If you’re new to investing, you likely have a lot of questions about the stock market and how it works. The ASX, LICs, stockbrokers, and share trading can seem like a lot of information to comprehend at first. That’s we’ve developed a beginners guide to clarify everything for you and help you get started on your investment journey.
How to Invest in ASX Stocks
Investing in stocks and buying shares can be a great way to build up your wealth over time, and once you know how the market works, you can begin trading in minutes. When it comes to learning how to buy shares on the ASX, the process can be broken down into three simple steps.
Step One: Outline Your Investment Goals and Analyse Your Finances
The first step is to work out what you want to achieve from investing and then make sure you are financially prepared to commit to your goals. Putting money into the stock market is a long-term commitment for the majority of investors; many people slowly add to their number of shares as time goes on in order to achieve their goals.
If you’re looking to invest in the stock market, ask yourself if you’re financially ready to play the long game. You may have enough money to purchase your shares, but will you need that money at some point in the next five to ten years? The money you invest has the potential to significantly increase your wealth, but only if it is left alone to accrue, which can be a decades-long process.
Step Two: Choose a Broker and Set Up Your Account
The next thing you’ll need to do is choose your broker. This could either be a full-service broker or an online broker, depending on your preferences. A full-service broker can offer advice on what shares you should buy or sell, and they can also do all the trading for you. They do, however, tend to charge higher fees than an online broker.
An online broker is essentially an online trading platform where you can log into your account, peruse the market activity, and decide which shares to trade all by yourself. While they don’t offer as much guidance, an online broker also has lower fees and can help you trade your shares quicker.
Using an online broker can be more daunting if you’re looking to invest a particularly large sum of money and you aren’t sure of the best shares to buy. However, if you are confident in your strategy and you aren’t investing too much in one go, an online broker can be a great way to invest without incurring higher fees.
Step Three: Research Stocks and Purchase Your Shares
The third and final step is to research the stocks you are interested in, work out which ones are most likely to align with your investment goals, and purchase your shares. When investing in the ASX, you can either invest in companies individually and build your own portfolio or buy shares in ASX listed investment companies, such as Flagship Investments.
How Do I Invest in Flagship Investments?
Flagship Investments is an ASX LIC that can be found on the ASX under the code “FSI” and can be bought through an online or a full-service broker. Depending on how much you’re willing to invest, you can buy FSI shares “at market” price, or for a set “at limit” price.