Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs. See full bio
Kylie's expertiseHere are 6 of the most popular methods for investing in shares in Australia:
When you buy shares (stocks, securities, or equities), you essentially become a part-owner of a company. This ownership entitles you to potential dividends and other benefits like voting rights.
You can choose to buy shares individually using a broker or share-trading app or join with others by investing in a managed fund.
There are 2 main ways to make money from the stock market:
One of the major benefits of owning shares is you can earn a passive income. Despite daily or even yearly fluctuations, history suggests that stock markets typically rise over the long term, meaning your wealth can grow with it if you've invested.
The main way to invest in the stock market is to buy shares through a stockbroker. You have 2 options here: you can buy shares online using a share trading platform or use a full-service stockbroker.
A full-service broker is a traditional brokerage firm or investment bank such as Goldman Sachs or Morgan Stanley.
The main benefit is your broker does all the trading for you based on your instructions and may offer advice. The downside is you'll be charged a premium fee for its service, starting from $70–$200 per trade.
The cheapest and simplest way to buy stocks is to use an online broker and place the trades yourself. These charge anywhere from $0–$30 per trade in brokerage fees.
You can check out our top picks for online brokers below or compare the full market through our comparison table.
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For our top picks, we compared our Finder partners using a proprietary algorithm beginning in 2023. We update the list every 3 months. Keep in mind our top picks may not be the best for your individual circumstances and we encourage you to compare for yourself. Read our full methodology here to find out more.
The goal of buying any stock is to get more money from it than you spent on purchasing it. For this reason, you'll want to invest in companies that you think will go up in price over time or at least pay out a dividend.
To master the art of this, you’ll need to do your own research into each of the companies.
It’s a good idea to know the company’s fundamentals, why you should own it, what you think the growth potential is like and when you might sell it.
Bear in mind that it's safer to have a diversified portfolio of stocks from different sectors and even countries to avoid major losses if a market falls. A diversified portfolio typically consists of at least 20-30 stocks.
"Look for sustainable competitive advantages from a great reputation, geographic location, benefits from scale, technology, patents, innovation or IP, the network effect or barriers to entry. Always remember the most valuable competitive advantage is the ability to raise prices without a detrimental impact on unit sales value."
CIO, Montgomery Investment ManagementThere are a few ways you can buy shares without a stock broker or share trading platform at all:
If you want to invest in shares but do not want to research individual companies, then buying an exchange-traded fund (ETF) could be an option.
ETFs are a whole portfolio of stocks. They vary in how many they hold and what their strategies are so make sure you read the product disclosure statement (PDS).
Generally speaking, they fall into 3 categories:
The mechanics behind an ETF are similar to shares in that you transact with them on the stock market.
Like stocks, the easiest way to invest in them is through an online stock broker where you can purchase them in the same way that you do stocks.
"ETFs are arguably the most cost-effective and efficient way to invest in the stock market. Index funds like ETFs also regularly outperform even professional fund managers over the long-term."
Want to turn your spare change or rebates on your shopping into shares? Well, you can through micro-investing apps.
These apps are popular among newer and younger investors.
Micro-investing apps will typically invest in a bunch of predetermined ETFs or stock portfolios that should match your risk tolerance.
You can typically set a recurring investment into your portfolio of choice on a weekly or monthly basis. Some apps such as Raiz Invest will even round up your spare change from purchases and automatically invest it.
While it will take a long time to fund larger saving goals such as buying a house through micro investing, it can help you get started in the market and is great way to passively invest.
"One of the most important things to consider when investing is your risk tolerance, goals and timeline. In understanding these you can have clarity on exactly what you should invest in and why. For example, knowing your risk tolerance can help you decide between investing in individual shares or in something a bit more diversified like ETFs. Similarly, knowing your timeline can be a deciding factor between investing within your super or outside of your super. Regardless, if you ever need support in working through your financial goals, talking to a professional is always a great idea, as they can help you with your strategy and tax planning."
Financial educatorYour superannuation is another way for you to start investing in the share market.
In fact, it's likely you are already invested in the share market.
For those using their superannuation to invest in shares, they are usually in a balanced or a higher growth option.
The lower-risk superannuation plans generally hold a larger portion of bonds and cash, while the higher growth plans own shares.
As a general rule of thumb, you should take on more risk when you’re younger and reduce it as you get older. Of course, personal risk tolerance plays a major role in what is the right option for you.
If you are a high-net wealth individual, you can directly take control of your superannuation through a self-managed super fund (SMSF).
Instead of relying on your super fund provider to manage your portfolio, you can decide which stocks and other financial assets (such as property or even gold) you want to hold.
While it can be beneficial to directly manage your own retirement fund, keep in mind that if you can’t outperform the market, then you’ll retire with less.
It's also generally agreed upon that due to the high costs of running an SMSF, it might not be worth it to open an SMSF if you have less than $250,000.
If you have larger amounts to invest and are unsure about how to manage your investments and assets, you could consider appointing a financial advisor to manage it on your behalf.
Financial advisors and wealth managers specialise in managing large investment portfolios on behalf of their clients, based on their risk profile and investing goals.
In Australia, anyone offering personal financial advice needs to have an Australian Financial Services Licence (AFSL), so if you decide to hire an advisor, make sure they have the relevant certification.
Naturally, wealth managers and advisors charge a fee for their services, and this is something that needs to be weighed up when considering whether to use them.
Investing in the stock market can be a great investment, but it can also be pretty risky, especially if you don’t have a financial plan.
To build a plan, you’ll need to ask yourself the following key questions:
Once you can answer these questions, you can start mapping out how you want to invest in the stock market and the types of stocks or ETFs you want to invest in.
As a rule of thumb, the riskier the investment, the bigger your potential profit. Work out if you can afford to buy high-risk stocks (such as penny stocks) or if you should stick to safer long-term investments like blue chip stocks or index funds.
Yes, you need to pay tax on any profits you make from shares, including dividends. Any income you make from dividends is automatically recorded by the Australian Taxation Office (ATO) and is included as part of your regular taxable income at tax time.
Profits that you make on capital gains – i.e. when you buy low and sell high – are only counted in the financial year that you’ve sold your shares. Your broker will usually send you a tax invoice with any profits that you’ve earned from stocks each financial year.
Tip: If you hold shares for more than a year, you only need to pay tax on half of the profits you’ve earned. You can read more about share trading and taxes in our tax guide.
You can think of the stock market (aka stock exchange) in the same way you think of an online marketplace like eBay or Facebook Marketplace.
Each day, thousands of people go online to buy and sell products with the aim of making as much money as they can - in the case of a stock market, it's company shares.
Every major country has at least one stock exchange.
The bigger the economy, the more likely they will have multiple exchanges. For instance, in the US there is the New York Stock Exchange (NYSE) and the Nasdaq exchanges as well as several other smaller exchanges.
In Australia we have the Australian Securities Exchange (ASX), Cboe Australia, the National Stock Exchange of Australia (NSX) and the Sydney Stock Exchange (SSX), although the ASX is by far the most popular.
Companies will choose which exchange to list their stocks on depending on where they think they will get the most investor support balanced with the costs.
Most Australian companies will list their stocks on the ASX, although some have chosen to list on US exchanges, such as Atlassian which is listed on the Nasdaq.
To buy stocks in any one company, you'll need to check which exchange it's listed on (noting it might be on more than one) and then find a broker with access to that exchange.
Before you start buying and selling stocks, be aware of the risks:
Take a look at Australian online trading platforms in the table below. These platforms will let you invest in various stock markets.
Depending on what you're after, it may save money to use more than one platform – for example, a platform for Australian shares and a platform for another market such as US or UK stocks.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
There are plenty of factors you'll need to take into account when choosing a broker, so check out our guide to choosing the best online share trading platform for more details.
Share market update - September 2024
This will depend on your brokerage platform. Some platforms will allow you to purchase a wide variety of exchange-listed shares and some will even allow you to purchase international shares. Research the different share trading platforms to see which stocks each provider allows you to buy and sell.
It depends on the investment platform you use. If you don’t already own stock in an Australian company, you’ll typically be required to purchase over $500 worth during your first trade. Once you own stock, you can buy further shares with no minimum. For US or other global stocks, the minimum can range anywhere from a few cents to a few hundred dollars, depending on the platform you use.
The maximum value of shares you can buy online will again depend on your brokerage platform. Some platforms will have no maximum amount but will require you to have the necessary funds for your purchase in your trading account.
The time it will take for your buy or sell order to go through will depend on whether you lodge your order at market or at limit. For example, if you’re buying shares at market value, the order will be placed as soon as possible and the shares purchased at the best price available at the time. However, if you place your order at limit, you can stipulate the maximum price you are willing to pay and how long you will wait for the right market conditions to arise. The limit order will then stay on the market until your designated expiry date, and if it has not been executed by then, your order will be cancelled.
If you’re lodging a market order, your brokerage platform will most likely provide you with the opportunity to review and modify your order before submitting it. However, once it has been submitted, it will be processed as soon as possible. If you decide to place a limit order and it has not yet been executed, you will be able to amend or even cancel the transaction.
Once you have purchased shares in a company, you literally own a small portion of that company. As the stock market fluctuates each day and the value of shares rises and falls, the value of your shares will similarly change. You’ll receive company reports and news updates so you can stay abreast of its performance and direction, while many companies will also pay out dividends (your share of the company’s profits or earnings) twice a year. It’s up to you to monitor the performance of your shares in line with your investment strategy and decide whether to sell, hold or buy more shares.
One option for those who have little money is to start investing through micro investment apps or through fractional shares. Micro investing lets you round up transactions, set up smaller weekly deposits and with some providers allows you to get cash back on your shopping. These apps will then invest your money into index or exchange-traded funds. Your other option is to look into fractional shares. Some brokers will let you buy a portion of shares instead of having to save enough to buy a full share. While both of these strategies have drawbacks, they can help you get started investing with little money.
If you want to invest in American stocks from Australia, you'll need to find a broker that allows you to buy US shares. Once you have found a broker, you'll need to fill out your basic information and provide some proof of identification. After that you can begin buying US shares. For more information, see our how to invest in US stocks from Australia 2024 guide.
If you're looking to buy shares in Chinese stocks, you'll need a brokerage account that allows you to access the right stock exchanges. However, it can be tricky to trade on Chinese stock exchanges directly and in many instances it is easier to invest in Chinese companies that are listed on other exchanges. Chinese stocks are in 3 categories: Chinese A stocks: These are listed on the Shanghai or Shenzhen stock exchange, are traded in local currencies and are usually exclusive to Chinese investors except for foreigners with a special licence. Chinese B stocks: These are stocks of Chinese companies listed on the Shanghai or Shenzhen stock exchange and can be traded by international investors. But with more access to A stocks in recent years, these shares are losing some of their liquidity. Hong Kong H stocks: These are stocks that are on the Hong Kong exchange, and you'll need to transfer your money to Hong Kong dollars before trading. This market is open to foreign investors. Many Chinese stocks are also listed on overseas markets such as the US and Australia. These include Alibaba, Baidu and NIO. In this case, you need to sign up to a broker with access to those markets.
In order to buy gold stocks, you'll need to find companies that mine gold. After that, you'll need to sign up with a broker and begin trading. While you won't directly be exposed to the gold price, the miners themselves are pretty closely aligned to the gold price. This goes without saying, but the higher the price of gold, the better it is for gold miners and vice versa. Alternatively, you can choose to invest in gold ETFs that are also traded on the stock exchange. These are either physically backed by gold or trade futures contracts. Finally, if neither of these options appeal to you and you would like to own gold you can buy gold bullion or even jewellery.
You can start investing in Australian shares from as little as $500 if they are CHESS sponsored and as little as $10 at a time into US stocks – depending on your online broker. If you choose to have a custodian model of ownership, you start buying Australian shares for even less. Regardless of what or where you choose to invest, you'll need to follow the same steps. You will need to research businesses that you would like to buy, sign up to a broker and purchase the shares.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
