How To Invest In Stocks In Australia (2023)

Australian stock market for beginners.


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Last updated: November 30th, 2023

how to invest in stocks australia

The information on this page is general factual information, not financial or investment advice. Before acting on this information, consider its appropriateness in regard to your financial situation, objectives and needs. All trading involves risk. Only risk capital you’re prepared to lose. Read the financial advice disclaimer.

Last updated: November 30th, 2023

Reading Time: 9 minutes

Stock market investing can be intimidating at the best of times, but with high inflation and interest rates, and economists flagging a possible recession, it’s even harder in 2023 to know how to invest in stocks to grow your wealth.

Yet, beginners can quickly tap into the power of long-term investing and join millions of other Australians participating in the share market.

ASX research from 2020 found that 46% of Australian adults (an estimated 9 million people) currently have some form of investments outside their superannuation or home. 74% of those who invest hold assets listed on a stock exchange.

To help you understand how to invest in stocks, we will share key share market investment options, investment strategies and tips for choosing the best stock trading apps, online brokers, share trading platforms.

Enjoy our beginner’s guide to investing in the Australian stock market 🙂

Before You Start Investing In The Stock Market.

Set yourself up for long-term success by creating a solid financial foundation.


An obvious but vital point: trading shares exposes you to the risk of losing your money, which means it won’t be available for other essential purposes. Invest only what you can afford to lose.

Our tips are:

  • Build an emergency fund: On top of your day-to-day budget, ensure you have enough to cover unforeseen expenses or emergencies. You should save at least three to six months of expenses in a separate bank account.
  • Pay off high-interest debt: If you have credit card debt, we recommend paying it off before investing in the stock market. There’s no point paying 19% on your credit card’s balance while trying to earn 10% via stock purchases.
  • Understand your existing investments: For instance, how does your fund currently invest your superannuation money? You can usually nominate an industry, so simply knowing how your existing funds are invested can help you create a more diversified portfolio overall.

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How Can You Make Money From Buying Shares?

Investors make money through one or both of the following ways:

  • Share Price Increases Over Time. Known as ‘capital gains’, they enable you to make money by buying your shares at a low price and selling them at a high price (the reverse also applies – you lose money if the share price falls.)
  • Share In The Company’s Profits. Known as ‘dividends’, they are periodic (usually bi-annual) payments to shareholders. Technically you can use dividends as a source of cash flow, but most experts agree that long-term, you’re better off reinvesting them into your portfolio.


Create an inventory of your material assets, current income, and expenses, and determine how much you can realistically invest in the share market. Use this guide.

What Can You Invest In?

In Australia, there are three main types of share market investment options available:

1. Individual Stocks. 

Also known as shares or equities, stocks represent ownership in a publicly listed company.

(Related: How To Buy Apple Stocks And Tesla Stocks).

There are over 2,000 companies listed on the Australian Securities Exchange (ASX), and you can buy shares in these companies via a full-service stockbroker or online brokerages like eToro, Tiger Brokers and CMC Markets.

Want exposure to international stocks? Look for online brokerages that also give you the option to trade on overseas exchanges, like NYSE, NASDAQ and HKEX.

Picking individual stocks gives you a significant amount of control, but requires more of your time and emotional discipline.


If you’re not prepared to spend a few hours each week researching stocks and are prone to acting on FOMO (fear of missing out), stay away from picking stocks.

2. Exchange-Traded Funds (ETFs).

ETFs are investment funds that are traded on stock exchanges.

Each ETF is a collection of assets — often composed of stocks in line with an index like the ASX200 — that you can also buy and sell via online brokerages.

When you buy units of an ETF, you benefit from the capital gains and dividend returns of the underlying holdings (the grouping of shares included), but the actual assets are owned and managed by the ETF provider.

While ETFs are professionally managed, they often follow an index and have relatively low management fees compared to traditional managed funds.

Other ETFs may focus on a specific market sector, investment theme, or strategy (such as dividend-focused ETFs).

In contrast to building your portfolio of individual stocks, ETFs offer instant diversification while placing far lower demands on your personal time.

An exchange-traded fund isn’t necessarily limited to stocks.

(Related: How To Day Trade In Australia).

It can bundle in many asset classes, including bonds (Australian government bonds explained) and commodities.

  • Vanguard Australian Shares Index ETF.
  • iShares Core S&P/ASX 200 ETF.
  • BetaShares NASDAQ 100 EFT.
  • SPDR S&P/ASX 200 EFT.

(Related: eToro Review: Pros, Cons, Fees & Is It Any Good?)

3. Superannuation (Super).

A lot of your super is probably already invested on your behalf into a portfolio of stocks.

Because it’s a tax-advantaged investment vehicle, you may decide that putting more of your money into your super fund makes more sense than directly purchasing stocks or ETFs.

In doing so, you’ll put more of your money to work rather than giving it to the taxman.

The downside of this strategy is twofold:

  • Your access to funds is very limited – until you hit retirement age. This lack of liquidity makes viewing this fund as your “rainy day” money more difficult.
  • You have very little control over investing decisions. Many superannuation funds limit your control to choosing sectors or a high-level investment approach (e.g., conservative or aggressive), although some may offer more control over the type and proportion of shares your super is invested in.


Self-managed super funds (SMSFs) are a type of superannuation fund that the members themselves manage. A well-managed fund can give investors greater control over their investment strategy and tax planning.

Create An Investment Strategy.

A haphazard, short-term, emotion-driven approach to the stock market is unlikely to work.

A strategy provides structure, which will help you make consistent, level-headed, long-term focused decisions — no matter how the market behaves.

(Related: Is Ethical Investing Right For You?)

Consider in your plan of attack:

  • Your goals and risk tolerance: Consider the timeframe, investment amount and type of returns you aim to achieve. Be honest with yourself about your level of comfort in maintaining positions through significant declines in market value. Clarity on these topics will help you determine your ideal mix of assets and how aggressive your strategy will be.
  • Scenario-based responses: What will you do when unexpected problems arise that adversely affect the price of your shares? At what price will you buy? When will you take profits? What level of price drop would impel you to sell? How will you use dividends?
  • Your available time: How much of your strategy’s success will depend on your ability to regularly research companies and the market more broadly? How will you develop this knowledge, and how often will you review and adjust your investments?

(Related: How To Invest In Futures).

In addition to your overarching plan, follow these steps to execute your strategy:

Step 1: Decide On An Amount.

Some experts say you should invest 10% to 20% of your income. This figure, of course, is debatable and will depend on your individual circumstances.

While you may be able to afford to invest a large lump sum initially, most pundits agree that you should frequently add to your portfolio over time.

Some investors will buy when prices are low, while others prefer a dollar-cost averaging approach whereby they automatically invest a small amount on a pre-defined schedule.

(Related: CMC Markets Review – Pros, Cons, Fees & Verdict).

Factor the following into your decision:

  • Your age (younger people can take more risks, as they have a longer financial runway).
  • Your existing financial liabilities (do you have a mortgage?)
  • Your household income (do both partners work or just one?)

Expert Tip.

Create an automatic money transfer to an account that’s dedicated to investing. This will create a regular top-up of your investable cash and prevent the temptation to spend it on depreciating assets.

Step 2: Choose Your Stocks.

The most common approach to picking stocks and ETFs is good old-fashioned research.

Remember that blue chip stocks, and other established large-cap companies heavily backed by institutional investors may pose less risk.

Research has found returns from large-cap stocks in major broad-based indexes tend to
outperform the results achieved by professional fund managers.

I’m not an investment expert, so I won’t even try to provide advice on the topic, but I highly recommend that you start by reading Intelligent Investor by Ben Graham.

Graham points out that most retail investors (that’s you and me) lose considerable amounts of money, and provides actionable strategies for preventing this.

If picking stocks isn’t your cup of tea, copy trading offers a more time-efficient alternative.

Instead of choosing stocks, your job shifts to choosing the best traders to copy, which comes with its own advantages and pitfalls.

Step 3: Choose An Online Trading Platform.

Australia is home to about a dozen online share trading platforms, or “brokerages”.

Most of them are headquartered overseas and operate here under the regulatory jurisdiction of ASIC.

Open a share trading account once you’ve picked the best brokerage. You’ll use it for buying and selling shares in the future.

(Related: Cheapest Stock Brokerages In Australia).

Step 4: Practice Using A Demo Trading Account.

If you’re an absolute beginner, start by investing fake money first. Most trading platforms will give you the option to trade shares using demo accounts.

They act the same way as real accounts do, except the money you earn or lose isn’t real.

Interfaces of certain online brokerages can be challenging to understand (I’m looking at you, Interactive Brokers!). Demo accounts are great for becoming familiar with the UI.

Demo accounts also:

  • Include different types of orders (market, limit, stop, etc.) to familiarise yourself with.
  • Allow you to practice short-selling (an advanced technique – don’t even think about this as a beginner, as your downside is unlimited).

Expert Tip.

Don’t spend too much time on demo accounts. You don’t learn much about risk management until you enter trades using real money.

Step 5: Invest And Monitor Funds.

Enter your purchase order via your online trading platform. You’ll be given a choice of a:

  • Market Order: Your broker (or you) will purchase the order at market value. If a stock is selling at $5 when the order is placed, you will pay $5 for that stock. 
  • Limit order: In this instance, you set the price you will pay for the stock. When that stock reaches your cost, the order will get processed. For example, if a stock is trading at $5 and you set your limit order at $4.75, the order will trigger when (and if) the stock reaches that number.

Once you purchased stocks or ETF units, you must regularly review your trades, referring back to your high-level investment strategy to keep your returns and risks in line with your goals:

  • Review the performance of each stock, as well as the overall performance of your portfolio.
  • Stay on top of market updates, economic news (e.g., Reserve Bank of Australia decisions) and company-specific developments.

Buy Stocks With Our Featured Partner.

Trade Australian and international shares on an easy-to-use, cutting-edge trading platform with 0% commissions on shares.

eToro Service ARSN 637 489 466 promoted by eToro AUS Capital Limited ACN 612 791 803 AFSL 491139. Capital at risk. See PDS and TMD. Zero commission does not apply to short or leveraged positions. Zero commission means that no broker fee has been charged when opening or closing the position. Limited stock exchanges only. Other fees apply.

Why Do Beginner Investors Fail?

Investing takes time and knowledge to perfect, and you don’t always get it right.

You may find it sobering that most professional investors fail to beat the mainstream indexes, like the ASX200 and S&P500.

Some tips from Intelligent Investor author Ben Graham are:

  • Start small: Begin with a small investment amount and gradually increase as you become more comfortable with the process.
  • Diversify your portfolio: Diversification can minimise your risk. Consider investing in different types of stocks and ETFs that track non-similar sectors.
  • Be patient: Investing is a long-term game, and it is crucial to maintain a long-term investment outlook. Avoid making impulsive decisions based on short-term market fluctuations, as they will always occur!
  • Seek professional advice: Consult a financial advisor to help you develop an investment strategy that aligns with your specific needs and goals.
  • Manage your emotions: It is essential to manage your emotions and avoid making investment decisions based on fear or greed. Stick to your investment plan and avoid making impulsive decisions.

(Related: Plus500 Review: Pros, Cons, Fees & Is It Any Good?)

Can Anyone Buy And Sell Shares On The Australian Securities Exchange (ASX)?

No. You must purchase and sell shares through an ASX participant stock broker. Broadly, you will encounter two types of brokers:

  • Full-service broker. If you are new to investing, want professional oversight, and have substantial amounts of money to invest, consider full-service brokers like Morgans and UBS.
  • Online broker. If you’d like to learn the craft of trading, are confident in your market knowledge and want to keep your brokerage fees low, online brokerages like eToro, CMC Markets, IG, Tiger Brokers are good options.

Can I Buy Shares On The Australian Stock Exchange Without A Broker?

Yes, technically. You can buy shares on the stock market via an IPO (Initial Public Offering), capital raising or a Dividend Reinvestment Plan (DRIP).

  • The first two are advanced moves and are not likely to be suitable for readers of this article.
  • DRIPs are simple mechanisms that facilitate the compounding of returns by reinvesting company earnings into your share portfolio. Your dividends purchase additional shares instead of being paid out as cash.

How Can I Learn More About Investing?

Below are books and podcasts that can be helpful for those at the beginning of their share investing journey. 

  • The Little Book of Common Sense Investing by John C. Bogle.
  • The Psychology of Money by Morgan Housel.
  • One Up On Wall Street by Peter Lynch.
  • The Simple Path to Wealth by JL Colli.

You can also discover a range of educational and informative investing podcasts here.

Final Thoughts On How To Invest In Stocks: Australia Edition.

Beginner stock investors do have multiple hoops to jump through to successfully know how to invest in stocks in Australia.

But by analysing each step from a personal standpoint and examining what is sustainable for your budget and life, you formulate a plan that will make investing less challenging and more rewarding.

I recommend undertaking as much preparation and research as possible, experimenting with a demo account, and speaking to friends and family who invest before engaging a financial advisor or broker.

As Warren Buffett (the father of investing) says, ‘The most important quality for an investor is temperament, not intellect.’


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