I'm a complete newbie to all this so please excuse any of my ignorance. After chatting to a trader the other day at a party his convinced me that investing in the market pays off far more than leaving my money in a savings account.
Basically at the moment I’m 24 I’ve got 27,000 in a high interest savings account (5% p.a paid monthly) I’m looking into taking that out of the bank and putting it into the share market as they say it pays roughly 10% in the long run my goals are to invest not trade and to one day be able to live comfortably off the dividends/interest.
So I’ve signed up to commsec to get an online brokerage account as it seems the only fee's are 19.95 per trade and it comes with $600 free brokerage. So far in my research to achieve my goal I’ve thought about either maybe going half of the investment in an etf like STW (SPDR S&P/ASX 200) Fund and then the other half split up in a few major ASX stocks like CBA, BHP, ANZ and WOW and maybe Telstra or maybe to just put it all into a few of the above seeing as STW basically use them. Or keeping it in a high interest account for now and waiting for another major fall in the market/crisis as everyone seems to think is on the horizon and doing one or the above buying up big banks and ect for cheaper and letting the investment grow my only problem with this is the longer I leave the money in the bank the more I’m losing out on compounding interest and capital gains and if this next major crisis never happens I’ve lost somewhat if I do invest now it will be for the long term so I wouldn't have lost anything as the market will eventually recover.
I've also been reading/researching investing in stocks on "the motley fool" (fool.com.au) and they seem to advise for long term investments not to wait to get in asap.
my questions are:
1. What are your opinions on the above strategy (trying to get as many perspectives as possible)?
2. Are there any other fee's for using commsec like inactive account fee's as I could find pop up, as I was thinking I could invest this 27,000 in 12 transactions and leave it for the next couple of years and it would cost me nothing due to the free 600 in brokerage fee's (I read through the fee pdf and only found the brokerage fee and dishonour fee's)?
3. With dividends and ect, I’m assuming they are paid directly into the commsec cash account so to accumulate compounding interest you would then have to reinvest it copping another brokage fee so how does one best take advantage of "compounding interest"?
4. With a eft as STW are they fully franked ( I think this is the term meaning the company pays the tax so you don’t have to, the trader I met said investing in Australian banks are best as they already pay the tax for you. I thought this sounded great as I’m pretty sure I got taxed hard this financial year due to having 27k in high interest savings)?
5. Do STW pay dividends as I read some stocks don't pay dividends.
6. Looking into recession proof stocks to add to my portfolio I was thinking two things garbage/waste management (as no matter how bad the recession waste needs to be dealt with) and accountants (also no matter how bad a recession people will still be taxed). So does anyone have any advice/tips what companies are major players on the asx dealing with these two industries?
Allot of questions there so sorry might as well be asking you guys to invest for me at this rate. Seriously though any help or pointing in the right direction to discover this info would be greatly appreciated.