In Share Investing – choosing what to buy, we built on the diversification theme introduced in Thinking of buying shares? – here’s a starting point. Many investors, however, find the prospect of researching and selecting 15 or more companies across a range of industries daunting and even off-putting.
There are, of course many professionals offering assistance: from stockbrokers to accountants, and investment newsletters to financial advisors.
But even so, for those starting with a relatively small amount, it can take a long time to achieve any real diversification.
The good news is, you can purchase an already-selected packages of shares.
A number of banks and brokers offer these “share packs” or “investment packs”, the key advantages of which are;
- A relatively small minimum investment – investment packs start around $4,000.
- Instant diversification – typical share packs contain 6 or 8 companies.
- Pre-selection – you choose a pack type, perhaps High Yield, or Growth, or Market leaders, and the pack provider chooses the individual companies.
- Low brokerage – you pay one amount of brokerage for the share pack.
- A starting point – you buy the shares together but own them individually which means that down the track, as your expertise and confidence grows, you can add to some stakes and sell others.
What about the limitations?
- If you invest the minimum amount into a share pack, then decide to sell one or more company, each holding will be quite small and will need to be sold separately so the brokerage will be relatively high (as brokers charge a minimum amount per trade).
- 6 to 8 companies is not really considered to be enough for the purposes of risk diversification.
If you’re looking for more diversification again, keep an eye out for our upcoming article on ‘Exchange Traded Funds, and Listed Investment Companies’.
As always, we suggest you seek personal financial advice before embarking on direct share investment
What are your thoughts?
Do you own shares? Is there more you’d like to know about share investing? Join the conversation — leave a comment below and let us know what you’re thoughts are.
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