Are you looking to invest your extra money, but are not fully aware of investment opportunities in Australia?
If you are a bold Aussie who isn’t afraid to take risks for a chance to make money, take a look at our guide on how to start investing in Australia.
Let’s see the basics of investing for beginners in Australia.
How to Start Investing in Australia
Before you start investing money in Australia, you should ensure you are in an excellent financial situation. Here are a few steps you should consider before you start investing.
Clear Your Debts
Before investing, make sure your debts are under control. Investing can be a great way to get more money, but it’s essential to have a solid financial foundation first. So, if you’re carrying any high-interest debt, it’s best to direct your extra money towards paying off your debts before you start investing.
Prepare Your Budget
Be honest with yourself about the amount of money you can invest without risking your livelihood. For an in-depth assessment of your budget you should:
- Calculate your net income so you know the amount of money you can spend
- Track your spending
- Set realistic long-term and short-term financial goals
- Make a plan for your future spending
- Calculate the amount you can use to invest
- Make sure you review your budget regularly
Once you know how much money you can invest, a great way to start is by making smaller investments to build experience in investing. Remember—you should never invest more money than you can afford because you can never be 100% sure you will make a profit.
Make an Investment Plan
Having done all of the things above, it’s time to make your own investment plan. The four elements you should always have in mind when making investment plans are:
- Effective diversification
- Active management of asset allocation
- Tax efficiency
- Cost efficiency
What do best investment plans look like?
The best investment plans include:
- Financial goals you want to achieve
- Determinating how big of a risk you’re willing to take
- The time you expect a return on your investments
- Types of investments you’d like to make (e.g. the stock market, bonds, mutual funds, bank savings accounts, gold, real estate, etc.)
- Regular monitoring, rebalance, and performance checking of your investments
Get financial advice
Whether you’re experienced in investing money in Australia or just a beginner, it’s always a good idea to consult a financial expert and get advice on improving your investment plan and on where and when to invest your money.
Choosing What You Can Invest In
Let’s see where you can invest your money right now and go through some of the best investment ideas in Australia.
Different Types of Stocks
The stock market offers different types of stocks you can invest in. There are several types of stock in which you can invest in Australia:
- Dividend stocks – if you invest in these stocks, you will be given a part of the company’s earnings and paid a dividend regularly. Some of the best ASX dividend stocks in Australia at the moment are Fortescue Metals Group, Rio Tinto, BHP Group, Wesfarmers Ltd, and Suncorp Group.
- Growth stocks – a bit riskier, but still one of the best investments in Australia you can make. The best time to buy growth stocks is when there is an economic expansion and low-interest rates. Top growth stocks in Australia in 2022 are GQG Partners, 29Metals, NextGen Energy, and Judo Capital Holdings.
- Blue-Chip Stocks – stocks in companies that have significant market capitalisation. They are usually a safe investment option, and the best investments in Australia you can make in blue-chip stocks include investing in companies such as the Commonwealth Bank of Australia, CSL Ltd, National Australia Bank Ltd, Westpac Banking Corporation and Telstra Corporation Ltd.
You just need to choose which of the Best Trading Apps in Australia you’ll use.
Different Types of Assets
The assets to invest in are countless, but we have picked some of the top investment ideas in Australia. Here are the different types of investments you can make in assets:
- Cash investments (saving accounts and term deposits).
- Fixed interest or fixed-income investments
- Investments in company shares
- Investments in managed funds
- Annuities (you are guaranteed income no matter what happens on the financial market)
- Gold (Investing in gold is a great way to protect your money from inflation).
Note: Whichever company you choose for investing money in Australia, you should always stay up to date with the Company Reports and do your research about the company you want to invest in or buy stocks from. Even if you choose to invest in one of the biggest tech companies right now, you should look at their performance and see their Price to Earnings, Price to Book and Dividend Yield indicators.
An investment in bonds is a low-risk and safer alternative to the volatile shares market.
How Much Money Do You Need to Start Investing?
There is no straightforward answer to this question because you need to take numerous factors into consideration, starting with your financial situation and investment goals.
However, what we can give you more information when it comes to investing money in Australia is micro-investing and investing more than $500:
If your finances only allow you to invest up to $500, you can consider micro-investing as an investment option (i.e., you can make small investments on an irregular basis). In Australia, you can do this via multiple micro-investing apps, including Raiz, Commsec Pocket and Sharesies.
Note: You don’t need deposits for micro-investments, but the return on such investments is usually small.
Investing More Than $500
Any ASX exchange requires a minimum investment amount of $500 (whether you’re buying shares of a company or investing in ETFs, the amount is the same).
What do you need to do if you’re interested in making such investments? T
he process is quite simple:
- Open an account with a broker – you can open an account at a bank that has brokerage offerings, use an independent brokerage firm or an app-based broker.
- Start investing in individual shares, index funds, and other types of investments.
For more information on how to buy index funds in Australia, take a look at this helpful guide.
Some additional things to keep in mind:
- If you choose to buy shares on the ASX worth more than $500, they will be labelled as an “unmarketable parcel” if their value gets to less than $500. If this happens, the company you invested in can sell or buy your shares at a lower price.
- The minimum investment in managed funds ranges from $5,000 to $250,000.
- The best investment in Australia for an amount of over $500 is investing in equities, properties and fixed income.
How do you learn to invest?
If you’re like most people, there’s a lot of information out there that seems more confusing than helpful, and the Australian website, MoneySmart is a good place to start with your investment education. Once you’ve educated yourself about the economy, interest rates, exchange rates, and government policy, you’ll be well on your way to feeling confident. It’s critical to understand how these factors affect a firm’s performance and why things are happening.
The Australian Securities Exchange (ASX) also has a section on its website dedicated to educating prospective investors about share trading.
With CommSec Pocket, you can invest anywhere, anytime, with just $50. Choose from seven themed investment options to invest in something that interests you – like technology, sustainability leaders, or the biggest 200 companies on the Australian market. As you use the app and learn more about investing, CommSec will help you along the way with tips, videos and articles.
There are many opportunities for investing in Australia; but before you start, it’s important to understand the basics of investing. Now that our guide has you covered on how to start investing in Australia, we can only wish you happy investing!
1. How do I invest in stocks in Australia?
Before you invest in a particular stock in Australia, you should do your research into the company’s predicted growth, its standing compared to competitors, and make sure the services the company provides will be in demand.
2. How a beginner should start investing?
The best advice for beginner investors in Australia is to consider the factors that influence your investments. The main factors are your willingness to take risks, financial situation, researching the market, and deciding on the best investment option.
If you are a first-time investor, make sure you read our how to start investing in Australia guide.