Google “how to start investing in Australia” or “investing for beginners Australia” and you will be confronted with an absolute avalanche of information. It can be completely overwhelming. So many different websites, different opinions, and different strategies and recommendations. This article is here to help you cut through the noise, and get down to the basics of how to begin investing in Australia.

Spoiler alert: you can start almost all types of investing we discuss below from an app, on your phone! Gotta love technology, right?

Please note: the content of this blogpost is considered general advice only and does not apply to your specific circumstances. As always, for personal financial advice please speak to your financial adviser or an investment professional.

First Things First: Are you Ready?

Deciding to invest can be a big, and somewhat scary decision for many. It is important that you are ready for this step. If you are unsure about whether you are in a financial position to begin investing, check your current situation against the below list. If you can answer “yes” to these questions, then you may be ready to give investing a go!

  1. Is your regular/normal income more than your regular expenses?
  2. If you have debt, are you paying off your debt without financial stress?
  3. Do you have some cash saved up that you won’t need for a while?
  4. Are you on a budget? If so, do you have spare cash for a regular investment amount?
  5. Have you accepted that there is inherent risk involved with investing?
  6. Would you be able to manage your investment dropping in value when the market is volatile?

If you’re unsure about how you rate against those 6 points, or if you have answered “yes” to all questions and remain unsure it may be a good idea to seek out guidance from a financial adviser. They should be able to assess your position thoroughly enough to help decide if you are ready to invest or not.

Ok- you’re ready! Now, what to invest in?

There are a number of different kinds of investments you can make. There are generally 5 main categories of investment vehicles, however, with the recent surge in mainstream ETF and Bitcoin popularity we have included these two as separate investment asset classes. The different investment asset classes are:

  • Cash (savings accounts);
  • Fixed interest products (such as Term Deposits);
  • Shares (also known as stocks); 
  • Exchange Traded Funds (ETFs);
  • Property; and
  • Cryptocurrencies.

For the purposes of this blog, we’re going to explore investing in Shares, ETFs, and Cryptocurrencies, and we’re going to explore just how easy it is to invest from an app on your phone.

Getting Started

How you get started depends a lot on your financial situation, and how involved you would like to be with your investments. If you are someone who wants to begin investing with a small weekly, or monthly amount, and you don’t want to be responsible for too much of the investment decisions- then MicroInvesting may be a great way for you to start investing.

Micro-investing

Micro-investing is most popularly done with Apps like Raiz, Spaceship, or Sharesies. Micro-investing focuses on getting you started even if you only have a small amount, and encourages you to make regular contributions over time. This is to help get you started, and get you benefitting from the wonder of compound interest working in your favour.

Raiz Invest or Spaceship will allow you to invest directly into a diversified portfolio of shares or Exchange Traded Funds (ETFs)  from just $5. Other MicroInvesting platforms such as CommSec Pocket or Stake function more like a broker- and allow you to buy into ETF bundles. To start investing in these apps simply download the App and get started! For CommSec Pocket, however, you will need to be an existing CBA customer and link your bank account.

One thing to be more mindful of with micro-investing, and any form of investing, are the fees involved. Typically, these apps will charge a higher fee for the accessibility of their investments and the convenience provided. Fees can quickly reduce your investment earnings so it is important to take this into consideration before you begin. 

Exchange Traded Funds (ETF)s

Exchange Traded Funds (ETFs) are very popular with new and experienced investors. An ETF is basically a whole bunch of stocks put together into one big bundle, and it is popular for risk management. The benefit of an ETF is that it is a bundle of a number of different companies, usually across a number of different industries. This means that if one stock goes down, your ETF price generally isn’t significantly impacted- as the risk is spread across a number of different stocks.  This benefit is most commonly known as diversification

You can begin investing in ETFs on many micro-investing platforms. Two of the most popular Platforms currently are CommSec Pocket and Pearler.  CommSec Pocket allows you to start investing with as little as $50. They have bundled the ETFs into 7 differently themed investment options to easily invest in something that appeals to you personally, or to your values – like tech, sustainability leaders, or the biggest 200 companies on the Australian market. Pearler is popular as it allows you to follow the profiles of other investors, and “finfluencers” to see what they invest in.

For a more cost effective approach, you can buy and hold ETFs directly through online brokerage platforms such as Nab Trade, Commsec, or Self Wealth. Instead of paying an ongoing monthly fee, you will have to pay ‘brokerage’ for each transaction, so investors typically buy larger quantities with reduced frequency. 

Direct Shares/Stocks

If you’re feeling more confident with beginning your investment journey, consider investing directly into shares. A share is basically a small piece of ownership of the company, and it is important to choose the right share for your risk tolerance, and your values. It’s also important to consider the risk of your overall portfolio so you can ensure your investments are adequately ‘diversified’.  

So how do you pick the right stock? Well, ASIC’s MoneySmart recommends asking the following questions when looking into purchasing a company’s shares:

  • Will the goods and services this company provides be in demand in the future?
  • Are there opportunities for the company to grow?
  • Who are the company’s competitors and are they in a strong position?

Many mainstream investing apps allow you to invest in direct shares. One of the most popular apps to invest in direct shares in Australia is CommSec. As with Commsec Pocket, you will need to have a CBA bank account to open an investment account.

If you are interested in investing in shares but aren’t sure you’re picking the right ones for your personal goals, it is worth consulting a financial adviser for guidance and direction.

Investing in Cryptocurrencies 

Last, but certainly not least: investing in cryptocurrencies! Investing into crypto has surged in recent years, driven by huge demand and a surge in prices. Crypto investments are typically seen as high risk as the value is quite unstable, and prone to market volatility. 

To begin investing in cryptocurrencies in Australia you simply need to download the right app, and select your preferred coin- it’s that simple! In Australia the most popular apps used to invest in and trade cryptocurrencies are CoinSpot, CoinJar, and Swyftx.

At the end of the day there is no one size fits all approach when it comes to investing. Your financial situation, your cash flow and your risk tolerance are all unique to you, and will guide you to what your best starter investment is.

Another consideration that both seasoned and beginner investors must take into account is the environmental or social impact of the investment. Do you want to avoid investing in coal mines, are your values more aligned to green enterprises and clean energy? If you are, we previously published a blog post on ethical investments, which you can find here.

We hope this guide helped put you on the right path for how to begin investing in Australia. If you have any further questions, our friendly team would be happy to help! If you’re looking to invest more than a few thousand dollars, the guidance of a financial adviser is recommended. You can book in for a complimentary 15 minute ‘Quick Chat’ via this link.  

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