How to buy at the right time in australia

by Leonard
(Syney, Australia)

I am 53 years of age and would like to take advantage of this asap as I have been informed that I have parkinsons
I am very interested your concept
But unsure how this would work in Australia
My time frame is a lot shorter getting to the end of work stage. I would like not to work after I am 58 to enjoy time with my wife

Regards
Leonard

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Jan 05, 2020
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starstarstarstarstar 		Timing the market
by: Mike

Hello Leonard,

I am very sorry to hear of your condition.

I must also apologize because we do not have a simple answer to your question. The reality is that we don't know all the details of your financial position and how much risk tolerance you should take or could handle. In many ways, I'm simply going to give you a few of my thoughts with a warning about stock markets.

When I buy an individual stock or a diversified group then I am aware that the stock market can be extremely volatile. You need to be prepared for some dramatic drops in the value of your portfolio. Some may recover but others may not. If you want an example from Australia - go and look at something like Retail Food Group over the last 3-4 years. This should have been a simple business but due to a number of errors there has been a permanent destruction of shareholder wealth. These are situations you need to really try and avoid (easier said than done!)

The volatility in stock prices means that I really don't try and time the market and I don't even look at stock prices once I've bought them. All I do is focus on the business and make sure the key numbers (earnings, returns on capital, debt levels, dividends, management actions, etc) are trending in the right direction. I'm aware that all businesses will go through leaner times as well. Ultimately this means that I am not trying to buy and then sell a stock - I am looking to buy the stock and hold it forever (as Warren Buffett aims to do). My returns come from dividends - either present or with future growth.

I know this isn't hugely helpful but we really don't want to set unrealistic expectations especially when you are nearing the end of your career. The reality is that I can't give you an answer without knowing all your financial details and your risk tolerance. You'll really need to speak to a good financial adviser. Just be aware of all the risks and understand what you are getting into by buying stocks or index trackers. If you do it well, then over a long period of time the rewards should be at least satisfactory.

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