Our top pick for
Cheap broker fees
Luckily, it’s cheaper and easier than ever to invest in shares from Australia. This guide will take you through everything you need to know, including how to buy shares online, how to pick a broker, how much money you need and whether it’s a safe option for you.
If you're ready to skip to the key steps, you can jump ahead using the links below or choose from one of the brokers below.
As the name suggests, shares or stocks represent a "share" of a company. When you buy a share, you own a small part of a company. The price of your stock rises if the company is doing well and falls if it underperforms.
Just as you’d trade goods over Amazon or eBay, share trading takes place over a digital marketplace known as the stock market or stock exchange. In Australia, we have the Australian Securities Exchange (ASX), and in the United States, there’s the New York Stock Exchange (NYSE) and the NASDAQ.
You make money from stocks the same as you would any other product – by buying when the price is low and selling when it's high. The difference will be your capital profit or loss.
The other way to earn money is through dividends. A dividend is a percentage of a company's annual profit which some companies choose to pay to their shareholders. These are typically paid twice a year and you can either bank these or reinvest them to compound profits.
To buy and sell shares, you'll need to sign up with a stockbroker. You have two main options here – you can buy shares online using a share trading platform or use a full-service broker.
A full-service broker is a traditional broker such as Goldman Sachs, Morgan Stanley and Morgans. Typically, you call or email your assigned stockbroker and they carry out any trades based on your instructions. They typically charge a premium fee for their service from $50-$200 per trade and may offer advice.
The other option is to use an online broker (share trading platform) and place the trades yourself. There are dozens of platforms available to Australian investors – some of them are offered by the major banks, while others are provided by specialist brokers.
Take a look at some of the top online trading platforms in Australia in the table below. Depending on what you're after, it may save money to use more than one platform, for example, one for Australian shares and the other for another market such as US stocks or forex.
Important: Share trading can be financially risky and the value of your investment can go down as well as up.
There are plenty of other factors you'll need to take into account, so check out our guide to choosing the best online share trading platform for more details.
You may not realise it but share trading platforms are technically online brokers – only without the personal interaction. If you're looking to buy shares online, you can use the table above to compare apps.
There are a few indirect ways you can buy shares without a broker:
Funds. You access shares by investing in an exchange-traded fund, managed fund or your superannuation. These are funds that typically hold multiple company stocks which are selected by a fund manager. They’re a good option if you’d prefer an expert to help you choose.
IPOs. Some crowd-funding platforms allow you to buy shares when a company first lists on a stock exchange, called an Initial Public Offering (IPO).
Your company. Some firms offer their staff company shares as part of their employment contract. These are called employee share schemes.
Off-market transfer. It’s possible to inherit shares or be given shares by someone else without a broker. This is called an off-market share transfer.
Share purchase plan (SPP). Sometimes companies raise extra capital by selling new shares, typically at a discounted price. In most cases you apply to invest in an SPP directly through the company itself.
To sign up to a broker in Australia, you’ll need to be at least 18 years old and an Australian resident.
Registering for an account with a broker is usually free, however there are sometimes subscription fees or fees to transfer funds to your account. If you’re a new customer, you’ll need to provide the following information:
Depending on the broker you choose, it can take as little as a few minutes for your account to be approved or it can take up to a fortnight.
You may be asked to deposit a specific minimum amount in order to open an account although this isn’t always the case. In most cases, you’ll have the option of funding your account through BPAY, bank transfer, credit card or debit card.
We know – this is the part people usually skip. But it’s really important that you have a plan before you seriously start buying shares.
Stocks can be a great investment, but they’re also pretty risky. The more companies you hold and the longer you can afford to have money locked into stocks, the less risky your investment is. So it’s important to have a timeline and some actions in mind if things change.
To build a plan, you’ll need to ask yourself the following key questions:
Once you can answer these questions, you can start mapping out the types of stocks you want to invest in. As a rule of thumb, the riskier the investment, the bigger your potential profit. Work out if you can afford to buy high-risk stocks (such as penny stocks) or if you should stick to safer long-term investments like blue chip stocks or index funds.
There are two main approaches to share trading – long-term investing and trading. Long-term investors buy stocks and hold them for many years, sometimes decades. This is the safest strategy.
Traders, on the other hand, buy and sell stocks frequently in an effort to make a quick profit from price volatility. They buy stocks they think will soon rise in value and sell once they do. Because "safer" blue chip stocks don’t tend to see their prices fluctuate much day-to-day, traders tend to buy and sell riskier stocks.
Picking your stocks is the most exciting and challenging part of the process.
With tens of thousands of stocks available to choose from, it's time to start researching which ones match your investment goals. Bear in mind that it's safer to have a diversified portfolio of stocks from different sectors to avoid major losses.
You’ll often be able to access a wide range of market research, analysis and even trading recommendations through your platform, so use this info to help make an informed decision. The other option is to follow the buy, hold or sell ratings of top brokers such as Morgan Stanley, Goldman Sachs, Morgans, UBS and Morningstar.
Here are a few tips to help you decide:
It’s worth considering whether a stock is overvalued before you decide to buy it. An expensive stock is where the share price has risen beyond its perceived value. An overvalued stock could indicate its price is going to fall soon, and in the most severe cases, it may not recover. An infamous example of this is the fall of Enron, where its price went to $90 at its height to just a few cents after its enormous debts were revealed.
It’s difficult to accurately value a stock, but there are a few popular strategies used by investors, including price-earnings (P/E) ratio and technical analysis – you can read about this in our guide on "how to value a stock".
Once you’ve decided which stocks you want to buy and how much you want to spend, the next step is to order them. If you have a full-service broker, you'll need to call or email them to place your trade. If you're using an online broker, this part’s up to you.
Keep in mind that larger purchases may incur higher fees depending on the trade. For example, your platform may charge you $30 as a brokerage fee to buy a smaller number of shares but will change the fee structure to 0.1% of the trade value when larger amounts are purchased.
Depending on which trading platform you have, there are a few different ways that you can order your stocks, ranging from simple to quite complex instructions. The names tend to differ between brokers, but the following are some of the more common types:
Market order. This is where you buy or sell shares as soon as possible at the most current available price.
Limit and stop orders. This allows you to buy or sell stocks depending on a specific price. For example, if CBA’s share price is at $68 but you want to wait until it falls to $65, you can set a limit order to execute once its price falls to $65 or lower (see example below). You can also use a limit order to minimise losses by selling if a stock price falls too far or similarly to buy if a stock starts rallying above a certain price.
Trailing order. This is a type of limit order where the limit is based on a percentage change or a price difference from the market price.
For example, say Afterpay (APT) has a price of $50 and you’d like to buy it for a price of around $40, but only if it’s price dips temporarily rather than indefinitely. You could set a trailing price trigger of $40 with a stop value of 5%. This means your order would be triggered once APT falls to $40 and then placed only once it rises by 5% to $42.
Once you’ve entered all the specifics of your transaction, you’ll then get a chance to review the details before placing your buy order. If you place a conditional order (a non-market order), you’ll typically receive a notification by email or text message once the order has been carried out.
Some brokers display the bid, offer (or ask) and last price of stocks. You can think of these as similar to auction prices, where buyers and sellers are offering their best prices.
A bid price is the highest price any trader is offering to buy a company’s stock at that moment and the ask or offer price is the lowest price any seller is willing to accept. The last price is the most current price – and also the last price bidders agreed upon.
Although the last price is the stock’s most recent price, it’s not necessarily what you can expect to pay if you make a market order. Instead, you’ll be paying the latest bid price and you’ll get the ask price when you sell.
These prices are constantly changing as buyers and sellers shift their bid and ask prices to get the best possible deal, so to avoid paying more or selling for less than you wish, you can set a limit order.
The funds needed to pay for your shares will automatically be charged from the linked cash account that you selected in step 2. In most cases, you can fund your account using a bank transfer, BPAY, credit card or debit card.
If you're using an online broker, you’ll need to have sufficient funds to cover the cost of any trade transactions you make, including fees that apply. The trade settlement period on the ASX and Chi-X is two business days (commonly referred to as T+2), which means your account will be charged two days after you've bought the shares.
If you don't have enough funds in your account by the time you're charged, you'll be hit with a hefty late fee – typically around $100.
Congratulations, you’ve bought some shares! If you’ve bought Australian shares, you should receive an email or letter confirming your status as a shareholder along with your holder identification number (HIN).
Keeping your investment plan in mind, the next step will be to monitor the performance of your stocks. How often you do this will depend on your plan. For example, if you have a long-term investment strategy, you may only need to check in every few months. If you have a short or medium-term strategy, it may be a good idea to check each night or each week.
If you decide to sell your stocks, the process is similar to creating a buy order above. You’ll need to log in, select the stocks you wish to sell and the number of stocks. If you like, you can also create a limit sell order to execute once a stock hits a certain price.
Yes, you do need to pay tax on any profits you make from shares, including dividends. Any income you make from dividends is automatically recorded by the Australian Taxation Office (ATO) and is included as part of your regular taxable income at tax time.
Profits that you make on capital gains – i.e. when you buy low and sell high – are only counted in the financial year that you’ve sold your shares. Your broker will usually send you a tax invoice with any profits that you’ve earned from stocks each financial year.
Tip: If you hold shares for more than a year, you only need to pay tax on half of the profits you’ve earned. You can read more about share trading and taxes in our tax guide.
Sharesight works alongside your online share trading platform and can be integrated with your Xero account.
In Australia, there’s a minimum $500 investment for every new ASX company you invest in. So if Afterpay (APT) has a share price of $50, you’d need to buy at least 10 shares of APT stock if it’s your first time buying.
These rules change depending on which country a stock is from. For example, you can invest as little as a few cents into US stocks, even if it's your first time buying. Some brokers also allow fractional investing where you can buy in fractions rather than whole stocks. So say Facebook is priced at $200 a share, instead of investing $200, you could buy one-tenth of a share for $20.
The other main cost you need to think about is the brokerage or commission fee. This is the fee charged by your broker or share trading platform every time you buy or sell stocks. Brokerage fees are around $10-$30 on most share trading platforms – sometimes called "discount brokers" – and anywhere from $50-$150 for full-service brokers.
Other fees charged by brokers include the currency conversion fee (for foreign stocks), account fees, custody fees (for US stocks) and inactivity fees. These are important considerations since any fees you pay your broker will reduce your earnings and impact how much you invest per trade.
If you want to get more out of share trading, try to keep the following tips in mind:
Before you start buying and selling stocks like you’re Gordon Gekko, make sure you’re aware of all the risks involved:
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.