How to Buy Shares in Australia 2023

Summary

Investing in the stock market can be a daunting experience for those who are new to it. But it doesn’t have to be. Online stock trading platforms have made trading and investing in shares more accessible and cheaper for investors and traders. The ASX trading platform is used for the electronic trading of shares in Australia, and the settlement of trades is done through CHESS, which stands for Clearing House Electronic Sub-register System. It’s worth checking whether the stock trading platform automatically registers your ASX stock trades and transfers your ownership with the CHESS.

Before asking what good shares are to buy, consider your risk appetite, investment priority, investment strategy, and how much money you are willing to invest. By spreading your investment or trades across a range of shares in different companies and market sectors (e.g., financial, industrial, technology, retail, agricultural), you become less exposed to individual share price fluctuations.

It is worthwhile to see where the company operates so that you can assess the risks before buying shares. Some companies listed on the Australian Stock Exchange have operations or assets outside Australia. Consider issues such as language, distance, and currency. Your investment may have less protection than Australian law if you buy shares in companies outside the country.

Investing and trading in stocks is inherently risky. But if the inherent risk is greater, so is the potential reward. Despite the war, natural disasters, terrorism, and a stock market crash, Australian stock prices have averaged 6% per year over the past 100 years, according to the Reserve Bank. Long-term investors are less vulnerable to sudden price movements in the market. In contrast, short-term stock trading is subject to potential losses and gains from sudden price movements.

Another way to minimise the risk is to invest, or trade-in, Exchange Traded Funds (ETFs), a type of tradable security that aggregates a range of shares and other financial investments, creating an automatic spread of risk. You can also invest in units in a managed fund, a diversified portfolio chosen and administered by an investment advisor.

Of course, the main underpinning for the best Australian shares to buy right now is the country’s vast natural resources that underlie it. However, there are also plenty of other options for investors and traders to choose from.

In this guide, we will explore in detail the fees and commission, trading platforms and different exchanges to buy shares in Australia. We will also mention our take on the best Australian shares to buy now.

How to Buy Shares in Australia?

As a beginner, the first question you might have is, how do I buy shares? The process may seem daunting, but buying shares is pretty straightforward in Australia. It involves the following steps:

1. Select a Broker
2. Create an Account
3. Apply for Holder Identification Number (HIN)
4. Deposit Funds
5. Select your Favourite Shares
6. Buy the Selected Shares
7. Monitor your Portfolio

What Markets can you Buy Shares from in Australia?

The stock market can be scary for novice investors- lots of numbers, flashing screens, and arcane jargon! It’s a far cry from tossing a coin into your piggy bank or depositing cash into your savings account. However, if you are saving for the future, say at least five years from now, an investment in the stock market can yield a greater return than a cash deposit. It can also help protect against the negative effects of inflation.

Thanks to the advancement in technology, today, you can buy shares listed on stock exchanges online through an online broker. For example, setting up an account and depositing with eToro gives residents access to not only Australian stocks but also provides access to international stocks listed on exchanges in the US, Europe, Asia, and more. Likewise, Capital.com offers access to many stock markets, such as the US, UK, Singapore, Netherlands, Germany, and more. Here are some of the stock exchanges you can buy shares from in Australia.

Australian Stock Exchange

The Australian Securities Exchange (ASX) is the largest in Australia and contains approximately 2,301 companies with a total market capitalization of over $2.3 trillion (AUD). The exchange provides access to thousands of stocks in financials, industry, consumer staples, materials, real estate, energy, and health care. Telstra Group Limited, Woodside Energy Group Ltd, South32 Limited, Sonic Healthcare Limited, and Qantas Airways Limited are some popular shares listed on Australian Stock Exchange.

The Sydney Stock Exchange

The Sydney Stock Exchange (SSX) is an Australian stock exchange licensed to trade by the Australian Securities and Investments Commission (ASIC). SSX serves and develops specialised markets in a variety of sectors including mining, oil and gas, healthcare, services, and consumer goods. As a stock exchange, SSX provides a “listing” facility for companies and issuers of securities, as well as a “trading facility” for stockbrokers, dealers and investors to buy and sell shares/securities. The exchange currently lists 6 companies.

New York Stock Exchange (NYSE)

NYSE, The New York Stock Exchange, is one of the world’s biggest stock exchanges on Wall Street in New York City. It was founded in 1792 and had a long history of trading in stocks, bonds, and other securities. The NYSE is home to over 2,400 listed companies, including some of the world’s most well-known and influential corporations across various industries. Some of the largest and most well-known companies listed on the NYSE include tech giants like Microsoft, and Amazon, financial institutions like JPMorgan and Goldman Sachs, consumer goods companies like Procter & Gamble and McDonald’s, and many more.

NASDAQ

National Association of Securities Dealers Automated Quotations also known as NASDAQ, is a US-based stock exchange. It was founded in 1971. With over 3,300+ listed companies, it is one of the world’s largest stock exchanges as it has a $18 trillion market cap. These companies come from various industries, including technology, healthcare, consumer goods, finance, and energy. Some of the largest and well-known companies listed on the Nasdaq include Facebook, Google, and Microsoft.

London Stock Exchange (LSE)

Founded in 1801, LSE is one of the world’s oldest and largest stock exchanges. It is located in the City of London and is home to many large, well-known companies from the UK and worldwide. The LSE lists 1,000+ companies across various industries, including finance, energy, healthcare, and consumer goods. Some of the largest companies listed on the LSE include BP, GlaxoSmithKline, and HSBC.

Madrid Stock Exchange

The Madrid Stock Exchange, also known as Bolsa de Madrid, is the main securities market in Spain. It was founded in 1831 and is located in the heart of Madrid’s financial district. The Madrid Stock Exchange lists 113+ companies, including many large Spanish corporations such as Banco Santander, Telefonica, and Inditex (Zara’s parent company).

Hong Kong Stock Exchange

The Hong Kong Stock Exchange (HKEX) is among the world’s top marketplaces for IPOs and is one of the largest stock exchanges in Asia. In 2022, the Hong Kong Stock Exchange listed 2,597 different firms. The Hong Kong Stock Exchange was founded in 1891, back then the city was under the British rule. Since then, the stock market has grown into a major international financial centre.

Euronext

Euronext is a pan-European stock exchange that operates markets in several European countries. It was founded in 2000 and is headquartered in Amsterdam, Netherlands. Euronext lists around 800 companies, including many large corporations such as Air France-KLM, Heineken, and many smaller companies from various sectors. The exchange offers a range of financial products, including stocks, bonds, and ETFs, and is known for its focus on technology and innovation.

What are the Fees of Buying Shares in Australia?

Along with considering which broker offers good shares to buy now, investors need to consider the broker’s fee as well. In addition to the purchase price of the shares you purchase, you may incur other fees such as transaction fees, monthly or annual account fees, cash withdrawal fees, foreign exchange fees and inactivity fees. Some brokers also charge the handling cost of the shares from their clients. Choosing the right broker with the right trading tools and fees that do not eat up your profits is a key step. Herein, we’d like to add that the fee structure of eToro and Capital.com is industry average and best suited for beginners who want to do stock trading.

Pros and Cons of Buying Shares in Australia

The following are some pros and cons of buying shares.

How to Choose the Broker I need to Buy Shares from in Australia?

When buying and selling securities, brokers act as intermediaries between traders and stock exchanges. Regardless, before selecting a broker to buy shares from, it’s crucial to consider various factors to guarantee the safety of your funds.

Regulation

To buy and sell shares as an Australian citizen, it is important to use a regulated online broker. Using a fully regulated broker can protect investors in the event of fraud or bankruptcy. The country’s main regulatory body is the Australian Securities and Investments Commission (ASIC).

The Australian Securities and Investments Commission is an independent commission of the Australian Government and serves as the national regulatory body for businesses. ASIC’s role is to enforce laws that regulate business and financial services. In addition to that, the regulator sets policies to protect consumers, investors, traders and creditors. For example, ASIC-regulated brokers must ensure that their clients’ funds are kept safe by regulating them in segregated accounts of major banks. Correspondingly, ASIC required the brokers to be completely transparent about their financial transactions, including sending regular audit reports. Brokerage firms like eToro and capital.com are fully regulated and authorised by ASIC to offer certain financial products and services. The brokers comply with ASIC policy and use advanced encryption to secure users’ information.

Markets

Brokerage firms offer various shares from various market sectors. Australian residents can access myriads of assets listed on the stock exchange through brokerage firms. You can buy shares in various sectors of the market. A brief overview of potential benefits and risks associated with shares in different sectors is given below:

Finance

Banks and other financial institutions usually provide stable income through high dividend.

Resources

Mining companies present high capital growth potential but do not typically pay large dividends. This sector is very cyclical. Good when the international economy is healthy, bad when not.

Consumers

Retailers proffer medium-sized dividends. This sector tends to go up and down with the Australian economy.

Healthcare

As people need healthcare all the time, the healthcare sector offers very stable and consistent returns that don’t correlate with the general direction of the stock market.

International

This market provides access to larger markets outside of Australia. International shares allow investment in other sectors or asset classes, providing broader diversification. However, they have higher risk of volatility as well as potentially higher returns at times.

Platforms

Australian investors have access to a plethora of platforms. Some are offered by the Big Four and other major banks, while specialised stockbrokers offer others. Staying with your current bank may be more convenient, but you may lose out on brokerage fees. Instead, do your due diligence and compare the features and fees of numerous platforms before choosing the right one. In this guide, we have summed this all up for you to choose the right broker to buy shares online.

Not all brokers in Australia provide mobile trading apps for their clients, so if you want to do on-the-go trading, choose accordingly. Likewise, some platforms give access to shares listed in ASX only while others offer access to exchanges worldwide. Additionally, some stock trading platforms are designed for casual investors, while others are more suitable for active and experienced traders. In short, to find the best trading platform for you, try to find the tools and features that suit your personal investment approach.

Offering

For investors who prefer to own the underlying asset, many brokers provide access to real shares. At the same time, some brokers offer traders the opportunity to fund positions with borrowed funds, allowing traders to participate with low collateral. It’s up to the traders what they prefer, real stocks or share CFDs.

If you like day trading or short-term trading, then Stock CFDs are your best choice. Real shares are better for long-term investment as only a one-time commission is charged. Moreover, actual shares give you ownership of the underlying asset. Before picking shares to buy today, consider your preference and what you want to achieve. For your convenience, we’d like to mention that Capital.com offers stock CFDs in the Australian jurisdiction. However, Australian investors can access real share investment experience via eToro.

Trading Commission

Trading fees apply when you want to buy or sell shares of a particular investment. The fee, commonly referred to as commission, is charged by the broker for their services in facilitating trades through their platform. One recommendation is to ensure that transaction fees do not exceed 1% of the transaction. For example, if a broker charges $10 per trade, make sure to trade at least $1,000 worth of stock.

However, some brokers do not charge any commission to buy shares. For instance, eToro and capital.com offer commission free trading.

What are the Popular Trading Platforms used to Buy Shares in Australia?

Trading platforms developed by brokers offer a range of features that help users have a worthwhile trading experience. Online brokers provide customised trading platforms for desktop and mobile devices to ensure a smooth and hassle-free trading experience.

Proprietary Trading Platforms and Apps

To ensure easy access to the market and smooth trading experience, brokers have designed an intuitive and innovative trading platform, the proprietary trading platform. This is different from third party platforms like the MT4, MT5 and cTrader, as it is unique to every broker. The proprietary trading platform can be used on both desktop and mobile devices.

Desktop Trading Platform

Online brokerages offer customised trading platforms that allow users to trade seamlessly. Australian residents have the advantage of accessing regulated brokers of their choice to implement various trading strategies. For example, eToro offers access to its robust in-house desktop trading platform, Web Trader. It allows clients to design and automate a variety of stock trading strategies with its advanced features.

Next in our list comes Capital.com, which offers its clients a web-based trading suite to trade and invest. Customers can customise charts according to their preferences and there over 75 technical indicators are available on the Capital.com proprietray platform. Traders can track various trades and toggle on and off up to 6 tabs.

Mobile App

Many brokers offer mobile trading apps to help clients trade no matter where they are. Custom watchlists can be synced between mobile and web platforms, allowing users to track their interests regardless of which version they use to access. With eToro’s Smart Portfolio, you can invest in a variety of portfolios focused on everything from private equity and infrastructure to technology and healthcare.

Likewise, Capital.com gives traders access to the market without sacrificing mobility and offers a top-notch mobile trading app. The app’s price alert feature keeps traders informed of big and small movements in the cryptocurrency market. This broker offers over 70 technical indicators, from the Ichimoku cloud to Bollinger Bands, allowing clients to perform in-depth technical analysis.

MT5 Platform & App

MT5 is a third-party multi-asset platform that allows the trading of various international and Australian stocks. Note that it is available for Australian users when accessed through a broker. It offers 35+ technical indicators. It also offers a set of custom technical indicators. The MT5 platform offers advanced trading scripts and robust Expert Advisors for traders who prefer automated trading.

There are 30+ technical indicators and 24+ analytical tools on the MT5 mobile app. Various trading instruments can be traded in real time on this platform.

What are the Best Shares to Buy in Australia?

Australian investors can buy international as well as domestic stocks through online brokers. Here are some of the best shares to buy. One important thing to note is that it is not investment advice, rather below-mentioned shares are picked based on their performance history and market trend. Furthermore, buying shares is a risky investment due to market volatility, so traders must consider all the risks involved before deciding to buy them.

Tesla

Tesla is the leading electric car company in terms of market capitalization. Tesla shares are traded on the NASDAQ Exchange under the ticker symbol TSLA. Note that the company does not pay dividends. On December 31, 2022, Tesla shares closed at $123.8. With sales of $74.86 billion in 2022, Tesla had a market capitalization of $616.24 billion and earnings per share of $3.65. At the time of writing this article, February 6 2023, Tesla closed $194.76, while it closed at $302.45 on February 7 2022. The company’s shares have fallen.

Amazon

Amazon is a leading tech e-commerce company listed on the NASDAQ Exchange under the ticker symbol AMZN. The company has a market capitalization of $1.042 Trillion, with Amazon stock valued at $102.18 as of February 7, 2023, with a trading volume of 81,823,800. Its EPS (Earning Per Share) is $1.11. Looking at price trends, the company’s share price closed at $84.00 on December 30, 2022, from $166.72 on December 30, 2021. If we look closely, Amazon’s stock has risen more than 180% in five years. To make investors’ individual shares more affordable to new investors in June 2022, Amazon split its stock by 20:1.

Apple

Apple is a multinational high-Tech company and Aussies can buy its shares through an online broker. Apple offers both buy to hold shares (BTH) shares and stock options that pay dividends, allowing investors to build their portfolios in various ways based on what is financially optimal for them. As of February 6, 2023 its closing price is $151.73, whereas it closed at $171.66 on February 7 2022.

Meta

Meta Platforms is the parent company of Facebook and many other subsidiaries. The company’s shares, as of 6th February 2023, closed at $186.06 at trading volume of 42,417,400. If we look at its historical data, the share traded at $224.91 on 7th February 2021.

Woodside Energy

We have one of the best shares to buy for speculators, Woodside Energy Group Ltd (NYSE:WDS). It is the largest independent Australian petroleum exploration and production company. Woodside shares have leapt 43% over the past 12 months. As of February 7, 2023 the company’s shares are traded at 36.16 AUD at the volume of 2,784,634 while one year earlier on February 7, 2022, the share closed at 26.76 AUD.

Are Shares Taxed in Australia?

In Australia, shares are subjected to Capital Gain Tax (CGT). You get a capital gain if you sell your investment for more than its original cost. Moreover, you have to declare capital gains on your tax return in the year you sell your shares. Capital gains are taxed at the marginal tax rate. However, only half of the capital gains are taxed if you hold the asset for more than 12 months. This is known as a capital gains tax (CGT) deduction.

Furthermore, you also need to pay tax on dividends. Even if you use the dividend to buy more shares, you must report all dividend income on your tax return. Hence, to buy shares online or offline you need to consider the tax levied on them.

What Reddit and Quora Say About Buying Shares in Australia

Reddit and Quora are famous social networking platforms where people ask their queries to get answers from other users. Below is some of the discourse of the users about how to buy shares in Australia.

Reddit

This Reddit user, on the question about the reliability of Australian stocks, commented that investment in Australian stocks is entirely safe in terms of fraud as shares are backed by CHESS. Furthermore, he added that the investor, not the broker, has ownership of the CHESS; hence, you can safely and confidently buy shares.

Quora

In Quora, this user, “Charles Patkar ”, went into detail about Australian shares to buy. He enlisted some best shares to buy for other Quora users. In his view, Iluka resources, Pepper money and Woolworths are the three top most shares.

This other Quora user also shared his view on stock trading and persuaded other traders to start getting basic investing knowledge. He suggests determining the risk tolerance and diversifying the portfolio.

Bottom Line

Due to the vast natural resources of Australia, the stock market has a fair share of the resource sector. Nevertheless, it is also essential to recognize that the best stocks to buy today are focused on more than just the commodities sector. There are some exciting opportunities outside of commodities.

To address the question of how to buy shares in Australia, we have provided a step-by-step guide to our readers. If you are thinking of buying shares online through an online broker, analyse and check its fee structure, regulations, markets offered, and trading platform with proper tools and its regulations. In our list of some best shares to buy today, we have international shares like Apple and Amazon and domestic shares like Woodside Energy and BHP group. We recommend doing your due diligence and researching different companies to buy shares. In our list of some best shares to buy today, we have international shares like Apple and Amazon and domestic shares like Woodside Energy and BHP group.