Investing my first $1500

exberliner1 · 27 November 2010

$1500 is ok to start with but I would recomend focusing on one sector and becoming knowledgable about it.

For example I focus entirely on the mining exploration small cap sector.

I prefer companies that are close to developping JORC resources or that are close to mining.

This allows the potential for accelerated gains (and losses) - it all depends how good your research is, both on the companies and the sector.

With $500 you could buy 3 small stakes in explorers probably $480 in each one after commission, if you have done your homework one or more of these 3 should produce gains over time.

$1500 is not really enough to either trade a lot or go for a dividend return so it is best to go all out for capital gains.

That,s what I did with my first investments in Australia back in 2005 - I bought Lihir gold at about $1.80 within 6 months it had more than doubled so I took my original stake back leaving me with a free carried holding in LHG and bought AUM (now CDU) which also went up. Again sold got my original stake back so by then I had a free holding in LHG and a free holding in CDU.

NB These are not recommendations for LHG or CDU I am referring to 2005 prices and movements not to today,s market.

My starting capital was more than $1500. I put all my cash into just one stock for the first few trades and was lucky enough to make the right call each time.

The market has changed a bit since then so splitting between 3 stocks cuts the risk a bit today.

I would however suggest when a stock you hold doubles consider selling half and getting your original cash back to put somewhere else. That way if you are any good at research you will over time build a portfolio at no cost.

I started doing this back in 2005 and by the end of 2006 I held 9 free carried positions.

I had invested before 2005 so I was not a complete novice and did buy the options instead of the shares where they were available for leverage however the principal remains the same.

I hope that helps

EB

Wysiwyg · 27 November 2010

nioka said:
Definitely.
Any stock I pick to invest in I expect to make an average of 50% profit in the first year so brokerage, while expensive would not eat all the profit. As the portfolio builds brokerage becomes less and less important. Capital gains tax takes over that role. My project for this exercise will use/ has used a minimum of $1000 per stock. I plan to sell half of any stock that gets to a point over $2,000 and use the funds to get into a new stock until I hold around five individual stocks. That is to spread the risk, demonstrate that $1,000 is a good starting fund and make investing more interesting.I'd prefer to have $1,000 invested in each of five stocks than $5,000 in only one.

Even this exercise is interesting me as much as my normal investments.

This may be hard to swallow but what you post are suggestions on "punting" on a stock and hope for the best. I do see the word "investing" in the thread statement. We do encourage your participation in market punting though.

IB12 · 27 November 2010

This also may be hard to swallow, but I would think more likely than not, as you are starting out, that you will most likely lose money rather than make anything, especially with 1.5K starting base.

You must be a big lurker though given your post count.

Wysiwyg · 28 November 2010

IB12 said:
This also may be hard to swallow, but I would think more likely than not, as you are starting out, that you will most likely lose money rather than make anything, especially with 1.5K starting base.

You must be a big lurker though given your post count.

Yes it is a well trodden section of the path ... that of the beginning. As you well know.

burglar · 28 November 2010

exberliner1 said:
The market has changed a bit since then so splitting between 3 stocks cuts the risk a bit today.
EB

I agreed with most all of what you said; except this bit.

It goes completely against the grain. Now to succeed, you need to pick 3 very good 'uns.

You did it a better way yourself, why recommend less to others!

exberliner1 · 28 November 2010

burglar .... yes I know I contradicted myself.

However there are greater uncertainties around today than in 2005 - 2006 so a bit of risk reduction over 3 stocks seemed to make sense in late 2010.

I must admit I would go for one stock today as well - but I have no understanding of the original poster's knowledge on sectors, markets etc... so was being safer.

But nice to see you agreed with my original strategy it gave me a silly gain in perentage terms. by end of 2006.

EB

burglar · 28 November 2010

exberliner1 said:
... I have no understanding of the original poster's knowledge on sectors, markets etc... so was being safer.

EB

EB,
The original poster, posted once. We don't know if (s)he came back to see the consternation (=debate) caused.
No thankyou to nioka for keepin' us on topic, nothing.

Nuntheless, other first-timers will come across this thread and enjoy!

burglar · 28 November 2010

Beachhead
1. the area that is the first objective of a military force landing on an enemy shore.
2. a secure initial position that has been gained and can be used for further advancement; foothold:

I've been mulling things over, to find the right word to use, for the inordinate *(or disproportionately large) risk we all take with our first investment!

prawn_86 · 28 November 2010

burglar said:
for the inordinate *(or disproportionately large) risk we all take with our first investment!

Exactly.

Buying a home is even worse with regards to amount of leverage required, entry/exit fees etc. At least with 1500 into one stock, providing your not leveraged that is the max you can lose in a worst case scenario

burglar · 28 November 2010

prawn_86 said:
Exactly.

Buying a home is even worse ...

You've just jogged my memory.
I invested in my first house in 1978.
Bought my first shares in 1980.
ECM East Coast 1,000 @ $0.19 plus $25 brokerage
... (for the nice man at the full-service telephone broker.)
Later that same year:
Sold ECM East Coast 1,000 @ $0.70 plus $35 brokerage.
Proceeds of sale went into a new front fence
for aforementioned property (value adding).

Lil' Johnny Howard was Minister for Housing around that time!

nioka · 28 November 2010

Wysiwyg said:
This may be hard to swallow but what you post are suggestions on "punting" on a stock and hope for the best. I do see the word "investing" in the thread statement. We do encourage your participation in market punting though.

You are far from the truth. I do not gamble. I research carefully before I do make any investment. In a perfect world that would eliminate all risk. However the world isn't perfect and I do make mistakes. That is the reason to spread the risk. The job is to minimise that risk.

I do not PUNT on the market. I invest real money with profiting in mind. While I only use money I can afford to lose I am a poor loser so I take all possible steps to avoid losing any, hence hedging the risks by holding a variety of stocks.

If I was a gambler I would have put everything I owned on SDL following the plane crash that took the lives of the board and senior management. It was obvious that the SP would crash as well. I had been researching that stock for some time but decided to wait for an entry closer to the time when they were at the all systems go stage. I bought SDL but stayed with all my other stock. I'm happy with what I have made there, could have made more if I was a gambler. I looked at SDL as an opportunistic investment.

(I had an Uncle that was a very successful bookmaker. The only tip he ever gave me was "don't gamble". He did not consider himself a gambler. His customers were. His was a business based on balancing the odds in his favour so that he skimmed a little from each of his gambling customers regardless of which horse won.)

johenmo · 28 November 2010

nioka said:
The original question was " IS IT WORTH INVESTING AS LITTLE AS $1500"

My example answered THAT question.

My answer is "YES"

My example proved that, yes it is.

Surely it is better to have more capital. Sure you can save more to add to it.

BUT... What do you do with the $1,500 while you save up more?

Answer, Invest wisely and accumulate.

I hold all of these in reasonable numbers. The fact that I hold is definitely no guarantee on success as I'm often wrong. My recommendation is that they are all worth researching. The above is only information related to "Is it worth investing a small amount of money like $1,500. The best of these stocks attract negative criticism so DYOR.

You are right - it can be done. Is it worth it? Considering the market atm and if the level of experience/knowledge is low then I would consider the risk to be too high. And I would spend some time saving and understanding. But the camp will remain divided, I guess. I agree with yr later post that says 5 x 1K positions is preferable to 1x5K. And that's what I was alluding to.

One thing I WOULDN'T do is to spend it on a course.

exberliner1 · 28 November 2010

Agreed there is enough free info for new investors on ASF and HC and people like us who can offer real time and often contradictory solutions.

I am 46 and bought my first stocks when I was 15 and for a living I run the international division of one of Ukraine's oldest invstment banks.

Plus my entire super fund is invested in Australia.

And there are many others with more knowledge than me registered with this site.

So why pay for a course??

Just ask here...

EB

Burgs · 29 November 2010

As a first time poster on this forum (and a Moderator on a large sport based one) I would really like to thank nioka for seeing out the process in this thread.
As someone looking to start in shares from quite a low base this is exactly the type of answer I was after.
Yes, I know that more money would be great and that knowledge is great (have already spent around $200 on books), what the original poster (and I) wanted to know is how low could you start from, not what the best alternative to a low start was.
I now have a better feel for what can be achieved and what my minimum, rather than optimum, savings target needs to be to start being involved in this interesting and potentially rewarding field.

In answer to a few remarks about a first time poster coming back, from my experience on the sport based forum I Mod, I'd suggest that the poster either came back in the middle of the initial condescending off hand remarks before nioka kicked in and decided you could jam it, or simply found the answers required elsewhere.
Both happen regularly, I wouldn't go getting hung up about it.
I would suggest that in a "Beginners Lounge" that newbie’s aren't looking to be made to look foolish though.
I look forward to be involved on here in the future but am interested as to how my feedback will be received.

burglar · 29 November 2010

Burgs,
Welcome to ASF!

Burgs said:
As someone looking to start in shares from quite a low base this is exactly the type of answer I was after.

Great, thankyou!~

Burgs said:
... wanted to know is how low could you start from, not what the best alternative to a low start was.
I now have a better feel for what can be achieved and what my minimum, rather than optimum, savings target needs to be to start being involved in this interesting and potentially rewarding field.

Couldn't agree more!
Hooray... Someone gets it!

Burgs said:
I'd suggest that the poster either came back in the middle of the initial condescending off hand remarks before nioka kicked in and decided you could jam it, or simply found the answers required elsewhere.
Both happen regularly, I wouldn't go getting hung up about it.

Not hung up, just felt like:

1. I was talking to myself !
2. Other posters should know?

That's all.

nioka · 15 December 2010

Update;

Having sold some EKA and bought some TXN

15/11/2010 WB5487XXXX Buy TXN 1,715 0.585
15/11/2010 WB5487XXXX Sell EKA 3,170 0.335

the holding now;

4000 EKA @ 0.325 = $1,300
1,715 TXN @ 0.555 = $943.25

Value $2,243.25.

Not a lot of financial progress lately, both stocks are down on a month ago but we have spread the risk over two stocks. EKA seems poised for a burst and TXN has good prospects in the short term with fraccing of their first well and production testing expected to start in the next day or two. The stage is set for a good new year.

The plan ahead, providing one of the current two perform as expected is to sell half of any stock that exceeds $2,000 in value and bring in a third one. The one in mind at this stage is NTU.

nioka · 17 December 2010

Ended the week up a little more with EKA now $0.335 and TXN $0.60. This makes the value $2361. The investment is now showing a 57% return in less than 6 months. Plenty of room left for more gains in my opinion.

Greedy_Kev · 17 December 2010

asfpep said:
Hello,

Id like to start buying shares but dont have the big bucks to do so. Is it possible to start with $500 - $1500?

Id like to buy a portfolio package where perhaps $1000 is invested in various companies.

Id also like to invest perhaps $500 in a particular company I see listed.

Is Comsec a good place to start?

Thanks

Humm it's riskier when u have less to play with unless, espcially if u are buying the more expensive shares,

like if u were buying a share that was $50 each then u would only have 10-15 shares and with comsec trading u need to make a minimum of $40 just to BREAK EVEN thus each share needs to make $4.

u also lose the flexiblility of buying in portion.

i think u should stay away from shares untill u got more money or go to a manage fund which has low fees, otherwise the fees will eat u alive.

please note that interms of % gain to break even will be the same for all shares, but likeliness of large % gain in larger companies in the short term is unlikely.

Julia · 17 December 2010

Greedy_Kev said:
Humm it's riskier when u have less to play with unless, espcially if u are buying the more expensive shares,

Why do you say this? The stability of a stock has little to do with the actual dollar value of each share.

like if u were buying a share that was $50 each then u would only have 10-15 shares and with comsec trading u need to make a minimum of $40 just to BREAK EVEN thus each share needs to make $4.

You are ignoring the fact that higher priced shares usually move in greater amounts. The only thing that matters is the % increase/decrease.

u also lose the flexiblility of buying in portion.

What does this mean? "Buying in portion"???

i think u should stay away from shares untill u got more money or go to a manage fund which has low fees, otherwise the fees will eat u alive.

What about the fees that are charged on managed funds, many of which have failed to even equate to the index? Even if they lose the customer money, they still extract their fees.

I'd absolutely contradict this suggestion.

please note that interms of % gain to break even will be the same for all shares, but likeliness of large % gain in larger companies in the short term is unlikely.

What are 'interms'?
On what basis do you assert that large % gain in larger companies in the short term is unlikely?

noirua · 18 December 2010

It all depends if you can get another $1,500 quickly or not and if it matters much to you if you lose some of it. If you can't get another $1,500 quickly or losing some matters to you, "steer clear of anything stock market related".

If losing some doesn't matter much and you want a number of shares, then punt on the oil and mining sector - not advice of course, just ramblings of noi.

I'm still suffering from shock about all these changes on ASF; I just can't believe it.

Investing my first $1500

exberliner1

Wysiwyg

Everyone wants money

IB12

Wysiwyg

Everyone wants money

burglar

exberliner1

burglar

burglar

prawn_86

Mod: Call me Dendrobranchiata

burglar

nioka

johenmo

exberliner1

Burgs

burglar

nioka

nioka

Greedy_Kev

Julia

In Memoriam

noirua

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