How to buy and sell shares in Australia
How to buy and sell shares in Australia
How do you start investing in the share market? Buying and selling shares is easier than you might think, especially in Australia. In this article, we’ll discuss the basics of buying and selling shares for beginners and answer some of the most common questions, such as “how many shares should I buy as a beginner?”, “what is the simplest way to buy and sell shares?”, and “can I buy and sell shares immediately?”.
What are shares?
Shares, also known as stocks or equities, represent ownership in a company. When you buy a share, you become a part owner of that company, which means you can potentially profit from the company’s success. Keep in mind though that if the company does not perform well, the value of your shares may decrease, and you could potentially lose money.
How many shares should I buy as a beginner?
The answer to this question is that it depends on your budget and investment goals. As a beginner, it’s important to start small and not put all of your eggs in one basket. A good rule of thumb is to only invest money that you can afford to lose.
It’s also important to remember that the more shares you buy, the more money you stand to gain or lose. While buying more shares can potentially lead to larger profits, it also increases your risk.
A share portfolio for beginners
As a beginner, it’s important to strike a balance between risk and reward. Claude Walker is the founder of A Rich Life writing the Ethical Equities column. In this short episode Claude talks about matching your risk to your experience, entering markets gradually, to keep learning and what he sees as the most common mistake made by new investors.
The simplest way to buy and sell shares in Australia is through an online broker. Online brokers allow you to buy and sell shares from the comfort of your own home, without having to go through a traditional broker. There are many online brokers to choose from, so it’s important to do your research and find one that suits your needs.
Some popular online brokers in Australia include CommSec, Pearler, NABtrade, Trade 4 Good and SelfWealth. These brokers offer different features and fees, so it’s important to compare them and choose the one that works best for you.
Once you’ve chosen an online broker, the process of buying and selling shares is relatively simple. First, you’ll need to open an account with the broker and deposit money. It's usually called a cash account, and it's where the money sits until you buy or sell you shares. Once you have money in your account, you can search for the company you want to invest in and place a buy order for the number of shares you want to buy. When the share price reaches your desired price, the broker will automatically execute the trade.
Selling shares works in a similar way. You can place a sell order for the number of shares you want to sell, and the broker will execute the trade when the share price reaches your desired price.
Can I buy and sell shares immediately?
Yes, you can buy and sell shares immediately, but it’s important to remember that the share price can be volatile and may fluctuate throughout the day. If you’re looking to make a quick profit by buying and selling shares in the same day, this is known as day trading.
In general, it’s recommended to hold onto your shares for a longer period of time to allow compounding to work it's magic.
But it's also important to work out when to exit a losing trade.
Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.