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Investment choices: Shares

Date: 2 December 2016

Investing shares

A shareholding is part ownership of a listed company. The shareholder receives dividends or income from their share investment and the company is able to raise valuable equity capital to fund its growth and operations. The shares can then be sold on the stock exchange and a potential capital gain realised if the share price rises – creating an opportunity for both income and capital growth.

What are the advantages of shares?

  • Flexibility and liquidity: shares offer real-time pricing, this means you can buy or sell your shares easily and quickly at any time whenever the market is open. This allows greater transparency plus the flexibility to invest over the long or short term and pick your stocks.
  • Low cost: shares are typically a cheaper investment option to manage due to lower operating costs and management fees.
  • Capital growth and dividends: shares offer capital growth and maximum control over capital gains realised, as you can make the decision when to sell. Shares held by resident individuals or trusts for more than 12 months qualify for a 50% discount on any capital gains tax (CGT) payable, in addition complying super funds can qualify for a 33.33% discount. Shares also offer income paid as dividends.
  • Franking credits: Australian shares often include franking or imputation credits, which means where the company has already paid the tax on their profits, you can use these franking credits to offset tax payable on your other income.

General Advice Warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

 

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