Following on from last week, we'd like to take a dive into the wonderful world of the share market – a place that seems to give investors both good and bad sensations.
Once you understand that buying shares is the same as becoming a part owner of a company, it's somewhat easier to understand how prices can move up and down each day. This is a reflection of what all the participants in the market feel a particular company is worth at any one moment, based on the knowledge they have at that time. There are different approaches you can take to investing in shares. Some people prefer to actively trade their share investments on a regular basis, sometimes multiple times per day. Others will take a longer-term position and buy into an investment in the belief that returns will gradually go up over time.
Our preferred investment approach is to hold a very large spread of shares and to access these shares at a low cost. We also feel it's best to only enter the share market if you can afford to buy into these investments and hold them for at least 5 years. This is to allow for the natural market movement an investor will experience over that time. We also know that history rewards those who are patient and disciplined in their investment approach. Below is the returns history of our Australian share market over the last 118 years. At an average return of 13.2% per year, making a long-term investment in the share market certainly makes a lot of sense.
If you'd like to discuss your investment options more with us, just remember we're only a phone call or an email away.