Posted: Wed Jan 30, 2008 4:51 pm Post subject: Re: Initial stocks Investing capital.
jameste wrote:
Lady & Gentlemen & Senior Investors. I am a beginner who has a first step in the stock investment market. As I know that stocks investment has it own risk to care but with proper planned, then it probably will be no problem.
My questions:
- How much the capital people (poor people) will invest into a stock market.
- Which one will be the best recommended place for purchase and sell the stocks? KLSE or BANKs.
- If I got RM1000 only to begin my stock investment. What should I do? (Open an account in Bank? What the cost?)
Any other suggest will be appreciated. Thank you very much~
HLeBroking is better than MBB2U - I've used both. Better in the sense of service AND you get 3% pa on any CASH you have in your trading account (compounded monthly). Ahem.. MBB2U.. elek.
As for stock picking and approach (yes, it's two different things), IMHO, it depends on whether you're investing OR trading.
Me - i generally invest and just trade a wee bit on the side (less than 10% of my total capital).
For investing, a fundamental approach is required to screen for good companies to invest in. Then, using those fundamentals and/or technical analysis - you wait for the market to be crazy and buy at a good price / value. Simple yar?
Investment approach can be based on Value, Growth, Dividend Yield, etc. OR a combination . The basics you must know is ROE, D/E, P/E, EPS, DY, P/Sales, P/(NTA/Share), etc. Once you know these, you can grab the info online or statistical books like Stock Performance Guide Malaysia (Yearly Edition by Dynaquest S/B) for the numbers.
Stocks vs Mutual Funds - a thought
I'd use EPF only for Mutual Funds due to the yearly Mgt Fees and the front load / commission as I can't touch my A/C1 until I'm grey (another 20yrs). Hey, those 1.5% to 2.2% management fee ratio (yearly) can add up quite a bit + the initial loss of 3% on buying. Cash has more opportunistic power.
Oops! Forgot 1 VERY important element - Money management (Risk Mgt) and Asset Allocation.
$ Management
If you start with $10K, please do NOT jump in with all that - maybe targe 50% to 67% of it for 2 to 3 companies' stocks from different sectors based on your screens and REASONs to invest in those companies (eg. LPI, Uchitec, Mamee). Keep the other 50% to 33% for opportunity to get into others or at a better price.
There are a few approaches / methods - like never risk more than 1%-2% of your portfolio on a single idea (trade or investment) OR a hard-based formulic approach like AIM / AIM-HI.
As for asset allocation - this is the BIG pix that you shd start with (your strategy so to speak). Generally 4 assets type that are very loosely correlated.
1. Equity: Stocks or Equity Mutual Funds
2. Fixed Income: Bonds, Bond Mutual Funds, (EPF is here IMHO)
3. Cash & Equivalents: for opportunities (high % a/c, Money Market, FD, Flexi Mortgage A/c)
4. Alternatives: Properties, REITs, Gold, etc
Eg (depending on your ability to sleep on risks):
Equity: 67%
FI: 20%
Cash: 3%
Alternatives: 10%
Then from this asset allocation (for maximizing returns based on risk), I diversify (reduce risk). Eg:
For Equity, I'll do Stocks and Mutual Funds. In stocks, I do % based on industry & growth/value/DY combination. For Mutual Funds, I do % Domestic, % Foreign - all growth/value/blue chip
whew.. big pix there. lots more details you can pick up via books & stuff
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My questions:
. The basics you must know is ROE, D/E, P/E, EPS, DY, P/Sales, P/(NTA/Share), etc. Once you know these, you can grab the info online or statistical books like Stock Performance Guide Malaysia (Yearly Edition by Dynaquest S/B) for the numbers.
