Investing in the share market

Given the growth in superannuation, along with some high profile privatisations, more Australians are now shareholders than in previous generations.

Shares are traded on the Australian Stock Exchange (ASX) - a market place where public companies are listed and their shares open for trade. When you buy a share, you purchase an ownership stake in a public company. You receive part of the company's profits through payments known as dividends. If the share price rises, you may also see a capital gain.

Managed funds

How to buy shares
Generally, only a licensed broker can buy and sell shares on the Australian Securities Exchange (ASIC). However, your access to direct share investment is now much more flexible than it once was. Full service brokers place your orders and can also offer advice on buying and selling shares and other securities. Non-advisory brokers place orders for you, but they will not provide any advice on the decisions you make. Online trading is available through organisations such as E*TRADE, enabling you to buy and sell shares online. Although they have research you can read, they don’t usually offer the services of a personal adviser. If you’re a novice, you may like to check out this site for new investors. The ASX also runs ‘webinars' for both seasoned investors and beginners. For more information to help decide what level of service suits you, you may like to check out the investing section at www.moneysmart.gov.au.

How to buy shares

Generally, only a licensed broker can buy and sell shares on the Australian Securities Exchange (ASIC). However, your access to direct share investment is now much more flexible than it once was.

Full service brokers place your orders and can also offer advice on buying and selling shares and other securities.

Non-advisory brokers place orders for you, but they will not provide any advice on the decisions you make.

Online trading is available through organisations such as E*TRADE, enabling you to buy and sell shares online. Although they have research you can read, they don’t usually offer the services of a personal adviser.

If you’re a novice, you may like to check out this site for new investors. The ASX also runs ‘webinars' for both seasoned investors and beginners.

For more information to help decide what level of service suits you, you may like to check out the investing section at www.moneysmart.gov.au.

Choosing your own shares
If you’re planning to trade in shares yourself, no matter what the size or reputation of the company, you should do your research and check five key areas: Industry What market does the company serve? Do companies in this industry typically return high profits and grow quickly? Strategy Does the company have a clear strategy for success against its competitors? Look for companies that dominate their market or fill a niche in a bigger market. Management Look at the people in charge. Are they capable? Are the directors well regarded? Will they provide an objective voice in management? Profitability Does the company have a track record of consistent profitability? Has the company regularly paid dividends in the past? Debt Companies in debt aren't necessarily bad investments. Like individuals, companies may borrow to increase their opportunities for profit. However, generally, the level of debt should not exceed the assets of the company.

Choosing your own shares

If you’re planning to trade in shares yourself, no matter what the size or reputation of the company, you should do your research and check five key areas:

Industry
What market does the company serve? Do companies in this industry typically return high profits and grow quickly?
Strategy
Does the company have a clear strategy for success against its competitors? Look for companies that dominate their market or fill a niche in a bigger market.
Management
Look at the people in charge. Are they capable? Are the directors well regarded? Will they provide an objective voice in management?
Profitability
Does the company have a track record of consistent profitability? Has the company regularly paid dividends in the past?
Debt
Companies in debt aren't necessarily bad investments. Like individuals, companies may borrow to increase their opportunities for profit. However, generally, the level of debt should not exceed the assets of the company.

ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited, ABN 11 005 357 522, the holder of an Australian Financial Services licence.

The ANZ E*TRADE online investing service is provided by ETRADE Australia Securities Ltd (trading as “E*TRADE Australia”) (ACN 078 174 973, AFSL No. 238277), a participant of the ASX Group. E*TRADE Australia and ANZ are separate legal entities. ANZ does not have any liability to you in respect of the ANZ E*TRADE online investing service; any information, product or service offered by any third party on or through the ANZ E*TRADE online investing website; or any other services provided by E*TRADE Australia. Similarly,

E*TRADE Australia does not have any liability to you in respect of services provided by ANZ.

You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided on this website. E*TRADE Australia does not provide investment advice to its clients.

The information provided is general information only and does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. Before making any decision to acquire, hold or sell any financial product, ANZ strongly recommends that you seek financial planning and/or tax advice and read ANZ’s Financial Services Guide (PDF 104kB), the relevant Product Disclosure Statement and/or Terms and Conditions. Terms and conditions are available on application. Fees and charges apply.

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Investing in the share market

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