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Chat Forum - Help for a very young, long term investor.

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TAKR
Contributor
If you were very young, willing to take a lot of risk, wanted to start a portfolio, which 2 stocks would you start with? Please all who read this just jot down 1, 2, 3 or four stocks if you have the time. Thanks in advance. Ty
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Not applicable
OK, I am assuming here you are not betting the farm, so none of this spread your risk business. So that would eliminate the boring options like Satrix, DBX, and other ETF's. So my strategy in this kind of situation would be to pick a company with a solid track record of acquisitive growth (the theory being that the SA economy doesn't grow fast enough for a bluechip type of stock to shoot the lights out growing organically). This isn't to say that the Capitecs, Calgro's, Coronations, etc aren't good bets, but buying these kinds of stocks requires a bit of risk spreading. So if I was going to pick a single stock, for 20 years, I would pick Steinhoff. They have an excellent track record at large acquisitions in big markets - and the stock is trading relatively cheap for the retail counter.
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indium
Contributor
Ascendis as it has low market cap is acquisitive and has lots of runway to compound many times. Wait for a nice pull back below R20, so be patient. A contrarian pick would be Redefine International (RPL) for the 5% pound yield that you can use to create further "Slaves". There is nothing wrong with cold hard cash-flow especially in a lower yield environment. Every year you redeploy into new investments. People underestimate the importance of cash flow. Cold hard cash on standby - one must assume a 40%+ correction in next 5 years so be patient and pick up some bargains when this happens. Best returns generated if the assets you buy are cheap. Split 50% Ascendis below R20, 25% RPL, 25% Cash (USD/GBP/Euro / Zar mix) Possibly an Oil ETF as well buy on weakness.
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Regular Contributor
My top picks for a long-term view would most definately be AdaptIT. Got to have anchor capital, italtile and kap. These four companies will go up 10 fold (Imo). Also bearing in mind when you are young and willing to take calculated risk, the most important is the capital outlay. If you for example only had R20 000 to invest you will be wasting time to buy shares in discovery @ R122 per share. I would rather put the 20k in kap.
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TAKR
Contributor
Thank you, Skaaptjop, Indium and Vince888, your input is greatly appreciated. If you have any other info / advice for someone just about to start out in the long road of investing, please feel free to pass it on.
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Super Contributor
good luck with your investment journey I have been in the game for 20 years and it is my main income to support me and family when I first started I did nothing for 2 years-kept my money in my cash trading account -studied read and then decided which 5 shares I liked and then waited until price looked attractive -the market in general terms is expensive commodities are pretty cheap may be buy territory if you believe they will recover in long term .banks are quite cheap at moment Zuma and world economy have impacted .property looks a bit expensive but it has been one of my best consistent returns over last 20 years .I hesitate to point you at any share as I believe you must develop your own pick approach .use common sense and control your emotions and you can be as good as any expert
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Super Contributor
Buy yourself some Steinhoof and hold for 12 to 18 months.
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Valued Contributor
this statement is not correct "If you for example only had R20 000 to invest you will be wasting time to buy shares in discovery @ R122 per share" .. what matter is value and growth not price ..
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Highlighted
Regular Contributor
Simon. Sorry, let me retract my last statement as it actually sounds ridiculous of what I said. Obviously my last statement was not well thought out before writing it down. It sounded correct during the thought process. Nontheless I will still buy adi, acg, ite and kap as long term hold. What meant to say was, when selecting shares as a first time invester one would have to know how long you want to invest for and the capital needed to invest in shares (and most importantly cost). If you had only R5000 to buy shares for example. Your share selection will be limited.
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Super Contributor
If I were starting out - knowing what I know now - I would look to accumulate a diversified portfolio of quality large-cap offshore shares! AND try to make sure they pay a dividend through the cycles.
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TAKR
Contributor
Thank you Geordie, Preston and THRESHOLD and Simon PB, all your input is much appreciated. Come on Geordie and Simon any thoughts on a share?
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Super Contributor
your biggest mistake is thinking that other people know better than you -they do not .a share that suits me as i wander towards retirement may not suit you.buy a share you have properly researched-you like the business model,the management are honest and competent and u think the business will be around in 20 years time.you know better than me what you want to invest in.be wary of those who recommend a share-their thinking will not be the same as you-their circumstances will not and however well meaning they are at best they are making a calculated guess-no one can predict the future-
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Som2
Contributor
This is just too powerful. Your comment is noted.
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indium
Contributor
As you are starting out on your investment journey you need to focus very keenly on compounding over a long period. An example as follows with rough rule of thumb numbers - if you can aim for a 12% compounded return annually that means your money will double very 6 years or so. That means over 30 years you will get 5 doubles. That means R1m, goes to R2m (First double), to R4m (2nd double) to R8m (3rd double) to R16m (4th double), to R32m(5th double) - so R1m goes to R32m after 30 years at 12%. If you can increase your compound rate to =-14,4% you can expect 6 doubles over 30 years, so your 6th double takes you to R64m. Now reflecting this back to Market Capitalisation a R1bn market cap would go to R64bn market cap over 30 years. A R10bn market cap would go R64bn market cap and a R100bn market cap R6400bn market cap over the 30 year period. So it is worth considering whether the type of business you are investing in has the ability to support that size market cap. As an example Apple on its very large market cap may struggle to compound at 15% odd percent over the next 30 years the size may end up being too big, unless they of course diversify into other areas like cars etc. Compounding is very very powerful and only requires a small but consistent return over many years. Time is almost more important that the % return you get each year. If you already knew this apologies for wasting your time. Last point a 2% investment fee each year out of your 14,4% compounded return is massive and that is why you are probably better off either investing in index tracker or selecting a few great companies or both to hedge yourself from yourself.
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indium
Contributor
R10bn market cap would go to R640Bn market cap over the 30 years. Apologies for typo.
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TAKR
Contributor
Thanks so much for all the feed back, have a great weekend all. T
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jamie
New Member
Let me give you a big piece of advice. 99.999% of young people start with this attitude (I know I did). After years of losses, you finally awake to the fact that long term dividend investing is the only way. Build a portfolio of dividend growth stocks. Growth in yield is most important.
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Super Contributor
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