Share investors can tolerate volatility by having a long term outlook in investing. The share market has low barriers to entry, in fact over recent years entering the share market has become far easier. Now you can invest using micro-investment apps before you have “real money” with as little as $5. Not likely to get you rich any time soon, this is a great way to learn, and experience (and hopefully tolerate) volatility.
Broad based index fund ETFs or LICs, brought using a broker, and paying a brokerage fee is next. This is a cost effective and fast way to build a diversified portfolio.
Those wishing to explore active investing should first build their passive “core” portfolio, whilst learning about analysis techniques. Individual shares have the possibility of infinite returns. Research tells us, however, very few of us will outperform the index over the long term.
Shares can be leveraged into, similar to property. Leverage increases potential risk, and potential reward. The volatility of shares in comparison with property makes leverage a more dramatic experience. The risk of “Margin calls” where you have to produce a significant amount of cash at short notice to stop the bank from selling your shares is a risk.
If you are an Australian you likely already have some share investments whether you realise it or not – in your superannuation. This will grow to a significant portfolio over the years. Make sure you are aware what you are invested in, and that it suits your timeline and risk tolerance.