• Australian (ASX) Stock Market Forum

Hello and welcome to Aussie Stock Forums!

To gain full access you must register. Registration is free and takes only a few seconds to complete.

Already a member? Log in here.

$12,500 to make first investment, split 4 ways or put it all in one company?

Discussion in 'Beginner's Lounge' started by steve foulds, Jul 23, 2011.

Tags:
  1. steve foulds

    steve foulds

    Posts:
    6
    Likes Received:
    0
    Joined:
    Jul 23, 2011
    Ive $12.5k to invest long-term in shares (5-30+ years), ive pretty much settled on the big 4 banks. General advice, would you suggest spreading evenly over the 4 (and paying the brokerage fees), 50/50 or just put it all in one?
     
  2. robusta

    robusta

    Posts:
    1,557
    Likes Received:
    0
    Joined:
    Oct 25, 2009
    Not sure if I would go all into the banks but anyway I would weight it to my best picks for example 40 % ANZ, 35 % CBA, 25% WBC (I am not a fan of NAB) :2twocents
     
  3. steve foulds

    steve foulds

    Posts:
    6
    Likes Received:
    0
    Joined:
    Jul 23, 2011
    Thanks Robusta, any particular reason you're not a fan of NAB?
     
  4. robusta

    robusta

    Posts:
    1,557
    Likes Received:
    0
    Joined:
    Oct 25, 2009
    Just some bad decisions in the past (Homeside in US...) and out of the big 4 they have the largest exposure to UK / Europe.

    Having said that they are normally at a fair discount to the other three.
     
  5. steve foulds

    steve foulds

    Posts:
    6
    Likes Received:
    0
    Joined:
    Jul 23, 2011
    Interesting... Thanks alot.
     
  6. MACCA350

    MACCA350

    Posts:
    561
    Likes Received:
    0
    Joined:
    Jun 22, 2008
    By 'splitting it four ways', I'm assuming you're wanting to diversify you're investment but what you've suggested is investing 100% in the banking industry.........not very diversified. When the banking sector takes a hit you'll feel the full force of it. If you spread over a few industries those hits won't make much of a dint in you're capital.

    It's all about you're risk profile. If you're looking for low risk with average returns then diversify. If you're happy to take on more risk to chase higher returns then put more of you're eggs in one basket and time you're trades.

    Cheers

    Disclaimer......this isn't advice, just an anonymous opinion.
     
  7. robusta

    robusta

    Posts:
    1,557
    Likes Received:
    0
    Joined:
    Oct 25, 2009
    Have to agree with you there Macca, the banks are good businesses but there are plenty of other good businesses listed in the ASX.

    On the subject of brokerage if you are looking to invest and hold for the long term it will not make much difference, better to hitch your wagon to the best stocks that will compound for you well into the future.
     
  8. Tysonboss1

    Tysonboss1

    Posts:
    2,944
    Likes Received:
    1
    Joined:
    Nov 12, 2007
    I agree that an all bank portfolio is probably not wise, personally I would spread across a few industries ie, cba, Bhp, wow, Tol.
     
  9. ENP

    ENP

    Posts:
    147
    Likes Received:
    0
    Joined:
    Sep 16, 2010
    The four banks are in the same country and make their money in roughly the same way. They lend to the same sort of people, are in the same economy and are all exposed to the same risks. That is not diversification!

    If you are dead set on investing in banks, why not just buy your favorite one?
     
  10. Greenvalley2006

    Greenvalley2006

    Posts:
    6
    Likes Received:
    0
    Joined:
    Jun 2, 2010
    Hi Steve
    Like you I am a beginner

    Lots of threads for a similar question

    Aim and risk. That is what its all about

    There are bank accounts that pay 6.5%, but they have no capital growth

    You have a 5 to 30 year time frame and probably already have bank deposits at 6.5%, : long term:
    personally I would be splitting across approx 4 sectors;
    or if your risk appetite is big, 4 'main' companies across 4 sectors, totaling $10 or $11k and the rest on four well researched small cap specs that you can cope with to amount to nothing

    But how much time are you prepared to spend reading and learning? Pay day is hard to get to

    Good luck and cheers

    I HAVE NO IDEA. DO NOT DO IT
     
  11. ROE

    ROE

    Posts:
    2,964
    Likes Received:
    11
    Joined:
    Jan 5, 2007
    Personally i think CBA is the best of the lot..
    well managed, most of their expansion are spot on to date
    They come out of no where with comsec to take the retail broking market.
    They working on exapanding their insurance business
    They stayed within their circle of competent ...domestic banking..dont venture outside it
    They took advantage of the GFC well and snapped up distress banks and they increase
    Their margin where they can like out of cycle rate rise..

    People hate it but a buiness is not there to be like but to be profitable.
    Every .25 extra is like extra 200m for their bottum line... You can lose some customers but it is a winning move...

    With investment you just need to pick the best of the lot and do that over time
    You will win -:)

    For me insurance qbe
    For debt collection ccp
    for leisure and travel flt
    For education nvt. Etc....
     
  12. Starcraftmazter

    Starcraftmazter

    Posts:
    1,544
    Likes Received:
    0
    Joined:
    May 20, 2011
    That is a terrible, terrible choice. If anything, you should use that money to buy shorts on the big 4 banks. Or better yet stay away from banking altogether.

    Open these up to 5 year histories.
    http://www.google.com/finance?client=ob&q=NYSE:C
    http://www.google.com/finance?client=ob&q=NYSE:BAC

    That's what the big 4 will look like in a few years.

    (Just my prediction of course).
     
  13. pixel

    pixel DIY Trader

    Posts:
    5,200
    Likes Received:
    314
    Joined:
    Feb 3, 2010
    Nobody can predict the future; if we could, there would hardly be a share market.
    For that reason, I would caution anybody against buying a share with the intention to "invest long-term" and hold for 5-30 years. Regardless of time horizon, IMHO it's important to keep an eye on one's portfolio and replace underperformers by overachievers. That review has to be done at least once a week; the only variable would be whether one looks at a weekly or a daily chart to determine in which direction each stock is trending.

    As regards diversification, spreading all your nesteggs across four banks is akin to hiding all your money in all four corners of the living room - and hoping to save at least three quarters should the house catch fire. Diversify across Markets; not simply inside one small segment.

    Without great brain strain, I can think of ABCD: 4 shares spread over 4 sectors, each with a different risk profile, but a high probability of surviving in one form or another the next 5 to 30 years:

    ANZ
    BHP
    COH
    DYE

    or

    ASB
    BSL
    CSL
    DJS
     
  14. Joe Blow

    Joe Blow Administrator Staff Member

    Posts:
    5,405
    Likes Received:
    497
    Joined:
    May 28, 2004
    Hi everyone. Just a brief reminder that while it is fine to offer your opinions on topics such as money management or portfolio structuring, it is not permitted to offer advice to someone about what companies they should invest in.

    Thanks for your co-operation.
     
  15. addison

    addison

    Posts:
    18
    Likes Received:
    0
    Joined:
    Mar 22, 2011
    maybe it might be better to invest your capital in 4 different sectors, instead of 4 particular banks, resources sectot is worth having one, or two, healthcare, with ageing population etc, would be another id have in mind for a longterm stake, at best i might put one split into banking, but id take some convincing, banks dont actually "make" anything of value ...
     
  16. robz7777

    robz7777

    Posts:
    76
    Likes Received:
    0
    Joined:
    Aug 10, 2010
    Hi Steve,

    Have you thought about using one of the Listed Investment Companies on the ASX?

    Plenty of diversification in those and only one stock to keep track of..
     
Loading...

Share This Page