Buying Shares

No longer is buying shares a privilege of the wealthy. It has never been easier or cheaper to invest in shares on the Australian stock exchange; you can get started buying shares in a company, or investing in a mutual fund for less than $1,000. The explosion of growth in Asia has a direct effect on the Australian stock market, as such, Australian shares have experienced tremendous growth as of late, this means there are many opportunities to profit both short-term and long-term from buying shares of Australian companies.

One important fact to keep in mind when buying shares is that you need to do sufficient research before investing in a company. Understanding the history and longer-term business fundamentals that a company is built in is very important for analyzing its growth prospects. Just as you would research any other major purchase before investing in it, such as a car or a house, you need to be certain you understand the inner workings of any company you are buying shares in before you lay your money on the line.

Once you are confident in your decision to invest in a specific company or mutual fund you will then to need to decide how you will go about buying the shares. There are essentially two routes you can take when buying shares; one is to use a full-service stock broker, the other is to use a discount broker.

Full-service stock brokers offer financial planning, and advice on how to invest in shares and mutual funds. Generally speaking you will pay around 1 to 1.5% of the value of the shares you are buying when going with a full-service broker. This can be money well spent if you simply do not have the time or interest required to manage your own portfolio, or if you are a total beginner.

Discount share brokers are targeted towards experienced investors and traders and those people willing and interested in doing their own research or who want to make their own investing decisions. Most discount share brokers operate online and over the phone, as such, they are unlikely to have local offices. Discount brokers don’t offer investing advice or extensive share reports, the flip side to this is that their commissions and fees are usually substantially lower than those of a full-service broker.

Generally speaking, if you have a decent amount of interest in the performance of your shares portfolio you will want to go with a discount broker after learning the basics. Full-service stock brokers get paid on commission and so they have a financial self-interest to get you to execute as many transactions as possible.

No one will ever care more about your money than you do, most of the information that stock brokers base their share recommendations on is readily available on the internet or in financial publications. After getting the basics out of the way you are probably going to be better off making your own trading decisions with the assistance of websites like shares to buy.