So you want to start investing, but don’t know where to start.

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So you want to start investing, but don’t know where to start.

I suppose the first thing that goes through your head is “How much money do I need?”. The truth is you don’t need thousands. All you need is $500 as that is the minimum trade amount for most trading accounts. Which is actually a good starting amount as you will be learning as you go. You will make mistakes, but better to do it with $500 than $10,000.

A great place to start is by setting up a CommSec account. Yes I know they have a higher transaction fee than other places, but if you are a complete beginner their apps and processes are much simpler and easier I have found. When you are confident you can then jump to a competitor if you wish.

An added plus is they have promotions regularly for first time users. At the moment your first 10 trades are free up to $600.

You also want to sign up as a chess user with a CDIA account. It doesn’t cost anything and will allow you to easily trade and manage your portfolio without a broker.

To sign up you simply go to the CommSec website and follow the instructions. If you are a commonwealth customer the process is super quick and simple. They use all the details they already have in netbank to authenticate you and your account is created in less than 24hours.

If you are with a different bank you can still apply online quickly and easily, however you will have to perform an ID check. This will allow them to confirm your identity.

You will receive a welcome email with all your details.

So I have a CommSec account now what?

If you already have shares you should transfer them over now. Again CommSec has made this really simple. You simply go to accounts portfolio transfer. Enter in your details and that’s it.

Note: The name and address on your CommSec account must match the name and address the share registry has.

You will receive an email within 24hrs confirming that your transfer was successfully submitted. Your shares will appear in CommSec in 24-48 hours. My experience so far has been less than 24 hours.

The next this you will want to do is buy shares. As a trader you don’t pay or receive money for your trades at the time of the trade. You pay later. This is a settlement period.

For most stock trades, settlement occurs three business days after the day the order executes. Another way to remember this is through the abbreviation T+3, or trade date plus three days. For example, if you were to execute an order on Monday, it would typically settle on Thursday.

So if you buy $500 worth of shares be aware it won’t take $500 off you until you reach the settlement period. Settlement periods can be great and let you do some interesting things. As you are just starting and are in it for the long term I hope, just ignore it and make sure you have enough money in your CDIA account for settlement.

To buy or sell shares simply login. Go to trade and enter the following information:

  • Order type (Buy or Sell)
  • Code of the shares (e.g. Telstra is TLS)
  • Quantity(Number of shares)
  • Price limit or market (Market – Buy or Sell for whatever price of the shares are when trade is executed, Price limit – Buy or Sell at or below a price you specify)
  • Expiry (How long you want your offer to be available to other traders)

Then click review and if you are happy complete the order. Congratulations you just bought shares.

Trading Apps

Now you are setup and have some shares. Time to get some apps to make your life easier and more convenient. Download the CommSec app it will allow you to buy and sell shares through the app on the go. You will also be able to see your position live during the day.

Now there are a lot of trading apps many allow you to create accounts and deposit money etc. You could use some instead of CommSec. Please do a lot of research before transferring money to any app. If you do register for any app use different passwords to your CommSec account and don’t tell them your CommSec client ID. The last thing you want to do is lose your investment to some dodgy people.

As you are just starting out there is only one app other than CommSec I would recommend. It is the Bloomberg Business App. It is free and will allow you to keep up to date with market news.

There are 3 cool features with this app:

  1. The latest news from around the world. As an investor you need to keep up to date. We are in a global interconnected economy. You want to know when something happens so you can adjust your portfolio accordingly if the need arises.
  2. You can add stock to a watch list. This allows you to easily see how your stocks are doing or stocks you may wish to buy in the future.
  3. On IOS and Android it allows you to create a widget. So you can see the latest news article as well as how all the stock in your watch list is doing. All without having to unlock your device.

Not bad for a free app.

Now you have a CommSec account and two trading apps you can easily buy and sell on the go. Just remember shares go up and down a lot. You are aiming for a 7% or greater return each year over 10+ years. So when you open your app and you see your stock is super low or super high don’t lose your head.

Happy investing :)

Links below:

CommSec Website: www.commsec.com.au

CommSec App: https://itunes.apple.com/au/app/commsec-mobile/id880540304?icid=700006:commsec:dcx:public:mobile:gs:logo:apple:store

Bloomberg Business App: http://ad.apps.fm/hVV6GyKHDSgYmLVi5eg6QfE7og6fuV2oOMeOQdRqrE1U0dTbjxYdZsxRW9QAP44uH1ksP_M7Ixam_mUYxiEeFJglgiZTquhnjLr-yJQ9A8U

3 comments on “So you want to start investing, but don’t know where to start.

    1. Thank you for your question.
      Stock puts and calls are options to sell or buy shares for a certain price at a later date.
      A put option is the option to sell and a call option is the option to buy.
      Simply put if you think the share price of a stock will go up, you could buy some call options.
      When the stock goes up you can then exercise your option to buy the shares and then sell them the same trading day.

      So why would we want to do this?
      Say a stock called toys is trading for $500 and you have $5,000. You believe toys price is low and will increase to $600 in less then a month. Now you could buy 10 shares and then sell them later making $1000. Or you can buy a $5,000 call option. Now lets say you can buy call options for a premium of $50 per share (premium is the intrinsic value, time value and implied volatility).
      So you can buy 100 shares instead of 10. When the stock reaches $600 you can then exercise your option and sell it on the market the same day. Profit equals sales price minus buy price minus premium, so $60,000 – $50,000 – $5,000 = $5,000.
      So you now have $10,000 and have made a $5,000 profit.

      However if the shares go down instead of up, your options are worthless and you have just lost your entire $5000.
      Put option is just the opposite so you think the price will go down. So you buy the option to sell shares at a certain price. When you exercise a put option you buy the shares at market price and sell them. Again profit is calculated as sales price minus buy price minus the premium.

      It has a greater risk, but if you have good information it allows you to leverage more of you capital.
      Any questions let me know.

      Note:
      You may need to setup an option account in addition to your trading account. I know with Commsec you do.
      Remember to take into account brokerage and other fees that you may be charged.

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