Beginners Guide to Investing
How to invest in stock

This beginners guide to investing suggests that it would be useful to have a minimum of $A5,000 to get started in stock investing.

So while investing for beginners requires some capital to get started, the requirement is much less than for other investments such as property.

Starting with $A5,000 would enable you to get some diversification early on by being able to purchase $A1,000 to $A2,000 holdings of stocks in several companies.

But if you are investing with little money, $A1,000 could get you started, depending on the minimum buying requirements of your broker.

As your portfolio grows you will want to increase your purchase amounts. For example, I started with $A2,000 purchases, then increased to $A3,000, then $A5,000 then $A10,000 and ever higher!

I find it useful to buy in approximate multiples of $A5,000s or $A10,000s. The larger the purchase amount, the smaller is the percentage cost of brokerage.

You will also require the services of a stock broker to buy and sell shares for you. The choice is between an online broker or a full-service broker.

A full-service broker provides advice on what shares to buy and sell as well as doing the buying and selling for you. As a result, their brokerage fees are significantly more expensive.

I use an online broker. Why? Because I take my own advice and mostly do my own research. You may wish to do the same in order to minimise costs and also to be in control of your own destiny.

Membership with online brokers is usually free, and you pay reduced brokerage charges.

For some brokers, if your purchase or sale cost exceeds a certain figure, you may have to pay more brokerage. In my case, I stay slightly below $A10,000 in order to reduce brokerage fees.

Of course, if you are using an online broker you will need a computer and access to the internet. To track your performance, you will also need an Excel spreadsheet that comes with the Microsoft Office software package.

You will also need to locate sources of advice. My online broker provides quite a lot, but check out other potential sources.

One way to get a beginners guide to investing in the stock market without losing money is to use a stock market simulator.

This type of game lets you use notional money and is commonly used in educational institutions to allow students to gain some stock market investing basics.

However, there is no experience like real experience and the sooner you put up real money, the faster you will learn.

But it is not only about money. You need to understand how to choose stocks. Check out my guide on the best stocks to invest in.

From Beginners Guide to Investing to Why stocks?