Is it a good time to enter the market?

[Doh!]

Hi I"m looking for a bit of reassurance here. I've been looking at investing now for about 5 years, but have only just decided to enter the share market with a equity loan of 50k this has has been advised through a well respected finance company. My itchy feet in the past have prevented me from making some fabulous gains in the last 5 years. Doh!
Any way to the future. Ive heard the saying "you can't time entering the market" but I have to ask is it a good time to enter the market now has the market bottomed out?

[Nyden]

Unfortunately, no one here is really allowed to tell you if it's the right time to enter :) You should seek professional advice, from a licenced advisor.

I will say this though; I certainly wouldn't be entering this volatile market on borrowed money :)

(Edit; Hey! We have the same avator! Mine seems to be more cheery though :p:)
Oh, & welcome to the forum!

[Trembling Hand]

just decided to enter the share market with a equity loan of 50k this has has been advised through a well respected finance company.


What makes them well respected and does that mean they will refund you any loses?



Ive heard the saying "you can't time entering the market"

Yes you can. but if YOU can't why would you jump all in with leverage in one go :eek: :eek:


I have to ask is it a good time to enter the market now has the market bottomed out?

What makes you think this IS the bottom?? And to be blunt you have wasted the last 5 years on the side lines not learning how you should trade/invest. To be even more blunt you are crazy to be entering the market with loaned money and asking these questions. You obviously have a knot in your stomach and for good reason. You just walked into the casino and put $50 Gs on black.

[Nyden]

What makes them well respected and does that mean they will refund you any loses?



Yes you can. but if YOU can't why would you jump all in with leverage in one go :eek: :eek:



What makes you think this IS the bottom?? And to be blunt you have wasted the last 5 years on the side lines not learning how you should trade/invest. To be even more blunt you are crazy to be entering the market with loaned money and asking these questions. You obviously have a knot in your stomach and for good reason. You just walked into the casino and put $50 Gs on black.

You seem to be a little too aggressive here towards this fella TH, be nice :p:

[Awesomandy]

You just walked into the casino and put $50 Gs on black.

Not quite. In such situations, I would think that you are more likely to make money in the casino then putting money blindly into the market. :)

Still, irrespective of what the market does, given you had itchy feet for the past 5 years watching everything go up, I would be very doubtful that what you are planning to do would match your risk profile. Just because you have a medium-long time frame, it doesn't automatically mean you should get a loan and invest in the market. There are a lot of other factors that are used to determine your risk appetite. I would suggest you to have a look at other forms of investments as well, and start with a smaller amount of capital to, as they say, "get your feet wet".

P.S. I don't know your exact circumstance, but given the (limited) information I have so far, the "well respected financial company" probably won't be so well respected in the future if they continue to give advices like ones they've just given you.

[3MT]

I agree with the above post. Start off with a smaller capital base to get your feet wet, you can always increase it over time.

I would also go and do some research on a respectable fund manager and invest with them. So many of us want control over the way we invest and over-estimate our ability to make sound investment decision -- its probably wiser to find someone who manages money on a full time basis than sift through all the stuff on this forum and everything else available on the internet. (not that you can't learn anything here, but for someone relatively new to the game, inexperience in this game is very costly)

As for whether its good to invest now? Like you said, you can't time the market, but having missed out the last 5 years and watching it pull back this far, its better to enter the market now than in november last year. This is just a blip on the long term trend, but that's not to say the blip won't still drift lower for a while.

but that's not advice, just an opinion.

[theasxgorilla]

Read TremblingHand's post and ask questions about things you don't understand or challenge things you might not today agree with.

ASX.G

[bvbfan]

Whether it's a good time to enter the market is depending on what you want.

A slow steady approach to build wealth over a number of years? If so then I don't think there is any bad time to enter the market.
Most people won't time the top or the bottom of any market but history will suggest you'll come out on top in the long run.
That said if you had invested in 1929/30 it would have taken about 15/16 years to break even.

If you are looking to trade and make short term gains then maybe this isn't the market for you unless you are willing to accept some losses and willing to develop a trading style/system.

I think getting a good education during a bear market will do you a world of good but that's my opinion and probably based more on the fact I started in 2001-3 bear.

Don't go out and buy with all your cash.

Also you don't mention whether you will add to the portfolio over the year or if it's just the 50K which will be all you will use.

[theasxgorilla]

You seem to be a little too aggressive here towards this fella TH, be nice :p:

It's 50k of leveraged money. You want 'nice', or effective? TH trades for a living. Heed the messages contained within.

[nioka]

Hi I"m looking for a bit of reassurance here. I've been looking at investing now for about 5 years, but have only just decided to enter the share market with a equity loan of 50k this has has been advised through a well respected finance company. My itchy feet in the past have prevented me from making some fabulous gains in the last 5 years. Doh!
Any way to the future. Ive heard the saying "you can't time entering the market" but I have to ask is it a good time to enter the market now has the market bottomed out?
What "well respected" financial adviser would recommend entering the market with borrowed funds at a time when interest rates are high and the market is volatile? Who respects him? What's his angle.

[MRC & Co]

Do you know which stocks you are going to invest in and why?

I would not enter now, personally, not for long-term investing.

I would wait until it at least makes higher lows and higher highs indicating the trend has turned up. Its best if the first reaction does not breach the most recent pivot high indicating trend strength.

Just a few thoughts and something you may wish to research.

[strudy]

At this point in time the share market is down on average around 25% to 30%. This also depends which stocks you are looking at as some are down further than others.

As to when the share market will start to go upwards again consistently is anyones guess, for no one really knows.

If you take a look at past history the market has always eventually climbed again to new heights only to recede again. The biggest factor here is the time element which is the main random factor.

At this point in time it could pay you to do some research into good solid companies which have had a serious decline in their share price and look at buying these for a medium to long term investment.

An old saying "Buy in gloom and sell in boom" could well apply here.

[Doh!]

What makes them well respected and does that mean they will refund you any loses?



Yes you can. but if YOU can't why would you jump all in with leverage in one go :eek: :eek:



What makes you think this IS the bottom?? And to be blunt you have wasted the last 5 years on the side lines not learning how you should trade/invest. To be even more blunt you are crazy to be entering the market with loaned money and asking these questions. You obviously have a knot in your stomach and for good reason. You just walked into the casino and put $50 Gs on black.

a guy has to start somewhere, I am a mr average i don't want to live my life saying "what if" there comes a time when you have to make some decissions about your future. rre you going to grind it out paying off a home loan then retire, not me. i want make a start

NO this advisor isn't going to garantee me against losses no advisor would.

Is'nt the #1 golden rule of investing

investing is a long term stategy

my propsed investment will be in a managed share fund
spread across 5 different funds

[Trembling Hand]

An old saying "Buy in gloom and sell in boom" could well apply here.

No. Wrong cliche for the wrong time.

try "The market can stay irrational longer than you can stay solvent"

As said by John Maynard Keynes (http://en.wikiquote.org/wiki/John_Maynard_Keynes)when using other peoples money. Said some 70 years ago after he went bust.

[Doh!]

Not quite. In such situations, I would think that you are more likely to make money in the casino then putting money blindly into the market. :)

Still, irrespective of what the market does, given you had itchy feet for the past 5 years watching everything go up, I would be very doubtful that what you are planning to do would match your risk profile. Just because you have a medium-long time frame, it doesn't automatically mean you should get a loan and invest in the market. There are a lot of other factors that are used to determine your risk appetite. I would suggest you to have a look at other forms of investments as well, and start with a smaller amount of capital to, as they say, "get your feet wet".

P.S. I don't know your exact circumstance, but given the (limited) information I have so far, the "well respected financial company" probably won't be so well respected in the future if they continue to give advices like ones they've just given you.

one reason i didn't start 5 years ago was because of family and mortgage since then my income has more tha doubled

would you say that most investors start by saving there own money

[Trembling Hand]

Is'nt the #1 golden rule of investing

investing is a long term stategy


No. The number 1 rule is to not lose you capital. Best way to do that is make sure you know what you are doing before you enter the water.


a guy has to start somewhere, I am a mr average i don't want to live my life saying "what if" there comes a time when you have to make some decissions about your future. Are you going to grind it out paying off a home loan then retire, not me. i want make a start



Wanting to make a start is fine but that is with education not the buy button.

[Doh!]

It's 50k of leveraged money. You want 'nice', or effective? TH trades for a living. Heed the messages contained within.

I don't see the point, people leverage money every day.
cars, homes.etc. etc. etc
if you can afford the repayments why not start with borrowed money?

[Ashsaege]

Knowledge is wealth. Invest in your education first mate. Minimize part of the risk by knowing and understanding what you are doing. Don't be a naked investor... which is what the richest man in the world has been saying.

If you dont have the knowledge, then it probably isn't the right time to enter the market.

[Doh!]

No. The number 1 rule is to not lose you capital. Best way to do that is make sure you know what you are doing before you enter the water.



Wanting to make a start is fine but that is with education not the buy button.

you only make a paper loss the day you pull out
I'm looking at 30 years + of investment

i believe i'm starting out the correct why under the wing of a managed share fund

[nomore4s]

I don't see the point, people leverage money every day.
cars, homes.etc. etc. etc
if you can afford the repayments why not start with borrowed money?

The difference in using leverage in the market is you can lose money a hell of alot faster than normal. What happens if you jump in now, with high leverage and the market continues to drop and you get a margin call?

I would suggest you do a bit more research before entering the market, now isn't the time for a newbie to be entering the market with leverage imo.


Knowledge is wealth. Invest in your education first mate. Minimize part of the risk by knowing and understanding what you are doing. Don't be a naked investor... which is what the richest man in the world has been saying.

If you dont have the knowledge, then it probably isn't the right time to enter the market.

Wise words

[Doh!]

Should I assume that investing with a managed fund is bad news?

Is it wrong to pay a fund manager for his expertise.

There are plenty of these funds avalible, someone must be using them.

[Trembling Hand]

I don't see the point, people leverage money every day.
cars, homes.etc. etc. etc
if you can afford the repayments why not start with borrowed money?

Because when you invest it is always with not how much you can win but the relationship between what you could win and what you could lose.

Can you afford to lose money that is not yours?

Back of the envelope cal. tells me you are going to pay about $5000 this year in interest.

You are going to need close to a 10% return just to break even every year(to cover interest). If you want to be greatly profitable you are going to need a market to go up 20% every year, which will only then give you 10% on 50k. hardly going to move you out of Mr.average league.

but if you simply saved your interest payment you now have 5k no risk.

[Doh!]

The difference in using leverage in the market is you can lose money a hell of alot faster than normal. What happens if you jump in now, with high leverage and the market continues to drop and you get a margin call?

I would suggest you do a bit more research before entering the market, now isn't the time for a newbie to be entering the market with leverage imo.

There would be no "margin call" on an equity loan. it is succured by my house. as long as i can make the payments the bank is happy

[cuttlefish]

you only make a paper loss the day you pull out
I'm looking at 30 years + of investment

i believe i'm starting out the correct why under the wing of a managed share fund

This won't seem like such a trite statement if you are paying off a $50k loan that is backed by only $40k of assets in 12 months time at interest rates of 10%+.

(I'm not saying this is the future but its one possible scenario).


Which fund are you going to invest in and who has recommended it to you (not the same people that are suggesting you borrow $50k to invest in it I hope). Are you paying for this financial advice? If not who is paying the advisor. What market sectors is the fund focused on?

What have you learnt about the markets and about investing in them in the 5 years you've been watching and how are you applying it in your current decision process.

[cuttlefish]

There would be no "margin call" on an equity loan. it is succured by my house. as long as i can make the payments the bank is happy

There will be if your LVR deteriorates below the required level which can happen when property goes down. And if investments are worth less than the loan you may not be able to meet it. How healthy is your property equity level?

[Doh!]

Because when you invest it is always with not how much you can win but the relationship between what you could win and what you could lose.

Can you afford to lose money that is not yours?

Back of the envelope cal. tells me you are going to pay about $5000 this year in interest.

You are going to need close to a 10% return just to break even every year(to cover interest). If you want to be greatly profitable you are going to need a market to go up 20% every year, which will only then give you 10% on 50k. hardly going to move you out of Mr.average league.

but if you simply saved your interest payment you now have 5k no risk.

So it's true advisors are sharks

[Timmy]

Hi I"m looking for a bit of reassurance here.

You're probably in the wrong place...

[Doh!]

There will be if your LVR deteriorates below the required level which can happen when property goes down. And if investments are worth less than the loan you may not be able to meet it. How healthy is your property equity level?

I have about 300 k in equity

[Trembling Hand]

So it's true advisors are sharks

Who knows but why don't you do some calculations for us just to show us what either they told you or what you are expecting to make from this. Please do this for us. just a simple P & L analysis. And post it here for some real meat to this thread. PLEASE.

[Doh!]

This won't seem like such a trite statement if you are paying off a $50k loan that is backed by only $40k of assets in 12 months time at interest rates of 10%+.

(I'm not saying this is the future but its one possible scenario).


Which fund are you going to invest in and who has recommended it to you (not the same people that are suggesting you borrow $50k to invest in it I hope). Are you paying for this financial advice? If not who is paying the advisor. What market sectors is the fund focused on?

What have you learnt about the markets and about investing in them in the 5 years you've been watching and how are you applying it in your current decision process.

Can I name funds in this forum?
the advisor is paid on commission and yes they are the same people

[cuttlefish]

So it's true advisors are sharks

Not necessarily, but if you think about it the people best qualified to give financial advice are probably floating around on big yachts somewhere or off heli-skiing in Alaska.

The very same that do not need to earn an income giving out financial advice but will probably happily give it out for free to anyone within ear shot that happens to pique their interest.

[cuttlefish]

I have about 300 k in equity

What I'm meaning is the proportion of debt to equity - how much does property need to fall before the bank starts to query the healthiness of their asset (the banks asset being their loan to you). Though $300k equity sounds reasonable for most Australian suburbs. Banks do stress test their portfolio's and can theoretically ask for top-ups or adjustments if property values fall enough to affect the LVR levels on your loan.

Not trying to rain on your parade - though you seem to be placing a lot of trust in your advisers. Do you have some justification/basis for why you have this level of faith in them, and have you researched a range of funds or sought some alternate opinions on the advice you've been given?

Asking the question on here seems to have generated plenty of food for though which can't hurt - its always good to have a healthy level of skepticism and eyes wide open before taking any significant investment decision.

[Doh!]

What I'm meaning is the proportion of debt to equity - how much does property need to fall before the bank starts to query the healthiness of their asset (the banks asset being their loan to you). Though $300k equity sounds reasonable for most Australian suburbs. Banks do stress test their portfolio's and can theoretically ask for top-ups or adjustments if property values fall enough to affect the LVR levels on your loan.

Not trying to rain on your parade - though you seem to be placing a lot of trust in your advisers. Do you have some justification/basis for why you have this level of faith in them, and have you researched a range of funds or sought some alternate opinions on the advice you've been given?

Asking the question on here seems to have generated plenty of food for though which can't hurt - its always good to have a healthy level of skepticism and eyes wide open before taking any significant investment decision.

Debt = 35% Equity 65%

This advisors company is known locally and interstate. he writes for papers and has published a hand full of books

They don't call this the beginners forum for nothing
thank you all for your input

[Doh!]

Who knows but why don't you do some calculations for us just to show us what either they told you or what you are expecting to make from this. Please do this for us. just a simple P & L analysis. And post it here for some real meat to this thread. PLEASE.

Fund #1 5 year return 38% }
Fund #2 5 year return 28% } average of 25% 5 years
Fund #3 5 year return 19% }
Fund #4 5 year return 17% }
FUND #5 1 year return 8%
All these funds are classed as growth
they have mixed asset allocations with the majority in the domestic market 65%

I under stand the first year I'll make a 4k loss with commission Fund entry fee $2000 Advisor $2000

I will pay intrest on the line of credit loan as interest only
any loss will be partially tax deductable

I will reinvest the divendends

[Doh!]

Paul Clitheroe is another writer who recommends the borrowing to invest strategy

[It's Snake Pliskin]

Hi I"m looking for a bit of reassurance here. I've been looking at investing now for about 5 years, but have only just decided to enter the share market with a equity loan of 50k this has has been advised through a well respected finance company. My itchy feet in the past have prevented me from making some fabulous gains in the last 5 years. Doh!
Any way to the future. Ive heard the saying "you can't time entering the market" but I have to ask is it a good time to enter the market now has the market bottomed out?

Please ignore cliches etc.

What does your advisor think?

[Rainmaker2000]

I'm assuming you've got some equityeg. cash otherwise they would not give you margin....

I'm loving the value there is out there in the market right now and definitely many astute buys.........since you are a market newcomer who has had some trouble pulling the trigger in the past, you would do well to head the caution from those above.....there are many not so astute buys too and this market has no mercy at all.......if I was you, I would look for some knowledge first to tell the difference between a great company and a future MFS, or ABS

[Rockety]

Ive heard the saying "you can't time entering the market" but I have to ask is it a good time to enter the market now has the market bottomed out?


Heh, I know a person who thought the market has bottomed out a few weeks ago and opened a few long positions... :D

[wayneL]

Budapest?

Bleedin' 'eck! Joe will have to change the name of the forum to something international soon

[cuttlefish]

Can I name funds in this forum?
the advisor is paid on commission and yes they are the same people

You get what you pay for. If your not paying then they are probably not serving you - they will work for the people that pay them - those people are the fund managers.


I under stand the first year I'll make a 4k loss with commission Fund entry fee $2000 Advisor $2000

You have just stated you are borrowing $50k to buy $46k worth of assets - why?!? You will need a ~10% return just to get back to your initial capital. Then to cover the borrowing costs you will need another ~10%. i.e. just to get back to BREAK EVEN you will need to make 20% this year ?!?.

I've never put my money into a fund and don't know much about them, but as I understand it there are listed funds you can enter that you will pay no commission on. (except for brokerage - a lot less than $2000 - more like $20). You may even find that some are trading below value at the moment. They do of course have management fees, though again the management fees are in the fractions of a percent, not 4%!?!? ($2K/$50K).



Paul Clitheroe is another writer who recommends the borrowing to invest strategy

Investing is when your money works for you. You are getting fleeced by 8% on entry to this 'investment'.


The '25%' figure - is that the fully compounded return over the 5 year period?
If so thats not much more than 5% per annum. You're 8% down on entry and you're probably going to be paying 8% plus interest per annum. If I've interpreted the figures you've provided correctly you will lose money if the fund continues to perform at the current level.

I suggest you work back on those 5 year return figures (take the highest one if you want to be an optimist but I'd be working of the lowest one) and plug all of these numbers into a spreadsheet and you will be able to see exactly how much this exercise will cost you.

I'd be very curious to see an exact clarification of the figures and also see what sort of figures the advisor has given you.

[Trembling Hand]

Fund #1 5 year return 38% }
Fund #2 5 year return 28% } average of 25% 5 years
Fund #3 5 year return 19% }
Fund #4 5 year return 17% }
FUND #5 1 year return 8%
All these funds are classed as growth
they have mixed asset allocations with the majority in the domestic market 65%

If you had half a brain when you did your expected P&L you would of 1/2 the return at least just to see what would happen if the next five years don't match the last five of a spectacular bull run.
Do you realize what the Average return of funds are when not in a ripping bull market??
If you think we are in the same environment that lead to an average growth over five years of 25% enjoy your ride.

[Doh!]

Can I name funds in this forum ??

[prawn_86]

Can I name funds in this forum ??

Yes, providing that the information you post is correct (obviously).

[Doh!]

Yes, providing that the information you post is correct (obviously).

Colonial First state 452 Geared share
Colonial First state global Resources
First choice australian share
Perpetual industrial share
ING tax effective income

[Doh!]

If you had half a brain when you did your expected P&L you would of 1/2 the return at least just to see what would happen if the next five years don't match the last five of a spectacular bull run.
Do you realize what the Average return of funds are when not in a ripping bull market??
If you think we are in the same environment that lead to an average growth over five years of 25% enjoy your ride.

Obviously we are in a different market now
Which brings me back to the original statement “is it a good time to enter the market now?”

As I said earlier I’m here for the long term not five years.

At some stage the market has to turn, you all sound like that time is far far Away

[ShareIt]

great time to trade, not invest!

[cuttlefish]

Doh! - I did a quick review of figures based on info on this site:

http://www.colonialfirststate.com.au/Price_performance/HistoricalUnitPrices.aspx?MainGroup=SF&GroupID=65&ProductID=40&Public=1&FundTransfer=false


The resource fund appears to have averaged 25% p.a. (so compounded its done 250% over the whole time). Thus you would have made a good profit if you'd invested 5 years ago. (though the interest costs and initial commision and outlay would have meant your average return was only 19% p.a. vs the 25% p.a. the fund made - though I haven't taken into account any tax implications both on the gain and on the interest).

Nobody can predict with certainty the likelihood of this performance continuing - there has been a strong commodities bull market for several years and the market has changed a lot in the past 6 months - if you believe that the resources run will continue into a new leg it might be worthwhile to put some into it - though I still think you are getting stung way too much on the entry fees and commission and question this.

You should not trust any numbers given to you and verify them all yourself, and should stress test them for things like large interest rate rises (what if rates went to 15% or more) and for much more conservative returns (i.e. work on a figure like 10% p.a.). Funds do often have negative returns in flat or falling markets - they're obliged to invest in stocks via their allocation rules so will be close to fully invested in stocks even if they have a negative market view.

I'd still be waiting for the dust to settle on the current market fallout before taking a first time entry to the market but thats only one opinion.

Funds also always like to show you their 'good' periods when trying to attract you, so have a look at longer term life of the fund etc. - i.e. as the saying goes DYOR.

[Doh!]

Doh! - I did a quick review of figures based on info on this site:

http://www.colonialfirststate.com.au/Price_performance/HistoricalUnitPrices.aspx?MainGroup=SF&GroupID=65&ProductID=40&Public=1&FundTransfer=false


The resource fund appears to have averaged 25% p.a. (so compounded its done 250% over the whole time). Thus you would have made a good profit if you'd invested 5 years ago. (though the interest costs and initial commision and outlay would have meant your average return was only 19% p.a. vs the 25% p.a. the fund made - though I haven't taken into account any tax implications both on the gain and on the interest).

Nobody can predict with certainty the likelihood of this performance continuing - there has been a strong commodities bull market for several years and the market has changed a lot in the past 6 months - if you believe that the resources run will continue into a new leg it might be worthwhile to put some into it - though I still think you are getting stung way too much on the entry fees and commission and question this.

You should not trust any numbers given to you and verify them all yourself, and should stress test them for things like large interest rate rises (what if rates went to 15% or more) and for much more conservative returns (i.e. work on a figure like 10% p.a.). Funds do often have negative returns in flat or falling markets - they're obliged to invest in stocks via their allocation rules so will be close to fully invested in stocks even if they have a negative market view.

I'd still be waiting for the dust to settle on the current market fallout before taking a first time entry to the market but thats only one opinion.

Funds also always like to show you their 'good' periods when trying to attract you, so have a look at longer term life of the fund etc. - i.e. as the saying goes DYOR.

Thank you Cuttle Fish

I really appreciate you taking the time to crunch some figures for me.

[arminius]

now is a better time than, say, august 10/ 07.
the greed in us want to buy at the exact low, absolute bottom.
i try to think how much resource shares would be if the USA were all rosy- unaffordable is my conclusion.
be happy with the company, invest for the right reasons, be happy with a price-regardless if it goes lower. otherwise you may get a little depressed.

[josjes]

you only make a paper loss the day you pull out
I'm looking at 30 years + of investment

i believe i'm starting out the correct why under the wing of a managed share fund

If you are in for 30 yrs plus, now is the best time to enter the market, after this 30% correction has happenned. Start with 30% of your fund, if it goes down again, progressively buy more.

I would start looking at LIC like ARG, AFI (a long standing investment company for over half century) or Index fund like STW or SFY.

Disclaimer on

[Doh!]

If you are in for 30 yrs plus, now is the best time to enter the market, after this 30% correction has happenned. Start with 30% of your fund, if it goes down again, progressively buy more.

Can you explain your idea further I'm not quite with you

[josjes]

I mean if you have say $100K, start buying $30K. Sit back and relax, when the market dip again, buy another $30K etc.
The market has already gone down 30% from high. Do you think it will go down for another 30%, I don't think so, IMHO. Your risk of dipping into the market now, is so much less than if you waded in 2, 3, 4 months ago. i.e the risk and reward ratio is in your favour.

[Aussiejeff]

No. Wrong cliche for the wrong time.

try "The market can stay irrational longer than you can stay solvent"

As said by John Maynard Keynes (http://en.wikiquote.org/wiki/John_Maynard_Keynes)when using other peoples money. Said some 70 years ago after he went bust.

Spoken like a true prophet, eh?....


AJ

[Trembling Hand]

Spoken like a true prophet, eh?....


AJ

Didn't you like that one?

[gdaf]

here's a way of looking at it:

If the average investor expects their blue chip stock market investment to achieve 25% year on year (as it would seem people do), this implies the ASX200 index by the end of the century to be trading at:

4118046071574
:eek7:

[Trembling Hand]

If the average investor expects their blue chip stock market investment to achieve 25% year on year (as it would seem people do), this implies the ASX200 index by the end of the century to be trading at:

4118046071574
:eek7:

LOL. I'm leveraging up even more now I know that.

[IFocus]

Fund #1 5 year return 38% }
Fund #2 5 year return 28% } average of 25% 5 years
Fund #3 5 year return 19% }
Fund #4 5 year return 17% }
FUND #5 1 year return 8%
All these funds are classed as growth
they have mixed asset allocations with the majority in the domestic market 65%

I under stand the first year I'll make a 4k loss with commission Fund entry fee $2000 Advisor $2000

I will pay intrest on the line of credit loan as interest only
any loss will be partially tax deductable

I will reinvest the divendends

Doh as TH has already said we are unlikely to see a Bull Market like the last 5 years any time soon so theres no immediate hurry. Plenty of time to research your idea.

Market trend is currently down. No bottom insight yet.

The fund entry and adviser fee is simply outrageous. If you are determine to go ahead to buy into a fund open a Comsec account and buy your own units no adviser fee and some have no entry fee.

There is some very good advice on this thread, suggest read it several times take some of the blunt replies as market reality not personally.

Good luck

[Doh!]

LOL. I'm leveraging up even more now I know that.


READ the quote 25% average over 5years, Yes in a bull market
There are peaks and troughs this happens to be a trough
How deep, nobody knows. hence my original question
On average the highs out-weigh the losses. True or false

[Doh!]

Doh as TH has already said we are unlikely to see a Bull Market like the last 5 years any time soon so theres no immediate hurry. Plenty of time to research your idea.

Market trend is currently down. No bottom insight yet.

The fund entry and adviser fee is simply outrageous. If you are determine to go ahead to buy into a fund open a Comsec account and buy your own units no adviser fee and some have no entry fee.

There is some very good advice on this thread, suggest read it several times take some of the blunt replies as market reality not personally.

Good luck

Well your all going to love this. If i don't follow the advice i have to give the advisor a $1000 fee for the cost of preparing the advice.
should i take the loss on the chin
and start planning from scratch
You all seem to have plenty to comments about my scenario and I respect the Knowledge, how did you start your journeys. What reference material etc
To me the share market is very secretive nobody likes to share wealth

[Trembling Hand]

READ the quote 25% average over 5years, Yes in a bull market
There are peaks and troughs this happens to be a trough
How deep, nobody knows. hence my original question
On average the highs out-weigh the losses. True or false

Doh! It seems that cuttlefish has done more research into the actual numbers than you. Do you expect the next 5 years to be like the last? No one I have read believes so, not even the most bullish. Even the most basic back of the envelope calculations shows what a waste of $$ you are about to embark on IF you don't get 25% avg return. If you think you can get 25 % average knock yourself out.

I wish you luck. Thats my last words on the subject as there is only so much I can :horse:

[Nyden]

I mean if you have say $100K, start buying $30K. Sit back and relax, when the market dip again, buy another $30K etc.
The market has already gone down 30% from high. Do you think it will go down for another 30%, I don't think so, IMHO. Your risk of dipping into the market now, is so much less than if you waded in 2, 3, 4 months ago. i.e the risk and reward ratio is in your favour.

Heh, could very well go down another 30%. If commodities go bust ... could be carnage!

Many seem to be targeting the range of 4700 for the XAO, which is still a fair drop from where we're at now (somewhere in the range of 10%?)


Personally; especially in this market, I am avidly against 'averaging down', or topping up whenever something hits new-time lows - sure, it looks better on paper that you now hold at a lower price; but you have vastly increased the risk to your total capital, by exposing more of it to the market. More money spent (an increase of risk) to chase back losses? Sounds a little too much like gambling at the pokie machines to me

[Doh!]

Doh! It seems that cuttlefish has done more research into the actual numbers than you. Do you expect the next 5 years to be like the last? No one I have read believes so, not even the most bullish. Even the most basic back of the envelope calculations shows what a waste of $$ you are about to embark on IF you don't get 25% avg return. If you think you can get 25 % average knock yourself out.

I wish you luck. Thats my last words on the subject as there is only so much I can :horse:
I'll be honest numbers in the share market mean nothing to me
I don't have the infomation to translate them.
Which is why I and plenty of other people like my self invest with and advisor under a managed fund, but it appears that DIY is the only way to go.

[MRC & Co]

If you are going to invest DOH! I would recommend this:

http://www.aussiestockforums.com/forums/showthread.php?t=10193

Do a search on google for more information.

Its only available at certain times and is capital guaranteed (so you cannot loose your shirt)!

This will gain you exposure to all kinds of markets, unlike many ordinary managed funds and you dont need to have millions of dollars to buy into it.

Good luck!

[cuttlefish]

Well your all going to love this. If i don't follow the advice i have to give the advisor a $1000 fee for the cost of preparing the advice.
should i take the loss on the chin
and start planning from scratch
You all seem to have plenty to comments about my scenario and I respect the Knowledge, how did you start your journeys. What reference material etc
To me the share market is very secretive nobody likes to share wealth

Doh! - I think you've done well in putting the question to the forum and getting responses and I respect the candid approach you've taken.
What exactly has the advisor 'prepared' for you - has he presented you with a range of options, fully costed, with upper and lower bound expectations including projected losses for the pessimistic case scenario? What are you paying for with the $1000. From where I stand the sting in the tail is effectively a form of coersion from where I see it. Any decent advisor will charge a flat fee and advise you of a range of options and should provide costings and would take a conservative approach. How did you come to deal with this person - was it through personal recommendation from a friend?

I'm not saying the advice won't work, nobody can predict that accurately, but it doesn't sound like you've been fully informed as to the risks and instead are being subject to a bit of a pushy sell. A balanced advisor would have explained that there'd been a strong bull market, that there were significant risks in entering at this point in time but potential significant rewards, would have discussed the current stage of the interest rate cycle and the state of world credit markets and tightness of credit etc.

Is the finance (i.e. the equity loan) being arranged by this individual as well? If so is that another commission based situation?

On the subject of how to start out with investing - read Tech/A's thread "Ideas for establishing a capital base" for some starting tips though you've already established a capital base. There are plenty of threads on here on all sorts of investment/market related topics.

I don't agree that people are secretive about the share market and there is plenty of free advice on here (so remember again - you get what you pay for lol - not all of it is good advice).

I would recommend reading Ben Graham's book and also the book "Rich Dad Poor Dad" (Robert Kiyosaki or something like that). (Robert Kiyosaki predominately focuses on property, Ben Graham on the stock market, but from a conceptual view both espouse similar concepts about how to determine true compelling value and act based on your own view rather than follow the herd.

To understand shorter term investing then you need to start to understand market psychology and understand disciplined trading and techinical/charting principles. Guppy's books are a good basic starting point to charting/trading concepts including useful things like determining capital allocations and the importance of money management principles in preserving your capital base.

You've got room to make mistakes though and making mistakes is an important part of any learning process. Investing in a managed fund as an idea is not necessarily a bad one, and picking market bottoms is also not easy though most with some experience would advise on either waiting until there is indisputable, compelling value (fundamental graham style investor - graham provides metrics) or clear evidence of a technical/chart turnaround (technical investing) or a combination of both before wading in heavily after a significant slump.

Plenty of people give advice but often people don't follow it.
Emotions - greed, fear, laziness/lack of discipline are the biggest enemies to succesful long term growth of wealth. Also there is so much apparently conflicting advice - so you will have to find your own path through it.

[josjes]

Heh, could very well go down another 30%. If commodities go bust ... could be carnage!

Many seem to be targeting the range of 4700 for the XAO, which is still a fair drop from where we're at now (somewhere in the range of 10%?)


Personally; especially in this market, I am avidly against 'averaging down', or topping up whenever something hits new-time lows - sure, it looks better on paper that you now hold at a lower price; but you have vastly increased the risk to your total capital, by exposing more of it to the market. More money spent (an increase of risk) to chase back losses? Sounds a little too much like gambling at the pokie machines to me

DOH did say that his/her timeframe is 30yrs +, he is not buying them now with the view of selling it in 3 months time, hence my opinion.

Heh, could very well go down another 30%. If commodities go bust ... could be carnage!
Many seem to be targeting the range of 4700 for the XAO, which is still a fair drop from where we're at now (somewhere in the range of 10%?)

The question this begs is why not everybody get completely out. For me,the reason I do not get completely out is, what if it is different? What if the 5100 on XAO is the low close? What if it is just a five month decline that is a hair less than 25%?

There is no convincing me this is the case but it could be nonetheless. Let's face it people who is calling for 4700 based on TA or FA are as clueless as you and me in predicting a future. As a matter of philosophy don't completely miss big moves up.
What I see is that we've already down 25-30% from top, the risk to the downside is getting less and less. If investor has her sight into 10,20 years then wating to pick the bottom is nigh impossible.

[IFocus]

Well your all going to love this. If i don't follow the advice i have to give the advisor a $1000 fee for the cost of preparing the advice.
should i take the loss on the chin
and start planning from scratch
You all seem to have plenty to comments about my scenario and I respect the Knowledge, how did you start your journeys. What reference material etc
To me the share market is very secretive nobody likes to share wealth

I think I got taken down $2K when I started out for a 2 day seminar that told my absolutely nothing of any use they too were thieving mongrels.

I would dispute the $1K fee sounds a little high to me maybe some of the others here may understand the system better on how to wiggle out.

[Doh!]

Doh! - I think you've done well in putting the question to the forum and getting responses and I respect the candid approach you've taken.
What exactly has the advisor 'prepared' for you - has he presented you with a range of options, fully costed, with upper and lower bound expectations including projected losses for the pessimistic case scenario? What are you paying for with the $1000. From where I stand the sting in the tail is effectively a form of coersion from where I see it. Any decent advisor will charge a flat fee and advise you of a range of options and should provide costings and would take a conservative approach. How did you come to deal with this person - was it through personal recommendation from a friend


Cuttlefish thank you for your level head. And also taking the time to right in length your advice.

The advisor has prepared a 55 page recommendation booklet 70% is just words. They have classed me as a growth or moderately aggressive investor with that they have matched the 5 funds to me using an equity loan on the house. As stated earlier I own 65 % of the dwelling

No range of returns have been given they have made me aware that the market fluctuates and that you take the good with the bad as I am a long term investor the gains will out balance the losses.

The reason I use to trust this advice is because of their prominent name in finance, the years they have been in finance and from books the co founder has written he also writes many articles in the courier mail news paper, i think you know who this is.

Yes I guess you could say it is coercion having to pay 1000k, they claim that this covers the cost of preparing the 55 pages of advice

I have arranged the finance myself with the bank under the advisors instruction

I have rich dad poor dad and will be reading it many times

Is it reasonable for someone to let a fund manager run there portfolio, after all everyone drives a car but not every person knows how the engine works, shouldn’t you best leave it to a mechanic or in this case a professional fund manager

[Doh!]

What is the title of Ben Grahams book?

[cuttlefish]

Ben Grahams book is "The Intelligent Investor".

I think putting your money into managed funds isn't a bad thing if you don't have the time or inclination to do your own homework and monitor your own investments directly - its no trivial exercise to consistently produce above average returns in the stock market. If investing in funds I think its still important to have at least a basic view at a sector level and also from a market timing perspective - and I'd suggest spreading it across two or three managed by separate institutions to reduce the risk of some systemic problem inside the institution.

By the way - I'm not advising you in any way on your course of action - as I've stated you need to make the decisions yourself - and I'd suggest taking some of the questions back to your advisor and see how they respond to it.

The Colonial funds are well known and reputable as far as I know - but there is a lot of turmoil going on in global credit markets as well and nobody is entirely sure who is holding the baby so a lot of people are steering clear of the financial sector - how this may or may not translate to vehicles like managed funds I'm not sure.

[Doh!]

Ben Grahams book is "The Intelligent Investor".

I think putting your money into managed funds isn't a bad thing if you don't have the time or inclination to do your own homework and monitor your own investments directly - its no trivial exercise to consistently produce above average returns in the stock market.

I am very time poor due to my work commitments,
but out of interest how much time per day would you spend on managing your portfolio


By the way - I'm not advising you in any way on your course of action - as I've stated you need to make the decisions yourself - and I'd suggest taking some of the questions back to your advisor and see how they respond to it.

Of course, and besides I'd never take advice from seafood

[Rockety]

I am very time poor due to my work commitments,
but out of interest how much time per day would you spend on managing your portfolio


Hmm, if you are preparing to invest for a long term timeframe you will probably put your money diversificated into the stockmarket by fundemental basis (though i wouldnt allocate all of my capital into equities only). In that case daily management is not a neccessary option in my oppinion (of course if you got the time it is certainly not a bad thing to do so, which you seem to not have). Technical analysis is good for determining good spots for entry/exit positions, setting news alerts, analisyt/company/fund reports, happenings in the world markets (especially US related news got a big impact on ASX at the moment), commodity prices bla bla etc etc the list could go on and on. I would say for you the optional would be a "check and go" before or after work, lets say 30 minutes on daily routine and a few hours on the weekend to do your own research and spot correlations in market movement.


well not sure if anything useful in there or not have been said or not univocal but thats my 2 cents :)

+ read this forum, there are many good TA - FA people around with great trading experience, i have learnt and will a learn more, really a good place to study some :) Made my first dollars on ZFX - put options when it started to move deeper and deeper, was trading only myself, was nice to get different views and ideas here :) Sometimes good tips too, i found MAK for example in a post by Kennas - under the potentional breakout thread, as a TA user i found it a good spot to enter long position... well lets say it worthed it, same goes for BRM. Wouldnt have found it without this forum, as i was in for option trading only more or less.

sorry for my bitter sweet english