A beginner’s guide to investing in stocks in Australia

Investing in the stock market sounds like something only rich people in suits do, right? But the truth is: you don’t need to be a millionaire to invest, and you definitely don’t need to be a financial expert.

Whether you’re saving for the future, building wealth slowly, or just curious about how the stock market works, any Aussie can start investing with just a little know-how and a bit of spare cash.

In this guide, we’ll walk you through everything you need to know to start investing in stocks in Australia, without the confusing jargon.
From picking a trading platform to understanding what to buy, here’s your friendly beginner’s guide to getting started.

What is stock investing?

Let’s start with the basics. When you buy a stock, you’re buying a small piece (or “share”) of a company. If the company does well, your share of it becomes more valuable.

You can also earn money through dividends, which are payments companies make to shareholders when they’re profitable.

In simple terms:

• Buy low, sell high = you make money on price increases
• Hold for dividends = you earn steady income
• Or both = long-term wealth growth!

Stock investing isn’t a get-rich-quick game—it’s a long-term strategy to grow your money over time. However, shares are investments with a certain amount of risk, so always keep an eye on the market and know that returns are not always guaranteed.

Why invest in the stock market?

People invest in stocks for all kinds of reasons:

• To grow wealth over time
• To beat inflation
• To build a retirement fund
• To earn passive income from dividends
• To have a say in the companies you believe in

Historically, the stock market has delivered average returns of up to 10% per year, which is much better than simply leaving your money in a bank account. In Australia specifically, the historical average return for the ASX 200 index is close to this range, ranging from 8% to 10% per year over the long term, taking into account dividend reinvestment.

When compared to bank accounts, bank deposits generally offer much lower returns (currently in Australia, around 2% to 5% per year, depending on the account and bank), well below the historical returns of shares.

Finally, to help, compound interest calculators are widely used to clearly demonstrate the power of long-term investment growth. Australian platforms such as MoneySmart (ASIC) and Finder offer useful calculators that help visualise this growth.

Step by step to invest

Learn the main steps to make your investment safer and more profitable.

Step 1: choose a stockbroker or trading platform

Before buying your first shares, you’ll need to choose a stockbroker or online trading platform. These platforms act as intermediaries, giving you access to the Australian Securities Exchange (ASX) and other international markets.

Popular platforms in Australia include CommSec, SelfWealth, Pearler, Sharesies, and HelloStake, which focuses particularly on U.S. stocks.

When selecting a platform, consider brokerage fees, ease of use, market access (local and international), availability of fractional shares (ideal if starting with smaller amounts), and options for automated or recurring investments.s

Step 2: set your goals and risk level

Once you’ve selected a platform, it’s crucial to establish clear investment goals and assess your risk tolerance. Reflect on whether your focus is short-term profits or long-term financial growth.

Determine how much you can comfortably invest without strain, and honestly consider your emotional response to potential market downturns—could you handle a 10% drop tomorrow without panic? Clarify whether your priority is generating regular income through dividends or seeking growth through appreciating share prices.

Understanding your objectives will guide your choice of investments; for instance, stable blue-chip stocks like BHP or Commonwealth Bank typically offer steady dividends, whereas tech startups can deliver rapid growth but carry greater risks.

Step 3: start small and diversify

As you begin investing, start modestly and prioritise diversification to mitigate risks. The essential rule is not to concentrate your investments in just one company or sector—spreading your investments across different companies, industries, and regions significantly reduces risk.

Diversification can easily be achieved through purchasing various individual stocks, investing in exchange-traded funds (ETFs) that include multiple stocks within a single fund, or by combining local and international investments.

ETFs, in particular, are highly suitable for beginners as they offer exposure to dozens or even hundreds of companies simultaneously, minimising the amount of research required.

If you’re looking to explore top ETFs available in Australia, you can review the comprehensive ETF listings provided by the ASX.

Step 4: understand fees and taxes

Here’s something nobody loves but everyone needs to know: fees and taxes can eat into your profits if you’re not careful.
Brokerage fees

These are small charges you pay every time you buy or sell a stock. Some platforms charge $5 to $20 per trade, while others let you trade for free (usually with some limitations).

Taxes

In Australia, any profits you make from selling stocks are subject to capital gains tax (CGT). The amount depends on your income and how long you held the investment.

If you sell an investment after 12 months, you may be eligible for a 50% CGT discount. Also, dividends are taxable—but they may come with franking credits to reduce your tax bill.

Not sure how CGT works? The ATO explains it clearly here.

Step 5: research before you buy

Let’s be honest: buying random stocks just because a mate says they’re “going to the moon” isn’t an investment strategy — it’s a gamble. Instead, it’s worth taking the time to properly research any company before you invest your hard-earned money.

Ask yourself: what does the company actually do, and how does it make money? Is it turning a consistent profit, or just burning through cash? Is the stock price reasonable based on its financials, or is it overhyped? Does the company pay dividends, and are they stable?

And finally, what are the experts saying — are analysts bullish, bearish, or sitting on the fence? Doing your homework upfront could be the difference between a smart investment and an expensive mistake.

Use tools like Market Index Australia to track company data, charts, and dividend history in one place. You don’t have to be a finance nerd—just stay curious and don’t follow hype blindly. https://www.marketindex.com.au/

Step 6: build a habit, not a one-off trade

Successful investors treat investing like a marathon, not a sprint.
Instead of waiting for the “perfect time,” consider setting up automated investing where you contribute a little each month. This strategy is called dollar-cost averaging—it helps you avoid emotional decisions and smooths out price fluctuations over time.

You don’t need thousands of dollars. Even $20 a week can grow into something meaningful. Some platforms offer auto-investing tools, which make it easy to stick to your goals without thinking about it.

Common mistakes to avoid

Here are a few things beginner investors often do—and how to steer clear:

– Checking your portfolio every hour

The market goes up and down all the time. Watching it constantly will only stress you out.

– Going all in on one “hot tip”

Even if a stock seems promising, don’t bet your entire budget on it.

– Panic selling during a dip

Markets fall. It’s normal. The worst thing you can do is sell out of fear and lock in a loss.

– Ignoring fees

A few dollars here and there adds up over time. Know what your platform charges.

Final thoughts

Investing in the stock market doesn’t have to be scary, boring, or reserved for the ultra-wealthy. With the right mindset, basic tools, and a little bit of patience, you can start growing your wealth today, right from your phone.

Here’s your action plan:

• Set your budget and goals
• Choose a low-fee trading platform
• Start with diversified investments
• Research before you buy
• Keep investing regularly—no matter what the market is doing

Don’t wait until you feel like an expert. The best way to learn investing is by actually doing it, with small steps and smart choices. So go ahead, pick a platform, set your first goal, and buy your first share. You’ve got this.