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Online Share Trading

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Advice for Youngster and for someone starting out in life

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Not applicable
Here is some advice for someone at university or just starting out. Whatever you do, don't buy into pensions, unit trusts or similar funding. Don't believe that the longer term you hold these kinds of funds and invest in them the more money you will make. The big companies will make the money and you will lose out. Statistically 80% of people will retire without adequate pension funds and these are the 80% of people who have the pension funding! Alternatively ask the big companies to guarantee your income plus inflation plus 10%, ie a 10% real rate of return. If they are worth their salt, they should be able to guarantee this. If they can't then do your own investing. I have never found a company who will guarantee this, but I still try. Don't believe inflation is 5%, especially if you want to buy a house. Houses in South Africa are increasing at about 15% per year. Find a small flat in a great area and buy it as soon as you are able, but say at about 30 years old, unless you make loads of money before then or get an incredible job, eg like a friend of mind who studied RFID at university and got an incredible job straight off. My personal aim is to grow my net worth by at least 15% a year just to feel better off than inflation. Sure the longer you hold your savings and investments the more money they will make you and you are in control. At your age you don't need a life policy. Get the policy when you buy a house. Ensure that the policy is a life only policy and doesn't include a savings element. Do your savings outside any of these kinds of instruments. Decide on your strategy and buy into it long term, ie for a 7 to 10 year time horizon. We are in the bear part of a 34 year trading range and commodities are on the up. This means, Simmers (a speculation), Goldfields (a bluechip), etc. Lay in. ie decide what you want to buy every month and buy it. Even if it's only R1000 worth of shares at a time. Remember that the more tax you pay the better you feel! This is because you have more money in your bank account even after paying the tax. But use a tax specialist so that you don't pay more tax than you have to. Ignore suggestions such as "you can save tax by buying this car" and rather look at the long term consequences on your cash flow. (Never buy a new car - one that is at least a year old is best) If you get along with your folks, stay at home at least until you are 27 or so and put 50% of your income into savings, ie 25% into shares and 25% into cash or the Gold ETF. Buy a Kruger Rand and keep it near you but not somewhere anyone knows about. It's great to feel and look at an ounce of gold as it has real value and is not a fiat currency. Don't listen to any advice on this forum. ie Make up your own mind. Lastly the friends you make at the parties you go to won't last when you stop going to the parties. Try it and see what happens. OTOH, the friends you can spend hours chatting now (no I don't mean on your cell phone or bullitin board) will always be around. Make sure you have 24 hour a day friends, ie the kind you can phone at 3am in the morning to give you a life home when you are drunk. Or the kind you can phone at 4am when you are working late or and feel like committing suicide - the one's who won't laugh at you. Read everything you can about investing before you start. Don't worry if you buy shares and they are down the next day. Use stop losses if you want and set them as trailing stop losses at 25% for blue chips and 35% for speculations. You won't always be right. be careful of "past success messages are an indicator of future success." eg look at all the top 40 companies that aren't in the index anymore. The top 40 index always has the top 40 companies at a particular time and gets updated every 3 to 6 months. If you can afford it buy some of the commentary. I buy the commentary from Zeal, www.zealllc.com, and I recommend it. Get onto their free mailing list as well and read all the free stuff on their site. eg http://www.zealllc.com/2004/survive.htm. Good luck.
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11 REPLIES 11
kr_pto
Super Contributor
um, i am assuming "Don't listen to any advice on this forum." excludes this particular post? ;)
one unit trust that I could recommend (yours is sound advice for the majority) is allan gray. solid invesmtent principle that will continue stand the test of time (so long as they dont change strategy or collapse due to some unforeseen corporate scandal or the like).
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Not applicable
Huaron, your fountain of Wizdom is appreciated...TA
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theyoungster
Super Contributor
thank you so much. i will consider that :-):-):-) thats the exact kind of advice i was looking for!!!!!
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LogicNvest
Contributor
Thank you for the sage advice, sure everyone can use at least part of it. Just for interest sake how long have you been involved in investing / trading?
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Not applicable
My bit of sage advice at the advanced age of 42....firstly never ever forget that YOUTH IS SPOILT ON THE YOUNG....most people forget this ...so although you need to provide for the future dont be sp fixated on the future and you forget the present.... and then just learn to trade ....if you can learn this you will have to do nothing else...all else will follow...you will be able to be properous through bad times and good...you will have an enduring interest which you can do from anywhere in the world. Listen only to propserous people and try and be in the same space they are physically and socially - leave losers behind they will drag you down. Most traders wipe out at least twice in their life...forget the paper trading and all the other prudent advice....better to wipe out now when you are resilient and can pick your self up again.
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Captain_Kidd
Contributor
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Not applicable
Agreed 100%, Thats spot on what Ive been doing since I finished college at 21 (5 years ago) Only part I didnt do (and I suppose that has changed now that house prices are through the roof) stay with the folks till 27. The day I got my first job I found a small flat in a great area for R100 000 and got my folks to sign surity, 1 year later I sold it for R300 000, bought the next for R400 000 and sold for R750 000, now my place is worth R1.3m which never would have been possible had I not got in as soon as possible. I also believe never buy a car unless you can buy it cash. Better car= expensive tyres, parts, services, insurance and depreciates by lager amounts. And last pearls of wisdom... NEVER sign a surity, they evil little things with lots of fine print which gets forgotten until the bad times come a knocking in which case is suddenly surfaces and kicks you when you down... (of yes thats the other advise - learn from others mistakes...)
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Not applicable
I'm also 42 years old. Been self employed for the past 12 years, so I suppose I've been investing for the past 12 years :) On the stock market I started in about 2001 and bailed when Siltek went under. Started again 2 years ago specialising in commodities. I've made a good return, but could have made much more if I was in my 20's and didn't have a family :) eg, I bought Simmers when it was 50c and sold most when it hit R2.50. A great speculation. My investments in my company usually give me a 4x return within 2 years, but I need to learn about the stock market and that's what I'm doing. I really like SEQ. The monthly fees are inexpensive although I still think the trading fees are high. eg the big boys don't pay trading fees or pay such small amounts that it's negligible. eg if I buy 35 GFI shares today for R5000, I get knocked about R5.70 per share. This means that the shares have to go up R5.70 just for me to break even on my trade. One thing I can say is that I have my own strategy, possibly like Zarp, and although it might not be everyone's strategy, it works for me.
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Not applicable
Cheers Hauron , right on the button mate..
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Not applicable
I visit this forum frequently. SEQ forum has lots of good information & discussion with many diverse views one can consider. Always a great read.
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SIMBA
Super Contributor
Buy a set of drain rods,a plunger and some wellies.Total investment R2500.00.Regardless of what you remove from the drains,tell the clients the caues was womens pads and you have them in a plastic bag in the van.In the 25 years i have been in buisness in R.S.A.i have never had a bad debt.You can work any where in the world and most clients insist on paying you cash in order to get you off of their premises pronto.
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