Ive got 5K and I want to get started........

Running Bing

OK so I have 5K to invest and I was just wondering what people believe would be the best option for me. The 5K is an initial sum and I intend to add to it very regularly(after and initial 10 month period).

So that will be the 5k for about 10 months and then I will be regularly adding to it.


My two options are either open an account with Davy's or some other stockbrokers or invest in index funds such as those offered by Quinn. Now I know 5K is not a very substantial sum but I would prefer to have an account with Davy's and have some say, but would the fee's just kill me? Would it be worth my while or would I just be better putting it into a quinn life freeway fund?


Also what are the exit fee's like with Davy's/other stockbrokers and do they charge inactivity fees?

A Random Walk

Babybing wrote:

Now I know 5K is not a very substantial sum but I would prefer to have an account with Davy's and have some say, but would the fee's just kill me? Would it be worth my while or would I just be better putting it into a quinn life freeway fund?

The reason why you'd consider a fund with an amount like this is because a fund gives you diversification. You could put that 5k into one share and the fees won't kill you, but you're obviously very dependent on how that single company does. Most commentators would say you would need to realistically spread your money around 20 or so companies to get "adequate" diversification.

On the other hand, investing in a small group of shares which you know well is a good way of concentrating your money and possibly getting a big return, but you have to be aware of the dangers.

What I mostly do is use ETFs (they're funds also but bought through stockbrokers) and mix in a few individual shares I like. You could also do something similar - maybe open a Quinn account and build up your money in a fund, then use a small amount of your money (say 2k at a time) to buy individual shares. The Quinn funds give you quite a range to choose from, so you're not tying yourself in too narrowly.

Running Bing

A Random Walk wrote:

The reason why you'd consider a fund with an amount like this is because a fund gives you diversification. You could put that 5k into one share and the fees won't kill you, but you're obviously very dependent on how that single company does. Most commentators would say you would need to realistically spread your money around 20 or so companies to get "adequate" diversification.

On the other hand, investing in a small group of shares which you know well is a good way of concentrating your money and possibly getting a big return, but you have to be aware of the dangers.

What I mostly do is use ETFs (they're funds also but bought through stockbrokers) and mix in a few individual shares I like. You could also do something similar - maybe open a Quinn account and build up your money in a fund, then use a small amount of your money (say 2k at a time) to buy individual shares. The Quinn funds give you quite a range to choose from, so you're not tying yourself in too narrowly.

I understand what your saying A Random Walk, I assume ETF's would be beyond my means?

I was intending to use the methods used by Mark Shipman in "The next big investment boom". He basically advocates a trend following strategy(You'll probably bite my head of for this ARW;) ) where basically you split you capital five ways and enter a market when you get an entry signal and exit when you get an exit signal.

I cant imagine I would be doing too many trades, but with a small amount is this worth my while or do you still think I would be better with a Quinn fund.

Also how would you recommend I split my money between the different funds?

A Random Walk

Babybing wrote:

I understand what your saying A Random Walk, I assume ETF's would be beyond my means?

You buy ETFs the same as normal shares, so you pay broker fees. What Quinn are probably doing with their funds is buying ETFs, but because they bundle together lots of small amounts they keep their charges to you low.

An ETF will cost more up front than the fund, but you will save on annual fees. If you want to invest lump sums for long terms, ETFs will usually be better (not always). If you want to invest small amounts (say hundreds per month), the fund will be cheaper.

One strategy would be to pay regular contributions into a fund and then when enough is built up move it into an ETF. 1% less in fees over 20 years is a surprisingly large amount.

I was intending to use the methods used by Mark Shipman in "The next big investment boom". He basically advocates a trend following strategy(You'll probably bite my head of for this ARW;) ) where basically you split you capital five ways and enter a market when you get an entry signal and exit when you get an exit signal.

I cant imagine I would be doing too many trades, but with a small amount is this worth my while or do you still think I would be better with a Quinn fund.

I could go on for days about mechanical investing methods, but I'll spare you and put it up on my blog

To be honest I think you'll get killed by fees. It depends on how much and how often you trade. If you check out the broker websites they will tell you what their fees are - usually a percentage. If say that's 1% and if you trade your money 5 times a year you'll be straight away down 5%. That's a big hurdle to make up - even the very best like Buffet only make a few % over the index. Anyone can buy the index and sit back.

Also how would you recommend I split my money between the different funds?

That all depends on how much risk you want to take on. You might find some ideas by looking up "life cycle investing".

Essentially the theory is that the younger you are, the more risk you take on. As you get older, you shift a larger percentage into cash and fixed income. You'll also have to consider when you might need your money, do you have a rainy day fund, any major purchases in the near future.

Running Bing

A Random Walk wrote:

You buy ETFs the same as normal shares, so you pay broker fees. What Quinn are probably doing with their funds is buying ETFs, but because they bundle together lots of small amounts they keep their charges to you low.

An ETF will cost more up front than the fund, but you will save on annual fees. If you want to invest lump sums for long terms, ETFs will usually be better (not always). If you want to invest small amounts (say hundreds per month), the fund will be cheaper.

One strategy would be to pay regular contributions into a fund and then when enough is built up move it into an ETF. 1% less in fees over 20 years is a surprisingly large amount.


I could go on for days about mechanical investing methods, but I'll spare you and put it up on my blog

To be honest I think you'll get killed by fees. It depends on how much and how often you trade. If you check out the broker websites they will tell you what their fees are - usually a percentage. If say that's 1% and if you trade your money 5 times a year you'll be straight away down 5%. That's a big hurdle to make up - even the very best like Buffet only make a few % over the index. Anyone can buy the index and sit back.


That all depends on how much risk you want to take on. You might find some ideas by looking up "life cycle investing".

Essentially the theory is that the younger you are, the more risk you take on. As you get older, you shift a larger percentage into cash and fixed income. You'll also have to consider when you might need your money, do you have a rainy day fund, any major purchases in the near future.

Good response on your Blog ARW. I think you should read Shipmans book if you can pick it up cheap though (its a very quick and too the point read). What he says makes a lot of sense and it doesnt seem like some of those "faddish" dogs of the Dow type strategies.


I have Malkiels book on the bookshelf though and I intend to start it today, I probably wont do anything until I see both sides of the coin......It can get confusing who to listen too though with so many successful and intelligent people advocating different systems.



I think what I'll try is for the time being stick the money into some of Quinns funds and try out some of Shipman's strategies on a fantasy trading game and see how I get on.

A Random Walk

Babybing wrote:

I think what I'll try is for the time being stick the money into some of Quinns funds and try out some of Shipman's strategies on a fantasy trading game and see how I get on.

Sounds like a good plan, I'll have a read of Shipman's book..

wheels of ire

Sounds like you are getting some sound advice. I have a mixture of ETFs,shares and funds,and started by buying one share,and whacking 2k down on it. I don't reccommend this unless you are really really sure about the share.Like I was when I bought Apple in April 05 and again in Jan 06 and again last week. And I had given myself the money as play money,to use to learn.
My next bunch of savings went into the ISEQ 20 which has done nicely over the last 2 years.
If you put in a lot of time on reading the top financial websites,and follow the financial press,and subscribe to a couple of good tipsheets,it is possible to do real well.But you will need nerves of steel.And put in the work. Personally,as it has now become a profitable hobby,I probably spend 2-3 hours a day on financial sites, and use Google Finance and Yahoo! to run shadow portfolios. Or is it because I do the research that I am lucky? If you are willing to do the work you should be rewarded. One of the best free places for free and good tips is the London Independent, www.independent.co.uk which runs a small share column several days a week.I have done well out of several of the tips. They also have a guy called Payne,who runs a notional portfolio of riskier shares,called 'No Pain,No Gain' which has had some spectacular gains,along with the odd flop.
And always remember that when you buy a share you are buying a piece of a real company.And before parting with your cash be sure you know why you are buying. Would you buy the company if you were Warren Buffett? Or a zillonaire? Do you understand what they do,and how they plan to make you money.If you can't quite understand just how it is going make you money,you may be caught up in hype.
But if I was you I'd look at Rabodirect where I put 10k of SSIA money across 5 funds (Latin America,China,India,Emerging Europe and European Small Caps),and they are cumulatively up nearly 8% in about 5 weeks.And even the worst is up 1.5%.
You can put in as little as 100 a time,and they only charge 0.75% entry and exit fees.
And no,I don't work for them.
And finally,use the evidence of your own eyes. For instance, I noticed tha Nintendo stuff was selling well,and when I saw people who wouldn't go near a computer game using the Wii to join their kids in tennis I started looking into Nintendo,and have bought it on NYSE. It is still worth buying,as it outsells PS3 by 6-1,and X-Box trails.And unlike the Sony and MS products,Nintendo make a profit on every console,and on every game.
If you make a bob or two on Nintendo do me a favour:give some of it to the RNLI. Sorry if this is long-winded;it is Friday night
Good luck,live long and start investing for your pension before I did.

wheels of ire

Sounds like you are getting some sound advice. I have a mixture of ETFs,shares and funds,and started by buying one share,and whacking 2k down on it. I don't reccommend this unless you are really really sure about the share.Like I was when I bought Apple in April 05 and again in Jan 06 and again last week. And I had given myself the money as play money,to use to learn.
My next bunch of savings went into the ISEQ 20 which has done nicely over the last 2 years.
If you put in a lot of time on reading the top financial websites,and follow the financial press,and subscribe to a couple of good tipsheets,it is possible to do real well.But you will need nerves of steel.And put in the work.
But if I was you I'd look at Rabodirect where I put 10k of SSIA money across 5 funds (Latin America,China,India,Emerging Europe and European Small Caps),and they are cumulatively up nearly 8% in about 5 weeks.And even the worst is up 1.5%.
You can put in as little as 100 a time,and they only charge 0.75% entry and exit fees.
And no,I don't work for them.
And finally,use the evidence of your own eyes. For instance, I noticed tha Nintendo stuff was selling well,and when I saw people who wouldn't go near a computer game using the Wii to join their kids in tennis I started looking into Nintendo,and have bought it on NYSE. It is still worth buying,as it outsells PS3 by 6-1,and X-Box trails.And unlike the Sony and MS products,Nintendo make a profit on every console,and on every game.
If you make a bob or two on Nintendo do me a favour:give some of it to the RNLI. Sorry if this is long-winded;it is Friday night
Good luck,live long and start planning for pension before I did.

benner

Just curious to see how the Shipman strategy is working for you? Have been using it mayself for a while now. Interested to see how others are getting on.