Some people consider investing in shares to be risky, the rich however praise shares for generating their wealth.
Strategic share investing on the Australian Stock Exchange (ASX) is possibly the most important way to make your money work hard for you, you can invest your money how you wish and generate wealth off the back of global companies performing well in their sector.
Is investing in shares for you?
You do not have to be a qualified Masters in Economics to understand the benefit of investing your money in Shares. Daily reading of the Financial Review and other online reports such as Marcus Today can further anyone’s knowledge of how investing works and give sound education on how to go about making wealth with investments.
The best outlook to approach shares is too see it as investing your money for a longer period of time, such as 2-3 years within a secure large company, formally known as Blue Chip.
The term “Blue Chip” is share jargon that describes a stock that tends to have a high market value. You could say that Blue Chip shares are the top 20 stocks listed on the market. The term Blue Chip comes from the days when the most expensive chip in a casino was blue!
A key investment strategy is to put away a percentage of every paycheque to utilise in your investment portfolio. Every time your Savings Account reaches a certain level, for example, $5000, it would be clever to purchase another batch of shares within large blue chip companies.
If one were to do this over their working life, the estimated wealth of any individual would be significantly enhanced. Of course all investments should be monitored to ensure maximum performance, Blue Chip stocks tend to be lower risk than that of small companies trying to ride the economy boom wave.
Share Market Tips
Emerging Economy’s such as China are starting to become quite the superpower within the world sphere, and investment into companies that deal with such nations would potentially be a wise move.
Banking sectors always yield a high profit at the end of financial years, normally creating a sold share price that tends to escalate rapidly every 12 months.
Mining Sectors are also starting to emerge as powerful sources of wealth generation, the reason for this is due to an increased demand in minerals and other mined products like Coal and Oil. Examples include that of BHP and RIO on the ASX, which have rapidly reached a 12month high on the back of rising commodities prices.
Shares increase your net worth w/ Dividends
Dividends are payments from a company back to the shareholders. When a company earns a profit at the end of a financial year it can be put to two different uses; It can be re-invested, which is called retained earnings, or it can be paid to the shareholders of the company in a dividend. This enables your net investment to grow by allowing you to buy more shares with the money they give you, or you can cash the cheque and utilise the money how you wish.
If you are not convinced of the benefits of shares, try utilising the ASX website’s online game in which you can participate in a real-time fake money investment game. This can teach you how to trade along with the in’s and out’s of how the Share Market works.
Remember, the share market is your friend in making money, so use it wisely and formulate investing strategy’s based upon economic indicators and continue to monitor your investments.