Best way to get into the game - 10k

the5thace

Hello,

I've recently started educating myself with regards to investments.
I'm finding myself stuck with a investment dilemma.

I have just started saving.
Currently I have 10k to invest.
I have two sources of income and I average 3 - 4k take home pay per month.
I have between 1.5 and 2k left over every month.
I'm 24 years of age.
No debt


Now, I would like to know your opinion on what my best options are -

I've been considering saving up for a deposit and investing in a 2 bed apartment in Dublin.

or

Creating a diversified portfolio of stocks

or

Finding a good mutual fund

---

Kind Regards

Frogdog

Firstly, I'd consider a pension before those three options, and max out your AVC limit considering the tax advantages.

Secondly, I wouldn't consider "investing" in property, and certainly not in an apartment.

Thirdly, why not consider ETFs as opposed to a mutual fund or a portfolio of equities - go with something with low annual fees and charges.

ballyharpat

Set up a virtual portfolio, use that for 6-12 months, see what you find out………it will educate you. Then after that, start off with maybe 5k, see how comfortable you are with the ups and downs……..if your time is limited, you are better with etf's if you have time to do research, look at a mix of stocks that interest you and meet your idea for value/growth. I believe that right now the stock market is way overvalued and is due a correction, but there may be more growth, take my advice(and everyone else's) with a grain of salt…..but wear sunscreen… good luck-

ps there is nothing wrong with property as an investment, I have 3 of them and they are all making a good return on investment, for the time involved.

tralalala

buying and selling stocks on a dummy account wont teach you anything, I know I did it and I learned nothing, it is not like the real thing at all because you have no emotions. First you have to learn about investing otherwise you will just play around randomly and lose money at some stage

learning about stocks takes time. If you can be a good long term shares investor you will beat the other options by far. ( I am not saying I am but that is just fact and that's what I will be)

if you don't want to learn, buy a fund and contribute monthly, better pick a shares index fund and stick to it, whether down or bad market.

if you want to be like everyone else buy an apartment, but I think a deposit may be better used when used to buy your main residence as you will end up saving on rent. If you do not need income, there is no point in receiving rent that will be taxed

ballyharpat

The goal for any investment is growth-dividend/rent/growth/capital appreciation etc, all increase your wealth, what you do with them after is up to you, reinvest, diversify or increase quality of life.

As I said above, take everything I say with a pinch of salt, but I started with a virtual fund, it thought me whether my instincts were right or not, it took 12 months of virtual trading for me to realize my style of investing and to follow through on it, rather than take a bit of this and a bit of that, I set my goals, my entries and my exits, and I followed through on all of these.
My end goal was to be independent of a job and retire by the time I was 50, I am well ahead of schedule, stocks have made me a lot of money, but I also realize that they are a lot of work and that is not what I want all the time, I am 20% in stocks, 10% cash and 70% property

paisley2

the5thace wrote: »

I've been considering saving up for a deposit and investing in a 2 bed apartment in Dublin.

Buying an individual investment property is probably one of the worst investments anyone could make. If you do a proper analysis of the costs (both financial and time wise) in owning a property over 20-30 years, including the stress of tenants, compliance with regulations, chasing rents etc, then it does not pay. Even if you are lucky enough to buy at the bottom of a property cycle and unload at the top of the cycle, it might give a nett profit but that's the only way it pays, and even then you are relying on luck, not a very wise investment strategy. The Irish fixation with owing an investment property stems from insecurity issues with land ownership and a general ignorance of other investments available. Other developed economies (US, Germany, Japan) don't have near the levels of private ownership of investment properties that we have here. Investing in property is either done on a large scale or not at all.

Creating a diversified portfolio of stocks

€10k is not near enough to do that. Fees will destroy your €10k.

Finding a good mutual fund

Again €10k is too small

My advise, put the €10k in an account and keep saving as much as you can, €2k a month, more if possible, when you have €80-€100k then go and talk to a professional firm and see what they have to offer. Don't worry about 0% deposit interest rates at the bank because we have near 0% inflation anyway, these cancel each other out.
Remember your day job is the best investment you will ever make in your life, your own career will produce more money than anything else during your life. Invest in your education and yourself and when you a have enough money to be of interest to professional money managers, give it to them, let them do their job and you go back to yours.

ballyharpat

paisley2 wrote: »

Buying an individual investment property is probably one of the worst investments anyone could make. If you do a proper analysis of the costs (both financial and time wise) in owning a property over 20-30 years, including the stress of tenants, compliance with regulations, chasing rents etc, then it does not pay. Even if you are lucky enough to buy at the bottom of a property cycle and unload at the top of the cycle, it might give a nett profit but that's the only way it pays, and even then you are relying on luck, not a very wise investment strategy. The Irish fixation with owing an investment property stems from insecurity issues with land ownership and a general ignorance of other investments available. Other developed economies (US, Germany, Japan) don't have near the levels of private ownership of investment properties that we have here. Investing in property is either done on a large scale or not at all.

The Americans are big into different investments, property being one of them. And it does not have to be multiple properties. The problem with Irish people and investing is they follow what everyone else is doing like sheep. Afraid to think outside the box.
Property is like any other investment it is price to earnings, one cannot count on selling after it has increased in value. If rent is not covering the mortgage or making 6% profit p/a then it is a poor investment.

[/quote] €10k is not near enough to do that. Fees will destroy your €10k.

Again €10k is too small

My advise, put the €10k in an account and keep saving as much as you can, €2k a month, more if possible, when you have €80-€100k then go and talk to a professional firm and see what they have to offer. Don't worry about 0% deposit interest rates at the bank because we have near 0% inflation anyway, these cancel each other out.[/quote]

0% interest rates will eat away at your money, the current qe by Europe is going to bring inflation up.

Professional managers , in my experience have been nothing but smooth talkers. They do not care about your money as much as you do. Educate yourself on the markets.

If you want to work all your life, go ahead, if you want your money to work for you, educate yourself and get experience in investing- not trading.

[/quote]Remember your day job is the best investment you will ever make in your life, your own career will produce more money than anything else during your life. Invest in your education and yourself and when you a have enough money to be of interest to professional money managers, give it to them, let them do their job and you go back to yours.[/quote]

10k -even 5k is fine to start with, I start with 5, it becomes a way of life and can be lots of fun if you learn to take the ups with the downs

robp

paisley2 wrote: »

My advise, put the €10k in an account and keep saving as much as you can, €2k a month, more if possible, when you have €80-€100k then go and talk to a professional firm and see what they have to offer. Don't worry about 0% deposit interest rates at the bank because we have near 0% inflation anyway, these cancel each other out.
Remember your day job is the best investment you will ever make in your life, your own career will produce more money than anything else during your life. Invest in your education and yourself and when you a have enough money to be of interest to professional money managers, give it to them, let them do their job and you go back to yours.

There is a certain sense in this. The power of compounding is impressive but only if you have a sizeable amount of capital to start off with. Early on the emphasis should be on accumulating savings.

ballyharpat

robp wrote: »

There is a certain sense in this. The power of compounding is impressive but only if you have a sizeable amount of capital to start off with. Early on the emphasis should be on accumulating savings.

The advice above does not take advantage of compounding though, 0% interest is not considered compounding-correct me if I'm wrong. Compounding is money making money.

The money money makes makes more money.

The advice above is in no way advice to anyone interested in investing, putting money in a 0% account is not investing-it is pure madness-IMO

robp

ballyharpat wrote: »

The advice above does not take advantage of compounding though, 0% interest is not considered compounding-correct me if I'm wrong. Compounding is money making money.

True. My point being the benefit of compounding is not so impressive if you start very small. Its better then nothing but only if the time you spend is not interfering with work and quality of life.

the5thace

What particular reason would you have against investing in an apartment?

Value Hunter

10k is not to small for a stock portfolio by any means.


For that amount you'll meet the threshold for interactive brokers. You'll have $1 fees to buy. As your under 25 your monthly inactivity fees will be $3 per month. This goes to $0 if you place 3 $1 orders.

$3 per month = $36 per year.

Add in some extra trades and call it $50 per year.

Thats less than 0.5% per year in fees.

paisley2

Value Hunter wrote: »

10k is not to small for a stock portfolio by any means.
For that amount you'll meet the threshold for interactive brokers. You'll have $1 fees to buy. As your under 25 your monthly inactivity fees will be $3 per month. This goes to $0 if you place 3 $1 orders.
$3 per month = $36 per year.
Add in some extra trades and call it $50 per year.
Thats less than 0.5% per year in fees.

I strongly disagree. €10k is way too small to begin a stock portfolio. Whatever about anything else in life, in investing size matters.
Just because you meet the minimum threshold to open an a/c doesn't mean you should open one. If you could just about afford the green fees and a set of clubs for a golf club membership, would you go out and play for your €10k again Rory Mc Ilory? Think about it.

There is literally trillions of dollars moving around the markets everyday in the hands of very clever and well resourced people. These people have been at it for decades. Trust me the markets don't need your €10k. The markets are structured to hover up the accounts of small investors with brokers soaking up commissions in between. Depending on which figures you use, 70-80% of small investors loose money over the long term when managing their own account. 80-90% of small traders loose.

Investing is not a young man's game. You need patience and discipline and a substantial a/c size. The average private investor in the US is 55 years old. Investing done properly is actually quite boring. There is an incredible about of BS around the whole area of investing and you need to learn which bits to ignore and which bits to take on board. Learning to do that takes time.

If you want to grow your savings steadily and securely for the rest of your life, put your money in the bank now, add as much as you can each month and start studying the markets and investing in general. Don't fall for the trap of looking for a home for your money because the bank are currently paying you no interest. At least they are not out to take if from you. As you sit through the interest rate/inflation crossover you might loose 1-2%, where as you could loose 30-40% in the blink of an eye with an on-line investing a/c. Think long term, cash is king. In a few years time if you are still interested in investing, then look at it again. You would be surprised the number of people who get 'interested in investing', loose a few grand over a year or so and then give up and miss out in the long run. How many times have you heard people say, 'it was a great buy at the time but I didn't have the money, nobody did'. You need to be the person who does have the money when the time is right.

Value Hunter

paisley2 wrote: »

I strongly disagree. €10k is way too small to begin a stock portfolio. Whatever about anything else in life, in investing size matters.
Just because you meet the minimum threshold to open an a/c doesn't mean you should open one. If you could just about afford the green fees and a set of clubs for a golf club membership, would you go out and play for your €10k again Rory Mc Ilory? Think about it.

There is literally trillions of dollars moving around the markets everyday in the hands of very clever and well resourced people. These people have been at it for decades. Trust me the markets don't need your €10k. The markets are structured to hover up the accounts of small investors with brokers soaking up commissions in between. Depending on which figures you use, 70-80% of small investors loose money over the long term when managing their own account. 80-90% of small traders loose.

Investing is not a young man's game. You need patience and discipline and a substantial a/c size. The average private investor in the US is 55 years old. Investing done properly is actually quite boring. There is an incredible about of BS around the whole area of investing and you need to learn which bits to ignore and which bits to take on board. Learning to do that takes time.

If you want to grow your savings steadily and securely for the rest of your life, put your money in the bank now, add as much as you can each month and start studying the markets and investing in general. Don't fall for the trap of looking for a home for your money because the bank are currently paying you no interest. At least they are not out to take if from you. As you sit through the interest rate/inflation crossover you might loose 1-2%, where as you could loose 30-40% in the blink of an eye with an on-line investing a/c. Think long term, cash is king. In a few years time if you are still interested in investing, then look at it again. You would be surprised the number of people who get 'interested in investing', loose a few grand over a year or so and then give up and miss out in the long run. How many times have you heard people say, 'it was a great buy at the time but I didn't have the money, nobody did'. You need to be the person who does have the money when the time is right.

Scaremongering,

The market is not a bookies, creating a portfolio of steady defensive names and holding for the long term while reinvesting dividends will ensure healthy returns. Compounding is your friend.

The hard work could even be taken out, invest in a few index etfs and gain instant diversification.

Massive losses using these methods only occur in times of major crisis and if the holder is foolish enough to sell at these times. Buying and letting compounding work is the soundest long term plan on a relative risk/reward basis.

Hold cash and watch it lose value slowly

robp

Value Hunter wrote: »

Scaremongering,

The market is not a bookies, creating a portfolio of steady defensive names and holding for the long term while reinvesting dividends will ensure healthy returns. Compounding is your friend.

The hard work could even be taken out, invest in a few index etfs and gain instant diversification.

Massive losses using these methods only occur in times of major crisis and if the holder is foolish enough to sell at these times. Buying and letting compounding work is the soundest long term plan on a relative risk/reward basis.

Hold cash and watch it lose value slowly

That approach works best with low fees and diversification which is tricky to do with small lump sums.

Also one can be very unlucky about timing. If you bought the Euro Stoxx 50 in 1999 you'd still be at a loss in 2015 excluding dividends.

ballyharpat

Look at the history of any successful investor, most of these started small-10k is a good amount and you can buy 2/34 different stocks and make a good profit with a good diversity……stay away from penny stocks, that is gambling-some may call it trading-invest in solid companies.

Invest, but don't 'put the house' on anything. I lost 80% of my portfolio in the crash in 08, but I kept putting money in and held what I had in there-I made a massive rebound and knew that it would happen-throughout history it has. had I left my money in a bank/savings account, I'd still be working 40+ hours a week and have 1/4 of my money to show for it……you have to speculate to accumulate…….

Value Hunter is giving good advice above as well….

paisley2

Value Hunter wrote: »

creating a portfolio of steady defensive names and holding for the long term while reinvesting dividends will ensure healthy returns. Compounding is your friend.
The hard work could even be taken out, invest in a few index etfs and gain instant diversification.

Yes that's Investing 101, it's all very well in theory, but can you explain how he can do that with just €10k and then add €1k a month for the next 10 years and not get hammered with commissions and maintenance fees? And all that's assuming the current bull market continues. And also assuming he maintains the patience and discipline to carryout the strategy for the next few years regardless of market conditions. Like I say, it all sounds good in theory.

Hold cash and watch it lose value slowly

As the song says "You got to know when to hold 'em and know when to fold 'em"
As someone investing or trading their own capital in the market, you need every advantage you can get and the one big advantage the small guy has is the ability to sit in cash sometimes.

ballyharpat

paisley2 wrote: »

Yes that's Investing 101, it's all very well in theory, but can you explain how he can do that with just €10k and then add €1k a month for the next 10 years and not get hammered with commissions and maintenance fees? And all that's assuming the current bull market continues. And also assuming he maintains the patience and discipline to carryout the strategy for the next few years regardless of market conditions. Like I say, it all sounds good in theory.

As the song says "You got to know when to hold 'em and know when to fold 'em"
As someone investing or trading their own capital in the market, you need every advantage you can get and the one big advantage the small guy has is the ability to sit in cash sometimes.

it is by following theories, that you get facts/reality. No matter what you believe in, some people always sell up 50%, some people always sell when they are down 8/10/15%, whichever it is, believe in it and follow through. taking half of every belief and doing nothing consistently, is where most traders end up in trouble….I won't say investors, because investors are in the game for the long haul to make money-not turn a fast buck.
Investing is all about patience….if you can't be patient, then it's not for you…

the lyrics you quote are from the song "the Gambler" that is about luck……investing is about knowledge and research

the big guys can sit in cash as much as the small guys can. The small guy can make a transaction in a small company without it being in the media straight away, the small guy can move in and out of stocks that are not suited to the bigger managers etc.

maintenance fees are non existent if you hold a portfolio above 5k, I believe, in TD, the price of a trade is very small with the right broker and if you do your own research, again, it's investing, not trading so you should not be doing a lot of trades.
Personally, I rarely purchase anything under 4k at the minute, but in the OP's situation, they could buy 2k's worth every 2 months, or wait for it to build up, if there is no stock that interests then at that time.

Out of curiosity Paisley2, are you a successful investor? if so, how long have you been doing it?

paisley2

ballyharpat wrote: »

it is by following theories, that you get facts/reality. No matter what you believe in, some people always sell up 50%, some people always sell when they are down 8/10/15%, whichever it is, believe in it and follow through. taking half of every belief and doing nothing consistently, is where most traders end up in trouble….I won't say investors, because investors are in the game for the long haul to make money-not turn a fast buck.
Investing is all about patience….if you can't be patient, then it's not for you…

the lyrics you quote are from the song "the Gambler" that is about luck……investing is about knowledge and research

the big guys can sit in cash as much as the small guys can. The small guy can make a transaction in a small company without it being in the media straight away, the small guy can move in and out of stocks that are not suited to the bigger managers etc.

Thank You Doctor

maintenance fees are non existent if you hold a portfolio above 5k

Sorry ballyharpat, but that's simply not true. Go and open a few accounts with €6k in them with the usual suspects serving the Irish & UK market (TD, Saxo, IB) and let me know how you got on with maintenance fees after a year, what they say and what you pay are two very different things. :rolleyes:

And that's just execution, add in the cost of a half decent charting and tech analysis package (especially if you want custom indicators), not to mention live feeds and you will need approx. $100k in your a/c or to trade 5000 shares to avoid maintenance and rental fees every month.

Out of curiosity Paisley2, are you a successful investor?

I suppose so, it pays the bills anyway.
Been investing over 25 years, trading part-time for about 10 but more seriously (2-3 days a week) for the past 3 years.

RobertKK

People wondering how much money is enough to start with.

I had Glanbia shares when they were only 42 cents or pence, it was a long time ago....


Now lets say in Euro...lets say you had €1000 plus the cost of buying, so you buy 1000/.42, you would have 2380 shares for your 1,000 euro.
I still have some of those shares, got them part of being a co-op member, so didn't actually pay for them, but wish I had bought some.
But that €1,000 worth of shares back then would be worth €42,221 today if you sold and before you pay taxes and cost of selling them.
I think it was .42 pence but the maths is the same...

There is a place for everyone to start, the more money you have to invest the better obviously, but one has to start somewhere.

ballyharpat

paisley2 wrote: »

Thank You Doctor

Sorry ballyharpat, but that's simply not true. Go and open a few accounts with €6k in them with the usual suspects serving the Irish & UK market (TD, Saxo, IB) and let me know how you got on with maintenance fees after a year, what they say and what you pay are two very different things. :roll eyes:

http://www.tddirectinvesting.ie/getting-started/rates-and-charges/


I had an account with TD and held it for 4 years, I paid 0 fees, I paid for trades, as with all transactions, but I only made 6 trades, so that was 75 euro over the period I was with them, they still charge no fees for anything above 5k


And that's just execution, add in the cost of a half decent charting and tech analysis package (especially if you want custom indicators), not to mention live feeds and you will need approx. $100k in your a/c or to trade 5000 shares to avoid maintenance and rental fees every month.

I don't believe that every investor will be look for the technical information you are looking for, and if they are, there are many sites that provide that information free. Live feeds can definitely be got on even the most basic websites……….

I suppose so, it pays the bills anyway.
Been investing over 25 years, trading part-time for about 10 but more seriously (2-3 days a week) for the past 3 years.

As someone investing for 25 years, I am surprised that you pay such high fees, but I guess if you are making that much, you can pay the fee and write it off as an expense….

Basically, the thing that the op should be hearing is-Invest, do it wisely, and don't be scared off. Every trader started with their first trade, and there are very few that waited until they had 100k-Paisley excluded

Value Hunter

I have a number of broker accounts, my newest (interactive brokers) has just 5K in it at present. Fees are no issue.


Get smarter with your broker choice if your worried about fees

robp

Value Hunter wrote: »

I have a number of broker accounts, my newest (interactive brokers) has just 5K in it at present. Fees are no issue.


Get smarter with your broker choice if your worried about fees

But if its outside the eurozone wiring money into the account can cost people significant fees. I have noticed people reporting that they paid over 30 Euro for this service with one Irish bank. Combine that to the bid/ask margin, commission and possibly stamp duty and it really adds up.

Value Hunter

robp wrote: »

But if its outside the eurozone wiring money into the account can cost people significant fees. I have noticed people reporting that they paid over 30 Euro for this service with one Irish bank. Combine that to the bid/ask margin, commission and possibly stamp duty and it really adds up.

Online bank transfers are free (its what I use). Bid/Ask margin is laughably small for any normal stock. Commission $1. Stamp duty only on Irish stocks iirc

ballyharpat

By the way this thread has gone, it's no wonder people in Ireland don't invest wisely……there is scaremongering, deceptions about fees, and advice to more or less put the money under the mattress until there's 100k-I would expect this from someone in their '60's, but I'm really surprised that the OP is not being told to embrace investing, learn from it, it's not a game. Only invest what you are comfortable with. Don't be put off by initial losses, you can't change the game, but you can change how you play it at any point…….

robp

Value Hunter wrote: »

Online bank transfers are free (its what I use). Bid/Ask margin is laughably small for any normal stock. Commission $1. Stamp duty only on Irish stocks iirc

I am not saying high fees are guaranteed but it is easy to end up paying them especially for beginners. I was looking at Irish Continental Group on the lSE Tuesday. The bid/ask was 2.4%, stamp duty another 1% plus EUR 20 trading fee if you are with TD or Saxo. If one was trading stocks not in Euros you will get hit 0.5-2% fx fees and possibly wire transfer fees.