Australia is one to the top countries in the world to invest in due to aspects such as dynamic industry, strong worldwide trade ties, and a stable economy which has allowed the country to become one of the most prosperous in the world. Although there are both benefits and risks associated with investing, listed below are some of the main benefits of investing in Australian shares.
- Accrue wealth
Everyone wants to have a bit more money to their name and one of the best ways to achieve this is to invest what you already have for growth purposes. You want to create a diverse portfolio to give you a better chance of making gains. Your initial portfolio is recommended to be a balance between aggressive and defensive and should be a mixture of both local and international stocks.
Australia has several large and wealthy conglomerates and many of which are in the mining sector. Australia has a large number of natural resources including petroleum, minerals, and metals, especially iron ore, copper, aluminum, and uranium. All of these commodities are highly sought after and therefore these companies always have stocks, that although fluctuating, tend to increase in value. So your portfolio should include major businesses like this, and you will reap the rewards in the long term.
- Protect against inflation
Stagnant money loses value over time due to inflation which is roughly about 3% per year in Australia. Inflation is when the price of commodities increases over time, lessening the value of your money. Investing is a good way to stay ahead of the rise of inflation so if you buy shares in Australia you can safeguard against this happening. For example, if the rise of inflation is 3% annually and you have shares that give you a return of 8%, then you will be ahead of inflation as well as having your money increase in value. This should be on everyone’s mind when considering investing, as inflation is inevitable and can vary wildly depending on many circumstances.
- Tax Benefits
If you hold onto your shares for more than 12 months, then sell them at a profit, you get a 50% discount on payable capital gains tax. So for example, if you sell shares at a profit and make for example $400 but make a loss on a different transaction of say $200, then your profit is $200. Then you can use your 50% discount to apply that to your remaining amount, giving you a total net profit of $100. Always make sure to seek professional advice when it comes to the tax side of things, as it can be very complicated and you don’t want to make the wrong move. It’s difficult to navigate the ins and outs of the taxation of shares but the right advice should help.
- Steady income
Companies distribute their profits out to the current shareholders annually or quarterly. These are known as dividends and are usually a cash payout. This can provide you with income that can increase if the companies you have shares in grow, and continue to be successful. Of course, you should not put all your eggs in one basket, but it is certainly a nice way to have some more money while you are still increasing your wealth through your investments. It is making your money work for you.