ABCs of Investing Stocks 

By Jack Liang

In this series, Tiger Brokers breaks down the basics of what you need to know to start investing in stocks. Become empowered to make your own investment decisions with the world’s markets at your fingertips. If you’ve been looking to start investing, chances are you’ve been faced with an overwhelming range of options to invest in. In Australia, there are different products available to build your investment portfolio, as well as different accounts to invest through, such as those available on online brokerage platform Tiger Brokers. 

What is an investment product? 
An investment product is any type of security purchased with the intention of increasing wealth over a period of time due to an increase in its value. This can include stocks, bonds, options, and alternative investment products such as property. Investment products are expected to appreciate over time which could contribute to a passive income for the investor. 

Different types of investment products 
The investment products most commonly traded on financial markets are company stocks, mutual funds or ETFs, and bonds. Tiger Brokers offers investment opportunities in stocks and ETFs across Australian and international markets. Owning stocks or shares means investing in a company by purchasing an equity share of the company. This means that you have a small share of ownership in the company, meaning that the value of the  stocks will fluctuate depending on the profitability and prospects of the business. Investors who trade in stocks may also earn a dividend, or interim income, which is a portion of the company’s profits relative to the size of the share. Preferred stocks enable investors to earn additional passive income from periodic dividend payouts, while common stocks are more commonly traded based on potential resale value. 
A fund is a grouping of stocks that are selected based on the top-performing investments in a particular sector, such as tech stocks, or on a particular market. It pools funds from individual investors to purchase shares across these managed portfolios. Exchange Traded Funds (ETFs) are a popular investment option in Australia, as they are listed funds that typically incur low fees. A bond can be bought from the government or a company that is aiming to raise money to fund their activity. They are a fixed income asset that pays interest through a coupon payment, and offer a full repayment of the initial investment at the end of the investment term.

Accessing the stock market 

A Tiger Brokers account offers a variety of options for accessing shares, accessible to all account holders, including the opportunity to invest through fractional shares and auto-investing features. The option to invest through fractional shares allows investors to purchase partial shares, enabling the purchase of company shares without a significant capital commitment, which allows them to build a diverse portfolio of stocks and manage risks.  Tiger Brokers’ auto-investing feature allows traders to automate the process of purchasing shares, reducing the burden of decision-making for individual traders and enabling investors to trade overseas shares in real time. Investors can automate the purchase of individual stocks and ETFs, and can even combine with the fractional shares feature to build their investment portfolio incrementally. Each investment product and method of investing comes with its own balance of risk and reward, and the best combination is a personal decision that depends on individual circumstances. 

Key takeaways 

● There are several types of investment products available to novice investors, including self-managed investments and index funds 

● Investors can potentially earn passive income through the appreciation of an investment product’s value 

● Investors can trade through different types of accounts that allow access to local and global markets at different levels of capital commitment Continue to learn the ABCs of investment as Tiger Brokers breaks down ten top trading topics in the next series installment. 

Disclaimer: Capital at risk. See FSG, risk disclosures, PDS, TMD and T&Cs via Tiger Brokers website before trading. Information provided may contain general advice without taking into account your objectives, financial situations or needs. 

About the author: Jack Liang is the Vice President at Tiger Brokers Australia.