Investing in the Australian Securities Exchange (ASX) isn’t a new venture. Many investors love ASX shares because the top 200 companies of the ASX market are among the most liquid worldwide. And nowadays, buying and selling shares is made even more accessible because of the abundance of investment platforms online. You simply need to log into your account then choose the shares you want to buy or sell.
One problem that aspiring investors often encounter is choosing ASX shares. It isn’t complicated. But the problem is that there are too many options, and many people get overwhelmed. So, when it comes to selecting the right ASX shares, you may want to consider the following tips:
- Seek Expert Advice
Whether you’re a newbie in ASX shares or have been in the game for quite some time, it’s best to listen to the experts. This is because you’ll be using your hard-earned cash to invest in a company’s shares; if the company goes bankrupt, chances are, your investments may also go down the drain. That’s why buying shares from a company you think will flourish isn’t enough; in this case, you’re going to need expert advice.
When you seek the advice of a professional, you’ll learn more about the ASX market. In doing so, you can gain good insights from experts like Maqro Capital and similar trading platforms. Utilizing this earned knowledge to make wiser investment decisions ensures that you’re buying the right ASX shares.
Most importantly, experts will help you think more objectively in times of uncertainty. Since they’ve been in the market for quite a long time, they know how to handle their emotions. So, if you’re worried about your decisions, these experts can advise you on separating personal feelings when investing.
- Always Check Market And Economic Changes
While having experts to assist you with your decisions is a good choice, staying updated on market and economic changes is highly recommended. These trends can significantly impact a company’s earnings. Knowing what’s happening around you will equip you with better information and enable sound decisions.
You may find relevant topics like overseas markets and economic trends affecting the Australian market helpful. Other reads such as regional and industry-specific influences, investor sentiments, and exchange rates would also be beneficial. And most importantly, you should know the different government policies and interest rates. The following sources include information that can be useful to you:
- Economic condition forecasts from reputable stockbrokers and banks
- New economic information from reputable finance and business sections of various newspapers, magazines, and websites
- Expert opinions on the Australian economy from the quarterly Statement on Monetary Policy of the Reserve Bank of Australia
- Choose Between Funds And Individual Shares
Depending on your availability and focus, you can invest in funds or individual shares, especially if you have a passion for learning and have the time to understand each company. But you might have to do the opposite if you’re a starter and can’t commit to learning about individual ASX shares. Instead, going for low-cost mutual funds and exchange-traded funds (ETFs) may be better.
In ETFs, investors trade on major exchanges to achieve a common goal. Here, you’ll be buying a specific number of ASX shares, and it’s not dependent on a fixed amount of money. And on the same day that you execute your trade, you’ll also enjoy the current market price.
In mutual funds, you’ll pool a specific amount of money to achieve a common goal. The fund’s manager will then use such funds to build a portfolio of shares. Unlike ETFs, mutual fund investments will happen when the market of the day has closed.
- Know The Debt Of The Company
A company’s debt is another vital aspect to consider when choosing individual shares. It’s not just about knowing how much they borrow; it’s also weighing the company’s ability to handle its debts.
Moreover, knowing this will help you understand if a company has a strong balance sheet. This means it should have more funds before tax and interest on its earnings than interests and debts. That way, you can ensure that the company isn’t on the brink of financial losses.
Conclusion
Choosing ASX shares can be difficult if you don’t know how to choose. Most people take an intuitive approach in choosing and buying shares that they feel will increase value. Unfortunately, this is not always effective.
While it’s easy to follow the ‘buy low, sell high’ principle you should first learn to choose the right ASX shares. That way, you can maximize your earnings instead of just waiting and hoping that the shares’ prices will rise.
