Whether you have recently started investing or you’re planning to start soon, your main objective will be to earn a good return and grow your wealth. If you want to diversify your portfolio, investing in Australian equities is a great option to consider. SG Hiscock is a leading Melbourne boutique fund manager specialising in high conviction actively managed investment strategies and Managed Discretionary Portfolios. Here we will explore what equity investments are and why you should consider Australian equities.
What Does Equity Investment Mean?
By definition, it’s a financial transaction where certain number of shares of a given company or fund are bought, entitling the owner to be compensated rateably according to his ownership percentage. In simple terms, it is where an individual or company invest money into a private or public company, essentially purchasing a share (also known as a stock) in that company, thus becoming a shareholder. These stocks entitle the shareholder to a certain portion of the profits and assets, and are typically traded on a stock exchange.
There are other types of equity investments such as preferred shares, stock options and convertible bonds. However, these are different to common shares as they limit the way the owner participates in the company’s profits or they require a certain event to take place before they can be converted into an equity instrument.
There are also financial companies that offer equity investment securities that serve as a pool of many equity investments. For investors to engage in these kind of investments, they must purchase the mutual fund or ETF shares. That entitles them to certain portion of the overall pool of equity investments.
Why Should I Consider Equities?
Equity investors purchase shares of a company with the expectation that its share price will increase in the long term, generating capital gains, and/or capital dividends. You might consider this type of investment if you believe a particular company has the potential to grow. If you hold shares in a company that sees significant growth, it’s highly likely the value of its shares will increase too.
What Are the Potential Benefits of Equity Investments?
- The possibility to increase the value of the principal amount invested. This comes in the form of capital gains and dividends.
- An equity fund offers investors a diversified investment option for a low initial investment. If an investor wanted to achieve the same level of diversification as an equity fund, it would require a much greater capital investment.
- Investors may also be able to increase investment through rights shares, should a company wish to raise additional capital in equity markets.
How Do I Invest in Australian Equities?
There are a few ways you can invest in both global and Australian equities; one common way is by using an online investment platform which offers equity funds or allows you to make equity investments. For expert advice and to ensure the best return, choosing to invest through experienced fund managers is the best choice.
Combined with the SGH existing suite of Australian equity and Australian REITs (Real Estate Investment Trusts), SG Hiscock & Company has broad capabilities across Global REITs and Global Equities for Australian retail investors. Find out more by getting in touch with us today.