Before you start

An investment in shares can start from as little as $500 plus brokerage costs. Generally, people start with an investment of $2000 due to the cost of transaction.

Setting your investment goals

Consider the following questions to help ensure this type of investment is right for you:

  • what do you want to achieve from your investments?
  • do you want a return in the form of income or capital growth?
  • are you prepared to risk some of your investment capital for the opportunity to make higher returns?
  • do you need additional security?

Your age and time frame for investing may affect your decisions. A full service broker can help assess your current financial situation and set your financial goals for the future.

Choosing who to use to buy and sell shares

Having decided to buy or sell shares, you need to choose which type of broker to use: advisory (full-service) or non advisory. If you are just starting out in the sharemarket and don't feel confident in your sharemarket knowledge you will probably value the advice of a full service broker. If you are interested in low cost trading and are confident in your knowledge of the sharemarket you may choose a non advisory stockbroker. Once you have chosen the basic type of broker you can now assess the services individual broking firms offer.

Setting up a trading account

Many brokers  will require you to set up a client account before you can start trading. This can take up to a week to finalise but can usually be done in 24 hours. Frequently brokers will require that you establish a cash management account with a particular bank or financial institution. This is to facilitate easy transfer of funds to pay for your purchase of shares and to allocate proceeds to you from the sale of shares.

Providing personal information

When a broker provides advice there is a legal obligation under the Corporations Law to ‘know the client’, meaning they have to ask you about your current financial situation (such as assets, debts etc) and needs before offering advice. You will most likely be asked to fill out a form with your financial details for the advisers’ records.

You don’t have to supply this information however the adviser can only make specific recommendations about investments with knowledge available of your specific needs and objectives. Non advisory brokers do not require this information as they do not give advice.