I'm buying an ASX bank share. I want to diversify my portfolio and provide some long-term stability. Plus I want a dividend.
What's weird for a new investor with the stock market is how much the share price and therefore your share portfolio moves around. I've bought one ASX Blue Chip Share Alumina (AWC) which raced up (ok I exaggerate) but it was in the black and was up a few hundred dollars, then a week later, it's in the red (I'm talking $18 down so no one is going to die).
I've bought two quite speculative small caps, one a producing small cap miner Panoramic Resources (PAN) and Volpara (VHT) a small cap med tech in the early stages of it's life cycle, read speculative but promising!, that helps detect breast cancer and help guide the patient's treatment. So those two speculative small caps did go down and now they are back in the black again. I know for long-term investors this comes as no surprise but it does to me!
Macquarie Telecom (MAQ) which is an established 'small cap' but really it's probably a mid cap with a strong track record and very stable management was up, then down and now the share price is where I bought it.
Why do ASX Share Prices Move without any news?
Overall, I'm pretty much even but a few days ago or a week ago I was up a hundred dollars or so. So share prices really do move around.
You begin to think that when there is no real material difference in the price (hard core investors who watch every cent please cut me some slack here - I'm really interested in the big picture but more on every cent in a second) why does it move so much?
What this gets me thinking about is actually waiting a few days when you want to buy a new share to see what it does. Is that the lesson? Clearly it's too early for me to have a clue but that's what I'm thinking at the back of my head - don't chase a stock especially when there isn't any material news as the market really does move around quite a bit.
Building a Diversified Share Portfolio one Stock at a time
Back to my mantra of building a share portfolio over time buying an ASX stock with the money I've saved in the month. This month I've spent just shy of $1,000 (muck around with the number of shares you are buying so that you can get the cheaper brokerage rate) on Volpara (VHT). It's a speculative small cap and I now want to balance out my share portfolio with something sturdier! VHT I hope will be around in 10 years but it can't be guaranteed, but we know that the big four banks will be because the Australian Government guarantees them!
Which of the Big Banks do I buy?
I really love our Blue Chip Value report because it is so simple. Don't get me wrong, there are big brains behind it but for a reader it's so easy to use.
I know that CBA and WBC are more consumer focussed and NAB amd ANZ are more business focussed.
Maybe I plan to buy one of each. Let me crunch some numbers.
Business focussed Bank ASX Shares
ANZ: Currently a Buy Recommendation, Current Price $27.42 Under the Radar's target opportunity 31.4% so we think that in 12-months it could be $36.03. Dividend yield of 5.8%
NAB: Currently a Buy Recommendation, Current price, $28.09, Under the Radar's target opportunity of 32.4%, with our target share price of $37.19 and a dividend yield of 5.9%. Our analysts believe this is the cheapest of all the banks. Don't know about you but I like cheap. I think at this point I'm putting NAB at the top of my buy list for the business focussed banking ASX shares.
Consumer focussed Bank ASX Shares
WBC: Currently a Buy Recommendation, Current Price $28.68, Under the Radar's target opportunity of 30.9%, Under the Radar Report's target share price is $37.54 dividend yield of 6.2%.
CBA: Currently a Buy Recommendation, Current price $78.60, Under the Radar's target opportunity 3.0%, Under the Radar Report's target price $80.97 - it's clearly the most expensive major bank but our analysts believe it is fairly valued and it pays a good dividend (5.5% yield).
I just checked CBA's price and it went up on Wednesday to $80.43 - given our price target I'm not really going to be getting any capital growth here and now the share price is back to $79.375. If I buy CBA I'm parking my money to get a dividend yield of 5.5%. I could wait a few more days (there is no immediate rush) and add CBA to my watchlist (which I just did with my online broking account - it's very easy to do) and see what it does. But I want more than just a dividend yield. I want share price growth potential too. CBA is looking less like an ASX stock that I want to buy.
So what about WBC?
Well, it also has a good dividend yeild of 6.2%, we have a target opportunity of 30.9% which means that we think it's share price could be 30% higher than it is now in 12-months time! (I like the sound of that - even if it doesn't get anywhere close - our technical analysis shows there is hope for share price growth!). And it is also $28.77 (down from $29.24 a share on Wednesday) so I can certainly buy a bigger parcel of shares.
ARE THE ASX BANK SHARES GOOD VALUE?
Our Blue Chip Value portfolio manager, Sam Ferraro, says that:
"In terms of valuation the major banks are actually trading at the cheapest they’ve been since the early 1990s in light of recent underperformance, which is another reason why we’re happy holders."
So, it does seem like a great time to hit buy on the big four ASX shares.
Do you Buy a clear parcel (say 500 ASX shares) or $2,500 worth of ASX shares?
Well, you can do either, but I've been buying a round parcel that makes sense with the dollar amount I want to invest. ie, I bought 110 MAQ shares and 3,000 PAN shares and 600 VHT shares. AWC was the first share I bought and I have 1,111! Clearly not a round number, but my plan now is to buy a clear parcel not to the exact value which will never be a divisible amount anyway.
Am I hitting BUY on these Banking ASX Shares now?
I'm certainly going to buy the cheapest (NAB). Now I know about the share price moving around quite a bit within a week or a month, I could watch it a bit before I hit buy. I know in the last two days it's dropped. But if I wait longer, I know what I'm like and I end up forgetting and doing something else. At a different stage of my life when I have time to burn I would watch it, but as a busy working Mum I'm just going to get through my list of things to do and hit BUY Now.
Brexit is all across the news as it's D-day for Boris Johnson and he has a deal that he now needs to get through. The market could rally if a Brexit deal is done or it could do nothing. Who knows. But I do know that the price is lower than it was on Wednesday so I'm just going to Buy 100 NAB shares now.
When I was juggling around online placing my bid I was trying to work out how many shares to buy. I decided on a clean 100 which meant I had to put in about $300 extra than I had planned. It means less coffee for me this month, but I'm excited that buying shares really is helping me save /invest more money and not just see it fly out the window with nothing to show for it.
So, my ASX share portfolio is growing. I now own 5 ASX stocks and my portfolio is valued at just shy of $10,000. I'm pretty happy with my actions so far and I'm excited to know that I'm doing something with my savings and I'm finally taking some action to plan for my future financial independence and security.
Fingers Crossed it all keeps going well.
My ASX Shares: Watchlist
Next month, (I need to gather more savings together), I'm going to check in again, but I'm going to put WBC on my ASX SHARES TO BUY list!
We also have a small cap dividend portfolio next week. When we have done these portfolios in the past they have made some handsome returns. More on that next week. Happy weekend.