Roger Kinsky - Starting with Shares: A Beginners Guide to Sharemarket Success

1. Chapter 3
2. Chapter 6
3. Chapter 9
4. Chapter 10
5. Chapter 12

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 5
5. Chapter 6
6. Chapter 8
7. Chapter 9
8. Chapter 10
9. Chapter 11
10. Chapter 12

Roger Kinsky

First published in 2022 by John Wiley & Sons Australia, Ltd
42 McDougall St, Milton Qld 4064
Office also in Melbourne

Typeset in Liberation Serif 11pt/14pt

John Wiley & Sons Australia, Ltd 2022

The moral rights of the author have been asserted

ISBN: 9780730395164

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover design by Wiley
Cover Image: Miloje/Shutterstock

Illustration sketches and concepts by Roger Kinsky
Illustrations by Delia Sala/Wiley

Disclaimer
The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

Australians have traditionally been interested in shares as a viable way of investing over the longer term and also making profits in the shorter term. Share ownership is ever growing and a recent study showed that about 6.6 million Australian adults, or 35 per cent of the population, own shares. In the past, share investing was often seen as the domain of males, but more recently there's been a growing trend for women to get involved and nowadays almost half our share investors are women. At the same time, there's been an emerging trend for younger people to get into shares. Investors today are also growing more interested in a wider diversity of shares in different asset classes, including international shares. In short, Australians from all walks of life are becoming more involved with a wider variety of shares.

The growing interest in shares is partly driven by low interest rates, which make holding cash in a bank account or term deposit a really unattractive proposition. At the same time, Australian property is increasingly more expensive and slipping out of the reach of many Australians. Shares are a viable investment alternative because you don't need a lot of money to get going. In fact, you can become a shareholder with as little as $500.

Unfortunately, many wouldbe investors don't know a great deal about shares and so lack the confidence to plunge into the sharemarket. If you fall into this category, this book is definitely for you! To make the book as userfriendly as possible, I try to avoid jargon unless the term is in common usage. In this case, I try to explain it in a straightforward manner that I hope will be readily understandable. I've minimised the complications of share investing by outlining only those strategies that I believe are really important for your success. In addition, I've provided heaps of tips that I hope you'll find useful. These are simply my suggestions, not as an infallible investment guru, but as someone who has learned about shares from my successesand failuresover 50plus years of share investing.

You'll find the book contains many simple illustrations. These are often in a lighthearted vein and are aimed to help reinforce your understanding of an important point. They may also help you to look at an issue affecting shares in a somewhat new (and hopefully useful) light. All illustrations were redrawn from my original sketches by illustrator, Delia Sala.

This book complements my other share investing books, also published by Wiley Australia:

• Online Investing on the Australian Sharemarket, 5th edition
• Teach Yourself about Shares, 3rd edition
• Shares Made Simple
• Charting Made Simple.

The publishers and I have taken every precaution to make this book free of errors and typos but perfection is extremely difficult to attain. In a book of over 50000 words, a few errors or typos will inevitably slip through. If you notice any of these, I would be most grateful to hear from you. I'm always happy to receive feedback or suggestions from readers so if you have any comments please contact me at: . I'll make every effort to answer all emails within a day or two of receiving them.

You can also visit my website, rogerkinskyshares.com.au, for further discussion about shares and my books. The site features a weekly blog Sharing shares, where I discuss topical items of interest to share investors. I also offer a share mentoring and education service, where I can help you with any difficulties you may experience. Details on how to access this service are outlined on my website.

Finally, I wish you a profitable share investing experience and I trust that this book will play a significant role in guiding you on your path to success with shares.

Roger Kinsky

Woollamia, NSW

October 2021

In this chapter, I outline what you really need to know about investing in shares so you can get started, covering market unpredictability, the relationship between risk and reward, and what you're actually investing in when you buy shares. I also highlight some of the stuff you don't really need. Are you surprised at that? You might think that the more you know about shares, the greater the profit you'll make when you invest in them. Actually, no evidence indicates that more information is necessarily better; in fact, more can be worse because you can get bogged down in detail and miss the important stuff. And, as I explain, some great share investing strategies are based on very simple ideas that anyone can apply.

Before I go too much further, however, I'd like you to meet someone who you'll see a lot of through this book.

In most cases, when financial decisions are involved a bias exists toward the male gender. Company directors and top executives are still predominantly male. And most finance books still seem to assume that the reader is male. In this book, I try to avoid gender discrimination and, because of the current bias toward males, I have deliberately used a female named Michelle in my illustrations. She appears in most of the illustrations in this book, guiding you through your introduction to share investing.