A beginner’s guide to investing in Australia

A beginners guide to investing
A beginner’s guide to investing in Australia

There are many ways to invest your money. Whether this is in property, in shares, in bonds and in regular interest bearing savings accounts.

In addition to these investments there are options such as investments in peer-to-peer platforms as well as the more controversial or complicated investments such as crypto currency and Forex trading among others.

This guide will not delve into specific investment strategies that you can employ but rather give you an overview of each of the major categories and investment opportunities available in Australia to help you gauge which would suit you best and which you should research in detail further.

Investment opportunities for beginners

#1: Investing in property in Australia

According to the Australian Bureau of Statistics the main contributor to household wealth is property with statistics showing sustained growth in the property market year on year. Household wealth is a function of household’s assets minus its liabilities.

With only a small percentage of Australians owning an investment property, the market is more than able to accommodate new investors. Property is a long term investment and requires a large sum of money, or the ability to access property finance to enter into the market.

This means barriers to entry are quite significant and this may intimidate new investors. That being said, even beginners can successfully secure an investment property and learn how to manage it to ensure they get the ROI they want.

ROI can come in the form of capital gains, rental income and even tax benefits. The best way to get started in property is to find a mentor who knows the game and can show you the ropes. If that’s not an option for you, you can make use of the many property investment books available that will teach you how it’s done.

You will notice that each investor will have their own unique property investment strategy which will include variations in the type of properties purchased, area of operation, investment time frames and cash flow and reinvestment management.

Real Estate Investment Trusts

For those that want a more diversified property investment strategy with little to no actual personal involvement as well as a smaller down payment, Real Estate Investment Trusts are ideal. A public market such as the ASX on which the Real Estate Invest Trust is listed on allows you to purchase units. Your money is then used to purchase a range of property, which is why this is considered a diversified property investment strategy.

Real Estate Investment Trusts (REIT’s) are usually geared towards commercial property but there are a wide range of options and REIT’s available. There are also two types of REIT’s; equity REIT’s and mortgage REIT’s. Equity rates generate ROI through rental while mortgage REIT’s generate ROI via interest earned on mortgages.

#2: Equities or stocks

Purchasing equities or stocks in a range of companies allows you to benefit from any profits generated in the form of dividends. Buying equities or stocks essentially makes you a shareholder in the company which makes you entitled to their profits and assets. There is also a risk that the shares will fall and your shares will drop in value.

There are preferred stocks and common stocks. Common stocks allow investors to vote while preferred stocks do not. Shares owned are kept track of digitally and returns are paid out.

This type of investment is not easy for beginners but you can get in touch with an advisor that will be able to direct you based on how much you want to invest and the level of risk and reward that will suit you. You can also research investing in stocks and get to know the various strategies and companies that you can invest in.

Exchange Traded Funds (ETS’s) in Australia

For a more beginner friendly option to shares, you can make use of Exchange Traded Funds which are an easier way to invest in shares with a lower investment amounts and can be bought through a stockbroker or even an online trading platform.

#3: Bonds

Investing in bonds is quite simple and straight forward and is considered to carry a low level of risk which is why it’s so popular with beginners and those looking to boost retirement savings.

You will be essentially loaning money to the company or government in exchange for earning in the form of interest. When a bond is initially issued you can buy it from the issuing government or company but once all issued bonds have been purchased you will only be able to access these bonds through a secondary market.

Bonds are issued for a fixed term and you will receive your initial investment at the end of this term. Government bonds are considered to carry the least risk but will also offer a lower return.

#4: Savings accounts in Australia

Savings accounts offer lower rates of return than the three major categories of investments discussed above but carry low risk and allow you to access liquid cash quickly and easily if required. Having your savings sitting in a low interest or regular transactional account means you’re losing out on returns.

While many people compare loans and credit cards, very few think that comparing savings accounts is necessary and generally tend to go with the best option offered by their bank.

In addition to being able to achieve your financial goals by offering you a virtually risk-free savings account that earns interest, you are able to quickly and easily access your savings.

This is different to term deposits which require notice to be given in order for the saver to access their money. We will primarily consider savings accounts but will also briefly take a look at term deposits.

Important features to take into account when comparing savings accounts

  • Initial deposit required.
  • Maximum deposit allowed.
  • Can you make additional deposits.
  • Savings terms available.
  • Interest rate.
  • Notice period required for withdrawals.
  • Fees to maintain the account.

Some of Australia’s leading savings accounts

This is by no means an exhaustive list of the savings accounts available in Australia and aims to simply introduce you to some of the leading savings accounts so that you can get an idea of the available options.

  • AMP: one of the country’s best savings accounts with an introductory interest rate of 2.36% which reverts to 1.40% after a 4 month period.
  • Australian Unity: offers an introductory interest rates of up to 2% per annum for a 4 month period on their Easy Saver option for deposits of up to $500,000.
  • Rabobank: offers interest of up to 2.50% which reverts to a rate of 1.05% for deposits of up to $250,000.
  • Ubank: offers a rate of 2.10% per annum bonus rate that is available to those who open a USaver savings account and like an Ultra transaction account. You must make a deposit of at least $200 to qualify for the bonus rate and keep your savings account balance at $200,000 or less.
  • MyStateBank: offers interest of 2% per annum on deposits up to $250,000 which are government guaranteed and offers a base interest rate of 0.30% per annum.

Term deposits for long term savings & better interest rates

Term deposits typically offer better interest rates but require holders to provide notice to access their funds or they will be charged penalty fees. Term deposits do not typically allow you to make additional deposits on your initial investment and are therefore not ideal for those who have a small initial amount.

Popular & reliable direct lenders offering Personal loans

  1. Cigno Personal loan


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  2. Bankwest Personal loan


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  3. IMB Bank Personal loan

    IMB Bank

    • Loans up to $75,000
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  4. RACV Personal loan


    • Loans up to $30,000
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