How to kick off share portfolio?

What’s the easiest way to jump into the world of buying shares … for generating an income, self managing..

-$100k to play with

Eg do I get on CommSec, select 4 blue chip…
Thanks in advance!

Comments

  • +8 votes

    VGS - 45%
    VAS - 45%
    VGB - 10%

    Have fun!

  • +2 votes

    Look at an indexed fund for the ASX 200.

    Its like buying a basket of shares.

    You won't encounter massive swings up/down.

    • If companies go bust, you're de-risked from their collapse. But you'll take a small hit.

    • Likewise, If companies go gangbusters, you'll take a small benefit.

    You'll get paid around 4% in distributions per year. Normally, around 24% tax is prepaid for you. So you only need to pay the difference. (c. 80% franking)
    * 100k will return about $4,000 in dividends

    • maybe around $4,000 - $5,000 in capital appreciation.
  • +2 votes

    Probably head over to r/ausstocks or r/ausfinance (reddit)

    Question has been asked there multiple times with good answers.

    Selfwealth is the cheapest CHESS broker. I rate them as I use them myself. Fee: $9.50 per trade ($600 min, No max)

    Essentially you will probably want to look at investing in ETFs or LICs. Hassle free almost as you don't have to keep up to date with what a company is doing. You decide how you diversify your portfolio.

    •  

      is it easy to do tax yourself ?

      •  

        It's pretty much automatic from what I've seen. As your broker has your TFN they submit all relevant info to the ato and it pops up when you do your online tax. At least it does for me.

        As for LIC's check out the Wilson stable, always popular with aussies, WAM WMI WLE and WGB is worth an extra look as it's trading about 40c below NAV atm and they all pay dividends too.

        If you don't mind a bit higher risk you might want to aportion some to RGI and BDA which should be doing well in the next year or so (barring the global meltdown of course but nobody seems to know when that will occur. When it does it will drag down everything.

    •  

      Thanks - great info
      With self wealth, to break it down is it as simple as purchasing x amount of EFT, then ensuring the reinvestment is selected via the share directory, and it will continue to just tick over (if I’m thinking long term?)
      And how easy is it to sell? Are there restrictions in buying and selling frequencies or only governed by the fee per trade?

      •  

        You are correct. Create an account with your share directory when you get the letter in the snail mail and fill out and select your preferences.

        Selling is easy as buying. Whether it's a happy sale or a sad sale is another story. :)
        You only pay the fee for each transaction made.

  • +5 votes

    Use the referral generator for selfwealth and you will get 5 trades free https://www.ozbargain.com.au/deals/selfwealth.com.au

    You can open up a commsec if you like looking at their data better, and then do the actual trades in selfwealth which is cheaper.

  • -2 votes

    Commsec pocket
    7 ETFs to choose from for 2% fee (above $1000)

    • +1 vote

      No friggen way should you use commsec pocket for a 100k+ investment that is literally mad

      • +1 vote

        He's not putting 100k in 1 trade I'd assume.
        If he's doing smaller transactions, few Ks a time spread accross many ETFs over time, dont see why not commsec pocket?

        • +1 vote

          Because doing a few ks at a time over many etfs will be a) a terrible investment strategy and b) still substantially more expensive than a real trading platform

  • +2 votes

    Don’t buy all $100k at once, unless this amount is more like an annual contribution. Seek to dollar cost average in (and later, out) so you don’t accidentally invest all your money the day before the crash.

    • +4 votes

      DCA'ing is generally not good: https://personal.vanguard.com/pdf/s315.pdf

      • +2 votes

        Stock market is at/near all time highs, inverted yield curves point to high risk of recession in next few years, and OP is not seeking an “average” outcome, they want to kick off an investment.
        DCA is less successful over the long run because markets have tended upward, not remained flat.
        If you just selected for years when the market was hitting new highs then you would see those also correspond with years with large losses - not always, but sometimes, and much more often than years well below all time highs.

        The stats you cite are a bit like saying fire insurance is not worth it. Yes, fire insurance averaged over everybody is not worth it, but it sucks if you are guy who has a fire and don’t have it.
        To sustain the analogy, the stock market is a tinderbox and there hasn’t been a fire for years and years. Surely that suggests fire insurance is more valuable that it would be in the years after a major burn?

        They are also suggesting to DCA the lump sum over 10 years. That is a long time to sit in cash, but DCA over a more compressed period (say 24 months with 1/3 invested each 12 months) does a lot to de-risk the chance of investing the day before a crash.

        • +2 votes

          On mobile right now don't have time to reply to all of it but it's worth noting that the stock market was also at an all time high generally from 90's until 2008.

          It's a nice analogy but it doesn't hold - what you are doing there is a form of market timing

          •  

            @tablewhale: every buy or sell is a form of timing, lol.

            DCA works well when one wishes to be prudent. Prudence in this environment is sensible.

            lump sum works well over the past history as history has provided good returns. Over the long term, with a few hiccups along the way.

            • +1 vote

              @cloudy: Not the sort of timing we are talking about here - timing the market as a phrase refers to a person making a subjective assessment of when they think is the right time to invest, verses doing it consistently which will always win out.

              If you read the study it actually isn't prudent to DCA in most cases. If you look at the accumulation index the market recovered very quickly even on a modest investment timescale.

              •  

                @tablewhale: I read the study, and stand by my comments.

                The question remains, do you take a view on markets or not?

                If not, then lump sum all the way, and hope/believe/trust in the long term (wealth winner of shares) will be on your side.

                Honestly that study is basically graphing every + and - day of the share market into a histogram and looking at the past result. It's really nothing more.

                • +1 vote

                  @cloudy: It has nothing to do with taking a view on the markets or "trust" or "belief", its statistically more probable that you will be better off not DAC'ing.

                  I'm gonna give you an insight here - a market's performance is a sum of the ups and downs over a period of time haha that is the nature of it.

                  DCA'ing is just a form of market timing in most cases. The premise also of "having a view" on the market is a flawed one inherently involving the market-timing phenomenon. Most very well paid hedge fund manages have an f-all idea of the "state" of the market hence passively managed funds have been outperforming managed ones.

                  •  

                    @tablewhale: DCA allows one to invest over time, and reduce the effects of timing. It is correct to say satistically just throwing it all in has been a more probably outcome. But again, that is because the history of share markets over the long term is a upwards moving graph.

                    Be unlucky, and pick the height of the GFC, and you would still be sitting here today and not have much gains. (lucky for dividends)

                    The game of statistics is great when you can play the game many times to achieve the statistical result, think of a casinos statistical advantage, as long as someone plays the game it will surely win.

                    •  

                      @cloudy: Well can't say much other than what has already been said - I don't agree with your premises.

                      Worth remembering too: dividends are the return of capital back to investors so it's not a matter of luck, rather correct course. That is why you need to look at the accumulation indexes as a correct measure. Those dividends would be cap gains if they were not distributed. If you invested at the absolute height of the GFC, you would have came back in the green around 6 years later. From then until this day you would have over doubled your pre-gfc capital.

                      •  

                        @tablewhale: I basically agree with you, but do you agree with the article that DCA is at least useful for:

                        minimizing downside risk [i.e. reducing the chance of a "very bad" outcome, while admittedly also reducing the chance of a "very good" outcome]

                        and/or

                        potential feelings of regret [for whatever that's worth psychologically]

                        • +1 vote

                          @Waldo000000: @Waldo000000 I can get behind those reasons yeah haha

                        • +1 vote

                          @Waldo000000: There's also that regret of "I wish I had bought more(less) yesterday before it jumped(dropped) 12% today."

                          •  

                            @muppet: Yep, absolutely, though when the maths collides with real life, the outcomes are asymmetric.

                            Specifically, you are more likely to regret an unexpected loss than you are to regret missing out on an unexpected gain of the same amount.

                            e.g. Compare these scenarios:
                            a) You suffer an unexpected 12% loss, and this means (for example) that your partner will unexpectedly have to go back to work [or something] in order to [insert whatever plans or obligations here], which substantially affects the course of your life. You regret the timing of your trade.
                            b) You miss out on an unexpected 12% gain, and this means… Not as much. You still regret the timing of your trade, but otherwise your life carries on as usual.

                            In summary, this is essentially why people recommend DCA:
                            1. Given that DCA reduces the potential downside and the potential upside by the same dollar amount,
                            2. If the potential downside has the potential to sting more (in practical/existential terms) than the equivalent upside,
                            3. Then DCA is expected to provide a more favourable outcome.

                            • +1 vote

                              @Waldo000000: What you're saying sounds true, except that if you did invest the money and suffered a 12% (unrealised) loss, you really haven't lost anything in practical / existential terms, unless you planned to sell your shares in the short term and realise that loss. If you just kept it on, and assuming you had chosen a good investment, e.g. an index / ETF of some sort, then over the (possibly very) long term it doesn't matter much.

                              There's no absolute right or wrong I guess, except that we might refer back to the statistics mentioned by @tablewhale in that it's statistically more beneficial to invest in lump sum vs DCA. My interpretation is that the odds are better to do lump sum, provided that you have a long enough term of investment. How long of a term? Well that's the thing isn't it.

  • -3 votes

    Just get a managed fund to do it for you, lots of options and goals.

  • +4 votes

    There's only one thing you need to know OP: You're not a day trader or a stock picker. Once you come to that realization you'll be fine, just choose a nicely diversified passively managed index fund. You can learn that lesson for free from me. I had to pay for it unfortunately - not much but enough to make the lesson stick ;)

  •  

    VGS
    VAS
    VGB
    VDHG
    ASX
    DCA
    ETF
    LIC
    WAM
    WMI
    WLE
    WGB

    Sooo many acronyms.

    My only advice when trading stocks like Gordon Gekko all day, and partying like Jordan Belfort all night, is to avoid catching a STI or UTI.

  • +5 votes

    In NSW, $100K gets you an Aldi Shopping Bag.

  • -2 votes

    heres a strategy for ya. every day, buy the fastest rising stock. they can only go higher

  •  

    Do your own research! I got in Afterpay touch group 2 years ago at $3.10 today $31.38. APT is only 5% of my portfolio.

  • -2 votes

    Buying gold atm is probably your smartest bet.

    •  

      Gold is only a hedge against a falling US dollar.
      Gold does not give you any dividend.
      Gold only used as a safety hedge.

      • +1 vote

        I think golds about to skyrocket to $10,000 an ounce. The system is a bit broken atm if you hadn't noticed.

  •  

    Wait for the impending recession and buy blue chips at the bottom.

  • +1 vote

    Commsec is a very good platform.

    The banks have always been good performers over the long run.

  •  

    Does anyone still use the Buffet intrinsic formula to calculate the intrinsic value of shares before buying or is it outdated?
    Any other recommendations for framework before picking single stocks?
    What do people think about screener from CMC?

    • +1 vote

      With the RBA and global central banks taking extraordinary monetary measures, Buffet intrinsic formula says everything is way overvalued and to be sitting on the sidelines with cash ready to pounce when and if the market goes south.

  •  

    I have about 10K to play with. Is Vanguard better than AFIC and Argo?

  •  

    Ummm… open a trading account?

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