SHARE DEALING INFORMATION

Below you will find information on Share Dealing.

        

What is Share Trading?

Share Trading allows people to buy and sell shares. When you buy a share in a company, you become the owner of a part of that business. You can now earn income from dividends paid by the company and from possible rises in the value of the shares between the purchase and sell date.

Companies are listed on the Australian Securities Exchange (ASX) and each day you will notice share values in those companies have they gone up or down?

How do you Buy and Sell Shares?

Buying and selling of shares takes place via a stockbroker there are many available nowadays and most of them order an easy online process. Just browse through Which Way To Pay Australia's comparison pages of Shares Trading brokers.

All of these stock brokers will have direct access to the ASX and will vary in the service they provide. Which one you go for is ultimately up to you it depends on things like how much assistance and advice you want. The more guidance you get from a stock broker, the more they are likely to charge for their services.

Is there a Difference between Trading and Investing Shares?

Whether you decide to invest in shares or trade them depends on your financial and investment goals. If you want a long term investment plan, then you are looking to buy shares and keep hold of them for anything from half a year to many years. Many stockbrokers offer this option alongside their trading accounts.

If you are more interested in a frequent buying and selling activity, then you can trade shares even up to many times a day. That means you are looking for a more short term investment strategy.

Either way, both short term and medium- to long term strategies are intended as ways to make profit!

How Long do I Need?

Whether you want to invest your money in shares in the long, medium or short term is up to you. Each person has their own investment and financial goals, and their own level or risk appetite. It also depends on how much attention and time you can give to your shares activity.

If you are able to actively monitor the market and are open to higher risk, then trading shares might be suitable. You will need to be prepared to stay updated with global financial, economic, corporate and even political news.

How Can I Start?

Before you get started in shares, it is highly recommended that you carry out some research and background work on how they and the market works. In addition, you'll need to work out what your personal risk level is.

You can read information directly from the ASX website, in financial books and on the internet. Use a trader training academy and sign up for free seminars and webinars this will help you to learn more and gain insight from expert investors.

Once you have fully assessed the risks, your personal goals and know how the market works you can decide what shares you want to invest in. Compare brokers on our site and check which one offers the best deal for you.

Here are some things you can ask yourself while looking for a good broker:

  • What markets can I access?
  • How frequently can I buy and sell shares?
  • What are the fees and how much?
  • Is this broker fully regulated?
  • What software is offered?
  • What additional features do they offer?

How Much does it Cost?

No matter if you are buying or selling shares, the broker will charge you a transaction fee. This will vary according to broker. In addition, you will be charged a range of fees:

  • Admin Fees

Admin fees vary according to broker but will be charged regularly throughout the year.

  • Dealing Commission

Dealing commission is charged by all brokers. Some brokers offer flat rate no matter what the trade size while others set this at a percentage of the trade value.

There may be additional admin or management fees you will need to compare these when you look for a suitable stock broker.

What Happens if the Company goes Bust?

If a company in which you hold shares goes broke, you are not liable. This also applies if the company has to default on loans the shareholder is under no obligation. On the other hand, as a shareholder of a bankrupt company, you will not receive any money until debts, loans and creditors are paid off by the company.

How Can I find Share Prices for a Company?

This is easy and is free of charge just go to the price section of the ASX website, or ask your stock broker to help you. Share prices on the ASX site are shown by a 20 minute delay if you want up-to-the-minute prices then your stock broker can provide these.

What are Dividends?

Dividends are a vital part of share dealing. For many people, dividend is one of the key factors of their choices of shares. Here's what they look for:

  • Does a company pay dividends?
  • How big are the dividends?

Dividends are paid from a company from its net earnings. They are usually a number of cents per share. But not all companies pay dividends they may reinvest earnings back into the business. Nevertheless, shareholders are entitled to a company's earnings/profits in which they hold shares.

How are Dividends Classed?

Dividends are given a Record Date this is the date a company looks at its share list to check which shareholders can receive the current dividend. All changes to this registration list must be final by this date.

Four business days before the Record Date, the ex dividend (or ex date) occurs. Shareholders who want to receive dividends must have purchased shares before the ex dividend date. On the ex dividend date, the registry for dividend shareholders is closed.

Dividends are paid to shareholders on the Date Payable.

Before shares reach the ex dividend date, they are classed as being cum dividend. While a share is cum dividend, it allows a person to buy it and still be entitled to the recently announced dividend.

Are Shares Taxed?

Stamp duty was removed in 2000 with the introduction of the Goods and Services Tax (or GST). The sale or purchase value of shares which are bought and sold are not subject to GST. However, GST might be applicable to broker fees on your share transactions ask your broker for a full breakdown of fees and taxes.

How Can I improve my Share Dealing Success?

There are numerous ways in which you can take measures to improve your chances of returns via share dealing.

You could look for a 'full service' or 'advisory service' broker they provide additional advice and guidance, market tips and insider information for clients. This carries extra fees and gives you no guarantee that you will be more successful.

Research and analysis is crucial in order to make good buy and sell decisions. Looking at which companies offer dividend, and how much is paid per share. What is the yield? The yield is the dividend per share divided by the share price. Another aspect to look at is a share price versus a company's actual earnings. This is called the 'price to earnings ratio'.

Look at company histories what has affected share prices up to today? How have they performed in the past? Do share values frequently change? Don't rely on instinct or guesswork here it is wise to seek an expert opinion to help you get the best shares.

What are the Advantages to Shares Dealing?

There are many advantages in shares. For one, they provide a wide range of investment opportunities you can invest directly via trade, via a collective fund or through derivatives such as CFDs. Here are some main benefits:

  • Increase income through dividend
  • Use them as collateral for borrowing
  • Pass on to family members as security
  • Can sell anytime (depending on investment type)

What are the Disadvantages?

By buying shares, you are risking capital. This is the case with all types of investment or trade the shares might lose value. Yet you can choose to invest long term and because shares are less exposed to fast fluctuations, the chances for returns are better.

Remember that during a time of economic hardship, share values generally fall.

Is Share Dealing good for Short Term?

Dealing shares via an online platform is a much more short term method than investing in them in the long term via a fund, trust or other type of investment plan. Therefore, you can choose whether you want to get involved in shares on a short, medium or long term basis.

The more short term you treat your shares, the higher the risk factor. If you treat them as a long term growth prospect, you can earn dividends over time and lower the impact from fluctuations in the ASX. Short term volatility will not factor as highly.

Diversification

Any financial advisor will tell you that it is a good idea to diversify your investment portfolio. That means having a portfolio which contains a wide range of investments and assets. This helps to spread risk if one investment fails, then you have the others which can still bring return.

Shares are included in many portfolios because of their relatively solid chance of returns over time.

What are the Risks?

Investing in shares can be a very beneficial and ultimately profitable way to get returns on your money. However it is still important to know and understand what the risks are. It is often said that shares are best when used as a long term plan as it reduces your exposure to market fluctuations.

That said, risk exposure is a constant factor. Here are some things to consider:

  • You could lose all of your invested capital
  • Share values can change
  • Relying on one area/sector is not recommended
  • There is no guarantee of returns

Make sure the stock broker you choose explains your options fully and if you have any questions, don't be shy to ask. They should clarify all factors, fees and risks in full.

        


Please Note: www.whichwaytopay.com.au is not authorised to give advice under the ASIC (Australian Securities & Investments Commission).

All of the Links, textural data, and image data is provided for informational purposes only.

Click here to view our Disclaimer

News Charts News and Charts

Students Feeling the hit of Studying costs has reached its highest
18 April 2017
Which Way To Pay
Many students in Australia are feeling a hit after studying costs rise , student credit cards are the way forward
Read More >>
As term time starts again , Student credit Cards are being used by more and more people .
30 August 2016
Which Way To Pay
Student credit cards have been proven to be the most popular card for students starting out in further studies .
Read More >>
Getting stung with large veterinary bills can prove to be a struggle . That's why Pet Insurance cover is so important.
30 August 2016
Which Way To Pay
Making sure all our family's favourite pets are covered on a insurance plan is very important.
Read More >>

Register for newsletter