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You’ve heard about freefalling Australian share prices but is it all bad news? Many people have lost money and will be licking their wounds in coming days but for the savvy new investor NOW could be a great time to buy your first shares.
Should I buy shares?
If you do not currently have any investments in Australian shares hearing about freefalling share prices should make your ears prick up. Sure, many people are losing money, but for a courageous new investor it could be a good time to get into the market. The lower prices however mean you can get better value for your investment – but it may also mean you’ll need nerves of steel. There could be additional share price drops in coming months but if you are buying quality shares that were previously over-valued your new portfolio is likely to survive the storm. On the upside, you’ll be able to start building yourself a great longer term investment.
Shares: buy low, sell high
The golden rule of investing is to buy for less than you sell for. In coming days although the bottom may fallen out of the Australian share market today, it is likely that many of those better companies share prices will bounce back. You could make two, five, even 10 percent, of the value back within a few days. What you do with the profits is up to you – you could re-invest the money into more shares or take it and put it into more stable investments, slowly building yourself a nest egg.
Online share trading
For a small-scale new investor who is just testing the water and looking to take advantage of opportunities such as a freefall in share prices online trading may be the best way to get started. You will also want to find a stock broker to give you some good advice about shares that have been hit hard but are likely to recover, if not overnight then in the short to medium term.
Popular online trading centres include CommSec (whose website did go down briefly during the peak trading frenzy on 22 Jan 2008), NAB Online Trading and e*Trade. There are many others though, so shop around for a service and price that you are happy with. You may prefer a smaller fee per transaction or alternative arrangement depending on your newly forming trading habits.
Research your shares
Before you go withdrawing your savings from your high interest bank account do yor research. Speak to a broker, start reading the papers, go to the Australian Stock Exchange website. You’ll want to make sure your purchase of shares at this volatile time is a savvy one. The best way to do that is get educated. Other sources of information include: Huntley’s newsletters, Fat Prophets reports and the Rivkin Report.
Happy investing and good luck!
