Why invest in shares?

Over the past 25 years, shares have provided better average returns than most other investments1. Plus, you can usually access your money two (2) business days after selling your shares, making them a flexible investment.

All investments involve some risk, and shares are no different. There is the possibility that the companies you've invested in could go out of business, or the share price could fall. If you need to sell your shares at a time when the price is lower than your buying price, you'll make a loss.

There are ways you may be able to minimise your risk, such as building a diverse portfolio of shares from different companies, so you're not putting all your eggs in one basket.

 

 

What is the stock market?

The stock market is where you buy and sell shares in publicly listed companies. Share prices may rise and fall in response to various factors, including company performance, economic changes and demand.

In Australia, shares are traded electronically on a centralised exchange –either the Australian Stock Exchange (ASX) or CHI-X.

Both the ASX and CHI-X markets are open Monday to Friday between 10am to 4pm (Sydney time).

What is the cost of buying shares?

Unlike property, you don't need a large investment to get started. It's free to join CommSec, and you can start trading with as little as $500.

There are two components to the cost of a share transaction:

Consideration
Brokerage including GST

Example:

X shares for Y amount = Consideration
Plus Brokerage cost = Total transaction cost

What are my investment goals?

When you’re deciding whether share trading is right for you, you should consider a range of factors:

Your lifestyle goals

Such as investing for retirement, building wealth in shares, to take advantage of potential tax benefits, or to supplement your income through dividends.

Your investment time-frame

Your age, and how long you’re expecting to hold onto your investment is important.

Returns

What returns does your investment need to deliver for you to meet your goals?

What is your risk tolerance?

Like any market investments, there are risks involved. One way to possibly reduce your risk is to build a diverse portfolio of shares from different companies and industry sectors.

All of these questions will help you to determine the right investment for you.

How to decide what to buy?

Defined your investment goals? Ready to get started?

Now it’s time to research companies that you might like to invest in. Knowing where to start can be the first challenge, given how many options there are. But there are ways to narrow down the possibilities.

Think about companies you know and have a relationship with — whether it’s a company you work for, shop at, travel with or something else.

Does that company meet your investment criteria?

Alternatively, you may prefer to try one of our share packs. These are diversified portfolios of leading companies chosen by the CommSec Investment Management Team.

 

See how CommSec can help you trade with confidence

Important Information

Commonwealth Securities Limited ABN 60 067 254 399, AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 and a market participant of the ASX and Chi-X Australia, a clearing participant of ASX Clear Pty Limited and a settlement participant of ASX Settlement Pty Limited. As this information has been prepared without taking into account your objectives, financial and taxation situation or needs, you should, before acting on this information, consider its appropriateness for your circumstances.

Please consider the full terms and conditions which are available on request. Fees and charges apply.

[1] Sourced from Reuters, Real Estate Institute of Australia, CoreLogic and IRESS. Data from: 1991-2016 – to June 30.

^ $10 brokerage for trades under $1000. To be eligible, you must trade online, be CHESS Sponsored with CommSec and settle your trades through either a Commonwealth Direct Investment Account (CDIA) or a CommSec Margin Loan.

 

Disclaimer

This site is directed and available to and for the benefit of Australian residents only. © Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec") is a wholly owned, but non guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and both entities are incorporated in Australia with limited liability.

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