Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Investing basics: Ready to invest? Here's how to get started

Margaret Giles  |  05 Feb 2021Text size  Decrease  Increase  |  
Email to Friend

The excitment around GameStop (GME) and Robinhood is sparking new (or renewed) interest in investing. Trading stocks is just one avenue. You can also use other investment vehicles, like managed funds, listed investment companines and exchange-traded funds, to get into the stock market.

But whether you want to invest in individual stocks, funds, or other securities, you'll need to open an investment account with a brokerage.

Here are some things to know before you get started:

What is a brokerage?

A brokerage, or stockbroker, is a company that’s licensed to buy and sell securities like stocks, bonds, and funds. Like a bank account, you can transfer money into and out of a brokerage account. You own the money and securities in your account, and you can sell your investments at any time. The brokerage acts as the middleman between you and the investments that you want to buy.

If you want to make your own investment decisions, setting up an account with an online broker is a great low-cost option. Australian investors can access trading platforms from a range of providers including big four banks (CommSec, nabtrade, Westpac Online Investing, ANZ Share Investing), SelfWealth, Bell Direct, Superhero, CMC Markets, IG Markets, InteractiveBrokers, Saxo Markets. Each broker offers a different level of service.

How to choose an online broker

Not all online brokers are alike. Here are the questions you should consider when deciding where to open an account:

  • Does the brokerage offer the types of investments I want?
  • Will I be charged commissions?
  • Are these account fees?
  • Is there an account minimum?
  • Does the brokerage offer the data or other resources I need?
  • Will I be able to get customer support if I need it?

MORE ON THIS TOPIC: Investing basics: find the best online Australian shares broker (for you)

Understand your investment options

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

Most brokers have similar investment offerings, but check to make sure that you can purchase the kinds of securities that you want. Common investment types include stocks, options, bonds, LICs and ETFs. Some brokerages will also give you access to futures and cryptocurrencies. It's important to understand what you'll be able to invest in before you go through the process of opening an account.

MORE ON THIS TOPIC: Investing basics: what is GameStop and why is everyone talking about it?

Though rarely done, a brokerage can restrict or adjust the menu of securities that you can buy using their platform. For example, in America, Robinhood and a few other online brokers placed buying restrictions on GameStop and a handful of other stocks after they saw a huge surge in purchases. This move sparked a negative response from both investors and some politicians.

Look out for fees

Commissions are fees that are charged when you buy or sell securities. They may vary by security type. While some online brokers still charge transaction fees, many have eliminated commissions altogether.

Beyond commissions, a brokerage may charge an annual fee to maintain your account. Be on the lookout for other fees as well. For example, you may be charged when you transfer money out of your account, or you may be charged a fee for inactivity. Find an online broker with small or zero annual fees and try to avoid those with inactivity fees.

MORE ON THIS TOPIC: $0 commissions: Australia's trading fee shakedown gathers steam

Know what you need for an account

If you're making your investing decisions on your own, it's important to have the resources you need to be informed. In addition to the tools you need to make trades, some brokerages offer educational materials. Whether you're an investing beginner or more experienced, look for an online broker whose resources meet your needs.

You might want to talk to a human

One of the benefits of an online brokerage is that you can conveniently manage your account entirely online, but there might be times when you have questions or technology issues prevent you from accessing your account online or on the broker's app. If that happens, it's comforting to know that you can get someone on the phone.

Be honest with yourself

Stock investing might not be right for you. You may not want to take the time to manage a brokerage account at all. If you want to take a more hands-off approach, you can use a full-service brokerage with an adviser who manages your account or a robo-adviser, a lower-cost alternative. Robo-advisers provide financial-planning services driven by computer algorithms. You may also consider simply investing in a multi-asset fund, whether via your superannuation fund or the exchange.

There are many ways to get started with investing. Find the path that works for you.

is a data journalist for Morningstar.

© 2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend