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What are the ways to invest in shares?

Amanda Varidel

There are a number of ways to buy shares and various platforms through which to do it.


You can buy shares either directly, by investing in individual companies, or indirectly by investing in a fund. Investing directly gives you complete control of which companies to invest in and when you buy and sell them. However, there is always a risk that individual companies will not perform as well as you hoped and you could lose money.


It’s important to have a diversified portfolio of investments to reduce that level of risk.


Investment funds

Investing in funds is a way to reduce the concentration of risk because each fund holds a selection of different assets, although good returns are never guaranteed. When you invest directly you have to pay a brokerage fee every time you buy or sell shares but those costs are lower through a fund because they trade in bulk. Investment funds do carry various other costs, however, which you should be aware of because they can eat into your investment returns over time.


Separately Managed Accounts and Exchange Traded Funds are generally cheaper than other managed funds, because they aim to replicate rather than beat the performance of share indexes or other groups of assets.


Can I buy shares myself?

We strongly not following this path for obvious reasons but for your information, there are several different ways that you can buy shares or invest in funds, the easiest of which is through an online broker such as E*TRADE, CommSec or DirectShares.


There companies offer execution-only services, which mean they make trades based on your instructions, without giving you any advice. For example, you make an order online to buy a certain amount of shares in a company and they place that order into the market according to your instructions and let you know when the deal is done.


Some brokers also offer advisory services to help you decide which shares to buy and sell, according to your personal circumstances and needs. This service comes at a higher cost.


You can also find brokers that offer discretionary services, which means they can buy and sell shares on your behalf, without consulting you each time.


This means the brokers can carry out deals quickly if they spot an opportunity but you are effectively handing over control of your portfolio and it’s possible they will make more or less trades than you deem necessary. Discretionary services come at a higher cost so you would typically need to have at least $50,000 available to make it worth your while.


Again, there is no substitute for seeking appropriate personal advice and assistance.

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Stu Varidel AR 324007 and Your Choice Financial Planning Pty Ltd ABN 80124246877 trading as Heart Financial Advisers CAR 323623 are authorised representatives of Sentry Financial Services Pty Ltd ABN 30 113 531 034 & AFSL 286786.

Warning The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Heart Financial Advisers and Heart Mortgage Services nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

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