1. Investing in shares is too complicated

People generally invest their money in the sharemarket with the hope that their investments will grow and provide returns over time. You may consider doing this by investing directly in a company’s shares, which is owning a piece of a company, with the aim of making your money grow if the share price rises. 

Or you might start by investing in ETFs, which stands for Exchange Traded Funds and is a way for new investors to start building a portfolio. An ETF is a pool of shares or other assets that can potentially diversify your portfolio, without the need to buy individual shares. From health care to tech or the top 200 Aussie stocks, there are plenty of ETFs to choose from. [Like all investments, ETFs have risks and benefits that investors should consider]. 

2. Share investing means giving up your lifestyle

A few years ago, it was all about owning your own property, which requires a large, upfront capital expense. For many Aussies, this meant sacrificing some of life’s greatest luxuries (we’re looking at you, avo on toast lovers!).

Today, more Australians are looking for other ways to put their money to work by dipping their toe in the sharemarket. There are potential positives when it comes to share investing - you can start small, it can be easier to get in (and out of) the sharemarket, and you can invest in a company or group of companies that interest you.

3. Share trading is way too risky

Like anything, share trading comes with risk. It is recommended that you first understand your risk tolerance - the ability to cope and recover from financial loss - so you can then be in a position to make investment choices that are right for you and at the level of risk you are willing to accept. 

Ideally, you may want to invest an amount that, even in the worst-case scenario, won’t have a major impact on your lifestyle.

Here are some risks that come with investing in the sharemarket:

• Business risk: A company’s shares could fall in value or fail to deliver expected returns due to business decisions or the overall business environment.
• Liquidity risk: Buying and selling can become difficult in some market conditions, making it harder for investors to buy or sell shares.
• Market and economic risks: Market sentiment, economic, technological, political or legal conditions may affect the value of investments.
• Interest rate risk: This involves the value of an investment potentially changing after interest rate fluctuations.
• Currency risk: While this typically impacts investors trading in overseas markets, changes in currency exchange rates can affect the value of an investment.

You can potentially manage these risks by diversifying your portfolio – this means spreading your investments across different sectors (e.g. energy, financial and health), having a mix of larger and smaller companies or investing in other asset classes like property or bonds.

4. Share trading costs a lot 

Unlike investing in property, investing in shares allows you to begin investing by starting small. For many brokers, it’s free to open an account to invest, however, there are a few costs to consider before diving in.

• Minimum investment amount: Most brokers have this. With CommSec, your initial purchase in any stock must be at least $500 worth of shares, known as a 'minimum marketable parcel'. After your initial purchase, you are able to purchase smaller amounts to top up existing shareholdings.
• Brokerage fee: This is the fee charged to buy and sell shares or any other asset through online investing platforms like CommSec. It covers the work required by the broker to confirm the sale and transfer shares to the buyer.
• Foreign exchange fee or share transfer fees: This is charged at a broker’s discretion for investors placing a trade in international markets.

5. Investing is a guessing game

Before you start investing, make sure you research the companies you want to buy in order to make an informed decision that aligns with your investing goals. Broker watchlists and alerts can help investors keep an eye on specific stocks or market movements. It’s like adding things to a shopping wish list!

Some investors might also research a company by reading company announcements, market news written by experts, or by listening to podcasts.

6. Finding an investment type is overwhelming

Before you start investing, it’s important to know what investment type is right for you based on your goals. Do you want to invest for the short-term or the long-term? Are you investing to generate another income stream, or to set your kids or grandkids up for their financial future? Once you’ve identified your goals, it’ll be easier to find your way to invest.

7. There’s a lot of paperwork involved 

You don’t need to dig into your archives to be ready to open an account. Before you open an account with a broker, it’s best to have the following handy:

• A valid form of photo ID (Australian drivers' licence or passport)
• Your full name (including middle names and salutation) as written on your chosen ID
• Your postal and residential addresses and phone number 
• Your tax file number (TFN)
• If you’re opening an international trading account, most brokers will ask you to complete a W-8 form. Brokers like CommSec have integrated this into their sign-up process, making it easy for new customers to set up their account. Learn more about W-8 forms.