Our top tips for getting started in shares
May 19, 2017
Investing in the share market can be extremely lucrative, but it’s important to do your research before you take the plunge.
In this article, we share some of our top tips for those who are just starting out in the share market.
And remember, if you do want to find out more about how to invest your money wisely and build for the future, LDB’s financial planners are only too happy to help!
Diversification is key
While there is no ‘crystal ball’ to determine which shares will perform better than others, LDB senior financial planner Chris Payne said there were steps investors could take to build a successful share portfolio.
“You should start by gaining exposure to different market sectors to diversify your portfolio and thereby spread the risk,” he said.
“Investors typically start by buying into some of the larger market sectors such as banks and resource companies – then you continue to diversify by adding exposure to other sectors such as healthcare, energy, retail and telecommunications.”
Start with blue-chip stocks
Those who are new to the share market should aim to build a solid foundation of blue-chip stocks, then expand their portfolio from there.
Blue-chip stocks are those of larger, well-established companies with a reliable financial track record.
Examples include BHP Billiton, Commonwealth Bank of Australia and Wesfarmers.
“Investors can then add in exposure to other opportunities such as International Shares or smaller listed companies that offer greater growth potential,” Mr Payne said.
“It is all about matching the portfolio to the objectives and risk-tolerance of each client and then working with the client to continually fine-tune the portfolio as market conditions change.”
Remember the big picture
When investing in the share market, it’s a good idea to take a long-term approach.
Mr Payne said investors should have a five to seven-year investment plan, in order to ride out the short-term volatility associated with markets and benefit from long-term gains.
“It is time in the market, not timing of the market that is important,” he said.
Seek expert advice
One of the great things about investing in shares is that you can get started even if you have a small budget.
As your financial planning specialists, LDB can help you build your portfolio over time and offer expert advice about different investment strategies.
To get started, please call (03) 9875 2900 or send us details via the contact form below.