Why trade Australian Shares?

Investment trading in stocks on the Australian stock market, or ASX, is a useful way of making some extra money once you get to grips with the platforms required to trade on and grasp the general behaviour of the markets.  

The Australian Securities Exchange (ASX) came about as the merger of multiple independent exchanges across Australia in 1987 when legislation allowed the six state independent stock exchanges to join but it wasn’t until the Sydney Futures Exchange came part of the team that the ASX as we know it was born.  

What can you buy and sell on the ASX?

Individuals can buy and sell shares from any of the 2,000 plus listed companies on the ASX, or invest more broadly through an Exchange Traded Fund or EFT and spread the risk over a number of listed companies. Some investors find it safer spreading the investment across several business sectors rather than focusing on one narrow market. If you are investing in certain business sectors it helps to gain some knowledge in those areas. It is advantageous to invest in an area that you have yourself worked in.  

While share trading in Australia is not without risk there are a number of ways to improve your odds of making a profit by reading up on the markets or studying tutorials on streaming websites. Firms that trade on ASX are grouped into sectors representing industry groups. Investors can use these classifications to search and sort companies to see how their value is performing against each other.    

Stocks can be a valuable part of your investments. Owning stocks in different firms can help build a savings portfolio, and also protect your cash from tax and inflation. Like any investment, it is important to be aware of the risks and the benefits. Long-term equity returns have been, historically, known to yield a better return than cash or fixed-income investments such as bonds or high-interest savings accounts based on stocks. However, prices will naturally fall and rise over time. 

Taxes and inflation will impact your wealth. Equity investments (shares in stocks) can give you better tax treatment that can slow down or prevent the negative effects of both taxes and inflation Different types of stocks hold dissimilar benefits. Common shares can offer capital growth. The price of a stock will rise over time. When it goes up, shareholders can choose to sell their shares at a profit or hold onto the investment. Much of the art to stock investment is knowing when to sell and when to hold. Many companies will pay dividends to their shareholders which works as a form of tax-efficient income investment.  Typically, common shares can be bought and sold with more ease than other investments, such as real estate, art or jewellery. This means investors can buy or sell their investments for cash with relative ease and reinvest or use the income for other purposes.