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Online Share Trading

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Does anybody here know what they are doing?

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Not applicable
Okay, okay, I am not asking this question to be sarcastic. Over the holidays, I asked myself the following question: What is my goal by buying a share, keeping it for 20 years and then selling it? Capital growth - this does not make sense at all. I need lots of money now. My kids are going to school now, not in 20 years time. I want to buy that new car now, not in 20 years time. My car needs tyres now, not in 20 years time. Further more, if you buy a share, you pay monthly fees for 20 years! Dividends - Do you know how many shares you must buy to get proper livable dividends? It seems millions! That's going to take one heng of long lifetime to get too. I had a lot more thoughts on this subject, but came to the conclusion that investing for the long term is great for growth, but not for average person. The only time this works, is when you start buying shares at age 21 and further more, Warren Buffet investing, is not a good example for modern day man!
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36 REPLIES 36
Super Contributor
Well then trade geared products like warrants or futures just be careful cos u could quit easily be taking ur kids to free schools by bicycle. There is a market for everyone u just gotta box clever!
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Valued Contributor
Snakepit, you can't generalise your situation to everybody .. but yes one does have to wor out your own why.what.how.
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Not applicable
Hey, Snakepit, Think of trading as a business, not a way to make a quick buck.If you had a business that paid you reliably, say R30k a month, how much would you have had to invest in that business? How much time would you have to devote to running that business efficiently and up-to-date to keep it paying you at that rate? Sure there are stories of some oak's uncle's brother's best friend's skelm stukkie that cracked a winner, but most of us have to work at it. And yes, you have to have a fortune invested if you expect a livable return on your money with no risk involved, would you guarantee someone a high return on their money and then carry their risk for them? Trade for fun, but be sure to keep adding to your long term nestegg.
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Not applicable
Okay, my very first comment was very general. The bottom line is that you must have a goal, and sure, it will most probably be a long term goal, BUT, to get to that, you need cashflow and as I see it, cashflow can only be generated through trading. This however seems like a catch 22 as trading (according to most traders) is the root of all evil and you will lose 90% of the time. That is why I keep saying to the guys - please do not keep telling people that they will lose money if they trade. It is not true! Yes,it does carry a much higher risk, but it is as important as your appy training if you one day want to be the greatest mechanic under the sun. The best advice I have read since starting trading, is do it in small bits. Take a R500 profit here and a R1000 profit there and learn, learn, learn. Then take that R1000 profit and pay it off on your credit card and save another 16% interest. What is the end result? You actually have a "project" with a valid goal and a feel good end result!
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Valued Contributor
if one plans to use trading to rauise cash flow, the vast majority will go nowhere but backwards .. what's wrong with R1k a month increasing every year at inflation for 20 years ??
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Super Contributor
yip....nothing wrong with getting rich (creating wealth) SLOWLY. Isn't arriving more important than how quickly one gets there. The tortoise won didn't he(she)?
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Super Contributor
You shouldn't really consider the next year or two's dividends. Rather focus on the divs you'll get in 5 years onwards - that's really not far in the future. Buy the right companies at the right price and forget about them. 5 years of compound growth will do some great things and then you get cash most years without having to do anything.

Having said that, I wouldn't go for the 1/2/3%-div okes, because the wait is just too long unless they're growing hectically. Those guys I trade.
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Super Contributor
But after 5 years, the company might have folded, or near to it - I don't like that risk for such a nominal reward - although this theory in a satdiv seems nice.
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Super Contributor
After all is said and done, There are plenty ways of skinning a cat. In reality we must all find one that works for us. Similar to a trading system! Personally I put 10% of my profits in a long term portfolio. Sort rainy day slush fund (tax free) rather have a cup of water a day than a bucket once a month!
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Valued Contributor
I would suggest that there are a bunch of comapnies that one could say with fair certainity will not folded in 5 years .. heck even 20 years ..
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Super Contributor
Sure - I missed OML's insane pricing last year because I was worried they'd tank. But over a number of companies the risk is reduced, and much of the time you get cap gains as well, and you aren't trapped in it forever. You choose now, you can pull out at any time.

There's always risk and reward, but a focus on only the next week means we don't see 5-year opportunities. I just did a CFD trade on a very near-term window that is supremely speculative, but when I see what I think is a great div opportunity I won't ignore it.
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Not applicable
Talking about skinning a cat - Why in the world would you buy a share that has a share installment coupled to it that allows you to buy two shares for the price of one while still getting full dividends? Then take the divs and buy the full share later. This allows you to buy more and get more bang for your buck and if plenty of a share is required to get big divs then is this not a better concept.
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Valued Contributor
because share instalment has time limitations .. imagine buying them late 2008 ??
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Super Contributor
Hi Snakepit,only in theory yes.Remember the charges involved in instalments,which is a monthly fee for the part of the share which you don't own.That is why you get the full dividend as if you own the whole share.As installments are geared they rise faster than the share,but when the dividend is payed the process reverses.That is why it really only pays to own an installment when a share is nearing payout as then the installment should out perform the share.
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Not applicable
But going back to your original post about the need to pay things now. If you are in this mode you will still be paying things due now, now, in 20 years time. Including your houseing loan. To get ahead, and really profit, one needs to ensure that income is greater than expenses. There has to be something left over each month. More than unexpected expenditure and allowing for unforeseen expenditure. This may mean no DSTV or a basic car. I can't afford DSTV. But my PA has it. And she rents! And bemoans the fact that she cannot live in a house like mine! But to get here I bought a house for R 170 000 seven years ago, did nothing to it besides painting it and sold it for R 700 000. I pay off debt as a priority. Debt is a prison sentence. DSTV over five years on a loan is the difference between my PA and me. (Well sought of but you get the point). DSTV in starix now in 5 years time? Bingo!
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Super Contributor
everyone must do what suits them.I started investing in property when I was 19-I got into shares when I was 32-I retired when I was 43.I did not touch income from above investments until over 40-so it took over 20 years for it to make a difference-but what a difference-no boss-no customers and plenty of time for family.
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Not applicable
Well I used to know exactly how to loose money ;-) buy a share and hope like heck I did the right thing...... but then after paying my school fees I decided 2 things.
1 If I have 1 mill to invest I could put in risk free bank money market fund and earn R5k pm at 6% interest pa. But I would suffer the ravages of inflation at 8% so i would loose. on 5K pm I could not live either (OK I have a salary from my business to add to it so now I would be OK).
2 I could learn to trade and not be greedy (the ultimate tool in trading), and build a long term portfolio over time. Thus with my school fees I took to devising my scalping system to make 3% plus three times per month. This allows me to double my funds over a year and beat the heck out of inflation. But I have to account for taxes etc so take 40% off and i still should lear 50% plus. (NOTE this is only one of my systems)

Comment on your post - "Buffet system does not suit the modern man" - well maybe modern man should learn from Buffet type systems and stop wanting everything NOW. Learn paitience and planning. Debt will kill you so kill it first then live free......
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Super Contributor
The rate of interest levied is shocking - conservative instruments run at over 25% per annum. If the share slides and the bank applies an aggressive stop loss, (delta?) you can wind up paying interest higher than the residual value of the share. Your interest and warrant costs never reduce - only your share in the underlying. The full years interest is payable in advance. The bank effectively sells shares (applying a stop loss) or adding - bulking the position - as the share moves. You lose control of this aspect. The market for the instalments opens 15 mins late and closes 15 mins early. You have a buy / sell spread applied to this instrument. These are great for trading - costs are next to nothing instead of .3%. You score a dividend if you are looking to dividend strip. And you get a bit of gearing without the madness of the time constraints of a warrant. (And to top it all off - apparently the dividend does not get paid if the value of the instalment falls below the value of the dividend.
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Not applicable
Some wise words, BUT, the truth is that even if you pay off all your debt, without an extra income, you will be a dead duck as cost of living is rising faster than what your investments can grow or larger than your yearly increase. I still feel that the old rules do not count anymore. The price of services and goods (look at the increase that Eskom is requesting 42%) is far higher than the returns that a normal old style investment can give you. It is now common policy for the cost of services to rise by 50% or even 100%. Gone are the days when a yearly 5% increase was requested by government departments for services.Lets look at property. With the maintenance cost of a house sky rocketing, electricity, water, rates and taxes and all the other services,paint and whatelse, I ask myself if the yearly increase in the value of my property actually exceed the capital outlay that I have per year. Surely what you spend on your house per year must be less than the increase in value of your house per year for it to be a good investment? Have you done the sums? Add every cent that you spend on having a house and see if the value of your property has increased more than what you spend.In the old days, it worked, but I am not too sure if it still does. Buffet has old rules. I would have loved to see him make it in these times!
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