Investing in ASX 200 to Catch The Re-Stabilisation Bubble ?

L6828 on 10/04/2020 - 09:38

I've never invested in the share market but I have been doing some preliminary research into the ASX200.

Given that I had other commitments when the GFC happened I couldn't catch the growth benefits afterwards.

I'm in a different position now and would like to temporarily divert my savings from my current ~2.5% savings account and catch the ASX200 rise then withdraw back into my savings account once the ASX200 reaches it's pre-Covid19 levels (Or close to it).

Could I do the investment myself or would it be better to take an admin fee hit and get an investment firm to do it for me?

I'm curious about the Tax implications (Capital Gains Tax) and ultimately if I'd be better off just sticking with a low interest rate savings account or term deposit.

Any thoughts would be appreciated.

Cheers.

Financial

Comments

  • inittobinit on 10/04/2020 - 09:47
    +51

    IF you already know you just want to invest in ASX200, just sign up for a brokerage account (Commsec, MyWealth etc) and just wire money in and put in a purchase order.

    While its a good time to buy RELATIVE to very recent prices before this freefall, remember this.

    (Trying) to time the market is gambling. We are in unchartered waters and nobody really knows where we're headed.

    Theres money to be made in gambling on the stock market during these times, but equally money to be lost.

    Only 'invest' what you can afford to lose.

    The adage is true, ask yourself what you're in this for.

    A quick buck? Be willing to lose what you put in.

    Long term investment? Buy now knowing you're getting a discount on only a month ago and don't look at it or the news for the foreseeable future.

    • [Deactivated] on 10/04/2020 - 12:46
      +18

      It's not that simple; don't give financial advice that may well prove wrong.

    • [Deactivated] on 12/04/2020 - 14:57
      +1

      ^ this. it is also against the law to provide financial advice unless you are registered with the FAA

    • supaderp on 30/04/2020 - 22:36

      The people who begged lmao

  • chumlee on 10/04/2020 - 10:25
    +28

    Wow sounds like a foolproof plan.

    Wonder why no one else is doing this.

    • OzPunter on 10/04/2020 - 12:11
      -3

      Could be that centerlink payments are barely enough to buy a square meal?

      • Mad Max on 10/04/2020 - 14:18
        +9

        No Centrelink payments get invested in the pockies

        • Inzo on 12/04/2020 - 11:21
          +2

          but the pokies all closed bro

        • tessel on 12/04/2020 - 19:00
          +2

          Monster energy drinks and EB games are pretty popular also.

  • modsec802 on 10/04/2020 - 10:30
    +17

    Sounds like gambling which often doesn’t end well

    If you want to invest in the ASX200 an easy way is to buy managed funds through Vanguard. The admin fee percentage is pretty low and allows you to buy small parcels for the same percentage fee unlike brokerage which usually has a min cost per investment.

    If you spread your investment to be weekly over the next x months it would take into account scenarios where there are further falls and you buy cheaper units.

    You can also reinvest dividends automatically.

    Capital gains tax is 50% less after 12 months.

    This isn’t investment advice. If you want to gamble - go ahead and buy a large chunk.

    • [Deactivated] on 10/04/2020 - 11:24
      +10

      Investing is the asx200 is no more gambling than buying a house

      • wordplay on 10/04/2020 - 11:38
        +3

        true, the value of your house could be $0 one day.
        I think investing in flight centre or similar would be more risky than buying a house

        • [Deactivated] on 10/04/2020 - 11:39

          Depends where the house is located.

        • dcep on 10/04/2020 - 13:26
          +13

          except when you're borrowing 95% and now renters not paying for 6 months or more, whilst you can't sell because you're in negative equity, owing the bank money

          so you're losing more than what you invested, not just $0 , but NEGATIVE

          • wordplay on 10/04/2020 - 13:28

            @dcep: oh yeah never thought of that. I guess shares are a lot more secure with less risk than property at the moment.

        • sangohan on 13/04/2020 - 23:40

          and investing in flight center has the possibility of returning 6-8x your initial investment. The risks and the rewards are interlinked.

      • serpserpserp on 10/04/2020 - 13:58
        -2

        Investing is the asx200 is no more gambling than buying a house

        Except buying shares you could literally end up with nothing in your hands. At least a house can still provide you shelter even if it lost all its value.

        • [Deactivated] on 10/04/2020 - 13:59

          Still got the papers that say you own the shares.

          • serpserpserp on 10/04/2020 - 14:09
            +2

            @[Deactivated]: Not if they go out of business. Then you just have paper for recycling.

            EDIT: plus these days you don't even get physical paper for shares.

            • [Deactivated] on 10/04/2020 - 14:51

              @serpserpserp: Hmm, i get them from the asx.

        • dcep on 10/04/2020 - 14:21
          +5

          Investing =/= PPOR home

          For IP ?
          no rents coming in
          lost job
          still got to pay IP outgoings
          negative equity, now you're in debt
          lost more than what you put in

        • idjces on 10/04/2020 - 14:55
          +9

          I suppose since you borrowed money to buy a house, the bank can repossess it, sell it off in a down market and chase you for the rest of their money that you lost.

          That particular scenario is worse then ending up "with nothing in your hands"

          • serpserpserp on 10/04/2020 - 15:50

            @idjces:

            That particular scenario is worse then ending up "with nothing in your hands"

            You can make up lots of non equal examples. But if you were to borrow to buy shares you'd have exactly the same problem.

            If you buy a property outright with money and you buy shares outright with money and their value both goes to zero, what do you prefer to have?

            • [Deactivated] on 10/04/2020 - 16:08
              +1

              @serpserpserp: Neither,they are both worthless for a reason

              • serpserpserp on 11/04/2020 - 10:45
                -1

                @[Deactivated]: Your house still exists in the real world. Your shares don't.

                You can try and be clever here, but that is the actual reality.

                Something can be worth nothing on paper and still have value to humans.

                • [Deactivated] on 11/04/2020 - 12:36
                  +3

                  @serpserpserp: If the house is worth zero there is a reason, like those in the fukushima region, may still be standing, but no doubt worth zero.

        • SlickMick on 11/04/2020 - 13:05
          +2

          if every company in the asx200 goes belly-up I think we'll have bigger problems than money

          A house keeps costing you whether you live in it or get rent from it or not

          • cheng2008 on 12/04/2020 - 14:51
            +4

            @SlickMick: I think people are confusing buying shares in one company on the asx vs the asx200, which is an index. The asx200 going to 0 is basically impossible.

        • Duram on 12/04/2020 - 13:00
          +1

          It's called an index fund, 0% chance of being worth nothing. How's the rent coming along? lololol.

        • N11 on 12/04/2020 - 17:52
          +2

          If you think asx200 index funds are going to end up at zero, the only investment worth making is a cemetery plot.

  • triviums on 10/04/2020 - 10:39
    +5

    Please don't.

    The head of the IMF has said that this is heading towards the worst economic fallout since the Great Depression.

    Australia has barely been hit by COVID-19, maybe that's because of good government policies to mitigate the effects of COVID-19. However, it's way too early to say that is true.

    • EightImmortals on 10/04/2020 - 10:52
      -1

      Yep, was the IMF who were expecting U.S unemployment to hit 30%?

      At the height of the last depression it 'only' 25%……..crikey.

      • EightImmortals on 10/04/2020 - 13:02
        +4

        https://www.marketwatch.com/story/unemployment-could-reach-3…

        That’s Federal Reserve Bank of St. Louis President James Bullard explaining to Bloomberg News why he sees the U.S. unemployment rate hitting 30% in the coming months as the world continues to grapple with the coronavirus pandemic.

        If his gloomy jobs projection proves to be true, unemployment would be worse than it was during the Great Depression and three times worse than the 2007-’09 recession, according to Reuters.

        Bullard also said he expects an unprecedented 50% plunge in gross domestic product.

        OK, so not the IMF…..

      • imagele90 on 11/04/2020 - 05:50
        +2

        It's 15% now and rising .

    • Melong on 14/04/2020 - 15:51

      I just moved all my super to fixed term deposits, will ride it out with cash till the vaccine is available, have lost about 5% from the start of the crisis.

      • Oofy Doofy on 14/04/2020 - 16:57
        +1

        I want to bet against you and say they won't create an efficacious and/or safe vaccine that will be approved for use. My reasoning behind this is simple, they haven't been able to make one that works for decades against Coronavirus family. I would bet on the BCG vaccine being used in place of a specific vaccine for this virus, or a pharmacological treatment of sorts.

        • muncan on 14/04/2020 - 18:50

          Yup, still waiting for a vaccine for SARS-CoV-1 from 2002-2004…

  • EightImmortals on 10/04/2020 - 10:50
    +41

    ASX200….wait for it….wait for it…….

    IMO we are currently seeing a sucker rally similar to what we saw in the 1929 crash. History has a habit of repeating but shouldn't be taken as gospel, a lot of other things are in play at the moment while the msm has most people distracted with doom porn. Wait till the 2nd quarter GDP figures arrive…:)

    Interesting comparison chart here: https://eogallery1.com/c9acb306-4f4c-11e9-a3c9-06b79b628af2%…

    And some reading here: https://www.shtfplan.com/headline-news/corona-critical-marke…

    As others have said though, we are in unprecedented (in our lifetimes) waters so no one (except the controllers) really knows how far this will go.

    Personally I'm just sitting it out for now and will look at buying back in/averaging down maybe in the 3rd quarter but will take each day as it comes. The first sign will be when they end the lockdowns, the next will be the huge placebo effect that will flow when they roll their vaccine out as that will placate people's fear somewhat. After that I guess it will be back to pure numbers as far as the markets are concerned which is why I am not jumping back in now.

    Use the time to set up an account, put some money in and do some reading and research so you can make a better informed opinion of what you want to do..and when. Local market forums topstocks and hotcopper might be a good place to start.

    (edit, This is all my opinion and not to be taken as financial advice)

    • OzPunter on 10/04/2020 - 12:13

      So true…Claps and whistles!!!

    • Bunnyburger on 14/04/2020 - 02:19

      About that comparison chart…back then did they have someone like J Poww with the quantitative easing?

      Also did we have the gold standard back then so they couldn't simply make money out of thin air?

      • EightImmortals on 14/04/2020 - 06:34

        Yes IIUC we/they slowly moved away from the gold standard from about the 20's or so and the final nail was put in the coffin by Nixon in the 70's. Not sure if they had QE back then, I suspect they might have something similar but I'm yet to be convinced of the actual benefit of printing paper money out of thin air non stop.

        I see the FED are now predicting a depression.

        https://www.youtube.com/watch?v=LPRMdCSFI8E

    • AwesomeAndrew on 14/04/2020 - 17:07
      -1

      Place a stop loss order to limit your losses. Even if the market falls your losses won't be too large.

    • pumpkins on 14/04/2020 - 19:07

      Do you have a reference to that then and now graph? I wouldn't mind watching how close it matches as we continue this ride…

    • clandestino on 14/04/2020 - 22:04

      I'm not sure that we're in that kind of environment. My personal opinion is that we're in a precarious financial environment, but one where all the stakeholders involved know which levers to pull in order to avoid a big crash.

      I put all of my cash back into Australian shares today, simply on the gut feeling that we won't be seeing a huge crash. Perhaps it'll drop down to 4500 or 4000, but I doubt it. If it does - I'll be regretting my decision but not stressing about it. Such is life!!

    • Oz Migrant on 20/04/2020 - 15:12

      Any forums you suggest one should begin with, before one enrolls into paid subscriptions?

      • EightImmortals on 20/04/2020 - 15:45
        -1

        Topstocks.com.au hotcopper.com.au both free I'm not aware of any paid subscriptions worth the money but others might.

        • Oz Migrant on 21/04/2020 - 20:29

          Thank you, I'll take a look! I was exploring paid subscriptions at Motlet Fool, Morning Star, etc but don't see the need at this stage. Being an Ozbargainer, wanted to save every penny that isn't worth spending :-)

  • polol on 10/04/2020 - 11:06
    +7

    Timing the market is bad. If you have to ask these questions you haven't done enough research.

    CGT is quite simple. You pay tax for anything you profit on. i.e. difference between the buy and sell price (assuming it went up). There is a discount of 50% if you hold the asset for longer than 12 months.

    Stick to what ptenkae said.

    • sangohan on 13/04/2020 - 23:42
      +3

      If you have to ask these questions you haven't done enough research.

      i hate it when people say this - asking on forums like this is part of the research.

  • aaron1988 on 10/04/2020 - 11:17

    Dont buy in stock = earning

    only if u really know how to deal.

  • mskeggs on 10/04/2020 - 11:59
    +13

    In the Great Depression, investors who took your approach lost 2/3 of their money. Even if they waited till the market was down 50% they still lost 60% if they sold at the bottom.
    Even people who bought right at the absolute bottom (market down 80%!!!) didn’t see particularly stellar returns, as the stock market took many years to recover.

    All we know for sure is prices are lower now than the very high prices a couple of months ago.
    We have no way of knowing if it has further to fall, and further might be a lot.

    • sangohan on 13/04/2020 - 23:44

      Or it might not. Nobody knows.

      Investing comes with risk. Any reward will always come with risk. It's up to the person deciding whether the risk is worth it. If you're a young person, it's almost always worth it, as long as you have money to invest (don't borrow to invest unless you know what you're doing). But if you have responsibilities with said money, and can't afford to lose it, then you cannot invest, even if the long term expected outcome is good.

  • alphaai on 10/04/2020 - 12:09

    It doesn't matter if someone tells you that the price will continue to fall or change direction. The only thing that matters is that you determine what it is worth now and into the future. If it drops below what you bought for, do you care what the market price is? No because you know what it is worth.

    • [Deactivated] on 10/04/2020 - 12:55
      -3

      Right now they're worth zero, zilch.. because no company is working!

      • dcep on 10/04/2020 - 13:07
        +3

        nobody working but market up 30% from 23/03/2020

        • [Deactivated] on 10/04/2020 - 13:25
          +1

          Yes, but is anyone working? I was directly answering @alphaai that said what matters.

          It's all panic buys, but panic has a limit. I don't expect shares to get to their 2019 prices without any positive economical growth.

          I can imagine so many people are holding into their long-held shares. Same panic can start in the opposite direction when prices have increased by this much with absolutely no economical growth. Companies are withholding dividends and people/corporates have debt, other needs. They start mass selling as the price may be good enough.

          Prices will fall by as much if not more until true growth is established.

          • dcep on 10/04/2020 - 13:33
            +2

            @[Deactivated]: it's not us small fries that move the market

            https://i.redd.it/h7bdffj8gqr41.png

            money printer goes brrrrrr~~~~ unlimited QE from RBA last few weeks

          • Zephyrus on 12/04/2020 - 11:31

            @[Deactivated]: Plenty of people are still working. Even if we have 30% unemployment, which Australia doesn't, that's still 70% employment. Not great, but still plenty still going. And you bet your butt that those still employed and working are, on average, higher income white collar jobs.

            • [Deactivated] on 12/04/2020 - 11:50

              @Zephyrus: That's a joke. Right now? Australian businesses flourishing?

  • dcep on 10/04/2020 - 12:46

    Yeah, buy at 23/03/2020

    all penny stocks doubled by now (except the one that bites the dust)

    • [Deactivated] on 10/04/2020 - 12:55
      +1

      'except'

  • Melb69 on 10/04/2020 - 12:47
    -4

    The stock market is another form of gambling. They should put it under the data that they are seeing of what people are doing as online gambling is up 60% from earlier in the year. Only gamble on what you can afford to lose. You don't want to be finding yourself needing the money and realising later on you need it. The stock may take a dive when you want to cash in.

    • dcep on 10/04/2020 - 13:05
      +7

      The investment property is another form of gambling that is much worse. You don't want to be finding yourself borrow 95% and realising later you can't do anything when renters not paying. The housing may take a dive and you can't even cash in as you're in negative equity owing the bank money.

      • wordplay on 10/04/2020 - 13:32

        will the banks still give loans at 95%?
        I was looking just a couple of months ago and they were pretty adamant that I would need 20% deposit - they were blaming it on the royal commission into the financial industry.
        If you could let me know which lenders are still giving loans with a small deposit (ie. 10% i can get, so not needing the 95% loan) that would really help me out at the mo.

        • dcep on 10/04/2020 - 14:06

          not right now when everyone's job is in jeopardy, banks only lend you $ on sunny days , not during rainy days

          in between a year after post-RC and pre-Covid, RBA/APRA/Gov. reversed their standing,
          asking banks to give out more loans to keep housing afloat
          loosen lending criteria
          lower interest rates
          introducing house deposit using your Super
          introducing 95% loan whilst exempting LMI, for 1st home buyer suckers

          you'll have better luck with brokers in this climate, they're desperate and will do anything to get deal done

          • wordplay on 10/04/2020 - 14:45

            @dcep: ok thanks, But then how can your above scenario come about if you can't get the 95% loans?

            • dcep on 10/04/2020 - 14:46
              +1

              @wordplay: pre-Covid loans ?

              would you even get an IP now ? or anyone with sanity

    • outlander on 13/04/2020 - 18:16
      +4

      Everything is a gamble, including not doing anything.

  • 6828 on 10/04/2020 - 16:02
    +2

    I'm the first to admit I'm new to being in the position of looking at investment options outside of Term Deposits and low yield savings accounts.

    The more people respond here and the more I can read, the better informed I'll be to make the best choices available to me right now.

    I'd just like to expand my savings and not have any regrets financially later.

    A company I worked for was running at 21 cents a share back in 2012 and started to turn a healthy profit and went to over $5 within three years. Understandably I have some regrets about not investing back then.

    I appreciate all the comments people have made, thanks for taking the time to respond !

    • MITM on 10/04/2020 - 16:14
      +6

      And what’s that share price now ?

      • 6828 on 10/04/2020 - 20:57
        +2

        $1.04 🤣

        • MITM on 11/04/2020 - 20:14

          So went from $5 in 2015 to $1.04 - so down 80% or went up 500% over 8 years or 62% pa.

    • Melb69 on 10/04/2020 - 16:16
      +1

      You could have also bought Nylex company shares and blown them. It's a gamble, but you can minimise the damage, by doing research and considering the amount you want to risk you want to take. There are also managed fund options. Good luck.

  • Meho2026 on 11/04/2020 - 08:21
    +17

    You’ve got no idea
    Don’t do it
    Don’t ask on a bargain website for financial advice
    People on here haven’t got a clue
    They think they do but think logically, if you were a successful investor, would you spend your days in ozbargain forums?
    The stock market is currently defying logic
    It’s a curious entity in that sense and while it is possible to trade it and profit the volatility, it means daily if not hourly trading with strict stop losses in place. You can’t do that with a $9.95 brokerage fee.
    Aside from the likes of westfarmers and Woolworths, most businesses are not profitable right now
    Use basic principles to invest and don’t invest in any company that is not making a profit and is not demonstrating growth.
    Every day some commentator mentions global recession, the worst is yet to come etc listen to this
    As a novice, don’t even try to pick the bottom of the market.
    Buy in when the upward move is well established and volatility is reduced.
    Big funds and governments are creating the market right now and it’s a trap for people like you

    • mqi on 11/04/2020 - 08:27
      +1

      I think OP is not looking to do trading. I read his post and it sounds like he wants to invest for long term. In which case buy some to start with and prepare to buy more as it drops.

    • 6828 on 11/04/2020 - 08:32
      +1

      I appreciate the advice.

      I'm using the OzBargain forum as part of my investment knowledge and will approach anything I do in the future in a balanced and informed way.

      Thanks for taking the time to respond.

      • mqi on 11/04/2020 - 08:52
        +7

        You get investment knowledge by reading books and listening to the greats (Warren Buffett, Peter Lynch etc) over a long period of time and thinking independently and drawing your own conclusions.
        Most of the folks on here have gone off topic talking about property etc…
        The other way to get investment knowledge is be invested and when you see it fall you’ll start reading up on it and reading their annual reports.

        If all you want is to take it easy the invest in an index fund like VAS and keep buying as it drops

        • Architectonic on 12/04/2020 - 19:49
          +1

          Warren Buffett never gives investment advice, for good reason……

      • frewer on 13/04/2020 - 22:05

        Then you may need to watch Collapse of China Explained By Chinese American Lawyer

  • mqi on 11/04/2020 - 08:25
    +1

    Buying an asx etf like VAS is probably the lowest risk option. But like many on here say we’re in uncharted waters. My picks are the ones that that aren’t likely to fail in the current environment : Woolies, Coles, Pharmaceutical, ventilator related, hospitals, big4 banks(govt should bail them out), etc

    Buy low, it drops, buy more. Read the news and think it thru why the company you buy will survive and thrive and come out the other end.

  • Ashbargin on 11/04/2020 - 09:37
    +8

    I am not sure how owning part of the 200 largest businesses in Australia is gambling. Gambling is either winning or losing. For those that say your shares might be worth $0. You are essentially saying all of 200 largest companies in are Australia become worthless. If commercial property trust is worthless with millions of square meter land, how do they think you home wouldn’t be worthless?

  • thirtysixd on 11/04/2020 - 12:38
    +3

    Id rather buy oil futures right now

    ASX 200 is basically 10 stocks and of which none are very appealing

    • malich on 11/04/2020 - 20:07
      +2

      It has 200 stocks? Some in of them are absolute gems that will soar through the crisis. Ansel, coles, Wesfarmers, wow to name a couple.

    • Climber on 11/04/2020 - 21:07

      The problem of oil price is "when".

      Only seven sisters know it and can make profits from oil futures.

      Without knowing "when" rollovers can cost too much and risky.

  • SlickMick on 11/04/2020 - 13:14
    +2

    Did you mention your timeline? If you can wait 10+ years to take your money back, then now would be a whole lot better time than when I did just at the start of the crash!
    (I didn't invest in the asx200, I carefully chose some specific companies… in the travel industry. I believe I bought cheap, just not halve as cheap as anybody with more patience!)

    If you think you can time the recovery and get your money back in 2 weeks, you'll find a roulette table even faster and more appropriate for your "investment" style.

    • [Deactivated] on 12/04/2020 - 12:06

      So, what's the plan for those shares that you bought but they fell? Are you keeping them with the hope they get back up?

      • SlickMick on 12/04/2020 - 13:53
        +1

        yeah for sure. I have them in super, so I keep them till I'm 60, roll them into a pension account, then they're CGT free

        The only trick is to find companies that likewise have a long-term game plan

  • Debuting on 11/04/2020 - 14:59
    +3

    I think people are forgetting in 2008 there was a bounce before it dropped another 25% down again from that bottom.

    Coronavirus is still blowing up with more and more deaths daily in the US. Nothing has stabilised. Testing is at maximum capacity and thus cases have stagnated. Don't be fooled though.

    Just go look at the data… It's right there in front of you. Add some common sense and you'll find this is not the best time to enter the market for free money.

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