Hey future wealth-builder, so you’re thinking about investing, maybe you’ve heard friends talking about their stock portfolios, or you’ve just realized that your savings account is falling short these days with everything getting more expensive.
Taking the first step can feel a little intimidating, like standing at the edge of a deep swimming pool. I can understand. I used to scroll through endless vlogs before, which used to be so engrossing that it made my head spin.
But the simple fact: you don’t need to be the Wolf of Wall Street to raise money. Investing is for everyone, and getting started in Australia is actually much more accessible.
This guide is a friendly hand that will guide you through beginner-friendly investment opportunities. Let’s get started.
Top Investment Opportunities in Australia for First-Time Investors
- Reality Check
First, a reality check: Investing is not a get-rich-quick scheme. It’s a process of building wealth over time. There will be ups and downs, but making a plan and sticking to it is the most important thing.
Think about what you want to achieve, a house deposit, a future holiday, or a long-term nest egg? Knowing your goals will help you choose the right path.
If you’re a little nervous, it’s a good idea to start with low-risk options, meaning wading in from the shallow end.
Low-Risk Options
A) High-Interest Savings Accounts (HISAs)
This is the simplest step you can take. A HISA gives you a better return than a regular transaction account, and the risk is almost negligible. In Australia, some accounts offer protection through the Australian Government’s Financial Claims Scheme (limits may vary), so this is a safe and accessible option.
- Great for beginners as it’s safe, easy to understand, and allows you to withdraw money whenever you want.
- Tip: The introductory rates look good, but always check what the ongoing rate is and whether there are any conditions (such as monthly deposits) to be met to get the bonus interest.
B) Term Deposits
This is similar to accounting, but you lock money for a fixed period, from a few months to a few years. In return, you get a fixed interest rate, so you know how much you will earn.
- Beginners like this because returns are predictable and guaranteed, and there is less temptation to spend.
- Trade-off: There is less flexibility, there may be a penalty if you need the money before the term.
Beginner-Friendly Growth Investments
Now dip into the market a little, beginner-friendly growth investments that involve the stock market, but with a simple design.
A) Exchange-Traded Funds (ETFs)
Imagine buying a single share that gives you a small share in hundreds of companies. That’s it, that’s what an ETF is. Instead of picking individual winning stocks (which is tough even for a pro), ETFs offer the option of buying a bundle.
- Great for beginners, as you get instant diversification – meaning you don’t have to put all the eggs in one basket.
- ETFs are low-cost and can easily be bought/sold on the ASX (Australian Securities Exchange).
- Example: An ETF tracking the ASX 200 is popular among beginners as it gives exposure to 200 of Australia’s largest companies.
- There are also theme-based ETFs such as technology, sustainability, or global markets.
B) Micro-Investing Apps
If you are thinking, “I don’t have hundreds or thousands to get started,” then micro-investing apps are perfect for you.
Apps like Raiz, CommSec Pocket, and Sharesies allow you to invest as little as $5 or your daily spare change. They break the barrier of entry.
- Some apps make investing automatic, which becomes a habit without having to think too much.
- Tip: Pay attention to the fees, even on small balances; small fees can accumulate over time.
- For example, CommSec Pocket allows you to start with as little as $50 but may incur a fee per trade.
C) Managed Funds
This is a pooled investment where your money and that of other investors is pooled together, and a professional fund manager decides where to invest.
- The advantage for beginners is that you can leave complex decisions to an expert and get investments that would be difficult to access yourself.
- Disadvantage: Managed funds usually charge more than ETFs because you are paying for professional management.
- It’s important to check the fund’s track record and costs.
Investing in Property: The Long Game
Long game: Investing in property is a favourite strategy for many Australians. It’s a big commitment, but it can be long-term rewarding.
A) Real Estate Investing
Buying an apartment or house and renting it out can generate rental income, and the property value can increase over time (capital growth).
- Popular because it is a tangible asset, can generate steady income, and there can be some tax benefits.
- Practical matters: costs such as initial deposit and stamp duty are high, liquidity is low (cannot sell overnight), and ongoing costs such as council rates, insurance, and maintenance have to be considered.
B) Real Estate Investment Trusts (A-REITs)
If you don’t have a big deposit for a house, you can still invest in the property market through A-REITs; these companies own and manage property portfolios (shopping centres, office buildings, warehouses). Their shares can be bought/sold on the ASX.
- Good for beginners as you get property exposure for less money, and there is diversification across property types.
- Honest point: A-REIT shares will fluctuate with the market, so they are not as stable as physical property.
Your Journey Begins Now
Your journey begins now. There were a lot of things, but look, you have taken the first big step by just starting. The important thing is to start, whether with $5 or $5,000. You only get the benefit of compounding when you have time, so the sooner you start, the better.
Next step: If you feel inspired, a good first move could be to open a micro-investing app or explore high-interest savings accounts. Feel a little inspired, start small, build confidence. You will do it.
Disclaimer: This guide is for general information only and is not financial advice. It is recommended to consult a qualified financial advisor before making any investment decision.
