October 20, 2018

Entering the Sharemarket for the First Time

There is a huge misconception that investment is only for the wealthy. Mutual funds, brokerage firms, and individual companies provide investment opportunities for the investor with a limited amount of funds available. If you can save $10 per week, you can think about how to start an investment portfolio. Here are some tips if you are considering to invest in the stock market with little money.

Think before you invest

If you want to know how to invest in stocks, spend time researching a company before making the decision to invest. By understanding the general operation and running of an organisation, you will increase your chances of selecting stocks that are profitable. You should also educate yourself on investment strategies such as diversification and dollar-cost averaging.

Specific Stock Research

There are documents regarding a company’s information that are available to the public. These include the company’s current quarterly report, and their annual report. Firms that are publicly traded often post this information on their websites under, “Investor Relations.”

You can also check websites such as MSN Money, and Yahoo Finance for in-depth past and present financial information.

You should pay attention to the company’s ability to generate profit and the effectiveness of its management team.

Compare the company and its competitors in terms of market share, profitability and growth.

Mutual Funds

Mutual funds raise their capital by selling shares to investors. The capital that is generated is used to purchase a basket of stocks selected by a fund manager. Some mutual funds require a minimum investment of $1,000, but there are some that will allow you to open an account with a few hundred dollars. Some funds will permit you to implement the dollar-cost average strategy by paying monthly installments debited from your bank account.

Get a Stockbroker

Regardless of what you think, there are some stockbrokers out there that will deal with smaller investors and help you select shares based on your specific requirements. Getting professional advice is always important when you are thinking of investing in an area that you are not well versed in. Arming yourself with the most information possible is always important.

Final Thought

If you have just started investing, and you have a limited amount of capital, the above suggestions are great ways to reap the benefits of having a professionally managed investment portfolio.

Got any tips for those starting out in investing in Australian shares? Comment below.

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