Newbie share trading.

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370 posts

Ultimate Geek

#1813449 5-Jul-2017 20:12

@tdgeek

You are right, my current understanding of diversifying a portfolio is by perhaps investing in different ETF's like the FNZ, Bond ETF's, Dividend ETF's and foreign market ETF's and also individual company stocks.

I've found out that ANZ securities ETF's are not suitable for ongoing monthly deposits due to brokerage fees and that Smartshares is the place to go. I was aware of Smartshares but not that ANZ ETF's didn't have an ongoing deposit plan. Does anyone here use Smartshares?

I read somewhere that ETF's have the potential to outperform active trading also but is active trading still something you would use to diversify a portfolio? The ETF trading seems more straight forward, it's the active trading that still doesn't make a lot of sense to me. Does active trading have the potential for more short term gain? Sorry my questions are still so newbie!

Can anyone explain how the bond and dividend ETF's work? If you were looking for dividend focused shares what might be better, a dividend ETF or high paying dividend individual stocks?

ArdRigh

25 posts

Geek

#1813510 6-Jul-2017 00:15

I am going to add another +1 for using Sharesies.

They mentioned in their latest update about going to open beta soon https://medium.com/sharesies/sharesies-beta-update-one-month-in-460ae8eeda7b

They use SmartShares because it fits the model to make small payments to get started, something other countries apparently don't have(?). It's a really good model for anyone to have a dabble with.

It is worth noting Sharesies are planning on adding more ETF products, which they are still working through the paperwork on.

I asked them specifically about things like technology or 'green' products, which it sounds like is a popular request.

networkn

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#1813544 6-Jul-2017 08:27

The only advice I can offer you, is advice my Grandfather gave me, which was mirrored by an investment guru a few years later.

Don't invest in the stock market, what you cannot afford to absolutely lose.

I'd be inclined to suggest starting very small

Kol12

370 posts

Ultimate Geek

#1819161 10-Jul-2017 20:34

I signed up for NZX virtual trading but before I make a fool of myself even with paper money can anyone offer some tips short term trading on the NZX? Do we look for up and coming companies rather than the more established companies for short term trading? It appears our stocks don't tend to move all that much am I wrong?

Ouranos

118 posts

Master Geek

#1823588 17-Jul-2017 08:55

Kol12:

I signed up for NZX virtual trading but before I make a fool of myself even with paper money can anyone offer some tips short term trading on the NZX? Do we look for up and coming companies rather than the more established companies for short term trading? It appears our stocks don't tend to move all that much am I wrong?

Short-term share trading is essentially gambling.

Like gambling, some people will win - at least for a while. Also like gambling, the odds are stacked against you.

There is a lot of research about various trading strategies. This article from Motley Fool is a good place to start https://www.fool.com/investing/general/2015/07/19/3-facts-of-life-short-term-traders-need-to-accept.aspx

It makes three points:

- Short-term trading is a zero-sum game, but not all outcomes are equally likely. A large study found that in the typical six month period, more than eight out of ten day traders lose money.

- It is much easier -- and financially more rewarding, according to piles of studies on investor behavior -- to simply buy stocks you like and hold them for the long term. Almost universally, more activity leads to worse investor performance.

- Short-term trading has tax implications. The article discusses US tax, but similar issues apply in NZ.

tdgeek

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#1823614 17-Jul-2017 09:19

Ouranos:

Kol12:

I signed up for NZX virtual trading but before I make a fool of myself even with paper money can anyone offer some tips short term trading on the NZX? Do we look for up and coming companies rather than the more established companies for short term trading? It appears our stocks don't tend to move all that much am I wrong?

Short-term share trading is essentially gambling.

Like gambling, some people will win - at least for a while. Also like gambling, the odds are stacked against you.

There is a lot of research about various trading strategies. This article from Motley Fool is a good place to start https://www.fool.com/investing/general/2015/07/19/3-facts-of-life-short-term-traders-need-to-accept.aspx

It makes three points:

- Short-term trading is a zero-sum game, but not all outcomes are equally likely. A large study found that in the typical six month period, more than eight out of ten day traders lose money.

- It is much easier -- and financially more rewarding, according to piles of studies on investor behavior -- to simply buy stocks you like and hold them for the long term. Almost universally, more activity leads to worse investor performance.

- Short-term trading has tax implications. The article discusses US tax, but similar issues apply in NZ.

I wouldn't call it gambling. What I would say is that you can't just manufacture short term trading. Like any investor, small or huge, you seek companies that look progressive and as they grow, your investment grows. Every now and then you may get a large share price gain, but then you may wish to hold as its still a great stock. Unless the OP is looking at low value mining shares that fluctuate in a small range, but what is actually a high % range? Thats gambling, for sure.

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#1823637 17-Jul-2017 10:01

ArdRigh:

I am going to add another +1 for using Sharesies.

They mentioned in their latest update about going to open beta soon https://medium.com/sharesies/sharesies-beta-update-one-month-in-460ae8eeda7b

They use SmartShares because it fits the model to make small payments to get started, something other countries apparently don't have(?). It's a really good model for anyone to have a dabble with.

I know this post was from a while back, but just to say thanks to those who have raised Sharesies as an option. While not wanting to thread-cr@p, this does seem a good option for someone like me, who doesn't have the time (and is not that interested) to put lots of effort into coming up to speed in order to dabble effectively in the share market. A year or so back I started a thread on GZ, seeking advice re investing in SmartShares or similar, and ended up not doing anything about it, but Sharesies appears even easier to manage.

Given it's a small start-up, I just wanted to be clear (and displaying my ignorance here!) - in the situation that the company itself goes under, I assume the "shares" are held in trust and thus would not be affected? (I'm assuming they're essentially a middle-man, but I may not be understanding how it works.) Thanks for any tips and guidance.

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Kol12

370 posts

Ultimate Geek

#1824074 17-Jul-2017 21:42

If my understanding is correct would you actually need to invest quite large sums of money in stocks to make short term gains on the NZX? Looking over some company price histories it seems stocks on the NZX don't go up a heck over short term periods, the data I'm seeing is around $1 over a years period. Remember I'm completely new to the NZX so my observations may be wrong, but it does seem like you'd need to hold stocks for some time to make useful gains, at least on the NZX...

Regarding Sharesies Smartshares came up as being the main place to go for ETF trading but I will check out Sharesies again.

Sam91

620 posts

Ultimate Geek

#1824087 17-Jul-2017 22:17

Another +1 for Sharesies, I hadn't heard of them until they were mentioned in this thread. There's a 24 minute interview with the CEO of Sharesies here.

Sharesies seems like a good option for the OP. It's so easy to get started and it's really easy to use. So far I'm up just over $1 on my $100 investment.

FYI, they have a yearly fee rather than a fee per transaction. It's a flat fee of $30 per year, but if you sign up at the moment you'll get $20 added to your wallet once you pay the $30 fee. This has probably already been mentioned in this thread.

jonathan18:

I know this post was from a while back, but just to say thanks to those who have raised Sharesies as an option. While not wanting to thread-cr@p, this does seem a good option for someone like me, who doesn't have the time (and is not that interested) to put lots of effort into coming up to speed in order to dabble effectively in the share market. A year or so back I started a thread on GZ, seeking advice re investing in SmartShares or similar, and ended up not doing anything about it, but Sharesies appears even easier to manage.

Given it's a small start-up, I just wanted to be clear (and displaying my ignorance here!) - in the situation that the company itself goes under, I assume the "shares" are held in trust and thus would not be affected? (I'm assuming they're essentially a middle-man, but I may not be understanding how it works.) Thanks for any tips and guidance.

This is answered in this interview at 6:50.

Kol12

370 posts

Ultimate Geek

#1824112 18-Jul-2017 00:01

My understanding is Sharesies invests in funds like Smartshares does, possibly the exact same funds the same way... so what makes them any different and what makes things easier to manage with them? Are they completely legit? Is my money safe with them?

st02197

36 posts

Geek

#1824122 18-Jul-2017 06:27

Another product worth checking out is Superlife (like Smartshares it is both owned by the NZX group). The thing that is good about it is you can create a diversified portfolio with them (e.g. 10% bonds, 10% property funds, 20% FNZ ETF 60% US S&P500 ETF) and you can make regular contributions to your portfolio without incurring trading fees.

I've also used Smartshares buying both FNZ and US500 and made use of their regular contributions to buy units every month without incurring trading fees (though I think I will end up consolidating and just using Superlife as they are too similar in what they do).

I'd also recommend checking out the sharetrader forum. Whilst the requirement for a non gmail/hotmail email is a pain, there are a lot of smart people posting there and I've personally learnt a lot from the forums there.

Edit: I personally prefer only buying individual NZ companies through the broker (e.g. ANZ or ASB securities) and buy the ETFs through Smartshares or Superlife so as not to incur trading fees.

Kol12

370 posts

Ultimate Geek

#1824720 18-Jul-2017 19:34

@st02197 What is the difference between Superlife and Smartshares? The way you describe it they sound pretty much the same...

I am set up to trade with ANZ securities also and I agree trading ETF's with them would not be suitable if you are looking to make regular contributions...

Would I be wasting my time having a little play with a couple of hundred dollars on an individual stock to get a feel?

I'm currently playing with NZX Virtual trading. If I'm reading things correctly I made $13 on Chorus today and I only brought the stocks today, that seems pretty neat no? My Ryman are worth $11 more than initial buy price over the course of 1-2 days also.

Sam91

620 posts

Ultimate Geek

#1824730 18-Jul-2017 19:56

Kol12:
@st02197 What is the difference between Superlife and Smartshares? The way you describe it they sound pretty much the same...

I am set up to trade with ANZ securities also and I agree trading ETF's with them would not be suitable if you are looking to make regular contributions...

Would I be wasting my time having a little play with a couple of hundred dollars on an individual stock to get a feel?

I'm currently playing with NZX Virtual trading. If I'm reading things correctly I made $13 on Chorus today and I only brought the stocks today, that seems pretty neat no? My Ryman are worth $11 more than initial buy price over the course of 1-2 days also.

A few years ago I was going to do the same thing. I soon realised it's pointless because of the fees involved. Let's say you invest $100 in Chorus, you'll be charged somewhere around $30 for your purchase, then when you decide to sell you'll be up for a similar (possibly greater) fee. So your investment would have to increase to around $160 just to break even. That's why it doesn't make sense to invest with small amounts. Sharesies exists for this very reason, they want to make investing accessible to everyone.

Kol12

370 posts

Ultimate Geek

#1824747 18-Jul-2017 20:23

Sam91:

A few years ago I was going to do the same thing. I soon realised it's pointless because of the fees involved. Let's say you invest $100 in Chorus, you'll be charged somewhere around $30 for your purchase, then when you decide to sell you'll be up for a similar (possibly greater) fee. So your investment would have to increase to around $160 just to break even. That's why it doesn't make sense to invest with small amounts. Sharesies exists for this very reason, they want to make investing accessible to everyone.

Yeah I see, but let's say you left $200-$500 over maybe 1-2 years, maybe that period of time would be more worthwhile?

Can you further elaborate on Sharesies and what you think accessible to everyone means? I've signed up for Sharesies beta (didn't realise it was so new...) but I don't really understand what advantages they have over brokers like ANZ securities and Smartshares. I'm yet to complete the application with my $30. Are they going to be totally legit?

st02197

36 posts

Geek

#1824759 18-Jul-2017 20:33

Yes both are similar in terms of what you can achieve. In general I find Superlife offers features that would make managing my portfolio easier, whilst investing directly in Smartshares may allow you to incur lower annual fees e.g. US500 ETF - 0.35% is charged by Smartshares whilst 0.44% is charged by Superlife.

I found this blog to describe the difference quite well.

It's worth noting that trading fees will also not currently be incurred for Smartshares if you join their regular investment plan. e,g. have a set amount automatically deducted from your bank each month. Trading fees are only incurred if you decide to sell the ETF.

In terms of buying individual stocks, I myself am quite new and have only been buying individual companies for 3 or so years. Though I would recommend a book that really helped me called The Intelligent Investor by Benjamin Graham (this book was recommended reading by Warren Buffett). If you live in Auckland, you can borrow the eBook for free from Auckland Libraries.

If there was one observation I have for investing a couple hundred dollars in a stock, it would be that 14.5% of your investment will be made up of fees (assuming $29 fee charged by ANZ Securities). Which means you will need the stock to increase by more than that before you start to realize a gain.

Thanks for starting this thread, it's interesting to read other's approach to investing in NZ :)

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