How to start investing in shares for beginners
The Australian Stock Exchange has a huge question mark hanging over it to many people, as it seems a mysterious vehicle for creating wealth for those who don’t know how to profit from it. For this reason, many people start investing in property before they begin gaining an understanding of how share investing works.
Bricks and mortar seem far easier to understand, making real estate the more popular option for first-time investors. But while stock market investing may seem difficult at first, once you know how it works, it can become a solid investment vehicle that can potentially yield you substantial passive income.
If you’re interested in entering the stock market, here are four basic steps in starting your investment journey in the ASX:
- Educate yourself
Before you buy your first unit of shares, you need to gain an understanding of the basics of stock investing. Learning everything about the market doesn’t happen overnight, but you can gain an idea what you’re getting into in a relatively short timeframe. You can try looking for free online tutorials on both fundamental and technical analyses, such as this one from the ASX website.
- Practice makes perfect
You may be equipped with a basic knowledge about investing in the stock market, but it can still be a little nerve-racking to actually do it! After all, you’re dealing with your hard-earned money here. Get your feet wet by playing the ASX Sharemarket Game, which will allow you to practice trading shares in real market conditions – minus the money.
- Find a broker and open an account
Once you’ve built up the confidence to finally do the real deal, find a broker that will suit your investment needs. Most people just open an online trading account with their current bank and link it to their bank account, as this can appear to be the easiest option. Brokerage fees usually starts at around A$15 to $20.
- Stay in the game
Investing in stocks may not be a ‘set and forget’ type of deal. Online stockbrokers usually do not provide specific advice on what to buy or sell, so you may be on your own when it comes to making investment decisions. Always be aware of the latest market happenings by reading the news and subscribing to investment blogs and newsletters. This way, you can make educated decisions on the shares that you are going to buy, hold, or sell.