Online Investing on the Australian Sharemarket, 5th Edition

Chapter 1Share investing online

In this chapter I explain some basic concepts and terminology associated with online share investing. I also outline why it's a good option to trade shares online, some potential pitfalls and how to avoid them. I'll start from the beginning, so if you have some knowledge and experience with shares and investing you may choose to skim quickly through this chapter.

Using the internet for share investing

Online investing is one example of how the internet has revolutionised business dealings. Now that almost all securities exchanges throughout the world are web based, the physical trading floor has been superseded. Online shopping, banking and information sourcing have skyrocketed over the past few years, while more and more investors are trading online rather than in the traditional way by calling their stockbroker.

Control

Increasingly, Australians want direct control over their shares and other financial investments. To put it bluntly, many have become disillusioned and are no longer prepared to entrust their investments to fund managers and investment advisers who charge an appreciable fee for advice that doesn't necessarily result in the promised returns. Even if a manager or adviser is able to achieve results that are better than or as good as a market index, the fees can soak up the additional benefit, with the investor no better off.

I don't mean to impugn fund managers and investment advisers, who no doubt provide a worthwhile service ...