Looking to start investing, advice?

BeardedBadger

Hi all,

I'm 21 and I'll be graduating college after this year and I want to get a headstart on my peers. I have almost 5k saved.

Is it feasible to get into the markets with so little cash?

Can anyone recommend any good books or training that would help me out?

Sabre Man

Absolutely. 5k is very good for a college student.

I myself started with just €500 recently. With DeGiro you pay far less in commission that traditional brokers. Please see my blog at http://theupsanddownsofanamateurinvestor.blogspot.ie/ if you would like to know more.

If you know nothing about shares I would recommend borrowing Investing in shares for dummies or a similar book from your local library. Here are some basic tips:
http://www.dummies.com/how-to/content/investing-in-shares-for-dummies-cheat-sheet.html

Never invest any money you can't afford to lose. The value of your investments will go up and down and you could potentially lose everything.

rain_soaked

BeardedBadger wrote: »

Hi all,

I'm 21 and I'll be graduating college after this year and I want to get a headstart on my peers. I have almost 5k saved.

Is it feasible to get into the markets with so little cash?

Can anyone recommend any good books or training that would help me out?

put it in one single global inex etf , id recomend vwrl on the amsterdam exchange , do the same this time next year if you have some spare cash , over twenty years you will average out very nicely , dont worry about day to day movements

there are only two things you need to make nice ( not spectacular , most are not smart enough to become rich investing in stocks ) returns are

1. patience

2. diversification

Fizman

BeardedBadger wrote: »

Hi all,

I'm 21 and I'll be graduating college after this year and I want to get a headstart on my peers. I have almost 5k saved.

Is it feasible to get into the markets with so little cash?

Can anyone recommend any good books or training that would help me out?

Investopedia is very useful.

There are lots of great books. I'm currently reading 'Millionaire Teacher' and think it's a great read for someone very green on investing. Best to read a few of the intro books first, then progress onto the likes of The Intelligent Investor and the likes.

Frogdog

+1 for Millionaire Teacher by Andrew Hallam.

lcwill

rain_soaked wrote: »

put it in one single global inex etf , id recomend vwrl on the amsterdam exchange , do the same this time next year if you have some spare cash , over twenty years you will average out very nicely , dont worry about day to day movements

there are only two things you need to make nice ( not spectacular , most are not smart enough to become rich investing in stocks ) returns are

1. patience

2. diversification

Best advice...but then i would say that: my first investment was E5000 of VWRL on the Amsterdam exchange, earlier this year. Pity I bought close to both the market peak, and the bottom of the Euro against the dollar.

A few things that I learned after that investment are, firstly that currency risk is a major factor, secondly, that currency risk is determined by the currency in which the underlying stocks are traded, not the currency in which you buy the ETF, and thirdly that the US accounts for 50% of global market capitalisation so when you buy VWRL you are buying 50% exposure to the EURUSD exchange rate.

I assumed my purchase of a global ETF was the safest bet I could make and that volatility would be low. Over the next few months the Euro value of my investment dropped by up to almost 20% - currently down about 14%. Luckily I am investing long term, hopefully forever.

I have had a few dividends which take the edge off but since then I have focused on getting a more balanced currency risk in my portfolio by buying ETFs with more Euro exposure - like iShares Eurozone ETF.

Now planning eventually to be at least 33% Euro and no more than 25% USD unless Euro gets very strong again.

Main lesson is that investing has a long learning curve. You should plan for your first investments to be an investment in your own education. Do some research before you buy, but if you make a mistake, learn from it, and that lesson will repay you many times over in future when your portfolio is much larger than E5k.

adamshare01

Investopedia is very useful.

ulinbac

Hi BB,

What type of trading are you looking at? If you want to trade take 6-12 months to study and study hard. Run a dummy paper account. Find your strategy that suits you. Take some well known ones and developed yours off the back of it.

2 books I would recommend would be The Naked Trader 4th Edition and Trading in the Zone. Psychology is a big part of the game.

I agree with Patience above but not with diversification. Have a few stocks and know them incredibly well. With a smaller account diversification will eat into your capital through costs alone. It depends on how risk averse you are. Your gains will probably be higher but same with losses. You can get around it by managing risk but that comes back to discipline and psychology.

Hope that helps

BeardedBadger

Cheers for all the advice. I've read a couple of books already and this 5k is money that I can afford to lose. It's a mix of birthdays etc and a direct debit I set up every time I start working.

Do all the books help a lot or is it something you just need to jump headlong into? It's tough to make the decisions on what to do as 5k is a lot to me at the moment even though I can get by without it. Would it be better to start smaller or split it into smaller amounts?

I'm open to a bit of risk provided the reward is good enough.

Thanks again for the advice

Chancer3001

I'd probably go 2k, 2k and 1k.

My advice,

Be realistic. Even if your shares jumped 100% in an absolute shocking growth burst, you still only make 5k. Don't expect to be a millionaire.

2- buy shares in companies you'd be happy to own shares in, even if you couldn't check their share price. So, basically, solid companies.

3- go long term. Unless you want to be doing trades every week or so, invest, sit back and hopefully watch the investment grow.

4- crashes in the markets are your friend. That's the time to buy. Not when everything is hunky dory and prices are high

ulinbac

I'd go 1k by 5. You learn off 5 trades rather then 3.

What do you want to invest in?

What is your time frame?

What is your risk limits per trade?

BeardedBadger

ulinbac wrote:

What is your risk limits per trade?

I'd like to try have a large risk, large potential return on 1 or 2k and use the rest to hopefully identify and start investing in a few that I can hold for life.

ulinbac wrote:

What is your time frame?

I'm 21 so the sky is really the limit on this, it could be locked away for 40 years.

ulinbac wrote:

What do you want to invest in?

I want to invest in something I understand well. My background is all in technology so that's the industry I've been looking in.

For ever odd

Would you be brave enough to back yourself, and set up your own company?

Prezatch

For ever odd wrote: »

Would you be brave enough to back yourself, and set up your own company?

:pac:

ulinbac

BeardedBadger wrote: »

I'd like to try have a large risk, large potential return on 1 or 2k and use the rest to hopefully identify and start investing in a few that I can hold for life.



I'm 21 so the sky is really the limit on this, it could be locked away for 40 years.



I want to invest in something I understand well. My background is all in technology so that's the industry I've been looking in.

The likelihood of having one share for life is minimal as it's more than likely for the company to have disappeared by then.

You need to read a bit more. Managing risk is a big thing in trading. It seems you are only concentrating on the rewards and not the loses. Buy The Naked Trader 4th Edition before you do anything. May help out a bit. Losing 20% of your capital (1k) on a trade is not a thing good traders tend to do from what I have read.

Don't rush it. Take your time. There will always be another stock on the horizon so don't be worried about missing one atm

Chancer3001

Defence companies seem to do well long term.

jesseps

One thing I have learnt over the 6 or so years of investing. Always do your due diligence. Also one person above did say something wise: patience and diversification.

Starting off with 5k is a good start, just pick and choose the right stocks or ETFs wisely or a mix bag.

All the best.

Invest. Don't trade. They are not the same thing.