How to invest in financial stocks in Australia

Because what better way to make money than investing in the companies that actually make the money?

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Thomas Stelzer

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Key takeaways

  • Start by comparing Australian brokerage platforms to find one that offers low fees and access to both local and global financial stocks.
  • Diversify your exposure by mixing individual finance stocks with sector ETFs to balance risk and potential returns.
  • Watch interest rate movements closely, as they can significantly influence the performance of financial sector investments.

What are financial stocks?

The financial sector is one of 11 stock market sectors and plays a crucial role in a healthy economy. This sector includes companies that provide financial goods and services, like mortgage loans and insurance policies, to commercial and retail customers.

What counts as a financial stock?

Financial stocks can be classified by the following subcategories:

  • Banking. Diversified and regional banks that hold financial assets for customers and lend to small and medium corporations.
  • Capital markets. Companies that trade securities, like stocks and bonds.
  • Consumer finance. Providers of consumer financing and other services, including credit cards, personal loans and car leases.
  • Diversified financial services. Those that offer a range of products and services, such as banking, insurance and student loans.
  • Insurance. This industry encompasses insurance policies, from life and health insurance to property and car protection.
  • Thrifts and mortgage finance. Financial institutions that primarily offer savings accounts and originate residential mortgages.

How to invest in the financial sector

Invest in the financial sector by buying individual stocks or exchange-traded funds (ETFs). When you purchase a stock, you get shares of that company. Stocks have fewer fees but are riskier than ETFs. If you take the ETF path, you’ll get a basket of financial stocks. You’ll probably see higher fees, but it’ll lower your exposure risk.

Here’s an overview of how to start investing in Australia:

  1. Choose a brokerage. Explore brokerage platforms in Australia to pick a firm that best fits your financial goals.
  2. Open an account. Most brokerage firms let you open an account online. Some may require a deposit to get started, while others allow you to add money when you’re ready to begin investing.
  3. Research securities. Use your firm’s research tools to browse different stocks and ETFs.
  4. Place an order. When you’re ready to start investing, place an order to buy your security.
  5. Monitor your portfolio. Log into your account to track your securities.

What are the best finance stocks in Australia?

This is a list of the 5 best-performing ASX finance stocks over the last 12 months1:

  1. Zip Co Limited (ASX: ZIP) - 894.74%
  2. Pinnacle Investment Management Group Limited (ASX: PNI) - 131.18%
  3. Tower Limited (ASX: TWR) - 107.69%
  4. Judo Capital Holdings (ASX: JDO) - 100.00%
  5. HMC Capital Limited (ASX: HMC) - 96.74%

This data was last updated on 15 October 2024.

What ETFs track the financial sector?

Take a look at the following financial sector ETFs available in Australia:

  • VanEck Vectors Australian Bank ETF (MVB)
  • SPDR S&P/ASX 200 Financials ex A-REIT Fund (OZF)
  • BetaShares Australian Financials Sector ETF (QFN)
  • Betashares Global Banks ETF – Currency Hedged (BNKS)

Why invest in the financial sector?

The financial sector may be an attractive long-term investment because of its potential for higher returns to help you stay ahead of inflation. For example, the S&P 500 Financials Index’s returned 32.1% in 2019, compared to the Federal Reserve’s estimated inflation rate of 2%.

Long-term trends also support growth in the financial sector. When the sector is strong, the economy thrives, which can lead to higher incomes for Australian consumers and bigger profit margins for companies. As Australians accumulate wealth, they need a way to manage their funds and plan for retirement.

Another attractive characteristic of financial stocks is their high dividend yield. The sector currently has a 4.19% dividend yield, compared to the S&P 500’s modest 1.96%.

What unique risks does the financial sector face?

The financial sector comes with considerable challenges and risks.

  • Regulation. Government red tape and legislative compliance can be a burden on companies, decreasing profit.
  • Drastic rise in interest rates. When rates rise, lenders generally make more money on the credit they issue to borrowers. But if banks raise interest rates before the economy is ready to adjust to the higher cost of borrowing, demand could drop and potentially trigger a recession. A weak economy can be detrimental to financial stocks.
  • Litigation. Businesses in the financial sector spend a lot on legal proceedings, which can impact profitability and share prices.
  • Weakening economy. Financial stocks are extremely sensitive to changes in the economy.
  • Debt liability. Many financial stocks come with some credit exposure risk. During an economic downturn, borrowers may default on their credit cards and loans, leaving some lenders with a mountain of debt.

Compare stock trading platforms

In order to purchase stocks or ETFs, you'll need a brokerage account in Australia. Compare your options using the table below to find the best fit.

6 of 6 results
Checked 13 October 2026
Finder Score AU Trading Fee US Trading Fee Asset Class
9.6 Excellent
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US$2.00
US$2.00
ASX shares, Global shares, US shares, ETFs, Cryptocurrencies
CFD service. Capital at risk.
Trade a range of assets from a single account with access to social trading features.
$150$150$150 RewardT&Cs apply
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$3.00
US$2.00
ASX shares, Global shares, Options trading, US shares, ETFs
Deposit any amount and receive $20 to trade in Tiger Brokers. Plus 4x zero brokerage trades and no FX fees on the first $2,000 you exchange every month. T&Cs apply.
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Trade US, Asian and CHESS-sponsored ASX stocks, China A-class shares, plus US and Hong Kong options and ETFs.
$120$120$120 RewardT&Cs apply
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Webull logo
9.8 Excellent
Webull
Finder Award
9.8 Excellent
$1.00
$0.00
ASX shares, Global shares, Options trading, US shares, ETFs, Cryptocurrencies
Earn up to 5,000 Qantas Points per month on international trades, plus 2,500 bonus points on your first international buy order with Webull. Min spend and T&Cs apply.
$150Finder Rewards: Join Finder then sign up to Webull as a new customer, deposit at least $2,000 in a single transaction and place at least 1 BUY order for a US-listed stock or ETF during the promotion period to receive a $150 digital Visa gift card. Ends 31 Oct 2026. T&Cs apply.
Invest in over 15,000 shares, options, and $0 Brokerage on all U.S. and Australian Chess-Sponsored ETFs.
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IG Markets logo
9.3 Excellent
IG Share Trading
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9.3 Excellent
$0.00
US$0.00
ASX shares, Global shares, US shares, UK shares, ETFs
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CMC Invest logo
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CMC Invest
Finder Award
9.9 Excellent
$0.00
$0.00
ASX shares, Global shares, Options trading, US shares, mFunds, ETFs, Cryptocurrencies
Trade 40,000+ listed securities across the local markets and 15 major global exchanges.
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Finder Score for share trading platforms

We've scored over 30 share trading platforms assessing them for their core features, fees, customer experience and accessibility. Our experts give each platform a score out of 10.

Read the full methodology

Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Bottom line

The financial sector may be a good choice as a long-term investment in a healthy economy because of its generous dividends and long-term growth potential. But keep in mind that it’s one of the most volatile sectors of the stock market and comes with inherent risks.

Compare online trading platforms to pick a brokerage firm for your investment account.

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Tom Stelzer is a journalist with 6 years of experience covering personal finance, specialising in investment and cryptocurrency. With a Master of Media Arts and Production and a Bachelor of Communications in Journalism from the University of Technology Sydney, Tom provides expert analysis on digital assets and market trends, helping readers navigate the fast-evolving world of finance. See full bio

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