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  1. #41
    Member NOCASH's Avatar
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    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    Bye Bye BUy

  2. #42
    Guru justakiwi's Avatar
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    Totally disagree. Even with only $5000 invested, diversification is still important. I have just under that figure and hold 1 fund and 6 companies. No plans to add any more, but what I have, gives me global and sector spread, the value of which is currently very apparent.

    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

  3. #43
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    I disagree also. Too many "great" picks have fallen by the wayside over the years, others have survived but failed to achieve the heights forecast by their supporters. The principle of diversification has been well demonstrated over the years - I would suggest at least 2 stocks in unrelated sectors for $5k, 3 or 4 for $10k of $15k. I won't bore you with a list of the great picks I've made in over 50 years of investing but CBL heads the list!

  4. #44
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    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    Before you even think about investing in ANY stock; you better be sure you know the business inside and out. This is the problem with active fund managers in that they are pretty much clueless on the shares they buy for their clients because they simply, don't spend (or know where to look or how) the time doing real research on the business. So if it's that difficult for these so called expert investors, what chance do you have? Perhaps a lot more as many investors have done very well just by understanding the business model without a bother of understanding fundamentals or technical analysis charts blah blah etc.

    The amount to invest where diversification becomes an issue doesn't really matter until you're working with super large amounts like $1M + Why? Because it all has to do with the investor's appetite for risk. To lose $5K is not so bad, but to lose $500K or $1M is a horse of a different colour. Generally those with significant sums want to be sure to get a 'high' probable return on the amount invested - like 5%. But to make 5% on something like $5K is kinda like a waste of time. I got this impressed at a local Chch investment seminar where Jarden Investments was doing a presentation. They were "Looking for clients with liquid assets in excess of $500K" because of the key reason being, to make the returns 'decent' enough for the investor. To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time. Sure you got to start somewhere but then again, look at how difficult it is to buy a house in Auckland? No pity to those that can't afford to get in one. The same applies to share investments IF you INTEND this to be the vehicle for your retirement.

  5. #45
    Guru justakiwi's Avatar
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    Wow. your arrogance is really showing this time.

    Quote Originally Posted by SBQ View Post
    .... But to make 5% on something like $5K is kinda like a waste of time......
    Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.

    To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time......
    Absolute BS.

    The same applies to share investments IF you INTEND this to be the vehicle for your retirement.
    Again, absolute BS.

    This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.

  6. #46
    Advanced Member BIRMANBOY's Avatar
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    When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.
    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    www.dividendyield.co.nz
    Conservative Investing and dividend producers...get rich slowly!
    https://www.facebook.com/dividendyieldnz

  7. #47
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    Quote Originally Posted by justakiwi View Post
    Wow. your arrogance is really showing this time.

    Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.

    Absolute BS.

    Again, absolute BS.

    This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.
    You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

    The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

    Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

  8. #48
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    Quote Originally Posted by BIRMANBOY View Post
    When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.
    I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

    Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

    I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.

  9. #49
    Advanced Member BIRMANBOY's Avatar
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    The reality as you have stated below is not THE reality it is simply YOUR or A reality. Like any endeavour in life different people are in different circumstances and have differing levels of capacity. I find its better to encourage people rather than discourage them so that they will not just give up because "someone with heaps of experience" makes them feel like its just all too hard and they are wasting their time. The best teachers and coaches are the ones that support everyone and not just the top 20%. This forum should be one for an exchange of opinions and ideas, but also supportive and encouraging to newbs and those less experienced. Stating that things should be done this way or that way, or shouldn't be done is not recognising individual differences.
    Quote Originally Posted by SBQ View Post
    I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

    Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

    I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.
    www.dividendyield.co.nz
    Conservative Investing and dividend producers...get rich slowly!
    https://www.facebook.com/dividendyieldnz

  10. #50
    Guru justakiwi's Avatar
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    Yes, I still say pretty much all of what you said in your previous post is arrogant and BS.

    You seem to think that every person who chooses to invest, is trying to get rich. I daresay there are plenty out there who are, but some of us are simply trying to improve our financial situation (whatever that may be), for the future. How many times do I have to remind you of my situation before you get it?

    *I am 59
    *I am divorced and live alone
    *I work part time for an annual income of probably no more than $26,000 (my shifts vary)
    *I live in my caravan - my choice as it was a better option than being stuck in a post divorce rent trap for the rest of my life
    *I have no house, no boat, no flash car - I have my caravan, my hail damaged/written off car, my KiwiSaver (currently sitting at only $25,000 but I am not worried about it), some savings, and my pathetic (in your eyes) share portfolio.
    *If there are any eligible sugar daddies in my area, they must knocking on someone else’s door, cause they sure aren’t knocking on mine

    I am not trying to get rich. I’m not stupid enough to even dream of that possibility.
    I am trying to build a small “safety net” or “emergency” investment portfolio - with regular, small (in your eyes) investments, so that by the time I need it, in 5-10 years maybe, it will be a small supplement to my govt super payments and my KiwiSaver. I live a minimalist, pretty frugal life and that won’t change. I am being proactive. So, your constant, monotonous implications that I am wasting my time, piss me off. For the most part, I ignore you, but when you post stuff like you do, that other beginners might take as gospel, I will call you out. You are wrong to impose your opinions on others. You are wrong to judge the way others are investing or managing their finances. You have tunnel vision based on your own world view and beliefs about money, and you seem unable to even attempt to see things from someone else’s situational perspective.

    So once again - bull**** on pretty much everything you use as an argument when you are trying to put me down for the efforts and decisions I am making for myself.

    Quote Originally Posted by SBQ View Post
    You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

    The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

    Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

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