Understanding how to invest in the ASX and NAB shares doesn’t have to be an overwhelming process. The simplest way to help you grasp this procedure, is by breaking it down into easy steps. For this example, we will be looking at how to use share trading platforms, as full-service brokers can do most of the following on your behalf.

Step One: Create or Open Your Account

Once you have carefully compared trading platforms and decided on one that meets your investment needs, you can sign up or login to your account.

To make a new account you will most likely have to provide:

• Two forms of identification.
• The details of the bank account you intend to link to your brokerage account.
• You tax file number (TFN).
• Personal information (full name, date of birth etc.)

Unless your brokerage charges a subscription fee, making an account should be free. However, you may need to deposit a set amount upon establishment.

Step Two: Analyse how NAB has been performing

When considering investing in any company, and not just NAB, it is important to assess that company’s financial health. Financial health is an umbrella term for how profitable a company currently is, its previous performance, its outlook, and its operation efficiency.

An excellent place to start your research into the operations of National Australia Bank, is with their ‘performance and reporting page’. Here you can find links to annual reports (which include income statements, balance sheets, and cashflow statements) reaching back to 2003. As well as reports on NABs behaviours and attitudes towards sustainability, climate change, and its customers.

If you value a business with a strong commitment to environment, social, and corporate governance (ESG), these reports may be vital to peruse before you invest. Next, try to evaluate the company’s leadership. Identifying stability among the board can mean less volatility for the company and may indicate whether strategies for growth are in place.

Analysing the price-to-earnings (P/E) ratio can also provide a summary of company performance. The P/E ratio is a representation of the time it would take for a company’s earnings to match its current share price. It calculates by dividing the company’s current share price by its earnings per share. At the time of writing, NABs P/E ratio is 13.21 which is quite strong, with 20-25 marking the average.

Despite past performance not being an indicator of future performance, reviewing NABs previous share prices – when taken with a grain of salt – may be useful. Since 2021, the price per NAB share has seen a very slow positive rise. However, looking at the last decade may give you an idea of how much a company can fluctuate. For example, the current NAB share price is $28.18, and in March 2003 it was $30.60.

Finally, monitoring the news can help you ensure that there aren’t any controversies surrounding the company you wish to invest in, as this may also be an indicator of potential volatility short-term.

Step Three: Decide when you should invest

Timing the market is difficult for investors—no matter how experienced they are. Despite NAB share prices experiencing a steady upward trend as of March 2023, no stock is volatility-proof. Fluctuations can happen at any time, and, despite the age old saying of ‘buy low, sell high’, the question of ‘should you time the market?’ remains.

The trading platform Spaceship found that, for a novice, midday on a Monday in the middle of a month can be the best time to buy. However, when you trade should depend on your goals, and, while buying the dip can work for some, speaking with a professional will likely be your best course of action.

Step Four: Identify How Much You Should Invest

Assuming you have already analysed NABs performance, and considered the market timing, the sum you invest should be based on your intentions, your experience, and any requirements the trading platform may have.

The ASX suggests that beginner investors start with at least $2,000—anything smaller means fees will make up a larger percentage of the transaction. Despite some platforms letting you get started with trades as small as $5-$50, the minimum for ASX trading is $500.

Depending on the platform you use, there may be a maximum share purchase limit. This is rare; although, you might benefit from a self-imposed limit order, which will prevent you from trading over, or under, a certain threshold when purchasing shares.

Before deciding how much to invest ask:

1. What can you afford to invest?
2. What can you afford to lose?
3. What will you do when prices rise? What about when they fall?
4. How long do you plan to hold your shares?

Step Five: Buy Your NAB shares

Finally, once you’ve decided what you will spend and you have enough funds in your brokerage account, you can place your order.

The ASX is open from 10pm to 4pm (Sydney time) Monday to Friday. When you trade during this time you will pay the market price. Trading when the ASX is closed may require you to implement a limit order. A limit order is the maximum amount you are willing to spend. When setting a limit order you also set a respective timeframe; if shares under your limit become available within this timeframe, the trade will execute.

You will have the opportunity to review your order before you purchase, once you are satisfied you can place your buy order and the transaction will go through.

Step Six: Keep Tabs on Your Investment

After your shares have officially been transferred under your name, all that’s left to do is to monitor your investment. How intensely you observe your NAB shares will depend on how long you intend to hold them for. If this will be an investment you hold for several years, which is recommended, you may be content to let them sit without much interference.

If you’d like to keep better track of your shares, here is a list of things you may like to do:

• Subscribe to alerts from ASIC and the ASX about share performance.
• Properly file your holding statements for tax returns.
• Read new company updates and annual reports.
• Track your dividends—rewards paid to shareholders in return for their investment.
• Create a spreadsheet for all your investments, and the transaction fees you paid for them.

Once you have added NAB shares to your portfolio, you may wish to diversify your future investments. Diversifying spreads your money across multiple asset classes, and options within these classes. That way, if one sector performs badly, your portfolio will be more risk averse.