Asset Class: Shares - Addisons Advisory Group

Asset Class: Shares

Shares are an important part of an investment strategy. Being good at investing in shares is about being informed


When you buy shares in a company, you are buying a part of that company and will share in the company’s performance in the form of profits which can be given to you as dividends and/or capital growth through the value of your shares increasing. Companies generally list on the stock exchange to raise capital for their company and to create a market in their shares. Companies you invest in benefit by using your money and that of other investors to finance their business or its expansion, without having to borrow money.

Shares are an important part of an investment strategy.  Being good at investing in shares is about being informed, monitoring your share’s performance on a regular basis, keeping an eye on your goals and investment strategy and participating in ongoing education as you need it.

Shares are a great long-term investment and have many tax benefits. They also offer other advantages, including flexibility and liquidity. The majority of the time, there are buyers and sellers for most major companies, meaning it is easier to buy and sell your shares at your own convenience. The proceeds from the sale of shares takes just three days to settle, meaning, if required you can obtain your cash very quickly.

The cost of share is also very low and the advent of internet trading has seen costs drop even further with some online brokers charging as little as $25 to buy or sell. There is also low capital requirements in that the minimum amount of shares that must be purchased when establishing a new shareholding in a listed company is just $500 worth and when adding to an existing holding, it can be as little as the investor pleases.

The simplicity of shares is also another attractive element in that it is very easy to obtain information on your investment. Share prices are very transparent and can be tracked in the newspapers or online. Public companies are required by law to produce an annual report, which is sent to shareholders, disclosing their financial track records for the previous year.

For Australian investors, dividends are often worth more than the cash payment they receive. This is because where companies have already paid tax on their profits, tax credits known as franking credits may be attached to the dividends the company pays to you. These franking credits can be used to offset tax payable by you on other income. In addition, shares held for more than 12 months qualify for a 50% discount on any capital gains tax payable.

To obtain more information on beginning or increasing your share market portfolio, please contact us for a complimentary consultation.