How to invest in the ASX – Forbes Advisor Australia

If you're wondering how difficult it is to start trading on the ASX, take comfort in knowing that it's fairly easy.

Actual trading (buy and sell orders) must go through a third party ASX participating broker. This could mean a professional broker, an online intermediary platform, or a fund manager.

• If you want to invest in individual stocks or ETFs, full service broker or Online broker platform or app.
• You can also choose to invest through managed funds. fund manager Decide what to invest in and make stock trades.

How much you can invest can influence which investment method you choose.

Mr White said anyone considering investing in the ASX should do their research beforehand to understand the risks and consult a financial advisor or broker if they have any questions.

“If you have money that you don’t need for general living expenses and are unlikely to need it for some time, you might consider investing in the ASX,” she said.

“The minimum amount to trade directly on the exchange is $500, but there are also micro-investing apps that allow you to invest even smaller amounts.”

Why choose a fund manager?

Like ETFs, managed funds are an indirect way to invest in stocks by pooling other funds across a diversified portfolio. Unlike ETFs, managed fund products are not traded on the ASX, they simply contain shares.

Managed funds are overseen by professional fund managers who make decisions about the mix of stocks and other assets to buy and sell. The Fund may invest only in stocks or in multiple types of assets. You may pay a higher fee for this expertise and active management of your investments.

Why use a broker?

Even inexperienced investors can be reassured by engaging a professional broker who is up-to-date on market trends and can advise on what types of securities to buy and when to buy and sell. Trading involves fees, so it's important to consider your investment strategy, such as whether you want to invest a lump sum or invest a small amount over a long period of time. Be sure to ask your prospective broker/advisor exactly what services they provide, how they charge for their services, and how often they review their investment approach. .

Why use a stock trading platform?

If you are confident in your market knowledge and want to take control of your investment decisions, you may choose to use an online platform that allows you to buy and manage your own stocks. Online platforms do not provide customized investment advice and simply facilitate trading, typically at lower commissions than brokers. To start purchasing stocks through a brokerage platform, you need to create an online account. This may require a fairly detailed identity verification process and may require you to set up a cash account with your bank.

What causes the ASX to rise or fall?

The ASX 200 rises or falls according to breaking news, company announcements and government policy. While these price movements may not be extreme, financial professionals and serious investors are always looking for trends and indicators of what will happen next.

Predicting changes in the stock market means paying attention to broader economic conditions, interest rates, major political and social developments, and the performance of individual companies listed on the ASX. Belinda White said valuations of companies are based on current performance and future potential.

“Some companies, such as tech companies, are not currently profitable, but people expect them to be profitable in the future, so they invest on that basis,” she says.

“Similarly, there are companies like banks, which have been profitable for a long time and are expected to be profitable in the future, but at a fairly stable rate.

“A company's performance depends on many factors, including its economic environment, business sector, quality of management, and amount of competition. Analysts look at these points when determining a company's value.”

The volatility of stock prices is another reason why you need to be clear about your reasons for investing. For example, Mr. White said, income-seeking retiree investors may be drawn to companies that pay dividends, while long-term investors may prefer companies that will increase in value in the future.

“Investors need to accept that the value of their investments can go up or down at any time,” she says.

“Selling your investment in a panic because it has fallen could mean locking in a virtual loss, as it is not a loss until you sell.

“In general, exchange-traded products are more suitable for long-term investors because they have higher volatility and take years to smooth out their ups and downs.”