How to Invest in ASX Securities — A Guide for Beginners

If you’re new to investing and are wondering how to invest in ASX securities, it’s important you start your journey on the right foot with professional guidance. At Global Masters Fund, our team is here to help. We have over twenty years of experience with trading shares in a global market and can offer the specialist advice you’re looking for.

What Is the ASX?

The Australian Securities Exchange, also known as the ASX, is the primary stock exchange in Australia. It lists a wide range of securities, including shares, bonds, exchange-traded funds (ETFs), and listed investment companies (LICs). The ASX is a popular destination for people looking to invest in Australian companies and gain exposure to our national economy.

Preparing to Invest in ASX-Listed Securities

When you invest in ASX securities, it can present many great opportunities for you to grow your wealth over the long term. However, before you begin your investment journey, there are a few steps you’ll need to take to ensure you are properly prepared. Before you get started, we recommend taking the following steps:

• Review your financial situation
• Understand your goals
• Research your investment options

Are You Financially Prepared to Invest?

Before you invest in the ASX, it’s important to review your finances with a financial advisor to make sure you have the funds to spare. Of course, the more money you invest, the higher your returns will be if your portfolio performs well. However, you’ll still need to consider your emergency funds and your existing financial obligations before you sink all your savings into your investments.

If you’re investing long-term, the money you put into your portfolio will likely have to be left alone to grow for decades to achieve your financial goals. That’s why we recommend reviewing how much money you will need to set aside to cover any emergencies or loan repayments in the future.

What Are Your Investment Goals?

You know you want to invest in the ASX, but do you know why? It may seem like a basic question to ask, but for many people at the start of their investment journey, it can be a deceptively tricky one to answer.

Establishing clear investment goals to outline exactly what you want to achieve from your investments can take time and have a significant impact on your portfolio’s performance. We recommend talking to a financial advisor to gain a better understanding of your goals and how you can achieve them.

Of course, the reason anyone invests is to make money, but beyond that, you’ll also need to know what you plan to use this money for. Is it part of your retirement plan? Are you hoping to use the money you generate to make a big purchase, such as a house? Perhaps you’re planning on using it to help your children by funding their education or increasing their inheritance.

Whatever your financial goals may look like, it’s important to establish them before you invest in ASX shares so you can build a portfolio that aligns with these goals. Once you have determined why you are investing, it will help you to then outline the following:

• How much money you will need to achieve your financial goals
• When you would like to start using the money you have made
• What your risk tolerance is when investing

Have You Considered Your Investment Options?

When the average Australian thinks of investing, they most likely picture putting their money into different ASX-listed stocks. However, this can be a tricky investment strategy to master if you’re just starting out and are looking for an easy way to diversify your portfolio and minimise risk. Luckily, there are a number of different investment products available on the ASX, such as LICs, ETFs, and managed funds. These investment products allow fledgling investors to benefit from the knowledge and experience of seasoned investors and their professional fund management services. By entrusting them to make the best investment decisions for your financial goals, it becomes a lot easier to profit from a diversified portfolio while reducing your risk.

Investing in ASX Listed Investment Companies (LICs)

LICs give investors exposure to a wide range of assets by pooling investors’ cash in a managed portfolio that is overseen by a professional investment manager. The exposure that LICs provide makes it easier for investors to diversify their portfolios with investment options they may otherwise find difficult to buy into, such as:

• International shares
• Private equity funds
• Specific sectors
• Emerging companies

At Global Masters Fund, our portfolio includes an array of quality growth companies listed on the ASX, as well as international stock exchanges in New York, London, and Johannesburg. We can be found on the ASX LIC list under the code GFL.

Contact our team today to find out how we can help you achieve your investment goals, or visit our ASX profile for more information.

FAQs

What types of securities can I invest in on the ASX?

On the ASX, you can invest in various securities including shares, bonds, exchange-traded funds (ETFs), and listed investment companies (LICs). Shares represent ownership in individual companies, providing exposure to their profits and growth. Bonds are debt instruments that pay interest over time. ETFs are funds that hold a diversified portfolio of assets and trade like shares, while LICs pool investors’ funds to invest in a managed portfolio, offering diversification and professional management.

What should I consider before starting my investment journey?

Before investing, assess your financial situation, including existing debts and emergency funds. Establish clear investment goals that outline what you want to achieve, such as saving for retirement or a major purchase. Research different investment options available on the ASX, such as stocks or managed funds, to understand how they align with your objectives. It’s also important to evaluate your risk tolerance – your comfort level with potential losses – before making any commitments.

What is the process for opening an account to trade on the ASX?

To open a trading account on the ASX, you typically need to choose a broker – either an online platform or a full-service broker. The process involves filling out an application form, providing identification (such as a driver’s licence or passport), and linking your bank account for transactions. Once your application is approved, you can fund your account and begin trading. Familiarise yourself with the broker’s trading platform and tools to effectively manage your investments.

What are the fees associated with trading on the ASX?

Trading on the ASX incurs various fees, including brokerage fees charged by your broker for executing trades. These can be a flat rate or a percentage of the transaction value. Additionally, if you invest in managed funds or LICs, there may be management fees that cover operational costs. Always review the fee structure before choosing a broker or investment product, as these costs can significantly impact your overall returns over time.

How can I track the performance of my investments?

To track your investments on the ASX, you can use various tools and platforms provided by your broker, which often include performance dashboards, price alerts, and detailed reporting. Additionally, financial news websites and stock market apps provide real-time updates and analytics. Consider setting clear benchmarks for your investments, such as specific growth targets or comparisons against market indices, to evaluate performance effectively. Regularly reviewing your portfolio will help you make informed decisions based on current market conditions.