How to Buy NAB Shares – Forbes Advisor Australia

Understanding how to invest in the ASX and NAB stocks doesn’t have to be an overwhelming process. The easiest way to help you understand this procedure is to break it down into simple steps. In this example we will look at using stock trading platforms as full service brokers can do most of the following tasks for you.

First step: create or open your account

Once you have carefully compared trading platforms and settled on one that suits your investing needs, you can log in or log into your account.

To create a new account, you will most likely need to provide the following:

• Two forms of identification.
• The details of the bank account you wish to link to your brokerage account.
• Your tax number (TFN).
• Personal data (full name, date of birth etc.)

Unless your broker charges a subscription fee, opening an account should be free. However, you may be required to deposit a set amount at setup.

Step 2: Analyze how NAB has evolved

If you’re considering investing in any company, and not just NAB, it’s important to assess that company’s financial health. Financial health is an umbrella term for how profitable a company is currently, its past performance, prospects and operational efficiency.

An excellent place to start your research on National Australia Bank’s operations is on the ‘Performance and Reports’ page. Here are links to annual reports (including income statements, balance sheets and cash flow statements) dating back to 2003. As well as reports on the behavior and attitudes of the NABs towards sustainability, climate change and their customers.

If you value a company with strong environmental, social and governance (ESG) commitments, these reports may be a must-read before investing. Next, try to evaluate the leadership of the company. Seeing stability on the board can mean less volatility for the company and can indicate if growth strategies are in place.

Price-to-earnings (P/E) ratio analysis can also provide a summary of a company’s performance. P/E is a representation of the time it would take for a company’s earnings to equal the current stock price. The calculation is made by dividing the company’s current share price by its earnings per share. At the time of writing, NAB’s P/E is 13.21, which is quite strong, with 20-25 marking the average.

While past performance is not an indicator of future performance, it can be helpful to review NABs’ past share prices – if viewed with caution. Since 2021, the price per NAB share has very slowly risen positively. However, a look at the last decade can give you an idea of ​​just how volatile a company can be. For example, the current NAB stock price is $28.18 and in March 2003 it was $30.60.

Finally, following the news can help you ensure that there is no controversy surrounding the company you are considering investing in, as it can also be an indicator of potential short-term volatility.

Step three: Decide when to invest

Market timing is difficult for investors, no matter how experienced. Although NAB stock prices are on a steady uptrend as of March 2023, no stock is volatility proof. Fluctuations can occur at any time and despite the age old adage “buy low, sell high” the question arises “should you time the market?”. Remains.

Trading platform Spaceship found that for a newbie, Monday lunchtime in the middle of the month can be the best time to buy. When you act should depend on your goals, however, and while buying the dip may work for some, speaking with a professional is probably the best course of action.

Step Four: Identify How Much You Should Invest

Assuming you have already analyzed the performance of NABs and considered market timing, the amount you invest should be based on your intentions, experience and any trading platform requirements.

The ASX suggests beginners start with at least $2,000 – anything smaller means fees make up a larger percentage of the transaction. Although some platforms allow you to start trades from as little as $5 to $50, the minimum for ASX trading is $500.

Depending on the platform you are using, there may be a maximum share purchase limit. That is rare; However, you could benefit from a self-imposed limit order that prevents you from trading above or below a certain threshold when buying stocks.

Before deciding how much to invest, ask:

1. What can you afford to invest?
2. What can you afford to lose?
3. What will you do if prices go up? what if they fall
4. How long do you plan to hold your shares?

Step Five: Buy your NAB shares

Finally, once you have decided what you are going to spend and you have sufficient funds in your brokerage account, you can place your order.

The ASX is open Monday to Friday from 10pm to 4pm (Sydney time). If you trade during this time, you pay the market price. Trading when the ASX is closed may require you to implement a limit order. A limit order is the maximum amount you are willing to spend. When you set a limit order, you also set an appropriate time frame; If stocks below your limit become available within this timeframe, the trade will be executed.

You have the opportunity to review your order before you buy it, once you are satisfied you can place your purchase order and the transaction will go through.

Step 6: Keep track of your investment

After your shares are officially transferred into your name, all you have to do is monitor your investment. How closely you monitor your NAB stocks depends on how long you intend to hold them. If this is an investment that you hold for a number of years, which is recommended, you can be content to let it sit without major intervention.

If you’d like to keep better track of your shares, here’s a list of things you might want to do:

• Subscribe to ASIC and ASX stock performance alerts.
• Properly submit your bank statements for tax returns.
• Read new company updates and annual reports.
• Track your dividends – premiums paid to shareholders in return for their investment.
• Make a spreadsheet of all your investments and the transaction fees you paid for them.

After adding NAB stocks to your portfolio, you may want to diversify your future investments. Diversify spreads your money across multiple asset classes and options within those classes. So if a sector is performing poorly, your portfolio will be more risk-averse.