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Stock market investing in Australia: what do first-timers need to know?

By FastBuySale Newsroom · 9 Nov 2026 · 2m ago

What are shares, and how do they make or lose money?

What a share is: Moneysmart says companies issue shares to raise money, and after that investors buy and sell those shares to and from each other. When you own shares, you own a small part of the company.

What owning a share can entitle you to: according to Moneysmart, you may be able to vote on big company decisions, such as who sits on the board, and one share usually equals one vote. You may share in profits (and losses) depending on how the company performs, because companies can pay profits to shareholders as dividends. Moneysmart stresses that not all companies make profits or pay dividends.

Capital growth: Moneysmart explains that if a company's profits grow, or are expected to grow, its value usually increases and investors may pay more for its shares. Its own example: if you buy a share for $10 and sell it for $15, the $5 difference is a capital gain. If you sell for less than you paid, you make a capital loss.

Franking credits: Moneysmart notes that Australian company dividends often come with franking credits, which reflect tax already paid by the company so that you are not taxed twice. Our explainer https://fastbuysale.com/news/au/franking-credits-checklist-what-to-know-before-you-claim covers this in more detail.

Ways to own shares: Moneysmart lists owning shares directly in your own name, owning them through an investment vehicle such as a managed fund, exchange-traded fund or listed investment company, and owning them through your super fund. It points out that many people already own shares without realising it, because part of their superannuation is likely invested in Australian and international shares. See https://fastbuysale.com/news/au/superannuation-rules-explained-in-plain-english-how-much-goes-in-how-its-taxed-and-when for how super works.

How do you buy and sell shares on the ASX?

Brokers: Moneysmart says you generally buy and sell shares through a broker, a licensed business that gives you access to the ASX and other markets. An online broker lets you open an account and make your own choices. A full-service broker places trades for you and can give advice, with higher fees that are usually a percentage of each trade. Moneysmart says most people who buy shares use an online broker.

Step 1, open an account: Moneysmart says opening an online broker account usually takes less than 15 minutes, although identity checks can sometimes take a day or two.

Step 2, fund it: most online brokers need money in your account before you place a trade, according to Moneysmart. Some let you settle a trade from a linked bank account within two business days, so check how your broker works.

Step 3, place the order: pick the company and number of shares, then the order type. A market order buys at the next available price and usually goes through quickly. A limit order sets the most you will pay (or the least you will accept when selling), and the trade only goes through if the market reaches your price. Ask your broker to explain any other order types before you use them.

Step 4, check the confirmation: Moneysmart says you will get a confirmation showing the price, the number of shares and the fees, and you should keep it for tax time. You may also get a holding statement confirming the shares are registered in your name.

Selling: Moneysmart says selling through an online broker is similar: pick the shares, choose an order type and check the confirmation. The money arrives in your brokerage account two business days after the trade day, known as the T+2 settlement period.

Other routes: Moneysmart also lists initial public offerings (floats), crowd-sourced funding, employee share schemes, dividend reinvestment plans and transfers by gift or inheritance as ways to become a shareholder.

What does it cost, and how is it taxed?

Brokerage: Moneysmart says most online brokers charge a flat fee for smaller trades, often around $20 or less, and switch to a percentage of the trade for larger amounts. A few charge the same flat fee whatever the size.

Other costs: Moneysmart lists platform fees (some online brokers charge a monthly or inactivity fee) and foreign exchange fees if you buy shares listed overseas.

Illustrative example (not from Moneysmart, and using an assumed $20 fee): if you buy $500 of shares and pay $20 brokerage, then sell later and pay another $20, the shares must rise by $40, or 8%, before you break even. That is why Moneysmart warns that fees can be a big share of a small trade, and to check the fees before you place each order.

Tax: Moneysmart says you may need to pay tax on dividends and on any capital gain when you sell shares for more than you paid. It also flags that the 2026 Federal Budget, delivered on 12 May, announced changes to how capital gains tax applies, subject to final legislation, and directs investors to the Australian Taxation Office for details. Our https://fastbuysale.com/news/au/how-does-capital-gains-tax-in-australia-work-a-beginners-explainer piece covers the basics.

Long-run growth: to see how reinvested returns could compound over time, try the https://fastbuysale.com/tools/compound-interest-calculator/ with your own assumed rate, remembering that no return is guaranteed. The https://fastbuysale.com/tools/inflation-calculator/ shows how inflation affects what your money can buy.

What are the risks, and how can beginners manage them?

Risks Moneysmart lists: all shares carry risk, and prices move up and down based on company results, interest rates, news events and global markets, sometimes quickly. You can lose money if the price falls below what you paid and you need to sell. Companies can reduce or stop dividends at any time. If a company goes broke, shareholders are generally paid last, after staff, lenders and suppliers, and you may get nothing back.

Diversification: Moneysmart describes diversification as spreading your money across a number of different investments to reduce the overall volatility of your portfolio. You can diversify by company, by sector, by country (including shares listed overseas) and by asset type, mixing shares with bonds or cash. Moneysmart notes that Australia has a small share of the world's investment opportunities. Diversification does not remove the risk of losing money.

Sectors and indices: the ASX groups shares into 11 sectors, Moneysmart says, including financials, materials, health care, energy and real estate. Australia's best-known index is the S&P/ASX 200, which tracks the 200 largest companies on the ASX.

Researching a company: Moneysmart suggests reading financial results (usually twice a year in Australia), annual reports and ASX announcements, and watching revenue and profit, debt, cash flow and dividend history.

Scams and identity theft: Moneysmart reports that stolen shares due to identity theft are on the rise and that ASIC has warned investors about fraudsters transferring or selling shares without owners knowing. If you get an unexpected offer to buy your shares, Moneysmart says to check who is making it, what your shares are worth, and that the offer letter is dated and gives you at least one month to accept. Misleading offers can be reported to ASIC. See https://fastbuysale.com/news/au/how-do-financial-scams-and-identity-theft-in-australia-work-and-how-can-beginners-protect-themselves for wider scam advice.

Before you start, Moneysmart suggests developing an investment plan and, if you need help building a diversified portfolio, talking to a financial adviser. The https://fastbuysale.com/tools/retirement-calculator/ can help you think about long-term goals.

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