Investing directly in shares can seem overwhelming for newbies or when market conditions turn hostile.

Here is my 12-point plan that can be used and re-used as a reminder of what’s important, as well as a good go-to checklist for all share investors.

  • Set Your Investment Goals: Establish how much money over time you have to invest; what you are aiming to achieve; will you trade or invest for real wealth creation? how much time and energy do you have to commit to direct investing? How much risk can you take (higher risk, higher reward but potentially greater losses)? Match your risk to your age, the younger you are the more risk you can take.
  • Find a Platform To Buy Shares: The internet has been a boon for share investors. There are several online share trading platforms that allow for a minimum of $500 share investment. Compare the costs and what is on offer, the lower-cost option may not always be the best option.
  • Plan Your Portfolio: Once you know how much money you have to invest and whether you can invest more money over time, you can select the structure of your share portfolio. The more cash you have to invest, the more opportunity you have to invest across a range of shares. This is called diversification or not putting all your eggs in the one basket. Be careful not to buy too many shares, as it makes it harder to stay on top of what is happening.
  • How To Select What To Buy: Get your research from reputable sources. Be careful of hot tips, as you don’t know what the motives behind the recommendation are. Make sure the share picks align with your goals and risk tolerance.
  • Picking Shares: I have long been an advocate for buying what I call quality shares. These shares tend not to be so cyclical in nature, i.e. exposure to the markets that go up and down, like the oil price or housing construction. Quality shares allow you to grow your wealth and sleep well at night.
  • Improving Your Investment Knowledge: Start with small steps and develop it over time. Rome wasn’t built in a day. Experience is crucial and a vital part of improving your share investing. Nothing replaces the visceral experience of your first share windfall or the first real loss.
  • Invest For The Long Term: The more you look at your share portfolio, the more inclined you may be to trade the shares. It is best to see through the passage of time. You are aiming to grow your wealth, not for next week or next month, but the years down the track.
  • Patience: The best advice for any share investor is to be patient. Try not to react to short term noise or unforeseen events. Share markets go up and down and the best investors are not fearful of buying when there is investor panic and scary headlines in the media.
  • Sell The Underperformers: Don’t be afraid to sell the shares that lose you money. You are better off selling them, taking what is left of the capital and reinvesting it in a company that makes you money.
  • Add To The Winners: Don’t be afraid to add to your winning shares. Great companies can go on making shareholders money for longer than you think.
  • Watch Out For Your Emotions: Watch out for greed or FOMO (fear of missing out) and FEAR (fear of not getting out). Be wary of chasing share price bubbles in shares that are in fad sectors (trend or momentum following). Never be afraid to take some profit. Try not to sell the quality shares when there is a big liquidity drawdown event like the March 2020 coronavirus crash.
  • Never Stop Learning: The best share investors never stop learning, are prepared to accept they were wrong, accept change and change their views when the investing world changes.

Sticking to your plan, knowing yourself and your shares, when matched with reliable and robust research sources will help you go a long way to achieving your share investment goals.

Danielle — HTM Guest Contributor


Danielle Ecuyer has been involved in share investing in Australia and Internationally for over three decades, both professionally and personally. Her experience and knowledge have been combined to help new or existing investors with long term wealth creation and income generation in her first book Shareplicity: A simple approach to share investing (Major Street Publishing $29.95). Find out more at www.shareplicity.com.au.


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