Tips for new investors: two experts reveal all
There were 25,000 more active online share investors in the 12 months to June 2015 than in the year to November 2014, according to Investment Trends' 2015 First Half Online Broking Report.
It found that 620,000 unique Australian investors placed at least one share trade through an online broker in the 12 months to June 2015 and more than 10% of those traded online for the first time.
"The strong performance of the Australian sharemarket to April encouraged 65,000 Australians to place their first ever online share trade in the six months to June 2015, breathing new life into a market that had been flat over the previous year," says Irene Guiamatsia, analyst at Investment Trends. "The inflow of 65,000 new investors within the six-month period is the highest since 2010."
The report also found that new traders, along with Gen Y, are driving smartphone usage for share trading with 60% of Australian online investors using a mobile device in relation to share trading, up from 53% a year ago.
If you're new to investing on the sharemarket it can be hard to know if you're getting it right. To give you a guide we went to two experts to get their top tips for trading newbies. Their advice can also serve as a good reminder for more seasoned investors.
James Carlisle, research director, Intelligent Investor
Probably the most important thing in investing is to keep your focus on the long term.
Try to worry less about short-term movements in the price of your shares and more about the long-term value of the businesses that underlie them.
As they say: "Price is what you pay and value is what you get." Of course, valuing businesses isn't easy, but if you're uncomfortable doing that then it needs to be the focus of your learning.
Chris Weston, chief market strategist, IG
First, I would ask a few important questions. What type of market participant are you? Are you a trader or an investor and from this perspective what is it that drives your edge over the market? How will you manage your risk (i.e, where do you get out) and what will be the level of capital you allocate to each investment?
Given what we have seen, I would absolutely recommend understanding how to adapt a portfolio to market volatility, as strategies such as income unravel quickly as investors preserve capital.