A Beginner's Guide to Navigating the Stock Market
Throughout Australia’s 2020 lockdown, there have been several things I’ve learnt. One of these would be investing.
Having savings in the bank is stable, but your potential returns or interests is generally better invested into stocks for a higher yield.
As a stockholder, when you’re buying shares you’re essentially into the ownership of a company. It’s worth, value as well as it’s profits are shared with you, therefore if a company grows, so does your initial investment.
The hardest part to grasps is the initial process from opening an account to buying and selling.
Exchange-Traded Fund (ETF) or Contract for Difference (CFD)
When you first begin investing, there are two types of investments you’ll commonly encounter, first being Exchange-Traded Fund (ETF) and Contract for Difference (CFD).
Exchange-Traded Fund (ETF) is considered the safe option where investors own the shares they’ve invested in. They are also given a share in the profits of the company, known as dividends.
Contract for Difference (CFD) investors are gambling on the potential profit of the shares they’ve bought. Your investment is lower and your gains are magnified, which also means so too are your losses. With CFDs you do not own or have any interest in the underlying asset.
We are ignoring CFDs for now, as it’s considered unsafe and has a higher potential of negative yield. We’ll begin with ETF.
The easiest way I’ve found to get started was to open a CommSec Account paired with a Commonwealth Direct Investment Account (CDIA).
The reason I chose CommSec over other platforms was due to the ease of use as well as the data provided to you. The fees involved are also lower than most brokers.
There are no monthly account fees or opening costs. The breakdown of brokerage fees or trading fees (fees involved when a trade is made) are as follows:
These fees are based on trading on CommSec with a CDIA account.
More information can be found here.
Which shares to watch
Shares in Australia are broken down into blue chips and white chips or “penny stocks”. Blue chips are considered financially sound companies. Blue chip companies generally offer high-quality, widely accepted products and services. These are established companies valued over $1 a share. Provided below is a list of companies which I’ve considered safe and worth watching.
The ASX Stock Market opens between 10am to 4pm. Orders can be placed at anytime during the day, however a trade is not made until the market is open. There maybe interruptions to trades when there are requested ‘trading halt’ by either the company or exchange, usually due to sensitive announcements.
Macquarie Group Ltd
Macquarie Group Limited is an Australian multinational independent investment bank and financial services company.
The Commonwealth Bank of Australia is an Australian multinational bank with businesses across New Zealand, Asia, the United States and the United Kingdom.
Domino’s Pizza Enterprises
Domino’s Pizza Enterprises Limited is the largest pizza chain in Australia in terms of network stores numbers and network sales, as well as the largest franchisee for the Domino’s Pizza brand in the world.
Afterpay Limited is an Australian financial technology company operating in the United States, United Kingdom, Australia and New Zealand.
CIMIC Group Limited
CIMIC Group Limited is an international contractor. It is active in the telecommunications, engineering and infrastructure, building and property, mining and resources, and environmental services industries.
Seek Limited and its subsidiary companies, known as the Seek Group, focus on facilitating the matching between jobseekers and employment opportunities and helping hirers find candidates for advertised roles.
VanEck Vectors Australian Banks
MVB is a financial holding company. Its primary business activities, through its subsidiaries, are primarily community banking and mortgage banking.
Australia and New Zealand Banking Group
The Australia and New Zealand Banking Group Limited, commonly called ANZ, is an Australian multinational banking and financial services company headquartered in Melbourne, Australia.
National Australia Bank Limited
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation, earnings and customers.
Westpac Banking Corporation
Westpac Banking Corporation, commonly known as Westpac, is an Australian bank and financial services provider headquartered at Westpac Place in Sydney.
Amcor PLC is a UK-domiciled packaging company. It develops and produces flexible packaging, rigid containers, specialty cartons, closures and services for food, beverage, pharmaceutical, medical-device, home and personal-care, and other products.
Flight Centre Travel Group Limited
Flight Centre Travel Group is a large retail travel agency in Australia. It was founded in 1982, and is headquartered in Brisbane, Australia. FCTG has many stores and offices under various retail and corporate brands.
Kogan.com is Australia’s largest online retailer, with incredible deals on TVs, Phones, Tablets, Computers, Kitchen Appliances, Homewares, Fitness, Beauty, Tools, and much more!
Crown Resorts Limited
Crown Resorts Limited is one of Australia’s largest gaming and entertainment groups which had, in April 2018, a market capitalisation of just over A$8.7 billion.
Coca-Cola Amatil Limited
Coca-Cola Amatil Limited is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region and one of the world’s five major Coca-Cola bottlers.
Zip Co Limited
Zip Co Limited previously known as ZipMoney Limited is an Australian public limited financial technology company.
Origin Energy Limited
Origin is an Australian listed public energy company with headquarters in Sydney. It is an Australian Stock Exchange publicly listed company.
Sydney Airport is an international airport in Sydney, Australia located 8 km south of the Sydney city centre, in the suburb of Mascot.
Webjet Limited is the largest travel agency in Australia and New Zealand. Its WebBeds division is the 2nd largest supplier of lodging to the travel industry.
Qantas Airways Limited
Qantas Airways Limited is the flag carrier of Australia and its largest airline by fleet size, international flights and international destinations.
Oil Search Limited
Oil Search Limited is the largest oil and gas exploration and development company incorporated in Papua New Guinea, which operates all of Papua New Guinea’s oilfields.
Tabcorp Holdings Limited is Australia’s leading diversified gambling entertainment group, employing more than 5000 people. It is the largest provider of lotteries, Keno, wagering and gaming products and services in Australia.
Telstra Corporation Ltd
Telstra Corporation Limited is an Australian telecommunications company which builds and operates telecommunications networks and markets voice, mobile, internet access, pay television and other products and services.
Domain Holdings Australia Limited
Domain Group (or simply Domain) is an Australian digital property portal and associated real-estate industry business.
The Star Entertainment Group Limited
The Star Entertainment Group Limited is an Australian gambling and entertainment company.
The shares listed above are part of a small portion of my watchlist. There are Facebook groups and financial resources available which will enable you to grow your watchlist as well as provide you with market tips and stocks to keep an eye out on.
When buying and selling shares on CommSec, there are few things to keep in mind, one being brokerage fees. This value is added to the bid/sale order for your chosen share. When buying small volumes or packages, you need to factor in your brokerage fees when purchasing and selling.
Ensure you watch the market trends, and trade with patience. Watching the market trend will enable you to evaluate the share’s worth and allow you to make decisions on selling, purchasing or holding your asset. Watch out for announcements or news for your company of interest; this will determine if your share will exhibit a magnified growth or negative downfall.
If there are any other questions, feel free to leave them in the comments.