"If you don’t have a number of good reasons for holding a stock then you should not hold it. The fact that you bought it at the current price is not a good reason." Rene Rivkin

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WHY INVEST IN SHARES?

Flexibility and liquidity

Beyond shares being the best long-term investment and having tax benefits, they also offer other advantages, including flexibility and liquidity.

At any given time, there are usually buyers and sellers in the market for most major companies. As a result, you can buy and sell at your convenience. This aspect of shares, known as liquidity, is in stark contrast to property, which can be expensive and time-consuming to buy and sell. Whilst shares can be sold with one quick phone call or one quick click on the Internet, property can take months to sell. And whilst the proceeds from a sale of shares take 3 days to settle, the standard settlement period for residential property is 6 weeks.

Cost

Another benefit to take note of is that the cost of buying and selling shares is very cheap in comparison to an asset class such a property, and the advent of Internet trading has seen transaction costs drop even further. These days, some online brokers charge as little as $25 to buy or sell. This compares favourably to the stamp duty incurred on property purchases and the agent’s fees, marketing and legal costs etc incurred on the sale of property.

Low capital requirements

Another advantage is that the minimum amount of shares that must be purchased when establishing a new shareholding in a listed company is $500 worth. When you are adding to an existing holding, you can spend as little as you want. Therefore, capital requirements are low.

Simplicity

Yet another advantage is that information on your investment is easy to obtain. You can track share prices in the newspapers and on the Internet. Public companies are also required by law to produce an annual report (which is sent to shareholders), disclosing their financial track records for the previous year.

Profile: Warren Buffett

Far and away the most famous and successful stock market investor of all time.

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Why Invest in Shares?

Beyond shares being the best long-term investment and having tax benefits, they also offer other advantages, including flexibility and liquidity.

more

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