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If you’re looking to build a secure future for yourself and your family, investing in shares could help you generate wealth and achieve your financial goals. But if you’re new to investing, it’s hard to know where to start.
So let’s take a look at the basics of buying and selling shares in our guide to share trading for dummies.
Active trader brokerage - Australian shares
Competitive broker fees on Australian shares, international shares, forex and CFD trading.
Important: Share trading carries risk of capital loss.
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
The sharemarket is a place where investors can buy and sell “shares” in public companies. Also known as stock exchanges, share markets exist in countries all over the world – in Australia our national exchange is the Australian Securities Exchange (ASX), while other famous international stock exchanges include the New York Stock Exchange and the London Stock Exchange.
A share is basically an ownership portion of a company. When you buy shares you become a shareholder, meaning you own a percentage of a company and get to have a say in how it is run. The value of your shares is influenced by a wide range of issues, including the company’s performance and earnings, supply and demand, and broader economic factors.
Once you own shares you can also sell them to other investors. In the past, share trading was done physically at a stock exchange – you’ve probably seen old news footage of chaotic scenes of traders yelling out complex orders to buy and sell shares.
Today, investors can buy and sell shares via online share trading platforms. Many major Australian banks offer share trading platforms, including the Big Four, while other share trading platforms are offered by specialist brokerage firms.
There are two main ways to make money selling shares:
Share trading provides many benefits to investors, including:
Just like any other form of investment, shares come with a range of risks attached, including:
Despite what some people and investment “experts” might tell you, there is no guaranteed method for choosing the right shares. Some shares offer a high risk/high reward approach: while they have the potential to increase in value quickly, they also have the potential to quickly drop in value. Other shares tend to be steadier performers and have a history of delivering solid profits and paying dividends to shareholders.
There are income shares, blue-chip shares in large companies, cyclical shares that rise and fall with economic trends, and even defensive shares that often maintain their value when the rest of the economy takes a dive.
The right shares for you will depend on your financial goals, your investment timeframe and your appetite for risk. Once you know exactly what you want to achieve with your share trading, you can start researching different companies and the benefits they will bring to your portfolio.
Back to topIf you want to start trading shares, there are a few simple things you need to do:
Share trading can help you generate wealth and reach your financial goals. Just make sure you’re fully aware of all the risks involved before you place your first trade.
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