade it, imagine you are buying it today at say $112 and you purchased 100 units. You then track the progress of the units over a period of time to see if you would have made a profit on those shares if you had bought them today.

Finally, please do your own research in the end of the day it's your money and you should know how its going to work hard for you.

 

*** The ETFs don't move a great deal in a short period of time, ***


using my buying prices of VAS in 2011

15/3/2011 ... $59.70 ( price entered overnight from memory )
15/3/2011 ... $59.45
12/7/2011 .....$57.84
03/8/2011 .....$56.45
19/12/2011....$52.70

( VAS is currently $84.60 at the close of trade Friday )

so don't expect the ETFs to resist the market trend ( they are designed to mirror them as precisely as possible .... buyers/sellers permitting )

deciding how you will react during major market moves , is very important

i had decided i needed to be aggressive ( but careful ) at the end of 2010 , and was at the start of my share-investing .( so had a reasonable cash reserve to reach into )

a $7 share price drop in 9 months can shake the confidence of the average novice