Overview

Buying shares can be risky. If a share price reduces then the value of your investment reduces as well. However shares have historically provided better returns over the long run than the other main asset classes: property, cash or bonds. Holding shares in just one company is very high risk.

In fact, it is considered as one of the best long-term investments in the financial market. Like for example, if you want to double your money in a year, buying shares would not be a good idea, but, it can be a rewarding investment if you want to invest for like 10 or 20 years.

The most common way to buy and sell shares is on the share market using a broker or broking service and you buy them in the stock market.

The stock market (a.k.a. share market or stock exchange) is where people buy and sell shares in listed companies. A stockbroker places all trades electronically and share settlement (ownership change) occurs two business days after the transaction.

The Australian Securities Exchange (ASX) is the largest in Australia and contains over 2,000 companies with a market capitalization over $2 trillion (AUD).

The benefits of investing in shares are: Potential capital gains from owning an asset that can grow in value over time. Potential income from dividends. Lower tax rates on long-term capital gains.

Share Acquisitions

Typically Shares can be bought via:

 Initial Public Offering (IPO)

An IPO is when a private company lists (i.e. "floats") on a stock exchange to raise funds by selling shares in the company to the public.

 Off Market Transfer

An off market transfer is a private sale normally done between family members or when dealing with deceased estates. No broker is required.

 Capital Raising

A capital raising involves a listed company issuing additional shares to current shareholders or Sophisticated Investors to raise funds. The offered price is usually at a discount to current market value to entice investors to take part in the raising.

 Managed Fund or Exchange Traded Fund (ETF)

You can buy shares indirectly by purchasing units in a Managed Fund or ETF. This method allows investors to gain exposure to a portfolio of shares in one transaction.

 Employee Share Scheme

Some listed companies allow their employees to purchase shares in the company at a discount to the current market price. These transactions do not go through a stockbroker and therefore don't involve brokerage fees.

Summary

We hope the above has provided you some information about share investment aspects, which will be considered in your overall Quantum Wealth Plan.

Exchanged Traded Funds document is available below:

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