What Is The Minimum Amount in the Australian Share Market

You don’t need to be a financial expert to get involved in the share market in Australia. The minimum amount you have to invest to buy your first shares on the Australian stock market is often a lot lower than most people think.

Getting Started with ASX Shares

Since buying and selling shares is considered a form of investment, you will need to understand just how it is you can make a profit from them.

minimum investment shares market

Capital return – this is where you buy the shares at one price point and then sell them when the value of the company and shares have increased. Then, there are dividends, which are profits paid out to the investors of the company. You can expect to get paid once or twice a year and the exact amount will depend on the number of shares you own.

Dividends.com has the perfect definition here:

A dividend is defined as a payment made by a corporation to its shareholders. Usually these payouts are made in cash (called “cash dividends”), but sometimes companies will also distribute stock dividends, whereby additional stock shares are distributed to shareholders. Stock dividends are also known as stock splits.

Minimum Amount Needed For The Australian Share Market

Especially if you are a new investor, you will probably want to start out with a lower amount of money.

  • What is the minimum investment in share market – This really depends on what type of trading you prefer. If you want to trade on the stock exchange then the minimum amount to buy shares is $500. But this varies from broker to broker. However you can start with only AU$50, if you like binary options investing. For binary options we recommand Highlow. Here is our honest HighLow review.
  • What is the minimum amount of shares I am able to purchase? – The minimum order size on the ASX is $500 for the first trade. After that you can make lower purchases. This is considered one of the best small investments in Australia. Of course you can buy as many shares as you want as long as the first trade is at least $500 (asx minimum trade).

As you can see the minimum you can invest in stocks is $500, but some brokers like Interactive Brokers require $10.000 minimum to open an account. And this amount goes down to $3000 in case of students.

Now lets see how you can buy and sell shares, even if you are a beginner.

How to invest in shares with little money?

1. The Different Ways You Can Buy Shares

There are four main ways you can buy shares, especially if you are a rookie Australian investor.

  • On market share buying is perhaps the most common avenue as it involves purchasing shares on an exchange. Here, you decide what shares you want to buy and place the order with your broker. Your broker is then obligated to find you the best price available.
  • There are some companies that decide to offer new shares in the market as they are hoping to raise capital. This is known as an initial public offering (IPO) or a float. First of all, you don’t necessarily need a broker to buy these shares. Oftentimes, sending in documentation along with a cheque is sufficient. Furthermore, your investment in a company isn’t guaranteed. For one thing, you may not actually receive the number of shares that you asked for. Or, you may find that the shares have already been sold out. In this case, it may be some time before you get your money back.
  • When investing in a managed fund, however, things are a little different. This is because you don’t actually buy shares from a particular company and therefore, don’t have claims of ownership. With a managed fund, you buy units in a fund that is handled by financial experts. These individuals will pool your money with other investors and then use this money to buy bigger chunks of asset classes or asset funds.
  • Finally, there is the employee share scheme. This is when you are an employee of a particular company and they present you with an opportunity to buy shares in the same organisation. In certain instances, you may be provided with a discounted price.

2. Open a Brokerage Account in Australia

Australian Share MarketMost people prefer to buy shares on market, which means that you will need to open up a brokerage account in order to place trades. So, one of your first tasks will be to find a broker that is suitable for you. Now, in Australia, you have two choices – to opt for an online broker or to go with a full-service broker.

How much minimum money is needed to buy shares? The minimum amount required for share trading can vary from $500 to even $100.000. Of course we will focus on online brokers that require a minimum amount for the Australian stock market.

Online brokers tend to be rather popular with individuals who are only just starting out with the share market. They are also good for people who don’t have a great deal of money to invest. Understand, online brokers typically charge around $15 to $20 a trade. However, they are only involved in the execution aspect of the trade and will not offer recommendations, advice, or any other type of assistance.

Full-service brokers, nonetheless, take a more hands-on approach with their clients. First, they will help you with any paperwork or documentation you will need to complete when getting started. Then, they will provide you with various recommendations about the type of shares that you would invest in. Finally, they will place the trade on your behalf. Due to this wide range of services, however, you can expect such brokers to charge at least $80 per trade.

3. How To Compare Brokers That Require Minimum Investment

Regardless of whether you want an online or full-time stockbroker, there are a few things that you will need to during the selection process. These are as follows:

  • Compare the brokerage fees to ensure that you are getting the best deal possible
  • Understand whether or not there will be ongoing fees attached to the account
  • Know what you can trade and if you can trade shares locally as well as internationally
  • Be aware of the minimum and maximum trade limits imposed on you
  • Check if there are additional educational and research services available and if they cost extra
  • Determine how easy the platform is to use
  • Find out if there are flexible and advanced trading options available

4. Selecting the Shares You Want to Buy

The next step in the process is to narrow down the companies from which you would like to buy shares from. Perhaps the most important piece of advice that you can receive is to buy shares from an industry or sector that you actually understand. After all, when determining when to buy and sell the shares, you will have to go through lots of material associated with that particular sector. This becomes a lot easier for you to do if you have some vested interested in the subject matter.

Typically, though, you will find that there are three main ways to select which shares to buy. They are fundamental analysis, technical analysis, and stockbroker research. Of course, there are some individuals who solely rely on stock tips but this isn’t a reliable method of choosing.

Fundamental analysis requires you to go through the financial statements of a company. This gives you an idea of how the company has been faring in various situations and an indication of how it may perform in the future as well. With technical analysis, you will use various information and analysis tools to understand how the share prices of the company have been performing in the past. Here, you will work under the assumption that these prices will be mimicked in similar situations, in the future.

5. Combine both fundamental and technical analysis

For the best results, combine both fundamental and technical analysis. Alone, you may not be able to get a complete picture of how a particular company is performing. However, when you put both types of information together, you will be able to make a more informed decision. We hope you will share your trading success story with us soon.

In case you don’t want to do all of the work yourself, you can rely on the third option – stockbroker research. Here, it is about creating an account with a stockbroker that offers you access to their research and analysis. Before choosing such individuals, though, you should know what type of analysis the stockbroker is dealing with.

6. Managing Your Portfolio

In between buying and selling your shares, you will need to manage your share investment portfolio. One of the best things you can do to limit the level of risk you are exposed to is to diversify your portfolio. This means investing in companies and sectors that often work inversely proportional to one another. By doing this, you will be able to ensure that at least a portion of your investments will maintain their value at any given time.

Another thing you should do is to take a long-term approach to the shares that you hold. The shares need to appreciate in value so playing the waiting game can be useful to you in the long run. At the same time, you should avoid constantly monitoring your shares as the prices do rise and fall minimally rather frequently.

It is also vital that you comprehend the brokerage fees involved every time you place a trade. This is especially significant if you want to make smaller trades on a regular basis. The cost of these transactions alone can make some of these trades a poor choice. So, always be aware of the cost versus profit of any trade.

7. How to Sell Shares

At some point or another, you will decide that it is time to sell the shares that you hold. Now, if you hold the shares directly – for instance, through a broker, IPO, or employee scheme, then the process is fairly simple. You will need to either contact your broker or place the shares online. It is then a matter of waiting for someone to purchase the shares. As with buying shares, this type of trade also incurs a brokerage fee.

Once you have sold your shares, the title of ownership changes from you to that of the purchaser. This ownership transfer and the settlement of the sale will be completed after two business working days in Australia. This is when the money from the sale will be transferred to your account.

If you don’t own the shares directly but rather, in a managed fund, you will end up selling the units you own. Of course, in a managed fund, there are certain regulations that you are held to. As such, you may incur a withdrawal fee if you sell the unit before a specific time period.

Of course, when selling your shares, you want to take advantage of the rate at which the share value may be increasing or decreasing. Nevertheless, you may also want to think about the tax implications of any given trade. Now, any profits you make from share investment are taxed via the Capital Gains Tax regulation. However, if you sell your shares a year or more after you initially purchased them, you can receive a tax break. This is because you will only have to pay CGT on 50 percent of your profits.

8. Understanding the Types of Orders

As an Australian investor, when you have decided to either buy or sell shares, you will need to place an order. There are several kinds of orders and they each have their uses contingent upon a particular financial situation. The orders typically relied upon are: market orders, limit orders, stop-loss orders, and conditional orders.

Market orders are placed to get the best available price for shares at that particular time in the market. This means that these orders take place quite quickly. The downside, of course, is that the share price can change from the time you have placed the order to when it is actually executed. So, during this time the price may have increased or decreased.

A limit order is set to ensure that you end up with a share price that you find suitable. This means that if you are buying shares, the order will only be executed if they fall to a certain price or go even lower in value. On the other hand, a limit order when selling shares means that the trade will only take place when the price reaches a certain value or goes higher. If neither of these conditions are met, the trade becomes unfulfilled.

A stop-loss order is used when you are selling your shares. This is employed to ensure that your shares are automatically sold if the share prices drop to a certain amount. By doing this, there is a chance to limit how much you could lose, if those share prices continue to decrease.

Should I invest only the minimum on the Australian Stock Exchange?

This is your call. Only you know how much money you have, and how much you are willing to risk. Don’t forget that all types of investments involve some degree of risk.

As you see the minimum investment in shares is around $500 and the minimum share purchase on the asx is not important.

Now you know how to get started, if you are a beginner investor who is eager to try their hand at the share market. The information presented here will be more than enough to teach you how to buy and sell your shares so that you can make a profit.

If this is an area you are interested in, you should definitely take the necessary steps to start trading stock. This is because it is one of the best ways to make a considerable profit, over the course of your lifetime. Below, you will find all of the information you need to get started with buying and selling shares.