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How to start a share portfolio in Australia

The beginner's guide to getting your stock portfolio off the ground.

What is a share portfolio?

A share portfolio is just another name for all the stocks you own.

Essentially, a share portfolio is the collection of stocks that you're currently invested in

The key idea behind having a stock portfolio is diversification.

Instead of having all your eggs in the one basket (in this case an individual stock), you invest your money across multiple companies so you're better protected if an individual stock loses value.

How to start a share portfolio (for beginners)

If you're looking to start investing in stocks, there's a couple of things you should keep in mind before you begin investing:

  • Start small. If you're new to investing, it's probably a good idea to start with small investments while you familiarise yourself with the investing process.
  • Diversify. The key to a good share portfolio is making sure it's diversified. Portfolio diversification can help minimise your investing risk.
  • Keep investing. Once you've got the hang of investing, it's important to make it a regular habit. Strategies like dollar cost averaging can help protect you from any short-term volatility while offering strong returns over the long-term.

How to build your portfolio

Part of creating a share portfolio is having a clear investment strategy that you stick to over time.

Your investment strategy should incorporate a mixture of your longer-term goals, your personal risk tolerance and your values as an investor.

When you're looking to add to your portfolio, you should be considering stocks that fit your overall investing strategy.

Say you're looking to build a portfolio of dividend stocks with the plan to live off the dividend income in future.

While you may be tempted to buy a high-growth stock (like Nvidia), it's not really going to help you reach that goal.

Greg Suefong's headshot
Expert insight: Why share portfolios help with your goals

"A well-managed share portfolio can be a cornerstone of long-term wealth accumulation and financial security. It can be tailored to fit an investor's individual financial strategy; balancing growth with risk management, as well as aligning with their financial goals and market outlook."

Financial adviser, Financial Spectrum

1. Buy individual shares

The most popular method of building a share portfolio is through purchasing individual stocks.

As the name suggests, shares or stocks represent a "share" of a company.

Basically, you own a very small part of a company, with your return being based on the performance of the business.

If the company performs well, it is likely over the long term the share price will rise, while poor performance will likely mean the share price will fall.

You make money from stocks the same as you would any other product – by selling for a higher price than what you initially paid.

2. Invest in ETFs

Alternatively, investors who find individual stock picking too complex or prefer to take a market approach can choose to invest in exchange traded funds (ETFs) instead.

ETFs are investment funds made up of multiple shares or other assets that can be bought and sold on a stock exchange.

Each ETF is allocated an ASX code and can be bought and sold by investors the same way that you would buy and sell shares.

By investing in ETFs, you can easily create a diversified portfolio and spread your investment across a wide range of asset classes.

You can think of them as a shortcut to building a share portfolio.

Much like individual stocks, not all ETFs do the same thing.

Many ETFs simply track a market. For example you can buy an ASX-listed ETF that tracks the performance of the ASX 200 (the 200 largest businesses on the Australian stock market).

Others may track a currency pair, commodity or even a certain sector.

For example, an investor who is interested in lithium shares but doesn't know which one to buy could invest in a lithium-themed ETF instead, like the Global X Lithium and Battery Tech ETF.

Name Product AUFST Brokerage on AU ETFs Inactivity fee Asset class
Moomoo Share Trading
$3
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Finder exclusive: Unlock up to AUD$4,000 AND US$4,000 in $0 brokerage over 60 days. T&Cs apply.
Trade US, Asian and CHESS-sponsored ASX stocks and get access to social trading
Tiger Brokers
Finder AwardExclusive
Tiger Brokers
$2.99
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Finder exclusive: Get 10 no-brokerage US or ASX trades in the first 180 days, plus US$30 NVDA shares (+US$30 TSLA shares ) when you deposit AU$2000 or more. Get 7% p.a. on uninvested cash for 30 days. T&Cs apply.
Trade US, Asian and CHESS-sponsored ASX stocks and US options.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
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Finder survey: How do Australians invest in ETFs?

Response
Online share trading platform or online broker62.72%
Micro-investing app20.71%
Robo-advisor8.28%
Other type of investment app4.73%
Full-service stock broker3.55%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023

3. Use a robo-advisor

Investors who are unsure of what they should buy but want to gain exposure to the share market could try robo-advice.

A robo-advisor is an online platform or app that provides the same services as a traditional financial adviser.

Using a mix of algorithms and analysis from experts working behind the scenes, these digital advisers create financial plans for customers and automatically manage their investments.

The investment portfolio you receive is based on your financial goals, investment timeframe and appetite for risk. Once your money is invested, the robo-advisor manages your portfolio and re-balances it whenever necessary to ensure it remains in line with your risk tolerance levels.

Traditional financial advice is expensive and the idea behind robo-advisor is that they can give you access to the same professional advice at a fraction of the cost.

The other advantage of using a robo-advisor instead of making decisions yourself is that it removes the emotion from investing that can often lead you to make the wrong decisions.

Name Product AUFST-RBO Fees Minimum Investment Investment product Number of Portfolios
Spaceship Voyager
$3 a month (on accounts over $100)
$0
Stocks, Cash, ETFs
5
Invest in Australian shares, global shares and cash markets.
More Info
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4. Invest in a managed fund

A managed fund is an investment fund that pools the capital of multiple investors, which is then actively invested by a fund manager who is responsible for the fund's performance.

Managed funds generally have much higher fees than investing in ETFs or buying individual shares, but can offer above-average returns.

It's also a hands-off way to start a portfolio and lets you potentially benefit from the expertise of a professional investor.

However, it's worth keeping in mind that most managed funds actually underperform the general stock market over the long term.

How many stocks should I have in a portfolio?

Investing for diversification is a balancing act. Investors want to be exposed to the winners, while mitigating exposure to the losers.

As such, how many stocks an individual needs to invest in to be classified as "diversified" ranges greatly between experts.

Some tell beginners that if you're going to invest in individual stocks, you should aim to invest in 10 to 15 different stocks as early as possible for diversification.

While others think investors need closer to 30 stocks to be protected from downside risks through diversification.

Whether the individual investor chooses 10 or 30 stocks for diversification, is up to them, but either way they should focus on businesses in different sectors.

The ASX classifies stocks into the following 11 sectors with a diversified investor having exposure in a variety of industries.

And while investors do not need exposure to all 11 sectors it is favourable not to have all your money tied to 1 sector.

  • Energy
  • Materials
  • Industrials
  • Consumer discretionary
  • Consumer staples
  • Health care
  • Financials
  • Information technology
  • Communication services
  • Utilities
  • Real estate

Remember, if an investor buys all 4 of Australia's largest banks, even though they bought 4 different shares, they all face the same risks and therefore the investor is not diversified.

Frequently asked questions

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
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Written by

Publisher

Tom Stelzer is a publisher and writer for Finder, covering investing and cryptocurrency. He previously worked for Finder as a writer in Australia and the UK, covering things like personal finance, loans, investing, insurance as well as small business and business loans. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio

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