How to invest $1,000 in Australia

It's never been easier to invest your money, and there's never been as many options to choose from. Around 48% of Australians have some form of investment, according to Finder data.¹

But how do you actually pick the best place to invest your money?

In this guide we'll talk you through popular investing options and whether they're suitable for certain investing goals.

• IMPORTANT: Before you invest...

  1. Pay off existing debt first. Before you invest, make sure to pay off any outstanding debt you may have, especially if the interest rate is high. The cost of your debt is likely going to be larger than any potential investment return. Even if you find an incredible investment, you'll need to eventually pay back the debt you owe and you may need to sell your investment anyway.

  2. Understand the risks. Everyone has a different appetite for risk (also known as your risk profile) and all investments come with some level of risk. Generally speaking, the higher the potential returns, the higher the risk. You should never invest without first understanding both your own risk profile and the potential risks of the asset you want to invest in.

1. Invest in shares

Share trading remains one of the most popular investing options in the world.

You can start investing in Australian shares from as little as $500 (for CHESS sponsored shares) if you want and as little as $10 at a time into US stocks – depending on your online broker.

Share market investors earn profits when share prices increase, and they can be paid dividends when the company generates profit.

However, stocks can be a risky investment and your investment can go or down in value. This is especially the case with individual stock picking. According to a study of eToro investors, around 80% of traders actually lose money when actively trading the stock market.²

2. Invest in an ETF

ETFs, or exchange-traded funds, are a convenient, low cost way to diversify your portfolio while also benefitting from the performance of the stock market.

ETFs are funds that give you exposure to multiple assets in a single investment.

For example, an ASX 200 ETF will invest in the 200 largest companies on the Australian Securities Exchange (ASX).

As a result, ETFs can be less risky than buying individual shares because you're not fully exposed to the performance of a single stock.

Of course, like with stocks, it's still entirely possible to lose money on ETFs.

In 2022 for example, the S&P 500 lost 18%. Any ETF that tracked the S&P 500 during that time would have therefore recorded a similar loss.

Like stocks, the minimum investment for an Australian ETF is $500, but will be lower for international ETFs.

3. Open a high interest savings account

A high interest savings account is an extremely low risk investing option that can still offer attractive returns.

However, the return you'll receive on a high interest saving account can vary quite a lot based on current interest rates.

When interest rates are high, you'll receive a better savings rate on your money, but when interest rates are low, your savings rate will be lower.

In Australia, any cash you leave in a bank or savings account is protected by the government up to $250,000. In the rare event that your bank collapses, your money will be safe.

While high interest savings accounts are effectively zero-risk, there is an opportunity cost to not investing in an asset with a higher potential return. This will also be the case in periods of high inflation. If you're earning 4% p.a. on your savings account, but inflation is 4.5% p.a., your money will actually be losing value in real terms.

4. Contribute towards your super

If you're prefer to take am even longer-term view to growing your wealth, you may want to consider making additional contributions to your superannuation account.

When you make contributions to your super from after-tax income, the government does not tax the contribution up to a certain threshold because it's already been taxed.

If you end up making post-tax contributions to your super and meet the income requirements, the government will even add to your super by matching your contributions, to a maximum of $500.

What's the best way to invest $1,000 in Australia?

8:04

How much do I need to start investing in shares?

Those that are less familiar with the market might think shares are only for wealthier people.

And while it is conventional wisdom to never invest more than you can afford to lose, how much you need to invest is actually less than you might think.

With the introduction of newer brokers to the market, you can now trade from as little as 1 cent. However, if you are buying Australian shares and you want CHESS-sponsored shares, you'll need to invest a minimum of $500.

Our expert says: Is $1,000 enough to start investing?

"$1,000 is more than enough to invest, especially if you're just starting out on your investing journey. However, it's important that you continue to invest over time in order to maximise your potential returns."

Thomas Stelzer

Journalist

What do I need to consider when signing up for a share trading platform?

When it comes to signing up for a new broker, there are a couple of things you might want to keep in mind:

• Minimum investment amount. If you're considering getting into the share market, you can start with just one share. You can start trading foreign currency with no more than $25, and you can also start trading in futures with little investment. To open a term deposit, you may have to start with a minimum of $500 or $1,000, depending on the financial institution you choose.
• Commissions and fees. If you plan to deal in shares and futures, there may be brokerage and other fees. Full-service brokers normally charge fees as a percentage of any given trade value, and some online brokers charge fixed fees per trade. For assets like term deposits and high interest savings accounts, financial institutions tend not to charge any account-keeping fees. Percent-based fees are often more suitable for smaller trades, but if you'll be making larger investments, it might be preferable to find an account with flat fees.

Should you just keep money in the bank?

The answer to this will depend on how long you can afford to have your money locked away for. While current savings rates are higher than inflation, the current rate of inflation means you're not getting much in real returns, even if you leave your money in a high interest savings account.

For example, if you left your $1,000 under your mattress since 2000, thanks to inflation, in 2024, that same $1,000 would buy roughly 53% of what it used to. As such, your purchasing power has gone down by almost half.

And those 24 years were considered for the most part to be a low inflation environment. As it currently stands, we are in a high inflation world where Australia's inflation rate is much higher than the targeted rate of 2-3%. This means your money buys less every year.

However, you should never invest money that you need over the short term. This is because prices fluctuate over time. Unfortunately, this could mean when you need your money, your investment is actually worth less than when you started.

If you have a long time horizon, shares and ETFs can be a good investment. Can you afford to wait for a year or more to get a good return on your investment and are you prepared for the possibility of losing your investment entirely?

If you want guaranteed returns without the risk, look at high interest savings accounts and term deposits. Both earn you interest as long as you have money in the account. Term deposits will require you to lock away funds for some time, but high interest savings accounts let you access your money as needed.

What are the risks of investing?

• Inadequate information. No matter where you plan to put your money, carrying out a little groundwork is important. Even with simpler assets like savings accounts and term deposits, it's still a good idea to do your research because banks offer different interest rates.
• Fees. Investing requires that you work with a financial institution or a broker. Both may charge fees to provide services, and it’s important that you know how much they may charge in different scenarios, and consider these costs alongside the potential returns of an investment.

How to work out your investing approach

Before you start investing, you should consider the following to help get a sense of how you'd like to invest:

• The risk factor. Every investor should start by understanding the link between risk and returns. High-risk investments tend to offer greater potential returns. What’s also true is that how people perceive risk can vary, and perceived risk does not necessarily reflect upon statistical analysis. You may want to avoid following your instincts until you've checked it against the facts.
• Your risk profile. Your risk profile essentially refers to your willingness to take risks and how it can have an effect on your ability to make decisions. Risk profiling gives investors the means to recognise investment pitfalls with consideration to their own capacity for and tolerance of risks. If you're a naturally cautious person or a natural risk-taker, it's important to recognise these qualities in yourself.
• Financial goals. Set yourself clear and measurable financial goals so you know whether your investments are on track to get you there. For example, you might be planning to have a specific amount by the time you retire, and you can adjust your investment habits to stay focused on this.

Frequently asked questions

• What are the risks of investing in shares?

  You’ll lose money if share prices fall, and it's possible for them to go all the way down to zero. If the company you invest in goes bust, shareholders are often last in line to receive any money. Since share values can vary periodically, you cannot expect fixed dividends.

• Does borrowing to invest work well?

  Borrowing to invest, also referred to as gearing, can be risky. While it can increase your returns in favourable market conditions, the reverse holds true as well. Ideally, you'll only go this way if you know your after-tax returns will exceed the cost of borrowing.

• How much of it can I afford to invest?

  Before you start investing, make sure you have your debts under control. Paying off debts is always a sensible financial move while investing is riskier. Keep money aside for emergencies, the equivalent of about 3 months of household expenses is a good amount, and consider making sure you have adequate insurance cover as well to reduce the risk of losing it all if something goes wrong. With these taken care of, you can start investing in diverse asset classes. Consider making some practice trades and trying out different markets until you've found one you can call home.

• Is $1,000 enough to start investing?

  Yes. Many online brokers have no minimum deposit requirements or minimums of $500, so $1,000 is enough to get started. You can buy a few individual shares, invest in ETFs, or use micro-investing apps to build a diversified portfolio at a low cost.

• What's the best way to invest $1,000 for beginners?

  For beginners, you amy want to consider starting with exchange traded funds (ETFs), low-cost index funds or micro-investing apps. These options spread your money across a range of assets, helping to reduce risk while still providing exposure to the share market.

• Can I lose money investing $1,000?

  Yes. All investments carry some risk, including the possibility of losing part or all of your investment. However, investing for the long term and diversifying your portfolio can help reduce the impact of short-term fluctuations. If you want to guarantee you won't lose money, consider something like a term deposit or savings account instead.

• Should I invest the full $1,000 at once or gradually?

  Investing gradually through dollar-cost averaging can smooth out market volatility, while investing the full amount at once lets your money start working for you sooner and may help you avoid additional transaction fees.

• What are the fees when investing $1,000?

  Some products have no fees (such as savings accounts and term deposits), while trading accounts usually do. Typical fees include brokerage costs when buying and selling shares, ETF management fees and potentially account or platform fees. Comparing brokers before you start can help you find one with affordable pricing and suitable features.

• Can I invest $1,000 in international shares from Australia?

  Yes. Many Australian trading platforms offer access to global markets, including US, UK and Asian exchanges. Just keep in mind that international investing may involve currency conversion fees.

• Is it better to save or invest my $1,000?

  If you don't have an emergency fund or you expect to need the money soon, saving might make more sense. If you can afford to invest for several years, investing could offer higher potential returns compared to a savings account.

• How can I reinvest my profits from a $1,000 investment?

  You can reinvest dividends or profits by buying more units of the same investment or using the funds to diversify into other assets. Many platforms also offer dividend reinvestment plans (DRPs) that automatically reinvest your earnings.

• Are there tax implications when investing $1,000?

  Yes. You may need to pay tax on any capital gains or dividends you earn from your investments, as well as interest earned from a savings account. Keeping good records and understanding your tax obligations can help you manage this efficiently.

• Can I use a robo-advisor to invest my $1,000?

  Yes, robo-advisors automatically build and manage a diversified portfolio for you based on your risk profile. They're a hands-off, low-cost option ideal for new investors or those who prefer a set-and-forget approach.

Written by

Kylie Purcell

Investments Analyst

Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments. See full bio

Kylie's expertise

Kylie has written 188 Finder guides across topics including:

• Investment strategies
• Financial platforms
• Stockbrokers
• Robo advisors
• Exchange traded funds (ETFs)
• Ethical investing
• ASX stocks
• Stock and forex markets