Investing - The Basics 01 (Jun 09 - Jun 16)

by **b0rderc0llie** » Wed Jun 24, 2009 11:40 pm

A person in his early twenties asked me how to get started in investing in the stock market. He is aiming to put about $100 each month into the market and willing to hold his investments for the long term. In time to come, with a better paying job, he might be able to save more and put in more money each month.

At the moment, with $100 each month, I have no idea how to advise him. I was thinking of putting the money into something like an index fund, but the commission charges will be very high, when compared to the amount being invested. I also thought of telling him to save up for 10 months, so that a starting capital of $1000 will allow access to more instruments, but he would like to start soon, and he has the idea of doing dollar cost averaging by buying into the market every month.

Does anyone has any suggestions?

by **kennynah** » Wed Jun 24, 2009 11:42 pm

i suggest he use this money to buy investment books to read... every month for at least the next 12 months..

by **iam802** » Wed Jun 24, 2009 11:45 pm

Depends on market as well.

eg. SGX must buy in 1000 shares. So, $1000 may not go that far...end up with penny stocks.

Maybe like K said, start buying books to read...and lurk around the forum here.

by **kennynah** » Wed Jun 24, 2009 11:50 pm

the funny thing is this...and i read this somewhere and made plenty of sense to me..

you and i and people with no pilot training, wont jump unto a plane..take over the pilot's seat and begin flying that jumbo jet...but very often, people with almost zero knowledge of trading/investing are willing to commit serious dollars into the market..and actually think they can make money.... where's that logical mind???

by **iam802** » Wed Jun 24, 2009 11:54 pm

bcos my friend, your friend, his friend...and someone's friend , uncle, aunty etc and also that char kway teow uncle just make some money from the market

Sounds so easy ....lor..(but, they never share the other stories)

by **sidney** » Thu Jun 25, 2009 12:02 am

If i'm the person, will not be over focus on financial aspect, but to strive to bring every aspect of life in balance. Time for nature, time for solidary, time for exercise, time for reading good books like self improvement/finances, time for friends and gf. For a start, buy a penny stock; to lock in commitment and investment interest. Gains/losses is immaterial at the moment..

Learn new skills like photography, golf... Visit forums, save up abit... Then invest a few k in fixed deposits. Soon, human nature will grow impatience and then will seek for higher returns in equities. Then hopefully by then.. the impatience are tempered with knowledge and not foolishily chase news of the day either in bull or bear.... Understand human nature... They preach but dun do... common sense is not common pratices...

Set Ji Ba Ban as ring tones, sms tones & alarm tones...

by **HengHeng** » Thu Jun 25, 2009 2:20 am

i've read in somewhere .. as long as you spent 1000 hours wholeheartedly on something ... it would make u relatively better than a average joe .. be it anything ..

I'm relatively good in sleeping .. i spent at least 7~10 hrs a day practising ..

the more multiples of 1000 hrs you do .. the more likely that u are better than the average joe ..

Of course you would not be the best .. those that are the best are usually blessed with talents ..and they work even harder than people ..

But rather than to procastinate .. start by reading up .. there are so many books availiable in libraries .. and stuff .. if u spend 1000hrs .. in reading up on trading .. i think u at least also read 10 books .. on trading ..

After building up your knowledge .. you will have alot of questions .. this is where forums would help you .. most forums provide. . different views and concepts.. then after that.. formulate your own answers ..

On getting those questions answered .. you wil need to spend time to "prototype" your methods of analysis and backtest or forward test .. just make sure it works before you commit..

The next part might be a viable number .. how much hours you spend losing before starting to learn how to win ...until now i still dunno the exact formula .. i still use LUCK as a guage ..

by **winston** » Thu Jun 25, 2009 6:52 am

Dear All,

As the titles are filed alphabetically, I will need to change the title of this thread. It is now filed under "G" and has no relevance to the discussion.

How about, "Newbie Investing" ? If there's no objection, I will change the title in the afternoon.

Thanks and take care,
Winston

by **Aspellian** » Thu Jun 25, 2009 9:22 am

Note: I am not from nor advertising for the below brokerage.

Poems (www.poems.com.sg) offer a product call Share Builders Plan - abit like dollar cost averaging / regular savings plan of unit trusts, but this one allows you to buy units in STI component stocks vs. saving up $15k to buy 1lot of DBS, you can do so just with $100 a month.

I feel that it works best in a bear market and with a mid to long term horizon. Ideal scenario is to buy when market was in 1600pts - and rally until the next bull run then sell (which dunno when). good for newbies who has no idea of timing, little upfront capital etc etc.

But downside is that you have to sell on "unit share" platform which may have slight abitrage difference to actual price traded and some not liquid at all.

Share Builders Plan
Share Builders Plan (SBP) is a regular fixed-dollar amount investment plan, which enables you to buy shares on a consistent and incremental basis so as to build up a portfolio of good securities for yourselves eventually. Therefore you do not need a huge amount of funds to invest in blue chip counters since SBP presents a new opportunity for you to buy odd lots at a reduced cost.
By investing a fixed amount of funds consistently every month over a period of time, your average cost of shares purchased will be lower than the average price of the shares over the same period of time. This is possible since with the same amount of funds, you will buy more shares when prices are low and less shares when prices are high. This investment method is known as dollar-cost-averaging, and it is especially useful in hedging against market volatility. With such a disciplined and consistent method, you will eventually build up a portfolio of stocks at a lower averaged cost.

by **kennynah** » Thu Jun 25, 2009 12:34 pm

winston wrote:Dear All,

As the titles are filed alphabetically, I will need to change the title of this thread. It is now filed under "G" and has no relevance to the discussion.

How about, "Newbie Investing" ? If there's no objection, I will change the title in the afternoon.

Thanks and take care,
Winston

How about Investing 101 - Getting Started...

"newbie" sounds derogatory ...just a suggestion... "if you like it...use it...if you dont like it..f**k it"... as i always say :mrgreen:

Support Our Forum
Donations Collected by OMICSBIO
on behalf of InvestIdeas.net