Investing: How to get started

investing

Mar 20

Written By Sanjee Sen

It’s fantastic to hear you’ve decided to start investing!

Firstly I’d say please do checkout some of these articles from the Australian Government Website.

Step 1: Gather money you’re comfortable to loose in the short term

This step is important because your initial investments might go completly wrong (hopefully not!). But just incase, you don’t want to be in the situation where you don’t have enough money to buy food or pay your rent/mortgage.
Generally it’s recommended you have built an “Emergency Fund” of cash with enough to cover 3-6 months of your expenses.
You also don’t want to be in the situation where you’ve decided to invest and if something goes wrong in your life (money wise), you have to sell your investments too early just to cover basic costs.

Brokerage firms will buy and sell shares on your behalf. They used to be all done over the phone - where you’d literally have to call someone and say “I want to buy $5,000 worth of shares in BHP” - and they’d put the order into the market on their end.
Now you can do this all online without having to call anyone.
One option you have is to find out if the bank you’re currently with has a “share trading” platform. For example Commonwealth bank has Commsec. Nab has Nabtrade. ANZ has ANZ Investing. Westpac Share Trading.
These companies will generally let you sign up for free because their business model is in taking a cut on each of your BUY and SELL orders.

Your brokerage site and account will have clear details on how to make this transfer.
It should be a simple transfer using your usual BSB and Account number from your main account into your Brokerage account.

If you’re thinking of buying an ETF - then check each of their websites for more information on each one before you commit. Vanguard, Betashares and iShares are all reasonable ETF providers.
The most common ETFs to buy are ones that broadly cover the Australian and international sharemarkets.
Two great examples of this are VAS - Invests in the top 300 companies in Australia. VGS - Invests in countries other than Australia (there is also a currency hedged version of this called VGAD.
Purchasing these two ETFs will essentially give you exposure to the “whole world” of shares (with some exclusions obviously). But it’s a great way of having a very broad exposure to both the Australian and international sharemarkets.

Each broker is different but the basic idea is the same with them all.
You can buy shares at either “market price” or “limit price”
You can read about it more here at the Investopedia article
I generally use Limit Orders and use the market depth as a reference on what price to pay.
Make sure you check everything twice before you hit the “CONFIRM” but because there is no undo on the share market! These transactions can go through lightening fast!

After you’ve made the purchase make sure you’ve actually got money in your trading account to cover the transaction!
You generally get 2 business days to have the money there. Some brokers will make sure you have the money before they make the purchase. While others will let you trade and then assume you’ll have the money there in 2 business days (more dangerous).

Once you’ve purchased those first set of shares…just chill out and stop stressing about how much the market and your shares are moving everyday.
That’s generally the quickest way to going backwards in the sharemarket is checking how it’s moving everyday.
You’ll be forcing yourself to make decisions and question how good your decision was everyday instead of looking at it over a long period of time.

Reminder that this isn’t financial advice and you should speak to an advisor before you make any major decisions that could impact your finances.

I did a full video on this on my YouTube channel where I went through the process (in a bit more detail) for the CommSec platform:

Sanjee Sen