shares

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Permalink Reply by Bandwidth on April 20, 2010 at 16:24

Hello Nikki

You will need a broker account either an online one like Comsec or a full service broker.

You could also look into some of the Index leveraged funds

There is so much to learn, much like when you first entered the property market

A good portfolio is the big question and it depends on sooooo many things, like your risk profile, desired goal and time frame.

See past posts

http://www.moneyconfessions.com.au/profiles/blogs/2081871:BlogPost:...

http://www.moneyconfessions.com.au/forum/topics/share-trading-news-...

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Permalink Reply by Vonny on April 24, 2010 at 20:20

I would think twice about leveraging against your PPoR. Remember you can live in your house, but you can't live in shares. But if you have investment properties, then I don't see as much of an issue borrowing against those.

Try the ASX website which has alot of good basic information: www.asx.com.au.
I use a discount/online broker (www.belldirect.com.au and www.etrade.com.au) where you can join for free and only pay if you make a trade. It sounds like you have mortgages and if you're with a big bank they tend to offer some free financial planning advice which you might be able to take advantage of (although of course they'd be biased towards investments that make THEM money as well). Full service brokers will offer advice and other perks along with the trading.

Taxwise, shares are similar to property where you can claim the loan interest as a tax deduction. Capital gains tax is applied if you buy, then sell and make a profit. If you hold the shares longer than 12 months, CGT is halved (similar again to property).

Theres a couple of ways people earn money off shares. One is via dividends and the other is via trading. You get dividends if you buy and are holding the company's shares on their "ex-div" date. Dividends are paid once or twice a year depending on the company and is essentially a cut of the profit they are making (hopefully they are making a profit). Trading (for basic shares) works by buying then selling at a higher price. The difference is subject to CGT.

If you're just starting out, the recommendation is to practise on the top "blue chip" companies as they are less volatile and more liquid. There are more complex things (CFDs, forex, options etc) you can buy and sell on the share market but it is better you start with basic shares and index funds before messing with the others as they can lose you alot more money if you get it wrong.

It's hard to tell you how much money you need because it depends on your time frame for trading/investing and on which stocks you buy. You basically need to see how much the share generally moves up in your timeframe and then work backwards to work out how much minimum you need to buy in a trade to make money (assuming you are trading and not investing). Investing usually refers to the buy and hold strategy where you don't really sell shares or you hold them for a long period of time (making money off dividends).

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Permalink Reply by nikki on April 25, 2010 at 18:55

Thanks for the advice. I love a challenge so I am off to check out the posts and websites. watch this space and i will post how we go
:)

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Permalink Reply by Keefe on November 1, 2010 at 13:54

This sort of thing can be arranged if you simply talk to your bank.

I must warn you this is very risky. If the stock market goes up, you will make a lot of money, but if the stock market goes down (e.g. if there is GFC II) then you will suffer greatly (remember Storm Financial).

As far as which companies to invest in, just go with big companies you know and trust. If you trust them enough to buy their products, you should buy their shares as well. E.g. Woolworths, Commonwealth Bank, Westfield, etc.

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Permalink Reply by cw on April 29, 2010 at 13:08

Hi nikki,

Suggested ways to go about this project are
Arrange a modest supplementary loan through your banker.
Open an account with Commsec
Look at the following stocks ARG & DJW as a starting point and consider adding the banks, miners and energy stocks. Later add some sound industrial stocks covering several sectors of the economy.
Always look for stocks with low debt levels, a sound business, strong management and a record of steadily increasing dividends.
The dividends should earn around 5.5% to start with and increase progressively. The interest on your loan will probably be around 7%.
Start repaying your loan.
Monitor the shares you have bought and be prepared to sell them if the company encounters any major difficulty.
You will eventually own a quality share portfolio that is debt free and provides a sound income.
If you enjoy the experience, repeat the exercise.

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Permalink Reply by jacquesk on May 5, 2010 at 12:42

Hi Vonny
I did this and it was a success (I made a profit rather than a loss). As regards what stocks to buy there are companies out there like Fat Profits, Wise Owl etc who offer share advice for a price (All care but no responsibility). Alternatively you could hook up with a full share broker who offers advice on what shares to purchase. All of this costs $$ to do but some may be claimable back on your tax. Alternatively you could do your own research. Each approach has its good points and bad points. Before doing any of the above you need to educate yourselves about shares and the share market. Your local library is a good place to start. There are also numerous websites and mailing lists out there on the net.

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Permalink Reply by cw on May 5, 2010 at 15:46

There is a book written by a Mr. Roth I think 100 top Australian shares.
He applies filters to each company and separates the wheat from the chaff. Quite a good read, except that by the time the book is published and appears on the shelves, the info can be a little out of date. As I say, it is worth a look, but check each share carefully before investing.

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Permalink Reply by jacquesk on May 10, 2010 at 12:47

I have read a couple of these and I agree that they are outdated by the time they are published. I was thinking more along the lines of a generalist book about what shares are etc. This is an area where preparation and education are very important.

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