

Investing in Shares


When we talk about investment as a means of earning income, most people think of buying stocks and shares.

That is for good reason, one of the largest markets in the world, buying shares allows investors to take advantage of opportunities in the success of businesses and industries across the world. Each share represents a fraction of the company, a portion of its total value.

That value goes up and down as the company’s fortunes change, and as the value of the company changes, so does the price of each share.

While share prices can be affected by any number of issues both within the company and in the broader economic situation, investing in shares centres around finding companies where the share value will go up over time. However, there are several strategies to achieve this, depending on the type of investor you are looking to be.

1. Price growth and Dividends

Making money from shares is earned in two ways. Firstly, shares are bought, whether through company success or prevailing economic conditions, the price goes up.

When shares are eventually sold, the difference between the purchase and selling price is the profit.

However, shares can also earn money another way, through dividends. Dividends are paid annually and are taxed separately from investment income, and are paid as a sum per share owned. The amount of dividend paid depends on company performance and other factors decided by the board. Not all shares pay dividends, and here is where the balance is found.


Investing  in Shares

In general, large, well-established companies pay dividends on their shares. However, those large companies also tend to have shares that have slow price movement too.

Smaller companies have much greater scope for rapid growth, and as a consequence, those shares can see quick price movements in their value too, however, they rarely offer dividend payments.


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Making money from shares is earned in two ways.
2. Risks of share buying

With shares in large companies that pay regular dividends, price movement tends to be reasonably predictable and slow.

In the context of share investments, these are relatively low risk, with the dividend providing a profit boost that goes some way to offsetting the slower price growth.

However, for smaller, younger companies, where shares can offer the potential for both fast growth and large price movements, there is a higher risk. If you examine what a share is, it is easy to see why.

The more volatile shares are related to smaller and younger companies, and for those less established organizations, while the opportunity for rapid growth is greater, the risk of failure is also much higher. That could lead to a collapse of share price, which in return results in investment losses.


Investing in Shares Risks

As with any kind of investment, investing in shares is all about balancing risk and return, and in this case, building a portfolio of shares that offer a blend of different risk profiles and profit potential presents an effective solution. How investors achieve that brings us to the next choice.

3. Managed or Individual share investment

A key choice when developing an investment strategy for shares is whether to take the individual approach, where an investor chooses the shares to invest in and buys them through a broker, or a managed portfolio.

With a managed portfolio, an investment management team will invest on your behalf, using both their expertise and your risk profile to develop an investment strategy that suits.

The best option for any individual will always come down to personal choice, however, there are some things to consider. If you have no experience in share trading, and little time to dedicate to it, then a managed account offers a straightforward way of getting involved in share investing.


There is an alternative, for those with experience, or who have the time to assess investment positions regularly and manage their own shares, going through a broker and investing as an individual may be the way to go.

It is important to understand the responsibilities of this approach though, not just in choosing the right shares to invest in, but the time commitment required to monitor markets and deliver growth.

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4. Choosing a managed service

For individual investors, choosing the right broker is also important, balancing fees with support provided to find the service that matches each investor’s unique needs.

For those looking for managed accounts, the choice of provider also matters, and there are a number of factors to consider.

Cost is obviously something to look at, this comes in two parts. Firstly, the minimum initial investment for a managed account, some require a significant investment to qualify, while others have a more modest initial investment requirement.

The other is the cost of the management service. This usually takes the form of a percentage of returns and a fixed fee.

Investing in a share portfolio

When looking at fees, always look for projected returns too, while the fee percentage may be a little higher with a fund, if they also deliver larger returns, it could still offer better value than others.

Perhaps the most important aspect though is the risk. The level of risk we are comfortable with is different for every investor. Managed funds usually allow for tailoring of risk profiles to suit, but it is important to ensure that a chosen management solution reaches risk levels you are comfortable with.

5. Investing in a Fund

An alternative to investing in specific shares, whether as an individual or through a managed account, is through a fund.

Here, investors pool their resources within a fund, and the management team then invest in shares on all fund member’s behalf.

There are benefits to this, in that it is an investment and wait for style approach. You pay in and receive your profit share either quarterly or annually depending on the fund itself.


However, you do lose out on some benefits of share investments, for instance even if the fund invests in shares that pay dividends, you don’t see the full benefit of those payments.

Funds have proven effective over time, with funds that track major indices, such as the S&P 500, showing consistent gains year on year, however, there is still a risk, as with any investment, there are no such things as a guaranteed profit.

6. Investment strategies

For those who prefer a more focused investment, whether buying shares themselves or using a managed account, the process of actually buying shares is relatively simple.

For those using a managed service, opening an account and setting risks gets things started.

For those looking to buy shares themselves, opening an account with an online broker gets you started.

After that, the question is, how much and where to invest? With a managed account, the question of what shares to invest in is taken care of for you. For those wanting a more hands-on approach, research is the key. Understanding the companies being invested in, and the overriding economic situation is crucial to making informed investment decisions.

investment strategies for shares

An important question for both types of investment, the amount invested has to be considered in relation to risk.

Investment in shares carries a higher risk than many alternatives and with it the potential for significant growth. In this way, in a long-term investment program, shares are a useful driver of growth, but should always be a small portion of your overall investment fund.

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7. Conclusion

Share investments area good option to grow your money and are able to offer a variety of ways to take advantage of the opportunity they bring.


For the lowest risk, a fund investment may provide lower returns, but are a proven source of steady growth. Here compounding can have a dramatic effect over the long term and build a significant profit over time, reinvesting profits to build your stake in the fund.

Investing in individual shares yourself, or through a managed account are higher risk, but do have the ability to achieve higher growth. For short- and medium-term profitability, individual shares allow you to see good returns, while dividends are another option for consistent income from share investments.


Share prices fluctuate based upon the performance of the company involved and are also influenced by the overriding economic situation, both nationally and globally. For those managing their own share investments, this makes research crucial, and constant monitoring of the company and economic data essential.

For investors who have the knowledge and time, that is a good option and complete control, however, a managed account allows those new to shares, or who simply do not have the available time to dedicate to share trading, to still benefit from those same opportunities.

Looking to get started in Investing:

1. Schedule an appointment (Conference Call) with an Investment Manager

2. Submit a Managed Discretionary Account (MDA) application with Walker Capital Australia.

3. Open a trading account with the Walker Capital Australia’s executing broker.

4. Select from our range of investment strategies and choose your asset allocation between the choices of accounts.

5. Once all accounts are opened, and funds have been chosen, our team gets to work and begins trading.


We welcome you to give our team a call to discuss your investment goals and objectives.
