“Like learning to swim”: Six tips for successfully cracking into the share market

I was a woman working in a man’s world throughout the 1980s and 1990s in my broking career, and my experience since releasing my new book Shareplicity has done nothing to suggest this has changed.

The share market ‘gurus’ are predominantly men and your economic commentators in the media on a daily basis are men in suits.

Strangely, though, much of the feedback I receive has been from women grateful for my guidance and straightforward approach to investing in shares.

If you’re ready to start investing in the share market then these six tips will help.

If you invest already, then they will provide a refresher on what you know (but may have forgotten).

1. Know yourself

Investing in the share market is like most skills in life, it pays to invest in yourself first.

Knowing yourself is as important as understanding the investment choices you are making.

Share investing is all about understanding your personal goals, financial risk tolerance and establishing investing boundaries that work for you.

Take some time to clarify your thinking and set some investment goals.

2. Learn their language

The share investing industry has been built on jargon and technical terms — bulls and bears, shorting and stop losses, growth stocks, blue chips techies and speckies — no wonder many people feel as if they’re learning a different language.

But by doing a little study, you will soon find yourself speaking like Warren Buffett.

There are lots of great podcasts, free online newsletters, books and short courses available to help you become more comfortable with the concepts around share investing.

You may even join a share club and learn together with other like-minded individuals.

3. Be patient

Share investing is like learning to swim, you can read and practice on land, but to learn you really need to dive right in.

However, like learning to swim, you learn to float first.

Start small, across a few shares or exchange-traded funds (ETFs).

Then, as your experience, knowledge and confidence grow, you can swim out further!

Just don’t dive straight into the deep end and invest all your savings into one or two hot tips. There are no lifesavers on the edges of the markets to throw you a line!

4. Make friends with financial analysis

If I had a dollar for every time someone said they couldn’t invest because they didn’t understand financial analysis, I’d be a very rich person.

The good news is you don’t need to be an expert as there are expert analysts out there who do the number-crunching for us.

You just need to learn where to go for information and learn to interpret some fundamental ratios to work out whether a share is cheap or expensive.

Share investing is as much about psychology, understanding greed and fear (investor sentiment) as it is about what makes for a quality share investment.

5. Change with the times

One of the greatest mistakes investors make is to assume that what worked in the past will keep working.

No matter what investments you select, you must be able to accept when you are wrong, understand what happened and make the necessary changes – it’s all part of the learning process.

Share investing is not about being right all the time; that is neither possible nor realistic.

Smart investors accept when circumstances or a situation has changed and accordingly adjust their strategy or investments.

6. Buy quality at the right price

When you start on your investment journey, you’ll hear a lot about ‘value’ and ‘growth’ investing.

Simply put, value usually equals finding cheap cyclical shares – think banks, resource companies and retail shares.

Growth shares are fast-growing companies, and often perceived by value investors as expensive, mostly because investors pay up for strong future earnings.

Smart investors can grow their savings and create wealth by buying companies at a reasonable price that can increase their earnings over time.

You will soon start to recognise these companies: they generate strong cashflow, have an excellent competitive advantage or ‘moat’ that protects their business, invest in the future, and usually have good governance and social responsibility.

Don’t be put off by the jargon or perceived difficulty of investing in the share market.

Smart investors invest in themselves to learn and keep up to date and I believe women have a natural aptitude for reading whether companies are good or not such suitable investments.

Don’t forget, investing in ETFs can be a great way of dipping your toe into the investment waters.

This article was first published by Women’s Agenda.

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