If you’re new to investing but are interested in buying stocks while in Australia, this is the page for you. We know there’s a lot of information and jargon to process. But, as this guide shows, getting started is easier than you’d think.
Online brokers take much of the hassle out of investing. You can simply create an account and start buying and selling stocks in Australia through websites and apps. Of course, you’ll always have the option to use traditional, full-service brokers. They will provide you a more hands-on, bespoke service with specific guidance and investment recommendations. However, the great thing about online platforms is you can dabble whenever you like, and they often don’t charge commissions. Just be sure to read the terms and conditions carefully to see what fees may be attached.
The price comparison site Finder has compiled a helpful list of the top online brokers in Australia in 2022. You can browse the options here. When comparing possible platforms, you’ll want to keep in mind that buying and selling on exchanges can involve:
- Individual shares in companies
- Exchange-traded funds, or ETFs, which are baskets of different stocks and other types of investments
Bear in mind that this guide is just a quick overview of buying stocks in Australia, and the information provided here is not intended to be financial advice. Investing in the stock market can be risky. You should consider seeking professional advice before investing in the stock market.
Buying Stocks 101
Online brokerage platforms provide access to stock exchanges, so you can buy/sell stocks in Australia using your computer, tablet, or phone. There are numerous stock exchanges operating across the globe. Some of the most famous include the New York Stock Exchange (NYSE) and Nasdaq. Prominent exchanges Down Under include:
- The Australian Securities Exchange (ASX)
- The National Stock Exchange of Australia (NSX)
- The New Zealand Exchange (NZX)
By logging into your online brokerage, you’ll be able to head to one of the available exchanges and buy/sell stocks. On the Australian Securities Exchange, for example, you’ll have access to stocks in firms like Qantas and National Australia Bank. There will be heaps to choose from, and a good platform will let you manage your assets with ease.
Start Investing Early
Some may feel it’s prudent to only invest when they gather substantial savings or earn a lot of disposable income. However, it’s often recommended that people actually get investing as early as possible. Here are two reasons why.
As with anywhere else in the world, the cost of living in Australia is not fixed. Say the prices of goods and services go up at a rate higher than what your bank pays in interest. This will diminish the value of any money you have in a savings account. Many people like to invest some of their savings in stocks to get around this problem. Investing in successful companies, you can grow your money as inflation increases, rather than see your savings lose purchasing power. A long-term approach is wise. Five years is often recommended as the minimum period to retain investments.
More Time to Grow Wealth
The other big advantage of investing early is that it puts more time on your side. Time to invest, diversify, gather profits, and provide for your retirement. And, just as importantly, time to ride out any dips in the market value of your stocks. Investing at an older age may make it harder to recoup any losses you incur.
Diversifying Your Stocks
Diversification is a big deal in the world of stocks. It’s generally recommended that investors spread their budget to encompass a variety of assets. Buying stocks in a selection of different companies and/or industry sectors can allow you to mitigate losses. If, say, one of your stocks loses value, your other more buoyant investments will hopefully make up for it. Acquiring ETFs can be a quick way to diversify, as they provide bundles of stocks rather than individual shares.
Where to Buy Stocks in Australia: Small-Cap Strategies
The good news is you don’t necessarily require a lot of savings to become an investor. You can look into highly affordable assets known as penny stocks. In Australia, these typically trade for less than $5, and are often known as small-cap stocks.
There are several advantages to small-cap stocks. Due to their relatively low price, you’ll be able to buy up larger percentages of the companies in question. There’s also a lot of growth potential, as small-cap companies are often startups hungry to expand. The risk is greater, compared to established, blue-chip firms. These startups may well fail, meaning your shares will plummet in value. On the other hand, if you pick wisely (or get lucky), you’ll own shares in companies that become successful.
These stocks may also provide a great way to diversify your portfolio. As we mentioned earlier, diversification is a sound tactic when investing. Buying different small-cap stocks can be an affordable way to spread your risk and protect yourself from big losses.
Where to Buy Stocks in Australia: Investing in Innovation
Investors like to put their money into flourishing sectors. After all, the companies working in future-facing fields can be, theoretically at least, well-positioned to make big profits. There are no guarantees, however, and research is always needed before you snap up assets.
Globally, investors are increasingly backing green energy firms, e-commerce companies, and fintech startups. These are the kinds of disrupter-filled subsectors that are capitalizing on evolving consumer concerns. Looking specifically at Australia, innovative sectors tipped to do well in 2022 and beyond include:
- Mining for metals used in electric vehicles, like nickel and cobalt
- IT and software solutions
Certain fund managers provide ETFs which cast their net over innovative, cutting-edge companies. For example, you can check out BetaShares’ range of tech-focused ETFs here.
What is Profit-Taking?
Profit-taking means selling your stocks when their value goes up. Or, to think of it in casino terms, cashing in your chips. When you actually do, this will depend on a number of factors. You may take the profit simply because you need the money right away. Or, you may feel nervous about the market dipping in the future, and don’t want to hold the stock for too long.
You’ll find lots of profit-taking strategies online, with experts providing calculations for determining the best time to sell. Ultimately, it will come down to your personal approach to balancing risks and potential rewards when investing. And that takes us to our final section.
Stock Investing and Risk
As an investor, you have to always keep one fact at the front of your mind: nothing is for certain. No matter how much experience you build, no matter which experts you listen to, you cannot guarantee profits. That being said, you can put yourself in the most advantageous position by following some of the tips we mentioned. Namely, researching companies thoroughly, diversifying your assets, and thinking long-term. You’ll then hopefully be able to grow your wealth while living in Australia.