You're ready to buy shares - here's how to get started

Congratulations. You've saved hard, read widely and maybe even noticed that the ASX has hit 6000 points for the first time since the global financial crisis. You understand that you can build real wealth through long-term, thoughtful investing, including reinvesting your dividends.

Which is one thing. But there's a hurdle in your way: just how, exactly, do you get started. I can remember opening my first discount brokerage account. It felt mostly like online banking, but with some strange differences. Enough, for some people, to be discouraging.

But don't give up. It's worth it. Here's how to get started.

First, just do it. But just do one thing. Don't think about the big picture right now, or it'll be overwhelming. How do you eat an elephant? One bite at a time.

Google "online stockbroker" and look for two or three names you've heard of. Visit those sites and have a look around. Does the site look easy to use and straight forward? What "help" resources are available? Then pick one and sign up. You don't have to do anything else, yet. Keep it simple.

The process will likely require you to fill out an online form. Probably sign it. And provide 100 points of identification. Yes, that's painful, but stick it out. (And a tip: if you decide to use the broker run by your bank, it might shortcut the process.)

Next, open a separate bank account (or take the option when you open your brokerage account, if it's offered). This account is vital, because it stops you dipping into your investment funds next time a bill is due or a new iPhone is released. Set up a direct deposit or salary split to that account. (And when the time comes, have your dividends paid there, too). If the account is part of the brokerage application, they'll probably be automatically linked. If not, jump onto your broker's website and put those details in the "settlement" section, so they know where to take the funds from when you buy your shares.

Now, you're good to make your first share investment. Again, here's where "just do it" comes in. Keeping your brokerage to no more than 2 per cent (so $20 on a $1000 purchase), it's time to buy. No, not some hot tip from your cabbie or brother-in-law. Not some hot stock you read about in an online chatroom. Buy $1000 worth of something you know and use. Your favourite supermarket or telco. The clothes you wear or what you eat and drink. This will help you learn about what it feels like to be a part-owner in a business and makes it feel more "real". It should also keep you from obsessing too much about daily share price moves!

Jump onto your broker's site. Look up the company's ASX code, then choose the "Trade" (or similar) option. Grab a calculator and work out how many shares you can buy with your $1000. Then enter that information into the trade screen: For example, buy 38 shares of Woolworths (ASX:WOW).

Foolish takeaway

Congratulations??? you're a shareholder. And it wasn't as hard as you feared. The good news is that you only have to set up your accounts once - and next time the trade process will be more familiar.

Keep up your regular savings plan, and before you know it, there'll be another $1000 ready to invest. And in under six months, your first dividends. You've started that snowball rolling, now keep it up. And stay the course ??? but that's a topic for another day.

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Scott Phillips is the Motley Fool's director of research. You can follow Scott on Twitter @TMFScottP or email ScottTheFool@gmail.com. The Motley Fool's purpose is to educate, amuse and enrich investors.

This story You're ready to buy shares - here's how to get started first appeared on The Sydney Morning Herald.