Investing in Shares for the complete novice

Its public holiday for some of us lucky enough to be in sydney.... shame its raining...

 

For me there is not such thing as favorite stock. Not every stock moving in the right direction may be a 'favorite one' or worth considering.
Amount of $3000 may get a one good 'spec dog' which may deliver (if properly chosen) around 60%-100% in relatively short period of time but this is a risky trade.
Buying blue chips in small parcels makes no sense to me, but some people are doing just that for their own reasons.
In your case MF may be a viable option (as you said, you can put in $2000 every month).
Unfortunately - only money makes money.
Without money there is not much you or me can do.
You see, certain rules/approach were invented for a purpose. Correct position size makes an individual trade/investment worth considering.
You can ask dozen of people what they would do in the particular situation and you may get dozen different answers which may totally confuse you.
In the end of the day you must decide what to do. It's your call.
Have a good one.

 

Another question, if out of your 20k you bought 3k of shares, is the next parcel of shares based on 2% of 17k?

 

2% applies to to the decline in the market value per one position i relation to total trading capital.

 

Can you dumb that down for me? And perhaps provide a yes or no?

 

Yes - (from $20K in this case)

 

I came across this which talks about trading system and decisions..

Markets: What to buy or sell
Position Sizing: How much to buy or sell
Entries: When to buy or sell
Stops: When to get out of a losing position
Exits: When to get out of a winning position
Tactics: How to buy or sell

 

It's a basic 'frame'.
You need parameters for system design and requirements for a trading system.

 

Tropo

I'm not saying you are wrong...but check the title of this thread again. It's about share investing and for the complete novice. You're essentially talking about trading. And you can't become an expert trader over night. In fact it probably takes 10,000 hours to become an expert at anything, trading included. Some people have neither the time nor the inclination to trade.

If a share investor ten years ago had just regularly invested in any one of the big four banks, for example, they would be doing very well. Is that largely a result of buying a sound business and riding the wave of strong markets over the long term? Yes. But then that's the essence of investing isn't it? Pick a good asset and ride the growth over time.

Whilst in an ideal world we'd study, practice then act in a fullly informed and educated way the reality of human nature is that sometimes we need to get some skin in the game to focus the mind and energy.

Investing a small amount in what one believes is a sensible way (having done some research) and then learning from that is a good way to get started and avoid investment inertia IMHO. It recognises that we truly aren't always entirely rational investment machines.

cheers
N

 

I'm not saying you are wrong...but check the title of this thread again. It's about share investing and for the complete novice. You're essentially talking about trading. And you can't become an expert trader over night. In fact it probably takes 10,000 hours to become an expert at anything, trading included. Some people have neither the time nor the inclination to trade.

There is not much difference between trading and active investing (time frame in some cases is different).
Position size is as important for investors as is for traders/active investors.
How much you can make if you hold 10 shares even if you pull 100% out of it?
There are no expert traders (IMHO). Some are good, some are bad, and some are outstanding. I am not aware of the 10 000 h "rule".

If a share investor ten years ago had just regularly invested in any one of the big four banks, for example, they would be doing very well. Is that largely a result of buying a sound business and riding the wave of strong markets over the long term? Yes. But then that's the essence of investing isn't it? Pick a good asset and ride the growth over time.

If you do have ability to find a future good performer that's fine.

Investing a small amount in what one believes is a sensible way (having done some research) and then learning from that is a good way to get started and avoid investment inertia IMHO. It recognises that we truly aren't always entirely rational investment machines.

I guess that you misunderstood my post.
There is nothing wrong with a small amount (beginners should play with the small amount). I am talking about ridiculously small position.
You are right, we are not rational investment machines because we are humans.

 

My initial foray into shares was by saving 10% of my wage and then investing that into a particular stock when I had around $1k +

Initial thoughts were to invest by dollar cost averaging or value averaging

Sold everything to purchase a block of land though about a year or so later