Growth shares or income shares for a 25 year old?

[curiost]

I've done a LOT of reading about growth v income shares and it seems to me that as a 25 year old I should be aiming for growth shares. My question is #1 - if income shares are reinvested through a DRP and the shares are held for say about 10-15 years then they *should* also become growth shares in the long term should they not? Then I'd be getting the best of both worlds.

I'm looking at forward paper trading for a while to see how it all works, but don't know whether I should be targeting income or growth? I guess it would be difficult to tell over such a short period of time (6-12 months) therefore I'm thinking I should aim for growth shares. Question #2, for growth shares with a stop loss of say 10%, and a portfolio of 5-10 stocks, what is the minimum $$ size per trade without having the potential gains being levelled by the brokerage fee (with the stocks performance review on a weekly basis)? Of course there is no absolute answer here, but say is $2.5K starting cash enough play around with? I'm interested to find out with how much $$ other people started in this game of shares

 

[Valued]

I've done a LOT of reading about growth v income shares and it seems to me that as a 25 year old I should be aiming for growth shares. My question is #1 - if income shares are reinvested through a DRP and the shares are held for say about 10-15 years then they *should* also become growth shares in the long term should they not? Then I'd be getting the best of both worlds.

I'm looking at forward paper trading for a while to see how it all works, but don't know whether I should be targeting income or growth? I guess it would be difficult to tell over such a short period of time (6-12 months) therefore I'm thinking I should aim for growth shares. Question #2, for growth shares with a stop loss of say 10%, and a portfolio of 5-10 stocks, what is the minimum $$ size per trade without having the potential gains being levelled by the brokerage fee (with the stocks performance review on a weekly basis)? Of course there is no absolute answer here, but say is $2.5K starting cash enough play around with? I'm interested to find out with how much $$ other people started in this game of shares

I don't like companies with dividend reinvestment plans since if they were able to use the money to create more than 1 dollar of shareholder wealth, why did they not retain the money in the first place? If they feel they cannot do that then why are they asking for it back? There are reasons to pay a dividend then ask for it back, I just don't consider them to be very good ones.

I also don't like seperating companies into growth stocks and income stocks. There is some mathematical soundness behind the idea... sort of but companies could be both as well. If you invest in what you think are growth shares and have a stop loss of 10% then it tells me you are just sticking your money in speculating without any idea of what the company is worth. If you think a company is worth $20 per share and it's trading at $15 per share and you sell when it drops to $13.50 then you have made a huge error. The error was either in your initial calculation of the worth of the company or in selling.

If you want a good stock pick for your 2.5k I am happy to give you one if you message me but only under the disclaimer that I am not offering you financial advice, I am not qualified to do so, and accept no liability for any loss whatsoever as a result of you investing in the pick I provide. I will also only do it if you promise not to use any leverage of any kind. The reason I don't mind giving you a stock pick is that with only a 2.5k investment you can't afford to sue me as well since the lawyers cost more than anything you could lose lol I am not sure if this is against the rules of the forum either.

 

[burglar]

... I am not sure if this is against the rules of the forum either.

I don't know if this is against the rules of the forum.
But don't do it anyway.
Why?
Because he'll promise to do his own research.
He'll promise to not use leverage!
He'll promise to not sue.
He'll assure you he knows how to stoploss.

In the end you will lose a friend, or come out square! :

 

[rcm617]

I don't believe there is any firm distinction between growth and income stock, both are capable of growing or declining in share price. Two of my most successful stocks to have grown in value over the last 15 years or so are WOW and DTL which are both income shares, now almost delivering the original purchase price in dividends. In the meantime I have also purchased plenty of growth stock which I have had to turf out. Main rule is hold on to your winners and dispose of your losers quickly.
I never do DRP's, to much paperwork when it comes time to sell. Timing is also important, it may not be the best time to buy the shares at the time. Much better off keeping the dividend and adding to the next purchase of shares.

 

[burglar]

I don't believe there is any firm distinction between growth and income stock ...

For the first time in my life, I bought income shares ... NAB
They ran very hard and when they'd gone up 12% in six weeks, I cashed in.



No divvies for burglar!

 

[So_Cynical]

What's a growth share and what's an income share? its bollocks!

I watched a growth share (JBH) go from $23 to $8 over a 30 month period...now its back to $18.

Timing is something that you wont read about in books, buts its 1 hell of a factor in buying any stock regardless of whether you call your stocks growth, income, speculative, sexy or anything else.

 

[burglar]

... speculative, sexy or anything else.

+1!

 

[sydboy007]

I like shares that at least pay me what I could earn in cash as a dividend.

If you have a longer term horizon, there's plenty of inflation linked bonds that pay around the CPI + 4% mark.

It doesn't sound a sexy return, but in the present market they are yielding around 6.5%, and an added benefit is they've hardly dropped their yield over the last 18 months, while most floating rate notes / bonds have dropped quite significantly - CPI has remained relatively static over the period while BBSW has dropped in line with the RBA cuts to rates.

I know this is a stock forum, but bonds offer a good counter cyclical balance to a share portfolio.