Step by Step Guide to Investing

First Step to Investing is Choosing a Broker

A broker is where you place all your trades! They are basically the middle man, and while it used to be a man (or maybe woman but probably not), brokers are now all online platforms where you can place trades at any time of the day. They will only be executed during market hours, but you have 24/7 access to these platforms. I originally used NAB Trade, however have recently moved across to Pearler. If you are new to investing, want something simple and easy to understand, I’d go with Pearler over one of the big 4 banks platforms.

Next You Need to Sign Up

The next step is signing up to a brokerage platform. You will need to just give your basic details, including name, address, DOB, TFN etc. You will receive a holder identification number (HIN), which is a unique number that ties you to the shares you buy- kind of like a username or something similar. If you choose to go with Pearler, use the code MINDOVERMONEY for a free trade! Most brokerage platforms won’t charge you to sign up, they will charge a standard, once of fee each time you execute a trade. There may be some services that use a subscription model and make you pay monthly or annually, however I’d suggest to avoid those, at least to start with. Once you have signed up, set up a recurring deposit or transfer a lump sum so you have some money to get invested!

Now is the fun part: Choosing a share and buying it!

The reason I love Pearler is because they have a list of their most popular shares. While this shouldn’t make your decision for you, it is a great place to start and see what you like. Another place to start is looking at the ASX and seeing what companies you use all the time and think would be a good investment. You aren’t going to get it perfectly right, as long as you start you are doing well!

Once you have decided on the share you want to buy, it is time to buy it! Use your broker to place a trade, you will have to enter the amount of money you want to use and/or the number of shares you want to buy. You will most likely be charged a once off brokerage fee, generally ranging from $5-$20 depending on the broker you are with. Once you have placed the trade, when the market opens you will have bought your shares! Congrats!

Soon You Will Receive Some Paperwork

Once you have received a HIN you will get some paperwork giving you a copy of that number. Once you buy your first investment, you will also receive a letter encouraging you to sign up to a share registry. There are a few around, so depending what you buy will determine which share registry you will need to sign up to. The registries keep track of all your investments under your HIN, and it is on these sites that you can update your bank details to receive dividends and distributions from your investments. The share registry is also where you can choose to take part in dividend reinvestment plans (DRP) where your dividends are automatically reinvested back into the same share. There should be details in the letter about how to sign up. The main two share registries are Computershare and Link Market Services.

Continue to Invest Regularly

The best gains are made with consistent, regular investing principles. Transferring a set amount of money over each week into your account, and investing every fortnight/month/quarter/year is the key to success in share investing. Consistently investing over the long term in a well diversified portfolio is a proven method of building wealth.

Reap the Rewards

Compound interest is the 8th wonder of the world and for good reason! If you continue to invest regularly over a long period of time, eventually your returns will outgrow what you are contributing and you will see exponential growth. The longer you invest the better return you will see, and eventually you will be able to reap the rewards. Whether that is being able to go part time and supplement your income with income from your dividends, or retire all together. The best part about investing is that it gives you choice to do what you want in life.

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