Ever wondered why some people have financial freedom and others simply just can’t get ahead?
We are not talking about driving fast cars & superyachts, we are talking about financial security, having a comfortable retirement, enjoying family holidays, not having to worry about money.
With money being the #1 cause of relationship breakdowns in Australia and 1-in-3 Australians now experiencing financial stress, isn’t it time to consider alternatives to secure your future?
The share market offers regular ‘mum and dad investors’ the opportunity to purchase shares in companies, enjoy in their profits and start setting ourselves and our families up for a strong and long financial future.
Understanding the share market and trading shares on the Australian Securities Exchange (ASX) or on global markets is something that many feels is ‘outside their capabilities’, but this couldn’t be further from the truth.
So, what is the share market?
A share market is a market in which securities (stocks/shares) are bought and sold, hence the name share market. A security or share as the name suggests is a financial instrument that can be traded for a monetary value.
In Australia, the ASX has over 2200 companies and issuers listed and is the eighth largest share market in the world! In summary, the ASX is the marketplace that allows you to buy and sell your share or securities in companies that have listed.
Based on the performance of a company, the demand for their shares and a range of micro & macroeconomic factors – such as government policy and trade deals that may affect the company directly – the price of a company’s shares may move up or down, meaning investors gain & lose money.
What is the difference between a share market investor and trader?
Some people invest, some people trade. Investing is purchasing shares for the ‘long-term’ and looking at shares that perform over a long period of time, providing not only grow on your principal investment, but also provide a ‘dividend per share’ from the profits the company generate to grow your investment further.
Investors are looking at the long game, setting themselves up for the future and short-term rises and falls in share prices are usually not felt by these people.
Traders on the other hand look at buying shares low and selling high, they move fast and take advantage of market news, company information and discrepancies in share prices verses valuations. They seek to make ‘quick profits’ and move onto the next trade. Share trading & investment courses are available online to get a better understanding of potentially investing, trading or simply gaining a better understanding.
Depending on your financial situation you may wish to be an investor, a trader or a combination of both – it all comes down to what you are looking to achieve, your available money to trade and the amount you can afford to lose.
What are the benefits of investing in shares?
Share investing is not only about making money, you are becoming an owner of a company – although a small part owner – but also you can invest in companies that you have a connection to and that you believe in what they are doing and that will ultimately hopefully provide you solid returns.
The current property market is bouncing around like a yo-yo, with some analysists predicting the market could potentially see a 30% collapse in price. This means to be financially secure and continue enjoying your quality of life, for a long & comfortable retirement and financial freedom you must diversify.
This means, you may – or may not – have a mortgage currently, but if you do you have one asset class. You may have some savings (cash) that is another asset class and you will have some superannuation that is another asset class.
If you invest in shares across a range of sectors, you again are investing in asset classes that are diversified, so if there is a housing crash, your shares & cash are not affected.
However, if you only invest in property and there is a crash or a move in interest rates, you could be on a slippery slope towards bankruptcy. If you put all your eggs in one basket – as many Australians do – you are putting your future security all on the line.
We all want more money, to travel, to buy new things, to enjoy life. Share market investing and trading can provide that. Some shares go up in value, some offer significant dividends, meaning that you can rely on income from the dividends to prop up your wage.
In addition, if you buy stocks in new and emerging industries, there may be a chance for you to make some big money if the company/industry takes off. For instance, former Prime Minister Malcolm Turnbull, who has an estimated net worth of $133 million, was an early investor in the Internet company OzEmail.
If you have shares they are considered liquid assets, meaning if you need to sell them quickly for money, you can more than likely do so on the ASX.
In addition, as previously mentioned, shares offer long-term dividend and growth opportunities that people who don’t invest, simply can’t get.
Understanding your super and your retirement
You may or may not be aware, but if you work in Australia and have superannuation, then you are actually investing in shares – it’s just being done for you.
Do you know how much super you have? Do you know where its invested and what in?
Understanding the share market will provide you with the knowledge to better understand your super, understand what you need in order to get the money you need for a comfortable retirement and always ensure you have the security, that you will never run out of money.
How to start learning about the share market, investing and your financial future?
The first step is to understand that you are never too old – or too young – to start learning about shares. It doesn’t matter if you don’t have a background in finance, business or even finished school, there are courses that can start you from the top.
Courses such as share trading & investment and Introduction to CFD’s, start from only $89 and provide you with the foundation knowledge to start trading, setting up your accounts and understanding the financial sections of the newspaper.
If learning face to face is more your style, Smart Money Company offer classroom, workshop, online and e-learning courses that are tailored to your specific knowledge, financial position and goals.
The key to your future financial success is the next step, Smart Money Company can help you not only take that first step but also be there every step of the way including training & education, trading services, SMSF administration and more.
Please note, all information is general in nature and does not take into consideration your financial situation.