Day: November 30, 2021

How to start investing in shares on the Australian stock market?

The first step to invest in shares is setting up a trading account. In this article I will give a beginner’s explanation to what is what and which platform I use to buy shares in Australian companies listed on the ASX.

A stock exchange is a market place where stocks can be exchanged between buyers and sellers. To place orders (buying or selling stocks) on an exchange you need to be registered to a financial institution that is licensed to buy shares on your behalf (a bank trading subsidiary). You need to have an account in a bank to be able to buy shares. It is obvious but it is also why an individual can’t buy shares in an other country so easily. It is not possible for an individual to open a bank account in a country they are not a resident or citizen. Of course Australian banks and brokers offer services to buy international shares but it is a little more paperwork. I have set up an international trading account with the Commonwealth bank of Australia to buy shares in the US and I will explain how in an other article.

Most banks offer services to trade shares. Buying and selling shares is called “placing an order” or “trading”. An order is a set of requirements that list the what, when, who, how much you want to buy or sell. Placing an order cost money. This is the fee a bank or broker will charge to send your order to the stock exchange. Professional traders use brokers or banks with low fees on orders because they place a lot of orders each day. In my case I only place a few orders a month so I don’t mind paying $10 per trade because I invest in the long term.

There is a minimum amount of $500 required to buy shares in Australia. In the US there is no minimum.

My setup: Commonwealth bank of Australia

First I opened a Smart Access account with Commbank. (See all account here) Their standard account is called Smart Access. It costs $4 per month unless you make a deposit of $2000+ on the account. It comes with your typical online services and a mobile app called Commbank.

Commbank Smart Access Account
ACCOUNTSDESCRIPTIONFEES
Netbank AccountTo transfer money in and out of Commbank$10 per month (unless deposit of $2000 per month)
CDIA Account (or trading account)To provision money to buy shares or receive money when selling sharesFree
Commsec Shares AccountTo see the total balance of investmentsFree
Commsec AccountPlace orders on ASXFree
Commsec mobile AppPlace orders ASX$10 per trade

I set up a direct transfer of $1000 per month to provisioned my account. The money can’t be sent directly to the CDIA account but transit through Netbank to CDIA. I make 2 orders per month of roughly $500 each. I explain why I invest in the company I select in the “We bought.”

Where to find inspiration to select Australian stocks?

Market index

The market index website has a great list of companies sorted by broker consensus. It gives a good glance at what’s the overall “sentiment” on ASX top 300 companies. Looking at at the “Strong buy” list and noting them down for future analysis is a good way to find potential candidates for success. https://www.marketindex.com.au/broker-consensus

Motley Fool

Subscribing to “Extreme opportunity” newsletter. They have some good analysis on some company. I only pick one of their stock every 3-4 months as I found their recommendations to not be always good.

Yahoo finance

Still one of the best finance mobile app around. You can add and remove stocks easily to keep an eye on a watchlist. Quite useful for US stocks. Their suggestion of “similar company” when browsing a specific company is great to discover new companies.

At work

Keeping an eye out. Working in big or small companies can give you ideas on useful companies. For example if your company use providers or partners with big names, chances are other companies are using them too. I found that a lot of similar big corporations use the exact same providers. Investing in those company has proven to be a win most of the time.

Reddit

Reddit is great to find inspiration and get the “sentiment” on companies. It is a wild community and its reactivity on some subject can’t be matched by any other media.

Twitter

Some accounts are really good for inspiration.

How much return on investment can you expect?

This varies on a number of thing.

  • The length of your investment
  • The number of companies you invest in
  • The diversification of your portfolio.

In my case +22.42% when I am writing this article. It was +14% in 2019.

I invest in companies for the long term. I don’t care if a company does well over a 6 months period because I rarely sell stocks.

I buy a maximum of $500 worth of shares in companies I select unless I have a really good intuition. So the maximum I can lose is $500 if the company valuation plummet. There is no maximum on the other side of the scale. So the companies with high growth can out balance the company at loss.

As per today, I invested in 48 companies listed on the ASX. 24 are in the green and 24 are in the red. Below are the best and worst companies I own. It illustrates that balancing.

I bought CANN Group at $2.366 4 years ago and is now worth $0.285.

I bought Camplify at $1.437 about 6 months ago and it is now trading at $4.00.

Before that Appen (ASX:APX) was my top stock. I bought it for $9.645 4 years ago. It went to $40 and is now back to $9.5

3 reasons why Solana could just be getting started

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Man on computer working on security issues.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Solana (CRYPTO: SOL) has been on an amazing run this year, becoming the fourth largest cryptocurrency by market cap and recently surpassing older, more established blockchains like Cardano (CRYPTO: ADA) and Ripple (CRYPTO: XRP).

Moving forward, Solana could have even more runway ahead of it as momentum for the blockchain continues to build. Here are three reasons why Solana could just be getting started. 

Lightning fast transaction speed (at a fraction of the cost!)

The Solana network processes a remarkable 50,000 to 65,000 transactions per second, compared to just 15-30 transactions per second for Ethereum (CRYPTO: ETH), or 250 for Cardano. This throughput also compares favorably to traditional financial networks like Visa (NYSE: V), which processes about 24,000 transactions per second. Furthermore, Solana does this for a low fee of $0.00001 to $0.00025 cents per transaction, which is much cheaper than the current cost of transacting on the Ethereum blockchain. Transactions on the Ethereum blockchain cost anywhere from $4 to $20 per transaction in ‘gas fees,’ making it impractical for smaller transactions. While these fees are coming down after Ethereum’s move to proof of stake, Solana still has a distinct advantage here. 

Amazing projects are coming to the Solana blockchain

The advent of decentralized applications (dApps) like CryptoPunks, Crypto Kitties, and NBA Top Shot on the Ethereum blockchain helped turn Ethereum into a $500 billion asset. Developers flocked to the Ethereum blockchain to build new projects while artists minted NFTs, adding value and excitement in the process. 

Solana is developing a dynamic ecosystem of its own. One interesting project is Audius, a decentralized, blockchain-based music streaming service whose AUDIO token utilizes the Solana blockchain. The service has 5 million listeners as of 2021. 

There’s also Solend, a lending platform built on the Solana blockchain that will allow users to lend out tokens and generate yield.

Additionally, there is a burgeoning array of NFTs sprouting up on Solana, like the Degenerate Ape Academy, which has generated over $100 million in secondary sales since August.  As more users and developers take advantage of the Solana blockchain, its value will continue to rise. 

Hitting exit velocity 

We could be at the point where Solana has reached ‘exit velocity.’ 

Last year, a run from $10,000 to $20,000 seemed to make Bitcoin more risky based on valuation. However, this strong performance and larger market cap put it on the radar of institutional investors and hedge funds. This institutional interest helped propel Bitcoin from $20,000 to $60,000. While seemingly counterintuitive, growing to this larger market cap helped ‘derisk’ Bitcoin in the eyes of larger investors and made institutions and corporations feel safe dabbling in the asset. 

Now that Solana is approaching a $70 billion market cap, we are at a point where hedge funds, institutions, and other large investors and corporations may be comfortable investing in Solana, and propel it to the next level.

Looking ahead 

With unparalleled transaction speed for a fraction of a cent, a flurry of development and interesting projects being built on its blockchain, and the potential for growing institutional interest as it reaches exit velocity, Solana is here to stay. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 reasons why Solana could just be getting started appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Michael Byrne owns shares of Solana, Ethereum and Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Monday showed why a long-term investing strategy is more important than ever

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

a man sits in front of his laptop computer with his head on his hand and a sad, dejected look on his face as though he is receiving bad news.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Stocks rebounded sharply on Monday, taking heart from more-upbeat comments following Friday’s steep declines. Despite ongoing concerns about how virulent the new omicron COVID-19 variant might be, investors nevertheless took a more positive view of the potential impact, especially in light of favorable comments from vaccine makers promising new weapons in the fight against the pandemic. The Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) didn’t claw back all of their losses, but they still put in a good day overall.

Index Daily Percentage Change Daily Point Change
Dow +0.68% +237
S&P 500 +1.32% +61
Nasdaq +1.88% +291

Data source: Yahoo! Finance.

Monday gave investors another example of how selling on down days can lead to poor outcomes. In many ways, those who are more susceptible to panic-selling under pressure would have been better served having simply taken a long weekend to ignore what the markets did on Friday.

A different look at the markets

Sometimes, getting a different perspective on investing just requires expanding your time horizon by the smallest amount. Consider how the markets have performed when you combine Friday’s losses and Monday’s gains:

  • The Dow has done by far the worst, falling almost 670 points, or just under 2%.
  • The S&P has fallen by about 46 points, or less than 1%.
  • The Nasdaq’s losses amounted to just 62 points, or less than 0.5%.

Moves of that size aren’t unusual, and they don’t establish anything close to a reversal of a prevailing trend. Rather, you can expect to see many moves in either direction over the course of several days in the stock market. Those moves can happen whether investors are in a bull market, bear market, or some sort of transition between the two.

Remember how far we’ve come

Another way to put declines in perspective is to think about how long it took to achieve a given milestone. For instance, the declines in the Nasdaq and S&P on Friday were significant, but they only took the indexes to levels that they first reached less than a month before. In other words, most investors would’ve been overjoyed if you’d told them a year ago that the S&P and Nasdaq would be where they were on Friday.

For the Dow, admittedly, it’s a little bit trickier. The average’s declines on Friday took it back to levels it first reached in May. Yet in the life of a long-term investor, even six months isn’t a huge span of time compared to your eventual time horizon.

Stay the course

Many investors saw Friday as potentially the first day of a huge downward move. That’s still possible, even though Monday provided at least a short respite. There’s always a chance that stocks will end up making a correction or entering a bear market, and in the long run, it’s inevitable.

If you try to anticipate those events with the goal of avoiding them, however, you’ll likely find that it ends up hurting you more than it helps you. In the long run, there are simply too many head-fakes from market volatility. The best way to reap the market’s long-term rewards is to stick with a consistent strategy and see it through. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Monday showed why a long-term investing strategy is more important than ever appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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2 buy-rated ASX shares with big growth plans

Graphic showing yellow arrow above vertical columns indicating a rising share price

The two ASX shares in this article could be leading ideas to think about as long-term ideas because of their plans that involve international growth.

Not every business is planning to expand geographically, but companies that do can materially increase their addressable market.

With that in mind, here are two ASX growth shares with major plans:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is an ASX retailer that sells a wide variety of baby and toddler products including prams, toys, clothes, furniture and so on.

The company has various plans to deliver profit growth and market share growth.

It’s investing in digital to deliver the best possible customer experience across channels. Baby Bunting is planning to invest to grow its market share from its core business. Baby Bunting wants to achieve growth from ‘new markets’ and aim for profit margin improvement.

New Zealand is an important part of Baby Bunting’s longer-term growth plans. It is aiming to open its first two stores in the country before the end of the financial year. Over time, Baby Bunting sees a network there of at least ten stores. In FY22 it’s also planning to open between six to eight new Australian stores.

Another area of growth for the ASX share is the amount of private label and exclusive products sold. In FY22 to its AGM date, 44.3% sales were from this source. The long-term goal is for these products to make up 50% of sales. This is helping the gross profit margin continue to rise.

In FY21, total sales increased 15.6% and pro forma net profit jumped 34.8% to $26 million. FY22 sales had increased by another 1.5% despite more than half of its stores being subject to lockdowns. Online sales were up 37.7% in the year to date.

The ASX growth share is rated as a buy by the broker Morgan Stanley with a price target of $6.90.

Redbubble Ltd (ASX: RBL)

Redbubble describes itself as the operator of two leading global online marketplaces – Redbubble.com and TeePublic.com. It enables artists to sell “uncommon designs on high-quality, everyday products such as apparel, stationery, housewares, bags, wall art and so on. It is steadily adding more product categories.

The ASX growth share generates its marketplace revenue from all over the world, though North America represented 69% of its FY22 first quarter sales. The EU (13%), the UK (9%) and ANZ (8%) represented the other major markets.

Excluding masks, Redbubble is expecting marketplace revenue in FY22 to be slightly above underlying FY21 marketplace revenue of $497 million.

In the next few years, it’s aiming to reach $1.25 billion of marketplace revenue.

Redbubble is planning to invest in multiple areas to grow the business in the medium-term, which likely means the earnings before interest, tax, depreciation and amortisation (EBITDA) margin will be in the mid-single digits.

However, the ASX share said in its recent trading update:

The business remains confident and excited about the medium-to-longer-term opportunity to grow strongly its online marketplaces for consumers and extend Redbubble’s global market leadership as the largest platform for independent artists.

Morgan Stanley currently rates Redbubble as a buy, with a price target of $6.50.

The post 2 buy-rated ASX shares with big growth plans appeared first on The Motley Fool Australia.

Should you invest $1,000 in Baby Bunting right now?

Before you consider Baby Bunting, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Baby Bunting wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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