When it comes to choosing an investment account, there's no single one that's best for everyone as all our needs are different – and what's best for you might not be best for someone else.
The "best" investment for you will be the one that best suits your risk profile, starting capital, time horizon and overall investment goals.
Also it's worth highlighting we don't compare every product in the market, but we hope that our tools and information will allow you to compare your options and find the best investment account for you.
What investment account types are there?
There are many ways that you can grow your money. Savings accounts, term deposits, superannuation, share trading and foreign exchange are all investment options that people use to increase their wealth.
Each type of investment comes with its own potential return and associated level of risk. As a general rule, the safest options offer the lowest returns, while the riskiest options have the potential for bigger returns.
We've divided your options into zero-risk or defensive investments (such as savings accounts and term deposits) and riskier growth-oriented investments (like stocks or forex) to give you an overview of your investing account options.
As we've outlined above, the key difference between most investment account types is what they offer in terms of risk and potential returns.
For example, the stock market has historically had a better return than that offered on savings accounts, but it's also possible to lose money on stocks, while that isn't really possible with a savings account.
If you’re looking to earn more from your money, start by considering whether you’re comfortable taking a loss. If you aren't, that will automatically rule out the "growth" investment accounts like share trading and forex.
Other factors, such as investment size and horizon, also play a part in picking an investment account, as does the current macroeconomic environment.
When cash rates are low, keeping your money in a savings account may not represent the best risk and reward profile, while the opposite might be true when rates are high.
You may also want to consider diversifying your investments across a number of the investment accounts, and many experts would recommend exactly that.
One final thing to keep in mind is that you should always try to pay off your existing debts first before looking to invest.
Expert insight: How to pick an investment account
"Start by defining clear, realistic financial goals based on your risk tolerance and time horizon. From there, drill into how you are going to achieve those goals with your chosen investing strategy."
Low- or zero-risk investments where your money is guaranteed include high-interest savings accounts and term deposits. With these kinds of investments, you'll make a small capital gain on your money with no real potential for loss.
In Australia, when it comes to savings accounts, your money is guaranteed by the government, up to the first $250,000 you have with a financial institution. This is a legacy from the global financial crisis but means today's savers' capital is secure regardless of what happens to the authorised deposit taking institution.
1. Savings accounts
Savings accounts are among the most widely used types of investment accounts by Australians because they're completely safe and your funds can be deposited or withdrawn at any time without hassle.
Earns income from interest payments based on the size of your cash deposit
Sometimes pays bonus interest during an introductory period
Allows your money to remain available to withdraw when you want
Can be easily accessed online or at a bank branch
Generally low or no fees
What are the potential downsides of savings accounts?
One of the biggest risks of savings accounts is the opportunity cost of not investing your money in an account with the potential for higher returns.
In Australia, interest rates have remained relatively high throughout 2023 and 2024, but economists are predicting that rates will come down over the next 6-12 months. If rates come down, so too will the money you earn from leaving your cash in a savings account.
We currently don't have a partnership for that product, but we have other similar offers to choose from (how we picked these
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2. Notice saver accounts
A notice saver is a relatively new product in Australia and a hybrid between a term deposit and a savings account. While your interest rate is variable as with a savings account, you can't access your funds immediately. Instead, you need to give notice of a month or more to withdraw your money. Notice periods are usually 30, 60 or 90 days.
Key features of a notice saver
No term date, but requires that you give notice to withdraw funds, typically 30, 60 or 90 days
Has a variable rate of interest which may benefit you
Is an ongoing investment; funds are withdrawn to a linked transaction or savings account
No minimum deposit usually required
What are the potential downsides of notice savers?
Notice Savers may potentially offer slightly higher rates than regular savings accounts, but come with the caveat that you can't access your money without seeing out the notice period.
While some investors may see this as a worthwhile trade off, for others it means they're giving up the flexibility of a savings account for potentially little in return.
A term deposit is a set and forget investment. You agree to deposit your money for a fixed term and get paid a fixed amount of interest over the life of the investment. As a banking product, there is no risk that you will lose your funds. On the other hand, if interest rates go up and you're locked into a lower rate account, you risk being stuck in an underperforming investment.
Has a minimum deposit requirement higher than a savings account
Requires you to lock your money away for a term ranging from 1 month to several years
Pays a fixed rate of interest over the life of the investment
Is a fee-free investment, though break fees apply for withdrawing funds before the end of the term
Is available to both personal and institutional investors
Is not an ongoing investment, but funds can be rolled over to another term deposit at maturity
What are the potential downsides of term deposits?
Like savings accounts and notice savers, the return you'll get from a term deposit is directly impacted by current interest rates. While term deposits offer a guaranteed return over an agreed period of time, they won't necessarily be the most effective way to invest your cash.
If you put your money in a term deposit and then interest rates continue to rise, chances are you would have been better off leaving your money in a standard savings account with a variable interest rate.
Any investment held outside of a bank account will carry some kind of risk because funds aren't guaranteed by the government if a company collapse occurs. At the same time, there's an opportunity to make higher returns and the risk of a company collapse is low for many well established organisations – it's all about doing your research.
Non-banking investments include exchange-traded funds (ETFs), P2P funds, share trading, managed funds and portfolios offered by robo-advisors. The following investments offer varying levels of risk and won't be suitable for everyone. Click through to their respective guides for more information.
4. Peer-to-peer investing accounts
Peer to peer (P2P) lending investment accounts appear like a mash between bonds and savings accounts. They'll have the same face value as a term deposit but because they're non-bank investments, you don't have the same safety guarantee.
They offer a fixed rate – typically much higher than those of savings accounts or term deposits – and your funds are locked down for a specified term.
Competitive return on investment typically higher than savings accounts or term deposits
Investors take on a higher level of risk than with term deposits and there's no guarantee of a return
Funds are locked away for a set period of time
Your funds are being loaned to borrowers
It's not an ongoing investment, but funds can be rolled over
Important stats to consider in 2024
Peer-to-peer (P2P) investing has become an increasingly significant part of investment portfolios in 2024, with several analyses and market reports highlighting its growth and strategic importance. Here are some key points and statistics around P2P investing in 20241:
Market growth. The P2P lending market has seen substantial growth. From 2023 to 2024, the market is expected to grow from $143.54 billion to $190.22 billion, a compound annual growth rate (CAGR) of 32.5%. This growth can be attributed to factors like market disruption, regulatory changes, and investor appetite.
Future market projections. Looking ahead, the P2P lending market is projected to continue its growth trajectory, reaching an estimated $559.73 billion by 2028, with a CAGR of 31.0%. This anticipated growth is likely due to a maturing regulatory environment and innovations in risk management.
Driving factors. Key factors driving the growth of P2P lending include the surge in digitisation within the banking industry and the provision of low-interest rates by P2P lending platforms. These platforms are becoming increasingly attractive to borrowers and investors due to their competitive rates compared to traditional banks.
Innovations in the market. In 2024, the P2P market has seen remarkable innovations, particularly in the integration of blockchain technology for enhanced security and transparency. Another significant development is the advent of AI-driven platforms that offer personalised lending and borrowing experiences, making it easier for users to find matches that suit their financial profiles.
These points highlight the significant role P2P lending is playing in the financial landscape of 2024, offering both growth opportunities and a viable option for diversifying investment portfolios.
What are the potential downsides of peer-to-peer investing?
P2P investing is still a relatively new sector and doesn't have the same level of government protection that a savings account would. While the return will likely be higher than a savings account, peer-to-peer investing has a different risk profile and it's possible to lose your money if the borrower fails to repay their loan.
5. Share trading accounts
Share trading accounts allow you to buy and sell stocks and other listed financial instruments – such as exchange-traded funds – by acting as an intermediary to the stock market.
With an online share trading platform you can buy and sell shares on your computer or mobile with lower fees than you'd normally get when you go through a personal full-service stock broker.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Key features of share trading accounts
Give you access to a wide range of investments including shares, ETFs and listed investment companies (LITs)
Charge a brokerage fee when you trade shares
Share trading has the potential for very high capital gains
There is the potential to lose money if your investments perform poorly
Is available for personal and institutional investors
Can deposit and withdraw funds easily online
What are the potential downsides of share trading?
Investing in the stock market remains one of the most popular ways for people to their invest their money but it's not without its risks. The price of stocks can go up and down and it's possible to lose money.
For example, the S&P 500 stock index, which tracks 500 of the largest companies on the US stock market, returned an impressive 24.23% in 2023. In 2022, it returned a worrying -19.44%.2
If you're planning to invest in stocks, it's recommended that you take a longer term outlook and make sure you do your due diligence before investing.
ETFs (exchange-traded funds) can be a good, low-cost way to invest in the stock market because they give you exposure to a group of companies with a single investment.
6. Robo-advisors
Robo-advisors are a relatively new service to Australia that let you invest in pre-built or professionaly curated portfolios based on your financial goals and risk profile. They offer competitively low fees compared to standard investment advisers and competitive high rates of return.
Most robo-advisors are app-based, so they make it easy to deposit your funds into and monitor the performance of your portfolio from your smartphone. They also tend to offer a broad range of investment portfolio choices, from aggressive to conservative and across a wider range of assets.
Matched to an investment fund based on your profile
Easy to access and monitor online or on your mobile
Broad range of investment fund options
Can access Australian and international theme investments
What are the potential downsides of robo-advisors?
Robo-advisors can be handy for beginner investors looking to get started but they lack the flexibility of other investment accounts. For example, you generally can't invest in individual stocks via a robo-advisor, and are instead limited to the handful of prebuilt portfolios that may not match your investing goals.
The performance of these portfolios can also vary, especially those geared towards riskier investments like stocks.
While robo-advisors also offer low fees, they won't necessarily be the most cost-effective method for intermediate and experienced investors.
7. Forex trading accounts
Forex trading has the potential for both high gains and big losses. This is all due to leverage – when it goes well you can make money quickly, but equally you can lose your capital fast. In fact, up to 86% of forex traders lose money, according to analysis of data released by European forex brokers.3
Rather than buying shares for capital growth or investing into a high interest fund, forex traders speculate on the future price movements of international currency pairs. For this reason, forex is not "investing" in the traditional sense – rather it is trading.
Online forex accounts allow you to trade currencies from around the world from your computer or mobile. In exchange, you typically pay a commission or FX fee, known as the spread.
Compare forex accounts
Disclaimer: General information only. All forms of investments (and in particular, trading CFDs, commodities and forex) carry significant risk, including the risk of losing more than the invested amounts, market volatility and liquidity risks. Past performance is no guarantee of future results. Such activities are not suitable for most investors.
Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.
Forex trading account key features
Forex trading requires specialist knowledge
Can be opened by both personal and institutional investors
You need to pay fees to the forex platform provider in the form of spread
Typically gives you access to other investments such as commodities and CFDs
Can leverage investments, which allows you to trade with more capital than you actually have. This can magnify both profits and losses
What are the potential downsides of forex trading?
Forex trading is a complex and fast-paced industry that is only suitable to experienced traders.
With forex trading, it's possible to lose all your money, especially if you use leverage or other advanced trading options.
Foreign exchange markets can be extremely volatile and even professional traders may struggle to beat the market.
Frequently asked questions
Investment accounts are financial accounts specifically designed for investing in various assets such as stocks, bonds, managed funds or ETFs. Interest earning cash accounts may also be called a type of low or zero risk investment account. They offer a platform to grow your wealth over time through capital appreciation or income generation.
This will really depend on your risk profile and investment goals, but popular accounts include high interest savings accounts, term deposits and share trading accounts.
If you're looking to invest in the stock market, a low-cost share trading account is probably the best option for those looking for a cost-effective way to buy shares.
The number of investment accounts you should have depends on your investment goals, risk tolerance, and diversification strategy.
Investment accounts are simply platforms to invest your money into different types of assets and it's generally a good idea to be invested in a diversified range of asset classes. For instance you might have a cash account, a share trading account and a managed fund account.
In some cases, it may make sense to have multiple accounts for one asset. For instance, some share trading accounts will offer better deals for different types of stocks, so it can be cheaper to sign up to more than 1 platform.
There's no limit to how many accounts you sign up to. That being said, some accounts will charge subscription fees and you'll also need to compile more documentation when it comes to tax time.
Start by contacting your bank or financial institution where you initially opened the account. They can assist you in locating any dormant or forgotten accounts. Additionally, you can search the Australian Securities and Investments Commission's (ASIC) MoneySmart website for unclaimed money or use their online tools.
In Australia, investment accounts are subject to taxation based on the type of investment and the investor's personal circumstances. Capital gains tax (CGT) may apply when selling investments, while dividends and interest earned are subject to income tax.
It's important to consult with a tax professional or refer to the Australian Taxation Office (ATO) guidelines to understand your specific tax obligations.
Important information: Powered by Finder.com.au. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
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To make sure you get accurate and helpful information, this guide has been edited by Moira Daniels as part of our fact-checking process.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs. See full bio
Kylie's expertise
Kylie has written 134 Finder guides across topics including:
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