September 22, 2017

4 Ways to Invest Money in Shares in Australia

Perhaps you’ve seen the indices speeding hastily across the bottom of your TV screen, or listened to business news and heard the ASX is an at all-time low or high. If it all seems like gobbledygook to you, that’s understandable. Even though we are told by numerous experts that we must invest in the sharemarket, finding information on how to invest money in shares can be tough to find. We hope to cut through the noise with this list of ways to invest money in Australia

Whether you choose to start investing in shares by purchasing units in funds or directly with a broker, remember to do your research before committing.

Share Funds

Share funds are one way to invest money in shares indirectly. To invest you simply purchase units in a fund. The price of each unit will rise and fall depending on performance of the shares it holds. In Australia you can choose between managed funds (sometimes called active funds) and Index funds (sometimes called passive funds). Managed funds are headed up by an investment advisor who charges management fees. The investment advisor makes decisions how which shares to buy and sell, based on performance and their own expertise. Managed funds are the simplest way to invest in shares as they often have a low initial investment and allow regular contributions. Index funds simply track an index, such as the ASX 200. As they don’t require management, index funds tend to charge lower fees.

Directly with a broker

Individual shares must be purchased via a broker. The type of broker you use will depend on your level of expertise. A full service broker can offer advice and recommendations but you pay higher fees. This is good option for the brand new investor. If you choose to use an online broker (sometimes known as a discount broker), you need to be confident in your own research and purchase decisions, as they offer little to no advice, however their fees are much lower.

Pro tip: If you think picking stocks is the way you want to go, check out the Sharemarket Game, available here. You can invest $50,000 any way you like, without losing any real money!

Via your Superannuation

Almost all superannuation funds invest in shares. If your portfolio contains a balanced or growth fund, up to 80% of your super fund could be invested in shares. Check with your super provider on the split, and remember you can change the allocation of your super balance if you want to hold more shares.

Employee Share Schemes

Some companies offer shares in an employee share scheme as part of their remuneration package. You may be offered a discounted purchase price or low brokerage fees if you decide to participate. Investing in an employee share scheme holds the same risk as investing in any other shares, however as a shareholder and employee, you have a vested interest in helping the company perform.

Whether you choose to start investing in shares by purchasing units in funds or directly with a broker, remember to do your research before committing. If learning how to invest money is overwhelming or you’d just like to learn more, the ASX has an a range of excellent online courses available for free. You can check them out here.

About the author  ⁄ Adrian Allwood

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