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Investing in shares in Australia can be a smart way to grow your wealth over time. The Australian market offers access to well-known companies, dividend income and tools designed for long-term investors.
This guide outlines the key steps, from setting goals and choosing a broker to placing your first trade and managing your portfolio.
Why invest in shares?
Australians invest in shares for a variety of reasons:
- Capital growth: Over the long term, shares have historically delivered strong returns, often outpacing inflation and outperforming many other asset classes.
- Dividend income: Many Australian companies pay dividends: regular cash payments to shareholders. These can be a valuable source of income, especially when reinvested over time.
- Portfolio diversification: Adding shares to your investment mix – alongside cash, property or bonds – helps spread your money across different types of assets. This can help to reduce risk and smooth out returns over time.
If you’re ready to get started, here are the key steps to investing in shares in Australia.
1. Define your financial goals
Before you invest in shares in Australia, it’s worth exploring what you’re aiming to achieve. Your goals will shape how much you invest, what you invest in and how long you plan to stay invested.
Consider the following:
- Your timeframe: Are you investing for a long-term goal like retirement or something medium-term like a house deposit?
- Your comfort with risk: Share prices can rise and fall. If a 20% drop would keep you up at night, you may want to start cautiously.
- How much you can invest: How much do you plan to invest initially, and will you then look to contribute regularly?
Having clear goals helps you stay focused, especially when markets get volatile. It also makes it easier to choose investments that suit your needs.
2. Understand the Australian market
When investing in shares in Australia, most people start with companies listed on the ASX – the Australian Securities Exchange. It’s home to over 2,000 businesses across banking, mining, healthcare, tech and more.
As you start exploring the market, it’s useful to know a few key benchmarks:
- ASX 200: Tracks the 200 largest companies on the exchange.
- ASX 300: Offers broader exposure to large and mid-sized companies.
- International shares: Many brokers also provide access to global markets like the US and UK. These can add diversification, but may involve currency fees and different tax rules.
Understanding how the Australian market works, and how it fits into your broader strategy, is an important part of investing with confidence.
3. Choose a brokerage account
To invest in shares in Australia, you’ll need to open an account with a broker or investment platform. Brokers provide the platform to buy and sell shares, access market data and manage your portfolio.
There are two directions you can go:
- Traditional online brokers: More traditional online brokers will allow you to buy and sell shares online, usually for a brokerage fee. They typically range from $3 up to $20 for smaller trade sizes. When trading higher dollar amounts, traditional online brokers may charge a percentage of the total value.
- Investment platform: Newer investing platforms like Betashares Direct offer zero brokerage on just under 400 ASX listed shares. Additionally, you can include shares as a part of your custom portfolio alongside ETFs and auto invest. Betashares Direct also offers features like fractional investing and investment minimums of $10.
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4. Step-by-step: Buying your first shares
Once your account is set up and funded, you’re ready to place your first trade. Here’s a step-by-step process to help you start investing in shares in Australia:
- Open and verify your account. You’ll generally need your ID, bank details and Tax File Number (TFN) in order to pass KYC.
- Fund your trading account. This is usually done via bank transfer or direct debit.
- Research companies. Look at key indicators like price-to-earnings (P/E) ratios, dividend history and industry trends. Use tools like ASX announcements and company reports to understand what you’re investing in.
- Use your platform to enter a buy order. A market order executes immediately at the current price, while a limit order lets you set the maximum price you’re willing to pay.
- Monitor your holdings. You might check this weekly but try to avoid overtrading – chasing short-term moves often erodes returns.
5. Tax implications to keep in mind
When you invest in shares in Australia, your returns may be subject to tax. Here are a few key considerations to be aware of:
- Franking credits: Some Australian companies pay franked dividends, which include a credit for tax the company has already paid. These franking credits can be used to reduce your own tax bill or increase your tax refund when you lodge your return.
- Capital Gains Tax (CGT): If you sell shares for more than you paid, the profit is considered a capital gain. If you’ve held the shares for over 12 months, you may be eligible for a 50% CGT discount as an individual investor.
- Record-keeping: Keep track of your trade confirmations, dividend statements and holding summaries. To make tax compliance easier, certain platforms, like Betashares Direct, prepare comprehensive tax reports to assist investors.
6. Regulatory considerations and investor protection
Australia has a strong regulatory framework to protect investors and maintain market integrity. A few key points to know:
- ASIC regulation: The Australian Securities and Investments Commission (ASIC) regulates brokers and enforces laws to protect investors. Make sure your broker holds an Australian Financial Services Licence (AFSL).
- Stay scam-aware: Only deal with trusted platforms. Be cautious with unsolicited investment offers and double-check website URLs and email sources.
- Investor education: Free tools like the ASX Education Centre, MoneySmart.gov.au and Betashares Insights offer free seminars and resources for beginners.
7. Managing your portfolio
Once you’ve made your first investments, managing your portfolio becomes about staying consistent, diversified and focused on your goals. A few key principles:
- Diversify by sector and market cap to reduce individual asset risk.
- Rebalance annually to maintain your target allocation.
- Use dollar-cost averaging via regular contributions to smooth market volatility.
- Consider ETFs for instant diversification and low ongoing costs.
Final tips for new investors
Starting out can feel overwhelming, but these simple habits can make a big difference over time:
- Start small and scale as you gain confidence.
- Automate regular contributions to stay consistent.
- Track a shortlist of shares or ETFs to build market familiarity.
- Keep an eye on company results and industry trends.
- Keep learning by using broker tools, reports and investor education resources.
Getting started in shares doesn’t have to be overwhelming. By defining clear goals, choosing the right broker, understanding tax rules and practising disciplined portfolio management, you’ll be on your way to building wealth through the Australian share market.
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