Investing in the Share Market

Investing in the Share Market

Introduction

People use different methods to achieve their financial goals. Investment can be done in several areas like property, cash, bonds & debentures and in shares. The main reasons for investment are: one to gain capital growth, create their wealth and get some protection against inflation, second aim is to get a source of income from their investments for example dividends from shares. In order to invest in a financial market like share market individuals should follow certain steps. First analyze your financial position, second what will be your level of risk and review your investment portfolios. In order to be successful investors should have the capability to make quick decisions, avail the opportunities and can bear the risks involved in an investment. According to Fontanills & Gentile, (2001), stock market is just like a lucky draw or rolling a dice, therefore investors should start their share market experience with a small amount of capital which can help investors learn about the market. In a situation where you have AUD $100,000 and after leaving AUD $ 25000 in saving account, how a person can use his or her AUD $ 75,000 for investing in the share market. Before making investment decision people need to collect in information about the companies listed in the stock exchange, so that you can decide a correct place for your investment. After trading shares for a month individuals will be able to understand whether they have earned some profit or are they facing losses.

Discussion

In Australia there are different levels of investments which are categorized on the basis of investment direction like foreign investment in Australia and Australian investment in other countries. These investments have several types that include direct investment, portfolio and investment in reserves. Direct investment is done by an individual living in another country but investing his money in your country or owning more than 10% shares of a company in another economy. Portfolio investment on the other hand is the investment in equity or debt either through direct investment or through reserve asset investment. Portfolio investment requires a lot of planning; the objectives of investing money should be determined, level of risk should be accumulated and strategically allocate your assets. Portfolio managers keep a watch on the changes occurring in the financial markets. On the basis of these changes portfolio managers develop their evaluation report and compare the changes with the plan developed.

Therefore, investing money in any kind of market is a professional job. Investment management is a professional services provided by many managers. Managers should be good predictors and have a lot of experience in investment management. There are many advantages and disadvantages in investing money in the stock exchange. The advantages include; first people do not know the real worth of your investments as compared to other investments where people know the amount you has invested. Second in comparison to interest rate the growth is more in investing ...