Getting Started In Shares
Step 1: Why Shares?
In part 1 of the Beginner Shares Series Owen answers:
- What are shares? (click here to learn more)
- Why do people buy shares?
- How much money do I need to buy shares?
- Are shares risky?
- Do I need an investment plan?
Shares represent an ownership stake in a company, similar to the way you would own a house.
But a public company on the sharemarket can have hundreds of thousands of other shareholders just like you.
Companies can also use debt, which is just like a mortgage on a house.
In the event that a company goes out of business, the banks and other owners of the debt would get their money before you do. It's the same as if you sold your house, the bank would get its money first.
Step 2: Setting Financial Goals
In part 2 of the beginner share investment series, Owen explains why it's important to:
- Set some goals and have a plan
- Why understanding how much time you have to invest is vital
- What 'paper trading' means and why it can help
- Why finding a friend or loved one to learn makes investing more fun
- How to track your goals with an investing journal
What is Paper Trading?
When you 'paper trade' you start with a made-up amount of money and put those imaginary dollars to work in the sharemarket. You can use the Newspaper (paper) to find the shares and do some extra research to decide if they're worth investing in.
For example, you start with a fake $10,000 portfolio and you decide to 'invest' your fake dollars in 10 different ASX shares evenly ($1,000 in each).
After a few weeks or months, you can look at the share prices to see which companies would have made you money -- and which ones would have lost you money.
You can use a trading journey to summarise what's happened in your make-believe portfolio.
Step 3: Buying The First Share
In part 3 of our beginner shares series, Owen explains the different ways to buy shares and how to get advice on shares from experts like financial advisers and investment advisers. He answers: