Usually there are only two ways to buy and sell shares through the ASX, and that is with the help of a Stockbroker or an online broking account.
Over the past few years we have seen the rise of online brokers take the place of the human element and market share of the traditional brokers.
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Online broker accounts
They give you access to the market and provide you all the tools that you need to use to make your own share portfolio.
You still need to action the order to “buy or sell” yourself and importantly you need to decide what share to invest in and what price you are willing to pay (with online accounts there is an expectation that you as the individual will do a lot of your own work).
These online broker accounts are based and marketed on lower transactional fees. On average you can expect to normally pay around $15-$25 per share trading fee (or 0.25% per trade value).
A Stock broker
They will normally provide you with the share advice and place the order to buy or sell and do all the transactional work for you. They can provide you with the share investment advice and take care of all the administration work for you – on average you can expect to normally pay around $80-$100 share trading fee (or 1.00% per trade value).
If you are new to shares, the most important question is:
What share to buy and when?
Essentially, who will give you the information and provide the recommendation to buy or sell.
When you buy shares you are actually investing into “a business” and like any investment in a business, it should be done with a longer time frame and only by investors who have done all their research and have a strong conviction to invest. We notice that sometimes when people first start to invest, most overlook the “invest in the business” concept and instead make their investment decision based purely on a number (the share price) that moves up and down.
Don’t overlook getting a basic understanding of the business and the relevant factors relating to that type of business and its industry, and then you’ll be able to make a better decision about whether to invest into that business or not.
This is where professional advice from people such as a Stock Brokers, Financial Advisers & also subscriptions to professional share advice services, can help.
As you can imagine it can be very hard to know which single share (a business) to buy and if it will do well, and essentially having all your money in one company is risky as it doesn’t give you proper diversification. I’m sure we have all heard of the old saying “don’t put all your eggs in one basket”.
To help counter the diversification risk, we have seen the rise of Exchange Traded Funds (ETFs). These are like buying a basket of different shares all in one share that can be quickly and easily traded. For example, there is an ETF that represents the top 200 companies of the Australian share market. ETFs come in all types and can be very general (such as the ‘U.S. 500 largest companies) or highly detailed and specifically themed (such as ‘Lithium only’ focused ETFs).
If you are just starting with a small portion of money, a single ETF could hold a very nice selection of shares based on a share index or theme and give you the benefit of a diversified share portfolio with a single share code.
It can be both scary and exciting investing for the first time especially if you are using your online broker account and making your own investment decisions.After a few share trades you will easily get the hang of the main concepts, however, if in doubt you can always pay a stockbroker to guide you through the process.
For more information and a full list of services, visit www.bellpartners.com