Share trading and investment supported by research and expert knowledge
Share trading and investing– or the buying and selling of company stock – presents thousands of options for investing in companies large and small, domestic and international. Our Equity Research department is a cornerstone of the firm. We provide our advisors with in-depth knowledge across ASX stocks and sectors and have capability to provide international coverage. In addition to common stock, LemSec advisors have access to investment vehicles such as seed capital, IPOs, on market opportunities and options that can potentially broaden the scope of a portfolio
Where to start?
When it comes to stock investing, knowing your investment goal is crucial. That, along with your investing time frame and how much risk you’re willing to take when investing in stocks, will help you determine how your stock investments should work with the rest of your investment portfolio.
Stock investing can help your investment portfolio by providing potential growth, income from dividends or a combination of the two. However, the value of any stock can fluctuate, it may be worth more or less than you originally paid.
Our advisors knowledge and research are cornerstones of LemSec. We provide our advisors with knowledge and support on individual stocks both domestic and global stocks. In addition our advisors have access to investment vehicles such as on market capital raisings, IPOs and options that can potentially broaden the scope of a portfolio.
What are shares?
Shares are sometimes also known as equities, securities, or stocks
Buying shares has historically given a better chance of making your money grow over a long period than other investments, but with that potential comes a higher risk of losses.
Companies issue shares to raise money. When investors buy those shares, they effectively get a stake in the business and the chance to make a profit if the company does well.
When you become a shareholder in a business you usually acquire certain voting rights, although only very large shareholders have any real say in how the company is run.
If the company performs well, you can benefit from share price growth and/or income paid as dividends. Equally, if the company performs poorly, your shares could decrease in value and/or the company may pay no dividends.
Trades are issued by listed companies and traded by investors on the ASX.
What are the benefits of owning shares?
Shares can rise in value over time and you may be able to sell them for more than you bought them, with the difference in those prices known as your capital growth.
If you buy $1,000 worth of shares and you sell them for $3,000, then your capital has grown by $2,000, prior to capital gains tax.
Another way you can make money by investing in shares is through dividends.
When a company makes a profit, it may choose to distribute a portion to its shareholders through dividend payments.
Companies are not obliged to pay dividends but if they decide to, they will typically announce the size of the dividend in tandem with their full or half year financial results.
Larger, well established companies are generally more likely to pay dividends than smaller, newer companies.
It’s important to remember that just like share price growth, past dividend payments are no guarantee of future ones.
What are the risks of owning shares?
Shares are considered to be the most risky of the asset classes.
The price of shares can fall as well as rise, which means you could lose money. In the worst case scenario, you could lose all the money you invested in the shares of a company if it goes bust, as shareholders are last in the queue to get their money back.
Again, larger, more established companies are considered less risky than smaller, start-up companies as they are less likely to go out of business, but the disintegration of Lehman Brothers in the US, proved that it can still happen.
- Capital growth – means that a share has increased in value however, shares can also lose value, so investors should carefully monitor the performance of their portfolios.
- Dividends – A dividend is a payment by a company to its shareholders, usually as a share of profits. Some companies pay dividends regularly, others pay dividends sometimes or not at all. Some companies also allow you to reinvest dividends into new shares. Some investors can also receive tax benefits on dividends in the form of franking credits.
- Buying and selling – ASX-listed shares are easy to buy and sell compared with unlisted shares, property and term deposits. You can buy or sell small amounts quickly through a licensed broker. Brokerage fees for executing a trade are usually a fixed fee or a small percentage of the value of the shares traded.
- Spreading your risk – There is risk involved in any investment in shares. For instance, if you concentrate your investments in a small number of companies or a single sector, then you can be more exposed to the risk of losing money due to falls in the share prices of those companies or market events impacting on that sector. One way to reduce this risk is by spreading your investments across different types of companies in different sectors.
- Shareholder rights – As a shareholder in a listed company, you will have the right to receive company information and to vote at annual general meetings. You can also have the right to participate in some further share issues by the company, such as rights issues. Your rights may vary depending on the type of shares that you hold
- Invest in approximately 20 to 30 stocks in at least six to eight sectors with different investment characteristics.
- No more than 20% of the total value of your stock portfolio should be in any one sector.
- No more than 10% of the total value of your stock portfolio should be in any one stock.
- You should invest a minimum of approximately 3% to 4% of the total value of your stock portfolio in each stock.
Deciding which stocks to invest in can be difficult, especially if you have a low tolerance for risk. That’s why it’s important to define one’s financial goals and how much risk can be tolerated. Research stocks that fit within your strategy and invest in stocks that have the potential to help you meet your specific goals, whether you want investment growth, income, or a combination of the two.
Your Investment Advisor can provide you with a wide range of stock investing services, including:
- Asset allocation strategy development
- Individual stock selection
- Help in deciding when to buy and sell your stocks