How To Start Investing in ASX shares for beginners
As a beginner it can be challenging to know how to start investing in ASX shares. It is essential that you take time to research how to start investing your money in ASX shares so that you maximise your portfolio growth. In this article we give beginners seven tips on how to start investing in ASX shares.
Why start investing in ASX shares?
Don’t start investing in ASX shares for the sake of it. People invest a lot of the time learning how to start investing in ASX shares because they fear missing out. It is important to remember when you start investing to ignore the stock market volality and noice. Only start investing in ASX shares that you believe in.
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How much money do you need to start investing in ASX shares?
If you are beginner, when you start investing in ASX shares you don't need any capital. Investing in ASX shares is about starting a watch list of ASX shares and getting comfortable with the risk that you are prepared to take. When you do start investing real money in ASX shares, invest very small amounts relative to your total capital. If nothing else, this gets you used to the communications you experience as a shareholder, or part owner of a company.
Everything big starts from something small, and that includes when you start investing in ASX shares. To understand what your risk tolerance is when you start investing, invest some money in ASX shares and work out when you are willing to cut your losses and how willing you are to hold on when you are making good returns on the ASX shares you start investing in.
When I start investing, how many ASX shares should I buy?
At Under the Radar Report we recommend that beginners who have just started investing in ASX shares follow our portfolio structure or cash (0-25%), Small Cap ASX shares (20-30%) and Blue Chip ASX shares (50-75%).
Start investing in seven to 10 ASX Small Caps over time to achieve diversification benefits as well as the potential for one or two of them to do well such as AfterpayTouch (APT). As a beginner you can build up a ASX share portfolio over months or even years.
Investing in ASX shares it not not a risk-free approach. Nobody can guarantee that the first ASX share you start to invest in will be a success. When start investing in ASX shares you need some diversity to avoid the risk of having several good investment ideas but only having a dud.
How much time do I need to start investing in ASX shares?
When you start investing in ASX shares you need to build up the amount of time you spend researching as it relates to your total asset base. The more you start investing in ASX shares, the more time you need to spend. We’re talking about your future, after all.
In most cases, the most productive use of your time when you start investing in ASX shares is your job. Beyond that, when you first start investing you should be putting in at least two hours a week reading material that relate to your ASX shares. When you start investing, you should always be looking for the edge in the ASX shares you invest in. That might occur when you're at a Smiggles store and you are interested in Premier Investments (PMV), or looking to see how many a2 cans are in stock in the supermarket. It never stops, really when you start investing in ASX shares.
What should a beginner invest in?
Beginners should start investing in ASX shares that are small companies as it gives you a competitive edge. When you start investing in ASX shares, you can buy a lot of ASX shares that most fund managers don’t bother with because they’re too small. You can start investing in ASX shares with a small amount of money which means it’s much easier to buy and sell without impacting the ASX share price.
The small investor now has more access to information and research than ever before making it easier for beginners to start investing in ASX shares. We always tell beginners when they start investing not to invest more than 25% of their total equity portfolio in Small Cap stocks, which we define as stocks with market caps of less than $500m.
There is a lot of volatility in this space, but it is combined with big potential when you start investing in . When the big rewards come, they are not to be scoffed at, which is why beginners should investi in Small Cap stocks. Our top ten ASX shares have returned 650% on average. These are the best ASX shares of course and not all stocks perform at this level. When you start investing, you need a portfolio of seven to 10 stocks, which you are comfortable with holding for the long term.
Investing in ASX shares is made easy with Under the Radar Report. We tell you when to Buy, Hold and Sell the ASX shares when you start investing. To join, sign up for our 14-day free trial here.