How To Invest In Stock Market For Beginners Australia – Choosing The Best Investment Broker – How to earn money investing in shares – how much money do you make investing in the stock market – Investment Brokers – how much does an investment broker make – investments brokers – share investing.
A decade after the dot-com bubble burst, investors are still keen to make money online. That includes Australia. If you’re new to investing, you may feel intimidated by the idea of how to invest in stock market for beginners Australia. Don’t despair! While people with years of investing experience failed to stop the market crash that caused the Great Recession, you can learn how to invest in stock market for beginners Australia sooner rather than later.
Table of Contents
Here’s some advice on how to get started in the sharemarket and what you need to buy shares and build up a solid, diversified share portfolio. Avoid picking stocks at random: Find a good broker, do your research and buy shares that will grow your wealth for you.
- Your first requirement is some spare money. You don’t need much to get started. You can invest any amount in the sharemarket, but because of the buying costs, the more money you have to invest, the cheaper the brokerage fees.
- Finding a broker is next. Brokers work for firms that simply take your order and enter it in the market, or firms that take you on as a client and provide advice, research and financial planning to help with your investments. The former is cheaper, but if you think you’ll need advice, the dearer fees of the latter may be money well spent.
- Decide whether you’re a trader or a long-term investor. As an investor (meaning a long-term buyer of shares), you’re in a safer position for share investment and more likely to succeed. Traders (meaning professionals and committed semi-professionals who buy and sell shares daily) are legitimate investors in the sharemarket, but this kind of activity is only for those who know what they’re doing.
- Choosing stocks is next. For a long-term investor, 8 to 12 well-chosen stocks will give you a portfolio with far less speculative risk than just 2 or 3 shares. What you buy depends on the return you’re hoping to make, the risks you’re prepared to run, the time frame you’re prepared to invest for, and whether you’ll need to take the money out before then.
- Research the companies whose shares you buy. Find out what the companies do and how they’ll make money for you. Buying shares you know nothing about based on tips from friends or acquaintances (even worse, strangers) is the same as going to a casino. A blue chip at $20 mightn’t look as exciting as a goldmining share at 10 cents, and the latter can double much more quickly — but it can also reach zero value faster.
- Don’t look for shortcuts to investing success. Unfortunately, you won’t find a guru or blackbox software tool that can predict which shares will rise and which will fall. If someone tries to sell you a foolproof investment formula, ask yourself — if it really worked, why would they share it with me?
The most common way to buy and sell shares is by using an online broking service or a full service broker.
When shares are first put on the market, you can buy them via a prospectus. You can also buy through an employee share scheme, or invest indirectly through a managed fund.
Buying shares (stocks, securities or equities) makes you a part-owner of a company. As a shareholder, you can get dividends and other benefits.
You can own shares yourself, or pool your money with others through a managed fund (a collective investment).
If you’re new to shares, visit the Australian Securities Exchange (ASX) education centre for information and online seminars.
You can choose to use an online broking service or a full service broker.
Online broking service
- You open an online trading account and make your own investment decisions.
- Because you do it yourself, fees are lower. You pay a fee each time you buy or sell shares — starting at around $20.
Full service brokers
- The broker does the trading for you, and can advise you on what to buy or sell. They must have a reasonable basis to recommend something to you, and disclose any interest they have in it.
- Fees are a percentage of the value of a trade. Typically, the larger the transaction, the lower the percentage you pay. Most brokers charge a minimum fee. For example, the fee on a transaction of up to $5,000 may be 2.5%. For a large trade, it may be 0.1%. So, small trades worth a few thousand dollars can be relatively expensive.
Find a broker
Use the Australian Securities Exchange (ASX) find a stockbroker tool to locate a broker that suits your needs.
Best Online Brokers Australia
1. CMC Markets
Overall
Through its offices regulated in major global financial centers, CMC Markets offers Australian traders a wide range of offerings with excellent pricing and its Next Generation trading platform, which is packed with innovative trading tools and charting. CMC Markets has also been rated as Canstar’s Broker of the Year the past eight years.
2. IG
Overall
Founded in 1974 and respected as one of the most trusted brokers in the world, IG offers Australian traders low cost share trading with excellent trading tools, research, beginner trading videos, and access to more than 8000 international share CFDs.
3. CommSec
Overall
CommSec is one of the largest online brokers in Australia, providing trading access to 25 exchanges throughout the world. While its shares trading fees are expensive, CommSEC offers traders a variety of trading tools and market research.
4. Interactive Brokers
Overall – Visit Site
While Interactive Brokers is not suitable for casual investors due to its complex platform, it is an international trading leader and offers low-cost commissions desired by professional traders. New and casual investors should be aware though of the miscellaneous fees and minimums charged by Interactive Brokers. Read full review
5. Westpac
Overall
Westpac is a more expensive option for Australians. However, the broker provides access to 30 international exchanges, as well as offering free reports, a stock screener, stock recommendations, charting features, and the option for more premium research provided by Morningstar.
6. Nabtrade
Overall
Nabtrade offers investors domestic and international trading at competitive prices, with customizable charting, third-party research from four different companies, real-time streaming, company stock and research, a global scanning tool, and more. However, Nabtrade’s mobile app has terrible ratings in both the Apple App store and Android Play store.
7. BellDirect
Overall
If you are looking to trade domestic stocks only, BellDirect offers average pricing, with research tools that include consensus research from 20 brokers, daily trading ideas, free conditional orders, and html5 charting technology.
8. ANZ
Overall
ANZ runs off the popular CMC Markets platform, which means traders have access to the following tools: trading guides to assist first-time traders and trading platforms that offer live news updates, advanced charting, and a stock filter tool.
9. Amscot
Overall
Amscot offers traders below-average commissions with the established IRESSTrader platform (paid subscription required). Traders also have access to research, raising capital, and advanced portfolio reporting from third-party sources.
How to Choose an Online Broker
Australian brokers work hard to stand out against one another beyond branding and marketing. What really matters though is the trading experience you receive once you are a client with a funded account.
Here’s a list of tips to keep in mind to help you select the right online broker the first time:
- Read the trading costs fine-print. Share trading fees can vary by trade amount, security type, quantity, exchange, among other factors. Before selecting a broker, view the full commissions structure and see how it fits into your portfolio size and trading frequency.
- Make sure your broker offers the asset class you want to trade. If you only trade Australian stocks, then no problem; any broker will service you. However, if you want to trade international stocks, options, forex, or futures, you will need to do select a broker that supports those offerings.
- For active traders, read the fine print to compare potential service benefits. Discounted trades are just one perk of being an active trader. Some brokers will increase the quality of the market data being streamed into the account. Others will grant access to better research tools or offer dedicated customer support.
- Customer service. When contacting a brokerage for account-related inquiries, all investors look for fast connection times and helpful representatives to assist them. Like all businesses, support quality and timeliness can vary. For a quick gauge, once you narrow down to two brokers, call both on the phone and ask them several questions. This speedy exercise may reveal a lot about what to expect as a client.
- Account Security. Is two-factor login available? What is the broker’s security policy? How are your assets protected and secured on an ongoing basis?
Conclusion
The stock market has taken the world by storm. Many see investing in the stock market as a powerful strategy which can help them grow their wealth for years to come. But it’s hard to get started with so many investment options available, not to mention all the legal jargon. That’s why I’m writing this article on how to invest in stock market for beginners Australia!