Buying stocks on the Australian Securities Exchange (ASX) and other markets is one of the recommended ways to build your retirement or investment portfolio. Buying stocks can keep the value of your assets from declining while allowing you to earn dividends. And when you invest it for the long term, you can double your money. However, it’ll depend on the stocks you have bought.
To learn more about investing stocks on the ASX, keep reading this guide.
Do You Need A Broker In Buying ASX Stocks
The answer to the question ‘Can I buy stocks without a broker?’ is ‘Yes.’ Online investment platforms allow you to buy and sell stocks independently. Yet, it may still be best to consider working with a licensed and experienced broker.
If you’re unfamiliar with how ASX works, then a broker can help. They can assist you in making wiser decisions on what stocks to buy since they know how to analyse companies that are more likely to yield higher returns in a fast-changing stock market.
What Does ‘Share’ Mean
Share refers to the denomination of stocks in small units, specifying a particular part of company ownership. When you buy more shares, you can have higher percentage on company ownership.
In addition, a share is sometimes associated with securities, stocks, and equities. Nevertheless, these terms may have unique characteristics, making them non-interchangeable.
What Is The ASX
The ASX is a prominent financial market situated in Australia, headquartered in New South Wales’ Sydney. It serves in a highly functioning financial market as a clearing house, market operator, and payments facilitator serving in the country, as well as neighbouring and international stock exchange bureaus.
The ASX is also regarded by experts as one of the most significant interest rate derivatives markets in the Asia-Pacific region. The ASX many know today came into fruition after the merger between the Australian Stock Exchange and the Sydney Futures Exchange in 2006.
How Much Money Is Needed When Investing In Shares
Gone are the days when budding investors need to secure a significant amount of money before investing in shares.
During recent years, brokerage fees and minimum investment amounts are said to have depreciated essentially. Now you can buy a share or two with only a few hundred dollars with some stockbrokers. Still, financial advisors advise would-be investors to allot and budget a certain amount for exclusive use in the stocks.
Regardless of how much you’re investing, you can diversify your investment by choosing from a vast number of ETFs or exchange-traded funds. With just a minimal investment upfront, you can start buying shares or commodities.
How Do I Earn From Shares
Investing in shares is one way to achieve your financial goals. That’s because when you buy stocks, you can enjoy the following ways to earn money:
- You can benefit from capital gains if the price of your shares increases. All you need to do is sell your stock at a more excellent value from the original price you’ve bought them. But financial losses can happen if you’re unfamiliar with the impact of share price depreciation. For instance, selling your share when the price downturns from the original value will not give you any earnings at all.
- Depending on the company you’ve invested in, you can receive a share of their profit through dividends. It’s normally paid twice a year. This means the more shares you buy, the more dividends you can earn.
How To Buy Shares
One common way of buying shares is ‘On Market.’ This means buying shares on an exchange—the ASX. You can find shares that you can buy at the best possible price.
Other ways of buying shares are the following:
- Employee Share Scheme (ESS): Employee Share Scheme gives employees the privilege to buy a share from their employer. This structure is quite favourable for eligible investors because most shares are offered exclusively at lower prices than the current market value. Stockbrokers have no involvement in the process, removing the need to pay for brokerage fees. It’s best to check if your company offers ESS.
- Exchange-Traded Fund (ETF) Or Managed Fund: With an ETF or Managed Fund, you can indirectly own stocks from various businesses via the management of a fund manager. This will save you from learning what different stocks to buy since your fund manager will do the investing for you.
- Initial Public Offering (IPO): Enterprises debuting in the ASX or any other securities exchanges can launch an IPO so that the public can buy shares from them. By doing this, businesses can generate funds that they may need to strengthen their present market position or expand reach. For you, you can use the ASX to purchase shares from promising budding companies of your choice after weighing the stocks’ potentials before availing them.
Bottom Line
Through this guide, you can now have a general idea of how the ASX works. Even so, if you want to maximize your stocks investment, it’s best to ask experts like brokers for some advice. That way, you can avoid buying stocks that may not yield positive returns and hurt your investment prospects.
