Top Ten Shares Questions

1.      When should I sell my shares?

No one can answer this is in the abstract. Shares rise and fall, and it depends on your investment strategy. Many investors caution that it is best to take a medium to long term views of shares, but of course you can get specific advice from a broker and/or financial advisor. Make sure they are qualified and appropriately licenced.

2.      Do I pay stamp duty and/or GST on the purchase of shares?

No, but the brokerage fees attract GST.

3.      What is a “non-advisory” broking service?

This is a broking service that does not offer personalised investment advice and does not recommend particular shares. On the other hand, their brokerage fees are usually less than “full service” brokers. They may concentrate on internet trading.

4.      How do I get shares in a float?

A “float” is when companies initially raise capital by issuing shares to the public. A prospectus is then offered, where you can check out then company’s details and offering. There will be a form you can fill out to buy shares, depending on how many are available and whether it is over/undersubscribed.

5.      Can I change brokers after I have bought shares through them?

Yes. Sometimes you need different types of investment advice, and some brokers concentrate more on certain types of sectors (e.g. mining).

6.      Do I get a say in the running of the company?

You can participate in the annual general meeting (AGM), and have every right to make your views known to the Board. At the AGM a Board will be voted on, and there will be a report from the Chairperson and perhaps the CEO.

7.      Why do my shares have fluctuating prices?

The share market is very much a “market”, so supply and demand plays a large part in the price of a share. If lots of investors want to buy a scarce share, its price will rise. Many other things are relevant, such as the company’s future earnings prospects, domestic and international economic factors, the level of unemployment etc.

8.      How do I know if my shares are doing well?

This depends on your investment strategy, the advice you receive, the research you carry out, the value of your dividend payments etc. What is “doing well” for one investor may not be the same for another.

9.      What is “margin lending” and should I get involved?

This is a term that means borrowing money from a broker or other lender to buy shares, which are in turn the collateral for the loan. Don’t do this unless you have appropriate professional advice. 

10.  Where can I learn about shares?

Ring the Australian Stock Exchange 131 ASX (279). They will be pleased to suggest courses and books for you. There are also online classes you can access.

LAW FOR YOU

Read this: This fact sheet is intended to be general information about the law in Australia. It is not a substitute for legal or other professional advice. Lawscape Communications Pty Ltd, Fairfax Interactive Pty Ltd or MoneyManager does not accept responsibility for loss to any person, who either acts or does not act because of this fact sheet.

© Lawscape Communications P/L

Last Updated – March 2007