Telstra Corporation Limited (ASX: TLS) is an Australian telecommunications company, and Australia's largest in terms of market share. It was founded in 1975 as Telecom Australia and renamed Telstra in 1995. Telstra is a member of the S&P/ASX 200 and has its headquarters in Melbourne.
This is the guide to investing in Telstra.
About the company
Telstra is a telecommunications and technology company that competes in all telecommunications markets across Australia. The company builds and operates telecommunications networks and markets voice, mobile, internet access, pay television, and other products and services. By 2020 it was the largest Australian wireless carrier with 18.8 million subscribers.
Subsidiaries of Telstra include Foxtel, On Australia Pty Limited, EPiCON, and Pacnet among others.
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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 many online brokers available, offering various options and features.
These are some of the key features to look for when choosing an online broker.
Some online brokers will offer free trades. This is quite widely available now, but generally not for shares listed on the ASX.
Ease of use
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 where you can practise without consequence, and educational guides (preferably in video format).
Research and reporting
Look for a platform with solid research and reporting on each company. Apart from charting, look for things like Telstra’s price history, market analyst recommendations, price forecasts, company announcements, earnings reports, etc.
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 Telstra'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 that own shares of Telstra include Vanguard Australian Shares High Yield ETF (VHY), BetaShares Australian Sustainability Leaders ETF (FAIR), and SPDR S&P/ASX 200 ESG FUND (SSGA).
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 Telstra shares at $4.20. You place an order but by the time it executes the share price has dropped to $3.90. You will get your shares at a 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 Telstra shares at $3.80 or lower. Once the price drops to $3.80, 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 $3.95. If your Telstra 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.
You can buy shares to hold them over the long term as an investment or to benefit from speculating on share price movements. Either way, you need to keep an eye on both company performance and share price movements.
Keep an eye on Telstra’s performance, financial fundamentals, and share price movements. Telstra is a dividend-paying company, so you also have to keep an eye on their dividend payments.
Track competition in the telecoms sector
As Australia's largest telecommunications provider, Telstra offers a full range of telecom services. It competes with a number of players across different subsegments and is the market leader in a number of them.
In the Australian mobile market, Telstra competes with Optus and Vodafone (VHA). In internet services, its competitors include TPG Telecom (TPG), Optus, and Vocus Group.
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