Where and how to invest $1,000 in Australia

Are you looking to invest $1,000 and not sure where to start? Luckily, there are plenty of options available for you to choose from – it all depends on what your goals are and how much risk you're willing to take on.

This guide explains what these investment options are, how to distinguish between assets like shares, cash, options, futures and ETFs, and what sort of fees you need to pay.

5 ways to invest $1,000

This is an overview of common investment options currently available in Australia:

1. Invest in shares

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.

While you can make a lot of profit with shares, the downside is that it's a risky investment. $1,000 is enough to buy stocks in 1 or 2 companies – can you afford to lose the money if the price falls? And will your returns cover your brokerage fees?

2. Invest in an ETF

Like stocks, the minimum investment for an Australian exchange traded fund (ETF) is $500. ETFs are less risky than buying shares directly because it gives you access to hundreds of companies in one trade. Here's how to invest in ETFs and why they're great for beginner investors.

3. Contribute towards your super

Add funds to your super while you're still young and watch it grow for decades. 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.

4. Open a high interest savings account.

A high interest savings account is your zero-risk option, and you'll still earn a return on your money. You can check out the best savings accounts in our comparison.

This is because in a post global financial crisis world, the first $250,000 is government backed. So even if something happens to your bank, you will receive your money.

5. Micro-investing.

Robo-advisors allow you to invest small amounts into the share market, sometimes as little as a few dollars at a time. This is known as micro-investing, and you can learn more about it in our guide.

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

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

If you're looking to invest money on behalf of your child, it's likely you'll have a longer time horizon for your investment. This means you might want to consider a passive, lower risk investment like an ETF. The main benefits of an ETF is that it's a relatively low-cost way to invest in the stock market and doesn't require constant monitoring.

Popular ETFs like the S&P/ASX 200 index has averaged a return around 8% per year over the last decade¹.

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. To read more about CHESS-sponsored shares, click here.

There's also what is known as exchanged-traded funds (ETFs). An exchange traded fund is a bundle of shares or options that is listed on a stock exchange that you can purchase through a single trade. They behave similar to shares in that you can buy and sell them on an exchange. Depending on the ETF, this can allow you to have a small stake in hundreds of listed companies. The broker will usually have the same minimum requirements for shares and ETFs.

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.

Is there anything else I should consider?

• 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 a good starting amount to invest?

  If you have saved $1,000 you will have more than enough to start investing. Now it's incredibly unlikely that you'll go from $1,000 to independently wealthy in a short time period. But $1,000 will allow you to take advantage of the share market, where you can make incremental gains over time. Better still you are not locked into just investing $1,000. You can start with that and add more should your financial security or education improve.