Before committing to any investment, it is important to consider the level of risk that you are comfortable with, and your investment objectives. We can help investors establish their most comfortable risk/return stance.
The share market is volatile and returns over any one year can be dramatically different from another. Investors should plan to hold and be adding to their shares for a medium-long period of time. This allows markets to go through cycles and reduces the risk of you buying at the top and selling at the bottom.
Do-It-Yourself Investment Portfolio
Many people have an appetite and ability to manage their own portfolio. Investors of a share portfolio will require three key elements to become smart ‘do-it-yourself’ investors:
- money to invest,
- a great deal of time to be well-informed about listed companies on an ongoing basis, and
- access to financial data to enable technical evaluation of shares.
The work of an investor does not stop once shares have been initially chosen and purchased. Ongoing, frequent assessment of whether to hold, sell or buy more shares is vital to the long term success of the portfolio.
When it comes to buying and selling shares there are two types of services offered to support investors; advice and execution.
If you already know what shares you want to buy, and only require a broker to perform the execution of a trade, i.e. conducting the transaction resulting in a purchase or sale of shares listed on the Australian Stock Exchange (ASX), then there are many execution-only brokers available, such as CommSec, Etrade and Bell Direct. You will typically pay a flat fee per trade, for transactions under $20,000. Note that a trade is considered purchasing a number of shares in one company. Once you open a trading account, you will have to transfer money into that account before you can buy your first shares. When you buy or sell a share, the money is taken out (or deposited) in your account 3 days later.
Additionally, some providers offer advice. This means they will do research on companies, dividends, movement in share prices and will provide recommendations to you about what shares to buy or sell and when to do so. For this type of service you should seek out a highly regarded share broker or financial advisor. Typically they will charge around 1% of the value of the trade for their services, or in the case of a financial planner, they may offer this advice as part of your broader financial planning service fee.
Professionally Managed Portfolios
Following share prices daily, keeping up to date with company announcements and managing the practicalities of buying and selling shares can be burdensome. Professionals such as financial planners are able to take the time and energy burden of share market investing off your hands, and professionally manage your portfolio on your behalf. Advisors will have access to the highest quality independent research such as van Eyk and Morningstar, and on a daily basis will keep up to date with relevant changes in the market. Professionals will be able to make the entire process simple for the investor, providing both advice, and handling all aspects of the implementation.
Edney Ryan Wealth Management
Whilst we can assist “do-it-yourself” investors with specific areas such as making the share trade or ad hoc advice as required, our typical client utilises our broader financial planning services, where investment in the share market comprises just one part of their holistic plan including superannuation, personal insurances, managed funds and tax effective investment strategies.
In advising clients on shares we use research from several sources to ensure we see different points of view and have access to online trading as well as a broker where we can get wholesale brokerage rates.
Our process commences with an analysis of your financial goals, concerns and attitudes to investment risk. Edney Ryan Wealth Management then tailors a financial strategy to achieve the agreed objectives. Once our client is comfortable with the proposed plan we action our agreements, and then continue to monitor each portfolio, communicating and meeting with clients on a regular basis about the performance of their investments.