All mothers have one annoying trait in common…
They all think their children can’t do anything wrong.
But my mum knows better. She knows I’m not perfect.
And thank god she does. Because if she didn’t know that, she’d never let me invest her money.
At least, not again…
The golden racket
When I was 20, I had little money to spare from my part-time jobs whilst studying at university but I loved the stock market and the idea of investing. So, my mum decided to give me $30,000 to invest.
At the time, I thought that was a lot of money.
At first, I bought some solid blue chip stocks and was pleased to see their value slowly increasing. Unfortunately, I let my success get the better of me and started buying penny stocks of companies I knew little or nothing about. Trying to get rich quick.
And in a single day of trading I lost around $5,000 of the money she’d given me. Worse yet, I dragged a friend down with me, into this tiny resources stock.
That was by no means the only investment that went wrong in the first year but it certainly cost the most.
A lesson worth learning
Now you’re probably thinking: “Well, that serves her right for giving you that amount of money”.
But you’d be wrong.
The lessons I learned from my first year of “investing”, where I lost around $10,000, have never been forgotten, even if it took me a while to put them into practice.
In the three or so years since I first began investing, the portfolio has performed exceptionally well and has more than recovered what was lost by that tiny resources company.
More recently I was asked by my mum to invest a much larger sum of her money. Ever since, I’ve been contemplating which stocks I should buy. Below is a list of five I’ve identified.
However, it should be noted that I don’t think all of them are a buy at today’s prices. The ones I do like at today’s prices, I already own (see my disclosure below). I will be patiently waiting for the others to move into an acceptable price range before committing to a purchase.
1. Australia and New Zealand Banking Group (ASX: ANZ) is our third largest bank and the only one of the big four with a significant presence across Asia. As a result of its overseas exposure, it is being tipped by analysts to grow its earnings per share at the fastest rate in coming years. Unfortunately, I believe ANZ shares are slightly pricey and they would have to drop well below $30 per share to get me interested.
2. Computershare Limited (ASX: CPU) is a name likely familiar to share market investors. It connects companies with their investors through its share registry services, which it conducts on a global scale. It’ll be a big beneficiary of a stronger USD.
3. Slater and Gordon Limited (ASX: SGH) is Australia’s largest personal injury law firm. However, the company is growing rapidly in the United Kingdom, a market five times larger than ours with a very similar legal environment. Shares seem well priced for buyers at today’s levels.
4. Telstra Corporation Ltd (ASX: TLS) is a name synonymous with Australian dividend stocks. The telco generates huge cash flows and pays an excellent fully franked distribution, year-in year-out. However, like ANZ, I’d prefer to see a lower price before buying in, even if I have to wait a while.
5. NetComm Wireless Ltd (ASX: NTC) is a small-cap tech stock and given my mother would prefer regular income, safety and modest capital gains over high-risk/high-reward opportunities, I’ll be keeping her exposure in these types of stocks to a minimum. However, NetComm’s strong push into Machine-to-Machine (M2M) communications could be extremely rewarding for long-term shareholders willing to accept extra risk.
In 10 years from now, I firmly believe my mother will thank me for providing her exposure to the best wealth generator on the planet: the share market.
At today’s prices, Telstra and ANZ are too expensive for me to justify an investment, but I’m not going to buy just five stocks for my mum’s portfolio…
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Motley Fool Contributor Owen Raszkiewicz owns shares in Computershare and Slater & Gordon Limited. The Motley Fool owns shares of Computershare.
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