I am thinking about buying shares, but have a few questions:
- Only looking to invest $500 every now and then, is it worth it or will it be eaten up by fees?
- Can I do it myself or do I need a broker?
- Are online brokers better (read: cheaper)?
- What kind of fees am I looking at, is there a monthly/yearly cost of just having a broker or is based per transaction?
TIA
(Just looking for opinions, I know it's not financial advice)
Thank you for your reply - going to look into everything you've said.
At the moment, I don't want to invest $5000 all at once, I'd like to pick and choose my own stocks.
Also consider making contributions to Super - especially if you qualify for the government co-contribution.
If he is young then he won't be able to touch this for a very long time though.
Yer, I'm almost 30
I don't qualify for co-contribution, but I'm putting away 3% of my salary in super already.
Co-contribution can be a bit of a government scam to suck punters into putting more cash into super. . I did it when I was unemployed for a spell - end result was that I locked into super (co-contribution) $1000 which I couldn't really afford at the time and 8 months later I go the government's contribution, which was a princely $37-50. Scheme is full of "clauses" and the waiting period for the money is a LONG time……
Why have you decided to invest this money? Do you want to make a return in the short term? long term? learn to invest? learn about stocks?
A large amount of your capital will get eaten up by brokerage but I still think it is a great idea to begin to trade shares. You are far better off learning from your mistakes now while you only have a small amount of money invested compared with putting a whole lot of cash on the line. If you have the discipline and patience to paper trade (make belive trading) then that is great way to learn but a little boring for me.
A good comparison of online brokers is available here:
http://www.canstar.com.au/online-trading/compare/casual-inve…
I am with belldirect and they have been good for me. Not sure what the interface on CMC markets is like.
Mainly learn to invest and learn about stocks.
I don't want to save up thousands and go all in, I'd rather invest a little at a time, watch how it goes, and if I lose the money, it's only $500.
Thanks for the link!
To learn about shares, check out the Australian Stock Exchange (ASX) site, in particular their education centre http://www.asx.com.au/education/shares-education.htm
They have free online courses and a virtual sharemarket game http://www.asx.com.au/education/sharemarket-games.htm where you get $50K virtual money to play with. Losing virtual money is painless.
I think $500 is too little to start with because it will be eaten up by fees. For example, Comsec charges $19.90 per trade, to buy and sell will cost you $39.80 which is nearly 8% of your capital. This means your share will need to grow by more than 8% to even make a profit. This is merely an example, there are cheaper brokers. It's something to consider.
I don't want to save up thousands and go all in, I'd rather invest a little at a time, watch how it goes, and if I lose the money, it's only $500
Ummm… this sounds like gambling rather than investing. LOL
Good luck with it and happy investing :)
ssx: That's great, I think you've got the right approach. The ASX site is a good place to start, for me I think there is limited value in the share market game because loosing virtual money is painless and the game is over a fairly short time frame which encourages high risk reward strategies. Also worth checking out are the ASX investor update podcast and I quite enjoy the Sky Business Your Money Your call podcast when I'm in the car. You need to choose carefully which panellists you listen to but there are some really know their stuff, I particularly like Ben Clarke from TMS capital.
I would stay away from the stock forums.
Debb: Every investor has to start somewhere and most make bad decisions in their first year or so, it doesn't sound to me like the OP is looking to gamble, just looking to learn with limited downside risk.
@akpv agree that every investor has to start somewhere. and yep. i did see that ssx said "Mainly learn to invest and learn about stocks." for that reason i included links to ASX. my gambling statement was made in jest, hence ending in LOL. I and some colleagues recently placed some bets on a major sporting event and that is almost exactly what i said which made me laugh. "I don't want to save up thousands and go all in, I'd rather invest bet a little at a time, watch how it goes, and if I lose the money, it's only $500".
I use etrade as I had specific companies that I wanted to invest in during the whole collapse of the markets.
I looked at investment strategies through banks and yes they can work well as you are not looking after your portfolio, you are letting them manage the funds around for you.
It comes back to your plan for the shares, are you going short or long? Do you want Australian or International coverage? What kind of areas do you want to invest in?
Long story short, you will pay brokerage on etrade for them to place the orders for you (buy/sell) but you manage the portfolio yourself.
For me it has worked out well as I bought the shares I was after and I am going long on them so I won't be selling them for some time. Some are reinvesting the dividends automatically while others are paying into my account.
Australian stocks at the moment - don't want to go global at the moment.
Not sure what short and long term are (in terms of stock investment)….I'd like to invest in something that gives dividends and hold onto them for at least 5 years.
There are a number of online brokers that offer free a certain number/value of free trades for new customers.
Commsec, Westpac are one of the few better online facilitators that provide you with free trades (within a certain time limit).
If you are an RACQ member Belldirect also gives you $100 credit.
If you really want to try and learn, I don't see where you could go wrong with these other than losing the opportunity in future if you want to trade more. Assuming they would still have the offer, but also by then your purchasing power would be stronger and the brokerage fee might not be so important.
$500 to go long would not be such a bad idea but if you wanted to make quick profits and are prepared to lose the money you can try penny stocks. I have not tried looking at those though so I can't advise you there.
Super is pointless. Assuming you live to 70, the government is constantly screwing with it. The last thing you should do is stick money in it when you likely won't touch it for a long long time, assuming its still around by then to boot. I also wouldn't bother with shares. Everything will fall apart sooner rather than later - de-dollarization, the Middle East, Russia/Ukraine, broken US economy etc. Stick it in a bank (for what good that will do, but meh).
Really want to thank all of you for taking the time to comment - appreciate it
A more prudent approach is to use an index fund or ETF to give appropriate diversification.
If you only want to invest $500 every now and then using an ETF or investing directly in shares will be impacted by brokerage (typically $11-20 for small amounts of shares, so ~2-4%). I'd be more inclined to save until a larger amount is available.
A more cost-effective approach for small frequent investments if you can invest an initial $5,000 is something like the Index fund selections from Colonial Wholesale, e.g. http://www.colonialfirststate.com.au/prospects/FS1554.pdf The ongoing fees are a bit higher than ETFs but basic australian and international share index funds can be had for around 0.4-0.5% p.a.
If you're just starting out, the amount you save will make a much bigger difference than investment returns. So perhaps start building up a UBank or similar savings account. Or if you're currently earning (being taxed) and looking (very) long-term a super contribution/salary sacrifice may also be more cost and tax-effective than investments outside super.
On your other questions, if you want shares/ETFs you can buy using an online brokerage (cheaper) and the cost is typically per transaction.