From all the media attention it gets, it would be easy to assume residential property is the nation’s favourite investment. But that’s not the case. Almost 6.5 million Australians own shares either directly or indirectly via a managed fund, making us one of the great share-loving nations of the world.
According to the latest Share Ownership Survey by the Australian Securities Exchange (ASX), shares are the preferred asset class for personal investments. Around one in three (31%) of us invest in shares compared to 21% who own an investment property.
The same research found 2.5 million non-investors are keen to get started in the sharemarket but are unsure about what’s involved.
If that sounds like you, the good news is that sharemarket investing isn’t just easier than it used to be, it’s also a lot cheaper.
There’s a wide choice of online brokers providing low cost ways for investors to build a share portfolio. Brokerage averages about $19 per trade but with some brokers, like CMC Markets, the cost can be as little as $11 per trade.
To get started, you’ll need a bank account linked to your share trading account, and in some cases the broker will specify which financial institution this account should be held with. With nabtrade for instance you’ll need to have a National Australia Bank account.
Once you have set up a share trading account, you can begin trading virtually straight away. To place an order simply quote the unique three-letter ASX ticker code that applies to each stock and note the quantity you’d like to buy (or sell). Online trading is remarkably quick, and your buy/sell order can reach the ASX in less than a second so it pays to double check your order before clicking the ‘send’ button.
The nuts and bolts of investing in shares is simple enough. It’s the question of which shares to choose that stumps many people. There’s no single answer to this. It’s a matter of researching the companies involved and making a decision based on your personal goals.
Investing in a managed share fund is an alternative to direct share ownership. It offers the benefits of diversity as your money is spread across a broad number of shares, as well as professional investment expertise, and you can normally get started with as little as $1,000.
For more on sharemarket investing visit the government’s MoneySmart website, speak with your financial adviser or take a look at my book Making Money.