Wednesday 23rd January 2002
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A: One thing I have heard over and over again in relation to buying shares is "don't use anything you can't afford to lose". However, while there is a risk return factor in investing, you can still have fun while doing it. It can be fun and serious at the same time. If you do your homework you can lessen the risk when you purchase shares - it is not like taking a bet each way on the horses.
Trading is slightly different but a lot of the same principals are involved. How much are you thinking of trading? That will have a bearing on which broker would be best for you. Different brokers have different rates so make sure you research them all.
Always choose a broker who is a member of the NZSE (all brokers who offer online trading in NZ are). Go to http://www.nzse.co.nz/ where you can find links to all broker sites. Read and see which ones you like best - you are not limited to one.
When choosing a stock to trade, watch for stocks that are out of favour. For example, if a company makes an announcement that the market judges 'bad' then the shares are sold 'en masse' by investors who often behave with a herd mentality. This is often the best time to buy. An example of a 'bad' announcement could be a director or managing director resigning - although it has a negative effect it is often rectified quickly. However if a company announces that they are about to make a massive loss or go into liquidation, then that's the time to follow the herd.
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