With interest rates at historic lows and rising inflation, keeping your money in a savings account or term deposit just won’t cut it if you’re looking to grow your wealth. You want high, stable, and consistent returns but how can you achieve this?
The share market of Australia today, while at times volatile, presents many opportunities for investors to build a reliable portfolio. Now, we’ve all heard success stories, but what about the risks of investing?
We'll look at five necessary precautions every investor should be aware of when investing in the stock market of Australia.
Be realistic with your expectations
A common trap first-time investors fall into is trying to achieve huge returns on their investment right off the bat. While there will always be stories of someone who made a hefty sum from a single trade, such cases are extremely rare and the truth is, investing in the stock market of Australia won't make you rich overnight.
Seasoned investors know that there is no guarantee that you will make money, but having patience is key and having a well-thought-out and long-term investment plan is the true path to financial independence. Don’t go it alone, get the latest Australian stock market news, support, Australian share price and know when to buy and sell.
Keep up to date with stock market news
While it helps with your sanity to not constantly check your investment, you don’t want to forget about it completely either.
The stock market of Australia is a fast-moving, ever-changing landscape with sectors that don't always perform well at the same time. This is why it’s important for investors to keep up to date with the latest Australian stock market news and trends to make the most out of the current market conditions - making the necessary moves that will help you to reach your financial goals.
Don’t trade on borrowed funds
Veteran investors know that it is important to be disciplined and only invest an amount that you are willing to lose. This is why investors, especially newcomers, should avoid borrowing funds to trade no matter how much of a sure thing an opportunity might be.
This kind of leverage can increase losses. Remember, if your investment value decreases in value, you still must pay back the initial loan - possibly doubling your losses.
Remove the emotion
When it comes to investing in shares ASX, it’s easy to get caught up in the hype. Whether you’re nervous or excited about an investment, it’s important to not get emotionally invested.
Take the time to understand and assess your risk tolerance, that is how much risk you can take emotionally. As well as your risk capacity, how much risk you can handle financially. Remember, if you can't sleep at night, you're beyond your risk tolerance and should reassess your investment into Australian shares ASX.
Do your research, and then research some more
This might seem obvious, but it is important to research the company you are looking to invest in. You shouldn’t buy shares ASX just because a friend or a friend of a friend said so, and you shouldn’t buy a stock solely because it has done well in the past. Remember, past performance isn’t an indicator of future performance.
So, do the homework and trade wisely. Some key information to look at is a company's financial reports, the quality of its products and/or services, upcoming projects or partnerships, and its overall outlook.
While there are many moving parts to the stock market of Australia, there are many opportunities if you know where to look. By following these simple rules combined with the right tools, you will be on your way to reaching your financial goals.
But you don’t need to go it alone, get the support when you need it, and know when to buy and sell.
At the Australian Stock Report, we’re here to help you protect your hard-earned savings, build a sustainable income to support your lifestyle, and achieve capital growth.
Speak to our team today and we can show you how to make better investing decisions to build the income you need.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purposes only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceedings. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.