Is it worthwhile investing 5K in shares?

[Corey Batt]

1. Make sure you know the rules of the game.
2. When you buy in with that 5k don't view it as 5k that you can get back.
3. Research into finding yourself a low-cap that you think can achieve good results.
4. Learn to become the master of your emotions when it all goes horribly wrong.

Thats the worst case scenario. I say do it.

 

[intrigued]

I have a measley 5K to play with and I want to try shares again. I say again becuase I have tried it before (same amount) and GFC ate it all up. I just tried my luck but I unfortunately it wasn't there at that time.

Anyway, if this is all the money I can put into shares, is it still worthwhile doing it? I don't want to go into speccies anymore since that's where I got caught. What would you do?

Me I'm more intrigued with what happened to the first 5K what was the stock and what are they worth today to me thats far more interesting and we and you could learn from what has happened.

We started at 30 and I wish I had started earlier a alot earlier so I did not have to take what I assumed a major risk at the time I would love to go back and start with as little as 5K, I was dragged, kicking and screaming to buy and hold. We started with 38.4K of CBA in 1991 today we have a little over 135K now. Compounding and time are what worked for us.

Invest in what you know and understand, not the lastest fad. And please always question where you get your information from.

And for those who can think of one company you would like to own and fully understand its operation also trully believe it will be there in 50Years time.
Please invest an imaginary $100K and watch what happens over the next 10 -20 years also you must reinvest its earnings and never sell. Just give it a go for a period of time.

So give us what happened to the first 5K DWV I for one would be interested.

Regards

 

[random]

Sorry guys , I've decided to give this the chop.

I'm still in a fragile position right now on other fronts and so it's probably best .

Cheers

 

[random]

ps , still pretty nervous about where the market might go should I be in the middle of some trades at the time.
But by the look of it , personally I think now it might at least be right til Christmas and could even have a few runs but I'm definitely not putting in any holds while I have a break this yr .

 

[JIT]

We started with 38.4K of CBA in 1991 today we have a little over 135K now.

Intrigued, just curious, how much dividends did you get in 1991, and how much now?

Compounding and time are what worked for us.

Good point, stock selection is way over-rated!

And please always question where you get your information from.

Great point.

 

[JIT]

I had 600 sitting in my account ready

...

Well my accounts back up thank God and gaining nicely so at the moment , I'm back on the old horse.

Cheers

random,

Fascinating story.

Just curious, what year did you start with the $600?

And how much have you got in your account now?

Are you any closer to achieving your financial goals?

Thanks.

 

[random]

Thanks Jit.

Ahh I'm still the new kid on the block really. I first opened in 07, I think, may have been later 06 I'd have to check.
Back up to around 79ish now , it was at 18 . I did do though some magnificent [ if I do say so myself ] trades since I've been back , that whacked things back up in a couple of hits or it would still only be at around 40 .
No nowhere near trading goals as yet , just for fun that is to beat my mates 500 in 12, with 501 in 11 . Mind you I might also quit , it's very stressful .

" I decided to remove this portion and also delete the following post ".

 

[dwv]

Thanks for the replies. I'll read all of them this evening. As for what happened to the previous 5K, I placed it all on several small caps a few months before the GFC hit. I was gaining some and losing some so I was ok... until one day everything went down and unfortunately for me I didn't have stop losses. Then I convinced myself it will bounce right back but it never did... they're still there but just a few hundreds left.

 

[oracle]

Mind you - before I put my hard earned money, I had read heaps of books about share investing, specially Peter Lynch's books, which I highly recommend.

I would also read Reminiscences of a Stock Operator, by Edwin Lefevre. It's about a stock trader named Jesse Livermore. Some invaluable lessons about trading and psychology of trading in it.

Cheers,
Oracle.

 

[Olly]

I've been very interested in this post 'cos I was thinking of having 'a go' myself with about the same amount. I did do a course some years ago and have read some books in the past but have not been interested for so long I feel I need to re-learn the basics all over again then go from there.

Anyhoo, I googled Peter Lynch's books which have been suggested a couple of times in this post and just wanted to share a great book site with everyone.

Using Booktopia as an example of a discount (cheap?) Aussie book site these were the prices for the following books -
Learn to Earn - $19.50, One Up on Wall Street - $20.90, Beating the Street - $20.90. Sub Total = $61.30 plus $6.50 delivery within Oz, so a total of $67.80.

But here's where I got my books - bookdepository.co.uk
Learn to Earn - $11.71, One Up on Wall Street - $14.50, Beating the Street - $14.50. Sub Total = $40.71 plus FREE delivery to Oz.
Such an easy site to use too.

Amazon was slightly cheaper but didn't have all books in stock and there was a delivery fee involved. I also don't understand the way they list their prices e.g. Buy New - $17.05. 28 new from $4.18. 84 used from $0.01. Huh????


Cheers
Olly

 

[Edmond Dantes]

I would also read Reminiscences of a Stock Operator, by Edwin Lefevre. It's about a stock trader named Jesse Livermore. Some invaluable lessons about trading and psychology of trading in it.

Cheers,
Oracle.

+1, read this one too

 

[evand]

Or try this one. I buy all my books here. Extremely good value and they contribute to world literacy from every sale.

www.betterworldbooks.com

 

[Murphy69]

Stock selection isn't that critical, more important is understanding the various methods for position sizing and risk management.

Important to remember its not about being right, its about being profitable. There are systems that are only right 30% of the time, and are profitable.

The biggest killer with only $5K is that you positions will be small, and that means that brokerage fees will have a bigger impact, and you can't afford a series of losses...particularly if you are using a good position sizing method, as your risk size will shrink as you account shrinks.

You will need to find the lowest brokerage you can. I'm paying $6 per trade, ($1 for US trades) but I think about $15 will be the best you can hope for using the mainstream retail brokers.

Don't bother too much with paper trading. Paper trading really works best for experienced traders/investors testing out new systems.

Murphy

 

[Hoffy]

We started at 30 and I wish I had started earlier a alot earlier so I did not have to take what I assumed a major risk at the time I would love to go back and start with as little as 5K, I was dragged, kicking and screaming to buy and hold. We started with 38.4K of CBA in 1991 today we have a little over 135K now. Compounding and time are what worked for us.

38.4K of CBA at list ($5.40) in 1991 would have bought you 7111 shares. Today worth 347k. Even if bought at the end of 1991 at $6.64 it would now be worth 283k.

You would have received over 202k of dividends in that time (assuming bought at list). A very good investment. Did you sell plenty along the way to only be holding 135k worth?

 

[Hoffy]

Intrigued, just curious, how much dividends did you get in 1991, and how much now?

Assuming purchase at list price of $5.40 and therefore holding 7111 shares, they would have received $2,844.40 of dividends in the first twelve months. The last twelve months (assuming they haven't reinvested the 200k of dividends in the preceding years) would have paid out $20,621.90.

 

[JIT]

38.4K of CBA at list ($5.40) in 1991 would have bought you 7111 shares. Today worth 347k. Even if bought at the end of 1991 at $6.64 it would now be worth 283k.

You would have received over 202k of dividends in that time (assuming bought at list). A very good investment. Did you sell plenty along the way to only be holding 135k worth?

Wow, so up to 308.6k in capital growth, plus 202k in dividends, so up to 510.7k total return over 19 years... or 14.59% pa compound growth.

 

[yadreamin]

Thanks for this thread everyone, l am really enjoying and learning from it.
Random heres cheers to you for putting it all out there dry.

To me saying "ahhh 5k dont waste your time go away" is like telling someone not to invest in a country ip or cheapie bread and butter ip
5k is a good starting point have a read of whats out there, what interests you, a company that appeals to you and go for it. Just start.
cheers

 

[WinstonWolfe]

For those thinking today is as good a time to buy 5k of stocks as any, I'd be interested in your views on where these indices and stocks are going in the next 3-6 mths.

 

[random]

Still , those CBA numbers aren't bad talking 100% passive .

Thanks Yadreamin ,in a chatty mood I think , I actually wouldn't mind deleting it now.

On another note , yeah the brokering is a killer. Myself I couldn't commit to EX amount of trades and being such small trades I was paying top dollar to start .
From memory when I reached 5k I split it into 3 separate small trades but b/c I go for high percentages it was still well worthwhile.

Cheers

 

[dwv]

Interesting read everyone! I guess I have to read and learn more before going back again. Went to the library and got some books - some about "getting rich" books (to get motivated) and some specifically about shares.

Random, interesting story... can I ask what your initial strategy was in general that you keep going back to?

For those working 9-5, how do you do it? I was using commsec in the office and it was definitely distracting me from work (especially since I traded small caps). Then there's the issue of internet use in the office... they've now blocked commsec from our internet .