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A beginner's guide to share investing


Published September 2019

Are you keen to learn how you could build your personal wealth through the sharemarket? 

Do you have a minimum of $500 (plus brokerage fees) to kickstart your investment? If you answered ‘yes’ to both questions, you’re just about ready to begin.

Taking that first step into the exciting world of share investing is much more convenient than you might have previously guessed. It all happens online, in your own time and within your pre-determined budget.

With that in mind, here’s a quick guide to consider before you start any share investing.

What is share investing?

Share investing is a relatively simple concept. Through a stock exchange, an investor buys shares in a particular company, with the objective that they’ll increase in value over time. In other words, share investing is a way to grow your personal wealth by trading on the performance of a company.

What are shares?

Shares are a stake in a business. By buying them you become a shareholder, a part-owner of the business. Likely a very minor one, but a part-owner nonetheless. (Shares are also called equities because you are buying equity in a company.)

Shares can be bought and traded as often as you like, and their value changes as the market fluctuates, due to a wide range of factors.

How does the sharemarket work?

Picture the sharemarket as a middle person, much like an auctioneer, managing a deal between a buyer and a seller. Companies list shares on an exchange, allowing investors to buy and sell those listed stocks, while the exchange keeps track of the shifting supply and demand.

Can anyone buy and sell shares?

Investors are able to trade shares on the sharemarket through an expert broker or by buying them online through a share trading platform (like ANZ Share Investing). Any adult can trade shares, but to begin they need a minimum of $500 to invest. There are also some fees associated with trading shares, generally known as brokerage fees.

Why invest in shares?

The short answer is to make money. Investing in shares gives you a chance to earn a profit depending on:

  • the amount you invest
  • the level of risk you’re prepared to take
  • the long-term success of your investments.

Returns from the shares you’ve invested in could, over time help you afford the comfortable, balanced lifestyle you seek. That could mean buying your own home, upgrading your car, getting married, travelling more frequently or retiring early.

You may even enjoy a direct return on your shares as some companies pay shareholders part of their profits, known as dividends.

Advantages of share investing

There are many advantages to medium and long-term share investing, such as:

  • the ease of investing across a variety of sectors and companies
  • investing at your comfort level, and taking time to build confidence
  • while you can’t rely on the past to predict the future, the sharemarket has performed well over the long term
  • eventual returns (often referred to as ‘capital growth’) can be high compared to other investments such as term deposits.

Risks of share investing

It’s important to understand the risks associated with share investing. For example:

  • If the value of your shares falls below what you paid for them, you’ll get back less than you invested if you sell. This means you could lose some or all of your capital invested
  • While the sharemarket has historically gone up over time, as with any form of investing, there is no guarantee this pattern will continue.  There’s a multitude of factors influencing the market, and even experts cannot predict when the market will swing up or down, so investors need to understand there’s no such thing as a certainty.

Share-investing strategies

While there’s no ‘one-size-fits-all’ approach to share investing, there are principles to follow, especially when you’re learning.

First, have a plan for how you’ll invest. A comfortable place to start may be industries and companies you have knowledge of. If you follow trends in retail, hospitality, emerging technologies or any other industry, use those existing insights to your advantage.

There are also other investment options available, such as exchange traded funds (ETFs). These types of investments can help to take some of the guess work out of share trading as they require very little active involvement from you, and can be bought and sold like shares. There’s a range of these funds available on the stock exchange, for example an ETF following the biggest 200 listed companies will automatically diversify your investment without you needing to buy multiple shares.

Second, make sure you research any company you plan to invest in (an ANZ Share Investing account will give you access to such information as ASX announcements, market news and Morningstar research). Understand how the company has performed and how it’s likely to perform in the future, by considering such factors as demand for its products or services, and overall trends for its industry.

Investing in businesses that share your values and ethics – from the environment to culture and ethics to its vision for its sector and society – may make it easier to hold on through any wobbles in share price.

Your confidence will build over time as you keep trading and learning about investment opportunities.

How to get started with share investing

Opening an account with ANZ

Opening a share trading account with ANZ is easy. Simply apply online, deposit funds into your share trading account, and start trading. 

Buying your first shares

Once you’ve logged into your account you’ll have access to research, which you can use to help choose the most suitable shares, exchange traded funds and more. Once you’ve made a decision you can place your order.

Buying your first shares isn’t a difficult process, but it’s still a big deal. You should be proud of your achievement. That investment will mark the beginning of a new investment journey for you which could lead to many benefits over time.

Want to know more? Read the ANZ Share Investing FAQ for quick answers to some of our most commonly asked questions. Happy investing.

Talk to us about share investing

  

1300 658 355

Mon-Fri 8.00am to 8.00pm (Sydney time)

  

Send us an email

   

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The ANZ Share Investing service is provided by CMC Markets Stockbroking Limited ABN 69 081 002 851 AFSL 246381 (CMC Markets Stockbroking), a Participant of the Australian Securities Exchange (ASX Group), Sydney Stock Exchange (SSX) and Chi-X Australia (Chi-X) at the request of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ). Disclosure documents relating to ANZ Share Investing products and services are available on anzshareinvesting.com or by calling us on 1300 658 355. ANZ is the issuer of the ANZ Cash Investment Account, ANZ Share Investment Loan and ANZ V2 PLUS Account. The obligations of CMC Markets Stockbroking are not guaranteed by ANZ. CMC Markets Stockbroking and ANZ are not representatives of each other.

Past performance is not a reliable indicator of future performance. This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. You should consider the appropriateness of the information, having regard to your objectives, financial situation and needs.