How To Invest Money In Australia: A Complete Guide

Students want to know how they can invest money in Australia to get good returns.


Investing your hard-earned cash is a reliable way to build wealth over time. However, it might not be easy, especially if you are a first-time investor.


With several investment options available, it is necessary to gain a basic understanding of each of them to find the right one.


To simplify investing for beginners in Australia, we have discussed some great investment options that you can consider based on your investing style, budget, and risk tolerance.



1. Why It Is Important To Invest?


There are two prime reasons why people should invest their money:


  • To benefit from the power of compounding

  • To beat inflation


When earning a higher interest rate on your money than the general inflation, you can retain the value of your money. Moreover, the long-term investment gives the benefit of price appreciation. By reinvesting the savings, you can build wealth over time. 


The stable economy and plethora of growth opportunities make Australia great for investment.



2. What Things You Should Consider Before Investing?


Before you dive into the world of investment, there are a few things you need to understand to ensure your finances stay in good shape:



Clear Your Debts


It is not wise to start investing while you are accruing debt elsewhere. Also, it may take a couple of years before you start getting returns on your money.


So, the first step is to clear your high-interest credit card debts, unpaid bills, loan repayments, or other types of debts before you begin investing. If you have taken out large loans, you can use your savings to repay the debt sooner.



Build A Contingency Fund


An emergency fund is necessary to save you from sudden expenses such as unexpected travel, medical bills, auto repairs etc. It offers financial safety to you or your family and avoids the need to borrow money from anywhere.


You should save six months of your monthly expenses as an emergency fund. It is a good idea to start investing when you are debt-free and have an adequate emergency fund in place. 



Your Investing Style


The next thing that you need to consider before investing money is to identify what type of investing interests you - active investing and passive investing. Both investing styles are profitable if you have a long-term investment horizon.


Active investing is where you build and maintain your investment by regularly researching different investment vehicles.


To be an active investor, you need adequate time, proper knowledge and the desire to manage and grow your investments. Forex: buying and selling stocks via an online broker.


On the contrary, in passive investing, you invest in investment vehicles managed by agencies or experienced financial advisors. They will do all the leg work for you to ensure moderate returns on the investment.


A great example of passive investing is investing in mutual funds, which bring simplicity, stability, convenience, low risk, low stress, tax benefits and moderate returns.



Prepare A Realistic Budget


Before starting investing, ensure you are financially prepared to invest money frequently over time. Start by identifying how much money you can afford to invest regularly after deducting your everyday bills and expenses.


Make sure you don’t include your emergency funds while planning your budget. It is because almost every investment option carries some risk, and you should never be forced to sell your investments to meet a crisis.



Your Risk Appetite


Ask yourself whether you are comfortable taking risks? If yes, figure out how many financial risks you are willing to take. Generally, low-risk investments like fixed deposits and bonds do not offer higher returns and vice versa.


So, the key is to strike a balance between capitalizing on the returns on your investment and finding a comfortable risk level.



Have An Investment Plan


Consider your existing financial situation, investment timeline, risk tolerance and financial goals for the future to determine optimal asset allocation.



3. What Are The Best Ways To Invest In Australia?


Here is a range of investment vehicles you can use to protect and grow your money:



Savings Account 


A saving account is a great investment option providing maximum liquidity and can easily convert to cash. However, it yields the lowest returns. 


The average interest rate is 2.2% in gross returns per annum over ten years. Some banks require a minimum deposit to get a high-interest rate.


Here is the list of popular banks that offer high-interest saving accounts: 


Name of the Bank Max Rate (p.a.) Base Rate Max. Interest (per month)

AMP Bank - AMP Saver Account




My State Bank - Bonus Saver Account




Macquarie - Macquarie Savings Account

1.50 %



Move Bank - Growth Saver Account






Fixed Income 


Fixed Income assets include corporate and government bonds that are comparatively stable and offer 5.02% returns per annum on average.


When buying a government bond, you lend money to the government, which is paid back in regular interest instalments throughout the investment duration.


Being a defensive asset, having them as part of your investment portfolio helps you counterbalance any losses you may incur from the share market.


The classification of government bonds:


  • Exchange-traded Treasury Bonds that give you fixed interest payments

  • Exchange-traded Treasury Indexed Bonds that pay you the interest based on inflation.  


The minimum investment required by the Australian government is 1 unit with a face value of $100.


Corporate bonds, on the other hand, carry higher risks than their counterparts because no payment is payable if the company closes. You can buy corporate bonds on the ASX or through a public offer.





Property investments have given average returns of 12.91% p.a. over ten years. This investment type can be expensive and has its ups and downs. Investors need a lot of surplus capital to consider investing in the Australian real estate market.


Finding the high growth area and the right time to invest when the property price is within your borrowing capacity is the key to generating good returns from this investment.


The best places for property investment in Australia are:


  • Belmont, Victoria

  • Wellard, Western Australia

  • Miranda, New South Wales

  • East Ipswich, Queensland

  • Greenacres, South Australia


You may consult the following professionals to get guidance on how to invest money in real estate:


  • Property manager

  • Buyer’s agent

  • Financial planner

  • Accountant

  • Mortgage broker

  • Conveyancer





Where to invest money to get good returns? It is the most common question among investors when they have excess funds on their hands. Equity investment has good potential and a history of providing high returns.


The highly volatile nature of stocks makes them a risky asset class where you can expect substantial gains or losses in your investment value.


If you choose this option, you must be very careful of the stocks you pick for investment. Analyzing the company's fundamentals and looking at its past performance and future demand and growth potential can help you decide on the right shares for your investment.


Investment brokers offer discounted and full services to invest in equities. While discounted brokers offer a low fee per transaction, full-service stockbrokers charge more. However, they also give personalized advice to help beginner investors make the right decision.


The minimum investment you need in the Equities asset class is $500. The following are the most traded shares on the Australian market in 2022:


  • Betashares NASDAQ

  • Pilbara Minerals Limited

  • AVZ Minerals LTD FPO

  • BHP Group Limited 

  • Core Lithium FPO





Young Aussies also have the option to trade on the foreign exchange market. It is a decentralized and liquid financial market where you can trade global currencies 24/7.


This form of trading involves betting on one currency value against another. Forex traders make profits by buying a currency at a low price and selling it at a higher price.


However, before investing in foreign markets, understand the working of the market and the associated processes. Taking Forex training workshops or professional courses can help you understand the intricacies involved in Forex trading.



Index Funds


In this type of investment, investors park their money in a large shared pool of money. The investment manager/ fund manager will use these funds to invest in various assets, such as high-value stocks. The returns depend on the asset value and the size of the investment.


Each Index fund has a minimum investment requirement, that range from $1000 to $5000.



Exchange-Traded Funds (ETFs)


ETFs are a combination of index funds and equities. Investors can buy units in an ETF on the stock exchange and sell them anytime. When compared to an Index fund, ETFs are relatively fast, more flexible and less expensive.


However, you should note that you will need to pay a commission for trading ETF shares to the broker/ fund manager. Stockspot and BetaShares are the popular brokers that offer this investment option in Australia. The minimum amount you need to invest in ETFs is $500.





You can also explore Cryptocurrencies such as Bitcoin, Ethereum, Dash, Litecoin, Monero and Ripple for investment. Be aware that investing in this currency is subjected to drastic price fluctuations.


As it is unregulated and not backed by the government, you need to be cautious when choosing this risky option for investment. 


To start with cryptocurrency, you must create an account with the Australian exchange. Some of the most popular crypto exchanges that let you invest in digital currency are Swyftx, CoinSpot, Coinjar, Cointree, and Digital Surge. 


You can buy cryptocurrency units in fractions as a minimum investment. The exchange will charge you a fee for offering the facility to invest in cryptocurrencies.



Term deposits


Term deposits are long-term investment instruments where you park your money for an agreed period and earn a higher interest rate. It is ideal for those who prefer guaranteed returns over the stock market fluctuations and have long-term investment goals for their money.


The only downside of term deposits is that your money gets locked in for a long term, and you can not withdraw it to meet your immediate needs.


When opening a term deposit, the bank will advise you on how much interest you will earn and the return you can make from your investment.


You can open a term deposit through a credit union, building society or bank. The minimum investment to open a term deposit is $5000. However, a few lenders offer the facility to invest for as low as $1000.


Here are the top lenders with the interest rates for 6-month term deposits:


Lender Name Rate of Interest (per annum) Payable annually at maturity
Citi 0.65%
QBank 0.55%
UniBank 0.65%
Heritage Bank 0.30%
Macquarie 1.90%
Teacher’s Mutual Fund 0.70%
FirstMa 2.20%
Judo Bank 1.85%





If you are an employee in a company, a minimum of 10% of your gross salary automatically goes into the super fund. You get this money with interest when you retire. It is also a great way to build your retirement wealth.


If you have worked for more than one employer, you could have multiple superannuation accounts in your name.


You can also make regular contributions to the super fund to save more for your retirement. It will help reduce your annual taxable income.


The Australian Retirement Trust, Aware, Amp Bank, LGIA super, Spirit Super and VIC Super are some of the best places you can consider investing in superannuation. 





Commodity investments are another great way to create long-term wealth, especially when researching and investing in commodities expected to have high demand and growth potential in the future.


The value of commodities fluctuates based on global supply and demand. The ASX offers the facility to invest in four commodity types: metals, energy, livestock and agricultural products.





Gold is a popular investment option for many investors. They prefer to invest in this precious metal to protect their wealth and hedge against inflation. Due to being unaffected by the factors that impact other investment options, it is a safer and more stable way to make money.


However, based on the last 10-year returns, gold has provided low returns to its investors. Besides physical gold, you can also invest in gold via gold ETFs, certificates, gold mining shares, and futures contracts.


ABC bullion and Perth Mint are gold depositories where you can start your gold investment from just $50 per month.



4. How Much Should I Invest?


You should only invest money that you don’t require for at least three years from now. It is the perfect timeframe to hold your investment before you can see decent gains in a safe investment instrument.


Consider your regular expenses, living expenses, existing debts, and short-term financial commitments before coming up with the investment amount.


Those interested in the Australian stock market can start investing with as little as $500, and many ‘micro-investing’ platforms do not have any minimum investment requirements. In other words, you can save minimal amounts periodically or buy a fraction of the share through these platforms.


It makes it a good option for low-income earners who need not wait till their savings reach a certain level, as in the case of fixed deposits.



5. How To Invest Money For Students?


There is no age to start investing. The sooner you start, the bigger your profits and the better your future will be.


If you are young and enthusiastic and looking for how to invest the money as a teenager, watch out for the following top investment options based on the current economy and trends:


  • Compound savings accounts

  • Term deposits

  • Equities

  • Managed/index funds 

  • Electronic Traded Funds

  • Cryptocurrencies

  • P2P lending

  • Property

  • Superannuation

  • Commodity investments, such as gold, silver, copper, iron, nickel, lead etc.

  • Precious metals (platinum, gold, palladium, silver, etc.)



6. What Is The Best Way To Invest $10k In Australia?


The best place to invest money right now with a 10K budget is in exchange-traded funds (ETFs) or managed funds.


Your money gets pooled with other investors' funds to get a holding in the asset portfolio.



7. How To Invest 20k In Australia? 


You have plenty of options to turn your investment into long-term profit. If you are an aggressive investor looking for a moderate risk-high yield option, then stocks could be your best bet.


If you are a risk-averse investor who expects decent returns, then ASX Exchange-traded Treasury indexed bonds or treasury bonds will be appropriate as they offer low-risk and moderate yield on your investment. 


However, if safety is your investment criteria, you should choose the least risk options, such as high-yield savings accounts, fixed deposits, and gold investment. 



8. What Is The Best Way To Invest 500k In Australia?


Are you thinking of where to invest money right now in Australia?  With 500K spare funds on your hand, you can invest in almost any investment opportunity based on your investment objectives and timeframe.


The best investment options are gold, property, shares, ETFs, and mutual funds.



9. Conclusion


Deciding the right investment option can be confusing and challenging, so research and organising your finances are necessary before you start investing.


Knowing your goals, investment timeframe, risk appetite, and comparing available investment options will help you grow your money effectively.


We hope you do not have difficulties choosing how to invest money to make money. Happy Investing!


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