INVESTING in shares has never been easier in a technical sense but how do you get started if you have never dipped your toe in the market before? For the uninitiated, it is easy to quickly feel overwhelmed by the complexity of share market jargon.
Buy backs, initial public offers, takeover bids, share placements they are all new concepts which, while relatively simple, can overwhelm the novice investor.
A great place to start is the Australian Securities Exchange website, and the Australian Securities and Investments Commission’s consumer website FIDO.
Both have plenty of information about share market basics, advice on trading strategies and real life examples of the results of different trading strategies.
The ASX’s Getting Started in Shares publication is particularly useful.
There are essentially two ways to buy and sell shares: Through a stock broker, or by doing it yourself using an online or telephone based service such as E*TRADE or CommSec.
The websites charge a range of prices, depending on how frequently you trade, but start at about $30 a trade.
Depending on how much you are willing to spend, or how much you trade and generate commissions, the sites provide a range of research tools, such as stock recommendations from brokers, price charts, financial balance sheets, information about major shareholders and so on.
For traders who have a small portfolio, or who are confident in their ability to do their own research, the online brokers can be the perfect trading solution.
Stockbrokers are useful for investors with a slightly different profile to those with larger portfolios, who may not be confident or have the time to manage their investments, or those who are seeking professional advice on their investment strategy.
Goldman Sachs JBWere director Andrew Bradley says advisers offer much more than just stock buying advice.
"An adviser is a licensed professional who can bring a whole range of products and services to clients and really bring a whole of portfolio perspective,’’ Mr Bradley says.
"The advice, therefore, becomes much more specific and tailored.’’
Mr Bradley says GSJBW advisers follow a rigorous process, with risk assessment a core element.
He says advisers have long term relationships with their clients and look at the big picture, including involving other family members, superannuation issues, philanthropy and changing financial goals.
Other sources of investment advice include investment clubs, newsletters, subsciption based and free investment magazines, and daily newspapers.
For the technically minded, there are a number of analysis products available, which suggest trades based on trading patterns in a particular stock or index rather than the actual performance of the business.
Fat Prophets’s Australasian Equities Report is an example of a paid for newsletter. For a tax deductible yearly fee, investors receive a weekly newsletter with advice on stocks.
How to pick shares
1 BEWARE the red hot tip. If it sounds too good to be true, it probably is.
2 WORK out your risk profile and invest accordingly. Are you a risk taking speculator or looking for slow, steady wealth accumulation? Perhaps a bit of both?
3 THE hardest decision is when to sell. Many investors have forgone good profits in the hope of excellent profits.
4 DEVISE a trading strategy and stick to it. Emotion is the enemy of the successful investor.
