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5 ways to pick stocks to trade in 2022

Posted: 14 June 2022 1:45 pm

Want to pick stocks to invest in but not sure where to start? We're here to help.

Sponsored by GO Markets Securities Pty Ltd.
Special Offer: $385 worth of free brokerage when you transfer your HIN.* Simply transfer your existing HIN before September 30. T&Cs apply. Corporate Authorised Representative No. 1292963 of Sanlam Private Wealth (AFSL No. 337927).

It's no secret that more Australians are jumping on the investing bandwagon.

According to an ASX Australian Investor Study 2020, 6.6 million Aussies, or 35% of the population, now hold listed investments and that number seems to only be on the rise.

With lockdowns, rising inflation, dwindling interest rates for term deposits and skyrocketing house prices, it seems there's never been a better time to try and look for alternatives to deposit and grow those hard-earned savings. Plus, with investment becoming far more accessible, it's easier than ever to step off the sidelines and jump in.

But while it might be a great time to start investing, new investors are also entering a market with too much information, which could make some feel overwhelmed.

To help with this, Finder and GO Markets have come up with 5 handy tips to help those who are not investing get started.

  1. Take stock before you start

If you're entirely new at investing, the key is to start with what you can afford and remember that even a little can go a long way. Setting some very specific goals will help to narrow down your investment options.

For instance, if you're after a regular income, you may opt for shares that pay good dividends. Or if you're simply looking to make a profit, you could look towards shares that go up in value but pay little or no dividends.

Being clear on your intentions is essential.

You may also want to consider several lower risk options to begin with.

This can mean starting with an exchange traded fund (ETF), which invests your money across lots of different investments, or sticking to blue chip or more established companies. Doing your due diligence – the research to determine if an investment option is right for you – will allow you to make empowered decisions with confidence.

  1. Look into trading tips from the experts

Much like any important decision, picking stocks shouldn't be a rush job. Taking the time to do some research or consult an expert should be your first port of call. And while there's a surplus of information out there, finding the right advice or platform can be part of the challenge. Thankfully, cutting edge programs such as ShareSmart powered by GO Markets are at your disposal

GO Markets securities analyst Alastair Kennelly says that ShareSmart was created to save investors time by streamlining the share-picking process.

"ShareSmart results from years of research, careful analysis and expert design to ensure it only suggests shares that meet the specific blueprint success formula," Kennelly explains.

  1. Start small

Kennelly says that too often, the biggest losers in financial markets are traders who invest too much when they start their investment journey.

Instead, you should start out small, especially when you're beginning.

"Learn to crawl, walk, jog and then run," he says.

"The chances of you following the system correctly will increase substantially if you start out making small investments to begin with and increase your investment size only after you have success."

Kennelly adds that starting with small investments can help to rein in expectations.

"You will manage your emotions far better if you start investing small amounts of money and you apply the 'numbers game' to your investing," the analyst continues.

"Doing so will keep you disciplined, and whilst you will make mistakes, the mistakes will cost you less."

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
  1. Diversify

A smart way to mitigate risk is to ensure you diversify your portfolio.

By investing across a range of industries and companies, you're less likely to take a hit should one of your investments lose value.

Potentially the easiest way to do this is through exchange traded funds (ETFs), which essentially splits your money across a range of investments and industries.

In doing so, you gain far more control over your money and ensure that you won't be at the mercy of your investments.

Getting started with an ETF is quite straightforward. Once you've set up your online trading account, you can then buy your first shares. However, before doing so, research the various ETFs on the market before deciding on one that's right for you.

Once you've made your choice, make sure to read the ETF's product disclosure statement (PDS) to help you understand the product and the kind of fees that will apply.

  1. What to do next?

You can't learn everything you need to know at the very start of your investing.

Instead, its a long-term journey.

What you can do though, is give yourself the best possible start by building the right foundations and begin acquiring valuable knowledge at the outset.

Now we don't suggest you dive straight into a live account yet. Developing a trading plan is essential.

If you were starting a new business venture, you'd create a business plan. The same is the case for trading; set your goals and “take stock” before you start.
Part of this plan should be selecting the right broker including factors such as their reputation, costs, markets they trade and how they align to your personal needs.

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GO Markets disclaimer: GO Markets Securities Pty Limited, ABN 24 653 400 527, CAR 1292963 of Sanlam Private Wealth Pty Ltd, AFSL No. 337927 provides ASX and Chi-X Share Trading services including Listed Investment Companies and Exchanged Traded Funds. It is important that you consider the relevant Share Trading legal documents before you decide whether or not to acquire any of the share trading services. Any advice that we provide to you for Share Trading Services is general advice only and has been prepared without taking account of your objectives, financial situation or needs. Before acting on any general advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.
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