Etfs and stocks

[danielgarcia]

Good evening, I'm fairly new at investing and trying out different things and I have 2 questions

1) after doing some research, I'm interested in the s&p 500. But how many shares of it is wise to get. An ETF is already diverse so would it be wise to buy maybe 6 shares if I have R500 to spare? Or should I have more and have a lump sum?

2) I noticed that Mr price and mtn do fairly well, is it wise to purchase a few shares(less than 5) from either one of them? And then buy 1 or 2 every month.

Ps, I'm a college student and can only invest under R500 every month.

Thank you for your help in advance

 

[ladydee68]

@danielgarcia I'd suggest reading up on the boglehead approach and maybe checking in on our friends at r/bogleheads .

My opinion is that if you don't know stocks stay with etfs. Look at the composition of each etf so that you don't over invest in one sector. And don't be scared if you buy a peak. The boglehead approach will explain why.

 

[ashellie]

@ladydee68 Ooh, I didn't know I am a Boglehead! I like it.

So they say invest in passive diversified low cost tax efficient things and forget. Based on that I've got my long term money all in a tax free account with low cost with EE invested in a bit of bonds, property, 4IR and a bit more emerging market and global ETFs.

 

[wonderdove]

@danielgarcia Alternate with other etfs too so that you can diversify . S&P500 with JSE top 40 and maybe something like industrials. I had financial index etf too, but it did nothing over majy years.

Great long term growth. I have s&P and top40 and keep investing every year.

I think these form part of a tax free account too

 

[jack100m]

@danielgarcia An ETF is a great way to invest. There is no perfect way to invest so that's up to you, but it typically is about time in the market. By that logic the sooner you are in the market the better. Buying shares thereafter means you either buy dips or highs, but long term you expect growth. Minimum trade fees could be an issue depending on which platform you use so keep an eye out for that.

Before you invest in a company I personally would suggest you look at the all time chart for those companies just as a start. Expecially those 2 companies. Then you have to decide whether the risk is acceptable to you. MTN has been doing great recently, but MTN's peak price was in 2014 and it's nowhere near that price now. Mr Price group has not been trading for longer than a few years so it's tough to tell where that will go. There are much better charts out there, but I understand those shares might be expensive. There are also much, much worse charts and anything can happen. Investing in individual companies is the most risky way of investing.

With such low amounts, and if you really want to buy shares, I suggest you look into Easy Equities, but stick to ETF's or funds. It is very hard to beat the market.

Remember anything can happen and the market doesn't really care about the valuation of a company. Everyone is trying to get ahead of everyone else if they think the price will tank or go to the moon in the future.

I am not a financial/investment advisor, but I would like to pass on some things I've learned along the way. You should always do your own research before listening to some random stranger on the internet.

 

[noeljack]

@danielgarcia With the amount you can save and with your knowledge I’d say ETFs for now. Later you can buy shares if you think you can beat the market. If you find you can, great. If you see you can’t, then just stick to ETFs.