Wetting my feet with ETFs

Tjnewie · 18 February 2013

Hi there,

I am a brand new investor with about $5k to play with. I am currently in the crazy research stage, and am planning on starting to trade in the new financial year. I am looking to make an additional $2k per year of trades with the ultimate goal of building a long term substantial portfolio. I am 30, and have been flirting with the idea of property investment for some time, which is why I haven't looked seriously into investments until now. I have more cash if I need it, but a) like to have a good buffer for a rainy day, and b) am very conscious that I am green in investment land and don't want to make really big mistakes!

So, my general thoughts or plans at this stage are...

2k into a asx200 etf like STW
1k into something like AFI/ARG
Then the remainder split across 2 industry specific ETFs

My questions, of course acknowledging that I can't get any specific advice, are...

1. Is it worth investing both in an indexed fund like AFI as well as an ETF?
2. Does anyone have any experience with the high dividend ETFs being offered?
3. Is this plan a workable one, or perhaps spreading too thin?
4. I notice that commbank have launched a new platform geared at newbie investors...has anyone got any comments/experience?

Very happy for comments and/or criticisms!

Cheers
Tj

Gringotts Bank · 18 February 2013

Tjnewie said:
Hi there,

I am a brand new investor with about $5k to play with. I am currently in the crazy research stage, and am planning on starting to trade in the new financial year. I am looking to make an additional $2k per year of trades with the ultimate goal of building a long term substantial portfolio. I am 30, and have been flirting with the idea of property investment for some time, which is why I haven't looked seriously into investments until now. I have more cash if I need it, but a) like to have a good buffer for a rainy day, and b) am very conscious that I am green in investment land and don't want to make really big mistakes!

So, my general thoughts or plans at this stage are...

2k into a asx200 etf like STW
1k into something like AFI/ARG
Then the remainder split across 2 industry specific ETFs

My questions, of course acknowledging that I can't get any specific advice, are...

1. Is it worth investing both in an indexed fund like AFI as well as an ETF?
2. Does anyone have any experience with the high dividend ETFs being offered?
3. Is this plan a workable one, or perhaps spreading too thin?
4. I notice that commbank have launched a new platform geared at newbie investors...has anyone got any comments/experience?

Very happy for comments and/or criticisms!

Cheers
Tj

1. Probably not. Check which stocks each of them hold. Unlikely to be much overlap, I'd suspect.
4. Try CMC - cheaper brokerage.

If it was me, I'd be looking to buy the gold ETF for a double bottom, or at least wait for STW to pullback a decent amount.

sydboy007 · 18 February 2013

Gringotts Bank said:
1. Probably not. Check which stocks each of them hold. Unlikely to be much overlap, I'd suspect.
4. Try CMC - cheaper brokerage.

If it was me, I'd be looking to buy the gold ETF for a double bottom, or at least wait for STW to pullback a decent amount.

AFI / ARG have good solid long term records of beating the market. The yield aint hot for either of them, but their capital growth is quite nice. I would say they are better than a broad ASX ETF.

I'd nearly say ETFs are great for getting exposure outside of Australia. Certainly most of them are cheaper than a lot of managed funds.

Tjnewie · 19 February 2013

sydboy007 said:
AFI / ARG have good solid long term records of beating the market. The yield aint hot for either of them, but their capital growth is quite nice. I would say they are better than a broad ASX ETF.

I'd nearly say ETFs are great for getting exposure outside of Australia. Certainly most of them are cheaper than a lot of managed funds.

Thanks for the feedback guys! My initial thoughts had always been to go with AFI/ARG then I stumbled across the ETF market, which seems to be the way that lots of folk are going.

Perhaps I will revise my plan!

Thraxier · 19 February 2013

I am in the exact same boat .... Been watching this thread with great interest. AFI has been in my mind from my frantic learnings along with CMC to kick things off.
What is your revised plan mate ? Split between ARG and AFI or go all into one ? Both seem to have a solid and long track record so risk seems very low if all is piled into one, but that said, I'm very green.

Tjnewie · 19 February 2013

Thraxier said:
I am in the exact same boat .... Been watching this thread with great interest. AFI has been in my mind from my frantic learnings along with CMC to kick things off.
What is your revised plan mate ? Split between ARG and AFI or go all into one ? Both seem to have a solid and long track record so risk seems very low if all is piled into one, but that said, I'm very green.

Hey,

Am now thinking perhaps dumping the idea of the eft and then maybe doing a split of 3000 across the AFI and ARG with then a couple of other efts, perhaps high div shares and an emerging market?

Thoughts?

Good to know that I am not the only one doing this caper!!

Thraxier · 21 February 2013

I'm thinking of just choosing the one between AFI and ARG, probably AFI and opting to do that reinvestment thing (sorry, I still get lost on all the correct terms and acronyms) where the dividend just gets automatically put back in, avoiding tax and hopefully compounding itself over time. With the majority in a low risk place I might mess around with a handful amount on an EFT or 2 and put any losses there down to learning how all this works. I like betting on the odd horse race and this feels very similar.

Fun days !!

Tjnewie · 21 February 2013

Mmm that sounds quite similar to the strategy I am now considering! I am considering perhaps having a small amount - maybe $1000 to place into random (although well thought out shares) to play around with a little!

Even perhaps a bear etf, just for interests sake!

sydboy007 · 23 February 2013

Remember that most trading platforms will have a fixed minimum for trades of less than $10K, so the smaller the trade the higher your buy sell costs would be.

I'd suggest saving up in a high interest savings account till you get around 5K then make your investment.

The good thing going with a LIC or ETF is you money is spread across a number of companies so in theory you are less likely to go too wrong.

Thraxier · 24 February 2013

Great tip !! Will do just that.

Tjnewie · 25 February 2013

Thanks for all the feedback/ideas!

Tjnewie · 5 March 2013

So, after re-reading replies etc on this forum and taking some time to think, I think I have made a revised plan. I am quite amazed at how much knowledge can be gained from forums and the interweb, but very conscious that I remain very very green! Thankyou for everyone's guidance!

Plan remains to invest 5k around the middle of the year. Goal is to build a long term portfolio, but also keen to devote a little cash to play around with. I have allowed an extra couple of hundred $ (not included in the 5k) for brokerage.

1k in AFI
1k in ARG
1k in ihd
1k in an overseas eft (haven't decided which one yet)
1k split across a couple of co, maybe tls and bhp (know with this amount am looking at small no, but the idea is for dividends to be reinvested and grow over time).

I will then plan to put 100 a month away to then invest when I reach 500. Due to the Blue chips which are covered in the lics/ETFs I am tempted to use the remaining cash to play around a little, with conditional orders in place of course!

Thoughts? Again, understanding that no one can give me advice about specifics!

George Washingto · 5 March 2013

Tjnewie said:
So, after re-reading replies etc on this forum and taking some time to think, I think I have made a revised plan. I am quite amazed at how much knowledge can be gained from forums and the interweb, but very conscious that I remain very very green! Thankyou for everyone's guidance!

Plan remains to invest 5k around the middle of the year. Goal is to build a long term portfolio, but also keen to devote a little cash to play around with. I have allowed an extra couple of hundred $ (not included in the 5k) for brokerage.

1k in AFI
1k in ARG
1k in ihd
1k in an overseas eft (haven't decided which one yet)
1k split across a couple of co, maybe tls and bhp (know with this amount am looking at small no, but the idea is for dividends to be reinvested and grow over time).

I will then plan to put 100 a month away to then invest when I reach 500. Due to the Blue chips which are covered in the lics/ETFs I am tempted to use the remaining cash to play around a little, with conditional orders in place of course!

Thoughts? Again, understanding that no one can give me advice about specifics!

Looks to me like your are overdiversified for the amount of money you can invest. There are 6 transactions there, $40 round trip for each. You've lost 5% of your money before you've even started.

I'd pick one of ARG, AFI or an ETF and put the 5k into it, and then dollar cost average over time. They are diversified enough on their own as it is.

Tjnewie · 7 March 2013

Thanks! That makes perfect sense

Tjnewie · 2 May 2013

Hi there,

Update from tjnewie planning land again! I have decided that I am going to put $4k into arg and then $1k into CTN. I will then add into both in an alternative fashion every time I clock $1k into the investment account. A couple more questions;

1. Is it worth setting up a stop loss for such long term investments?
2. I am tempted to sign up for the free commsec brokerage, but would then plan to change to CMC due to cheaper costs. Is it difficult to change across? Should I just go to CMC to start given I am looking to make investments every couple of months?
3. Is 1k enough for packets, to dollar cost average or should I wait for bigger stash?

I am interested in others thoughts about this stuff, as it seems everyone seems to have some slightly different ideas? Of course not looking for specific financial advice!

Cheers
Tj

Wetting my feet with ETFs

Similar threads

Privacy & Transparency

Privacy & Transparency