Is there an easy way to get into shares if you have limited funds? For example, if you only had $1000 and had never invested before?

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Permalink Reply by Keefe on November 1, 2010 at 13:56

For $2000 you can buy shares in QR National. Signing up with Commsec allows you to buy shares, even with $1000, although I recommend you save up more.

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Permalink Reply by skippi_oz on November 3, 2010 at 20:40

Thx Keefe. I hope to save up more B4 I start but sometimes I wonder if just grabbing a few to start with might just get the momentum happening a bit sooner. We have a regularly quite ill child so often any 'spare' gets used for hospital if needed. It means we start again from scratch with savings. Sometimes I wonder if I could start with a minor investment (while still leaving emergency money)...it might just change the focus a little. Thanks again for your reply. :)

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Permalink Reply by jacquesk on November 15, 2010 at 16:57

Have a look at Members Equity's managed funds. You can buy into them for a very small amount of money. No idea on how well they perform.

ps I wouldnt invest in QR National. There are better options out there.

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Permalink Reply by skippi_oz on December 11, 2010 at 21:54

Thanks Jacquesk. I just feel like I'm spinning my wheels so to speak and thought if I could at least start a little portfolio I may be able to gradually grow it over time. Not having any stocks seems to be a continual state for me ATM and I was hoping starting a portfolio (however small) might inspire me to grow it each year by a certain amount. :) Thank you for your advice once again.

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Permalink Reply by jacquesk on December 13, 2010 at 10:43

Hi Skippi_Oz

Happy to help. Some companies offer dividend reinvestment for their shares, ie you use your profit to purchase more shares rather than getting the $$. This is a good way to increase the size of your holding over time. It has its good and bad points. I personally like and use it but I have friends who do not like it.

Good

Increases holding over time often at a (slight) discount to market rate.

If share price goes up you gain

Bad

When you go to sell you have a odd number of shares and that can make them harder to sell

If share prices goes down you lose.

 

 

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Permalink Reply by Editor on December 23, 2010 at 5:28

Hi, skippi_oz.

There is no harm in taking a peek at the advice and tutorials to be found on the website of the Australian Securities Exchange (ASX) itself. Go to the ASX website. They have a huge list of links under “Education and Resources”. Naturally, this body has a vested interest in getting your custom. But keeping that in mind, you can get some good pointers there.

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Permalink Reply by Keefe on January 3, 2011 at 13:19

Hi SkippyOz.

 

You don't have to invest in QR National. That was just an example. Choose a company that you know and trust and invest in that. If you trust a company enough to buy products and services from it, you may as well trust it enough to invest in it.

 

Furthermore, don't put all your money into one company. Spread it around a little. For example, BHP shares will do well while the commodity boom continues, but if something happens to derail the Chinese economy then BHP shares will be hit hard. If you spread your money around other companies, e.g. banks (Commonwealth Bank) or telecommunications (Telstra) it will help manage risk.

 

In terms of filling out your tax forms, you can do it yourself if you know what you're doing, but if you don't I recommend simply ringing up your nearest H&R Block office and booking an appointment. Make sure you keep all receipts, papers, tax statements etc that you receive from Commsec or the company in which you invest and hand it over to the H&R Block accountants and they will do it all for you.

 

Obviously investing can be more complicated than this but this is what I recommend for a beginner.

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Permalink Reply by Stephen Roberts on January 22, 2011 at 16:27

Maybe I've missed something, but nobody has mentioned Listed Invesment Companies (LIC's)

Companies like,  ABERDEEN LEADERS LIMITED (ALR), CARLTON INVESTMENTS LIMITED (CIN), ARGO INVESTMENTS LIMITED (ARG) and AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED (AFI.

 

They have the advantage of diversification in one place and some have been around for 40 yrs or more.

Just remember that no matter where you invest or what you invest in.

Please do your own due diligence!!!

 

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Permalink Reply by FatCat on January 30, 2011 at 23:03

If you do want to know more about LICs, here's an explanation of what they are from TheBull.com.au:

Investment Terms: Listed Investment Companies (LICs)

Australian investors are becoming less willing to pour money into costly managed funds when other investments such as listed investment companies (LICs) do the same thing for a fraction of the price. Both LICs and managed funds are share portfolios that are externally managed by a professional fund manager – the difference being that LICs are listed on the sharemarket and managed funds are not.

An LIC can be a handy addition to your portfolio since your chosen LIC can sit alongside your Rio Tinto and Westpac share holdings in the same share trading account. This can make reporting and monitoring your portfolio much simpler than holding a mix of shares and unlisted managed funds, which are purchased as units from a fund manager not as shares from the ASX.

If you think that LICs are simply another new-beaut product to hit the market, think again. The oldest LIC in Australia, Australian Foundation Investment Company (AFIC) is 79 years old. Other older LICs include Choiseul, Milton and Argo Investments.

Since LICs act like ordinary shares, when more investors buy a particular LIC its share price will rise. Likewise, when investors sell out of an LIC its share price will drop. Analysts like to spend time comparing the current share price of an LIC with its underlying value, called its net tangible asset (NTA) backing. LICs can trade at either a discount or premium to their NTA.

Self-funded retirees are attracted to LICs because dividends are always fully franked, rather than partially franked as is common with managed funds. Typical yields are 3 to 4 per cent.

It’s not uncommon, however, for LICs to periodically weather bad press as they fall out of favour with investors and share prices sag. Typical moments of unpopularity are during booming sharemarkets when investors ditch LICs for direct shares or more aggressive managed funds. An avalanche of new listings can also push the average share price of LICs lower as the market grapples with the extra supply.

Today there are over 60 LICs trading on the ASX across Australian shares, international shares, private equity and specialist LICs including global mining funds.

The trouble for investors in LICs is that it never seems to be the right time to buy. When LICs lose favour, everyone is quick to point out lagging performance and sagging popularity. LICs typically trade at a discount to their NTA during these times. However during more bearish market conditions – when LICs spring to life again and share price bounce to a premium to NTA – they can be branded as expensive. So what should you do?

Most analysts tend to look to buy LICs at a decent discount to NTA, or cheaply. So in that sense, less favourable times are probably the best opportunities to hop on board.

 

And here are a few articles about LICs:

Check out these stocks for volatile times - Listed Investment Compa...

A stock for a lifetime - TheBull.com.au

Top LICs (Australian Securities Exchange) - asx.com.au

 

Cheers,

FatCat

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