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The most common way to buy and sell shares is by using an online broking service or a full service broker.

When shares are first put on the market, you can buy them via a prospectus. You can also buy through an employee share scheme, or invest indirectly through a managed fund.

Buying shares (stocks, securities or equities) makes you a part-owner of a company. As a shareholder, you can get dividends and other benefits.

You can own shares yourself, or pool your money with others through a managed fund (a collective investment).

If you're new to shares, visit the Australian Securities Exchange (ASX) education centre for information and online seminars.

You can choose to use an online broking service or a full service broker.

Use the Australian Securities Exchange (ASX) find a stockbroker tool to locate a broker that suits your needs.

Initial public offerings (IPO)toggle accordian row

Companies may offer new shares to the market as a way of raising capital. This is called a 'float' or an 'initial public offering' (IPO).

To decide whether to invest in an IPO, read the prospectus. A prospectus contains details about the company and the float. It tells you:

A prospectus must be lodged with ASIC. To check this, see ASIC's OFFERlist database.

Things to look for in a prospectus:

If there's anything in the prospectus you don't understand or are unsure about, talk to a broker or financial adviser before you invest.

Crowd-sourced funding (CSF) enables start-ups and small to medium-sized companies to raise public money to finance their business. This is also known as 'equity crowd funding' or 'crowd-sourced funding of shares'.

Crowd-sourced funding of shares is not the same as:

Employee share schemestoggle accordian row

You may get shares, or the opportunity to buy shares, via an employee share scheme at your workplace. You could get a discount on the market price, and may not have to pay a brokerage fee. Check if there are restrictions on when you can buy, sell or access the shares.

Managed fundtoggle accordian row

When you invest in a managed fund, you buy fund 'units' and pool your money with other investors. A professional fund manager buys a range of shares and other assets on your behalf, diversifying and reducing risk.

This is a convenient way to buy shares, as someone else makes the buy and sell decisions. Depending on the type of fund you choose, fees may be higher than on other indirect investments.

Exchange traded fund (ETF)toggle accordian row

An exchange traded fund (ETF) invests in a group of shares that make up an index, such as the S&P/ASX 200. An ETF allows you to diversify your portfolio without having a lot of money to invest.

You can buy or sell ETFs just like any other share. ETFs generally have lower ongoing fees than managed funds. But if you want to invest small amounts regularly, youll pay a broking fee on each contribution.

Listed investment company (LIC)toggle accordian row

A listed investment company (LIC) uses money from investors to invest in a range of companies and other assets. It pays dividends from earnings.

LICs generally have lower ongoing fees than managed funds. They may not suit you if you want to invest small amounts regularly, as you pay a broking fee on each contribution.

CHESS Depositary Interest (CDI)toggle accordian row

A CHESS Depositary Interest (CDI) allows shares of a foreign company to be traded on Australian markets, such as the ASX.

When you buy a CDI, you get the financial benefit of investing in a foreign company. But the product title is held by a depositary nominee company on your behalf. Generally, you get the same benefits as other shareholders, such as dividends or participation in share offers. Usually, you cannot vote at company meetings, but can direct the depositary nominee to vote on your behalf.

To find out more, see the ASX publication Understanding CHESS Depositary Interests.

Limit ordertoggle accordian row

Used when you want to buy or sell your shares at a specific price, or better. If buying, you set the maximum price youre willing to pay. If selling, you set the minimum price youre willing to accept. A limit order may not execute. It can be placed for the day, or left open until cancelled or expired.

Market ordertoggle accordian row

Used when you want to accept market price for a share at the time you place the order. If buying, you pay the highest asking price. If selling, you accept the highest bid. A market order is more likely to execute. But you effectively pay a transaction cost when you cross the bid-ask spread.

Good til cancelled (GTC) ordertoggle accordian row

Stays open in the market until cancelled, giving you the benefit of order queue priority. The risk is it could expose you to significant price swings, for example due to overnight international news and market moves. So you could experience a loss. The risk is higher during times of greater market volatility, such as COVID-19.

Good til expiry (GTE) ordertoggle accordian row

Stays open in the market until the expiry date, giving you the benefit of order queue priority. Expiry can be a date you nominate, or your brokers default, commonly set at 20 trading days. The risk is it could expose you to significant price swings, for example due to overnight international news and market moves. So you could experience a loss. The risk is higher during times of greater market volatility, such as COVID-19.

Good for day (GFD) ordertoggle accordian row

Stays open in the market for one trading day. The unexecuted portion of the order, if any, is cancelled at end of day. If all or part of your order doesnt execute, you can put it back on the market next trading day. This means your order will avoid exposure to overnight price swings and unexpected loss. But your order will get a new place in the queue, according to price-time priority.

How to sell your sharestoggle accordian row

If you hold shares directly, you can sell them by placing a trade online or contacting your broker. You pay a fee each time you make a trade.

You exchange the legal title of ownership when you sell shares. Settlement for the sale and transfer of ownership happens two business days after the trade (known as T+2). After settlement, the sale proceeds are transferred into your bank account.

If you hold shares indirectly through a managed fund, you can sell them by selling your units in the managed fund. Before you do this, check if there are any withdrawal costs. Keep a copy of the trade confirmation or receipt for tax purposes.

Market volatility and trading haltstoggle accordian row

Be aware that, during times of higher market volatility like COVID-19, share prices may change dramatically. Its very hard to time the market, so stop and think before you trade. If you buy or sell too frequently, youll pay more in transaction costs which may not be worth it.

Sometimes a trading halt is placed on shares. For example, to allow the market to digest new information about a company. In this context, prices could fall and volatility may increase. You may not be able to sell your shares when you want, or at a price you like.

When looking at share performance, look beyond recent events. Markets typically recover over the longer-term.

Share buy-backstoggle accordian row

A company you own shares in may offer to buy back some of its shares. If you receive a buy-back offer, you can choose to accept or decline it. Before you decide, consider:

Unexpected offers to buy your sharestoggle accordian row

You may receive an unexpected letter from someone offering to buy your shares. Before you accept it, check:

It is not illegal to make an unsolicited offer to buy your shares. It is against the law to mislead shareholders into making or accepting an offer. If you get an unexpected offer you believe is misleading, visit the ASIC website or call 1300 300 630 to report it.

Follow this link:
How to buy and sell shares - Moneysmart.gov.au