- Planning to buy shares in a supermarket chain?
- Learn what to look for in an online broker and how to open an account.
- Understand how different types of trades work before you invest.
Coles Group Limited (ASX: COL) is an Australian public company that operates retail chains in food, groceries and liquor. Coles was founded in 1914 and is headquartered in Melbourne. The company was previously called Coles Myer Ltd.
If you want to invest in Coles shares, here's everything you need to know.
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Coles subsidiaries include Coles Supermarkets, Coles Express, Liquorland, and Coles Financial Services. The company sells food and groceries through a network of more than 800 Coles supermarkets and online. Coles retails liquor under multiple brands — both online and offline — and operates more than 700 fuel and convenience stores. Coles Financial Services offers insurance, credit cards, and personal loans to consumers.
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Step 1: Choose a broker
When you buy shares online, you do it through an intermediary called a broker. There are hundreds of online brokers available, offering various options.
Here are some key features to look for when choosing an online broker.
The advent of online share trading has seen brokerage costs plunge.
If you shop around, you’ll be able to find online platforms offering very competitive brokerage rates.
Be careful to weigh up brokerage costs against other services the online trader may or may not offer.
Some online brokers will offer free trades if you sign up with them — often limited to a certain initial period of time or capped per month — and this may be a consideration when buying your Coles shares.
Easy-to-use trading platform
Trading in shares needn’t be complicated, so keep an eye out for a trading platform that is straightforward to use.
Other useful features for new investors include demo trading accounts so you can practise without consequence, and education guides (preferably in video format).
Research and reporting
Look for a platform that has a solid research and reporting section that can give you important information about Coles, including company overview, price history, recommendations and price forecasts.
Step 2: Fund your account
You need to add money to your account with your online broker before you can trade. It's a good idea to start with a small amount. You can expand your horizons when you become more confident at trading, but never invest an amount you cannot afford to lose, because share prices can be very volatile.
Step 3: Decide how much you want to invest
You should always have an investment plan, based on what you can afford. Take a look at Cole's current share price and make a judgement, but remember you can always buy more when the price drops.
Step 4: Shares or an ETF?
One big question you'll have to answer is whether you want to invest in shares or an ETF. An ETF (Exchange Traded Fund) is considered to be a less risky option because it invests in a group of companies or market indices rather than relying on the performance of a specific company. This means less volatility, and you win if the market wins, but it is less interesting for those looking to actively manage their investments.
ETFs with exposure to Coles include Vanguard Australian Shares Index ETF (VAS), iShares Edge MSCI Australian Minimum Volatility ETF (MVOL), Fidelity International Index Fund (FSPSX), and International Strategic Equities Portfolio (STEYX).
Step 5: Decide your order type
Orders are how you tell online brokers what sort of trades you'd like to make, and decide how you'd like your money to behave.
A market order is an order to buy shares at the current market price. In fast-moving markets, these prices can change while you're making the trade. Let’s say you place an order for Coles shares at $20. You place an order but by the time it executes the share price has dropped to $19. You will get your shares at the lower price. The same situation applies if the share price goes up while your order is being executed.
With a buy limit order, your trade will only execute when the share price reaches the price, or lower, that you nominate. Let’s say you decide you only want to buy Coles shares at $19.50 or lower. Once the price drops to $19.50, your limit order will kick in.
This is when you nominate a price range within which you want to buy or sell your shares. The stop price activates the order and the limit price indicates the highest price at which you are prepared to buy or the lowest price at which you are prepared to sell. Your order is only executed if shares can be bought or sold within your nominated price range.
In this case you nominate a price at which you decide to sell your shares. If the share price drops significantly, for example, the stop loss means you automatically sell out before your shareholding suffers too much damage.
You might decide to set a stop loss at $17.00. If your Coles shares hit this price, the order executes and they are sold.
Step 6: Place your order
Once you're happy with your strategy and with funds in place, it's time to get going with trading. On most platforms, you can place your order with the click of a button.
Step 7: Monitor your investment
Product launches, major announcements and shareholder meetings are big news and can affect your share price, as can world events and other international news. And remember, not all bad news is bad for business. A sudden fall in price is a great chance to grab more shares in anticipation of a rebound, averaging down your position.
Track Coles’ performance
Keep track of the business performance and financial fundamentals of Coles, in addition to watching its share price movements. With dividend stocks like Coles, you also want to see the trends in dividend payments.
Watch for developments in the consumer staples sector
Typically, in times of market stress, investors turn to shares of consumer staples as being safer than most others. Everyone needs to eat and buy groceries. Since they deal in essential goods, companies such as Coles in the consumer staples sector are also less severely affected by events such as a pandemic when compared with other companies.
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