Shares can be bought and sold on ASX’s market. Also, you don’t need large amounts of money to get started – you can buy as little as $500 worth of shares.
As with any investment, shares also carry risk and investors need to inform themselves of these.
WHAT ARE SHARES?
By investing in shares on ASX you are buying part ownership of an ASX-listed company.
If the company performs well, you can benefit from share price growth and/or income paid as dividends. Equally, if the company performs poorly, your shares could decrease in value and/or the company may pay no dividends.
Trades are issued by listed companies and traded by investors on the ASX share market. You can trade shares by using a licensed broker to buy and sell shares on your behalf.
Capital growth means that a share has increased in value however; shares can also lose value, so investors should carefully monitor the performance of their portfolios.
A dividend is a payment by a company to its shareholders, usually as a share of profits. Some companies pay dividends regularly, others pay dividends sometimes or not at all. Some companies also allow you to reinvest dividends into new shares. Some investors can also receive tax benefits on dividends in the form of franking credits.
Buying and selling
ASX-listed shares are easy to buy and sell compared with unlisted shares, property and term deposits. You can buy or sell small amounts quickly through a licensed broker. Brokerage fees for executing a trade are usually a fixed fee or a small percentage of the value of the shares traded.
Spreading your risk
There is risk involved in any investment in shares. For instance, if you concentrate your investments in a small number of companies or a single sector, then you can be more exposed to the risk of losing money due to falls in the share prices of those companies or market events impacting on that sector. One way to reduce this risk is by spreading your investments across different types of companies in different sectors.
As a shareholder in a listed company, you will have the right to receive company information and to vote at annual general meetings. You can also have the right to participate in some further share issues by the company, such as rights issues. Your rights may vary depending on the type of shares that you hold.