It's never been easier to invest your money, and there's never been as many options to choose from. Around 48% of Australians have some form of investment, according to Finder data.1
But how do you actually pick the best place to invest your money?
In this guide we'll talk you through popular investing options and whether they're suitable for certain investing goals.
This is a list of popular ways to invest $1,000 in Australia based on the type of investor they may suit:
Share trading remains one of the most popular investing options in the world.
You can start investing in Australian shares from as little as $500 (for CHESS sponsored shares) if you want and as little as $10 at a time into US stocks – depending on your online broker.
Share market investors earn profits when share prices increase, and they can be paid dividends when the company generates profit.
However, stocks can be a risky investment and your investment can go or down in value. This is especially the case with individual stock picking. According to a study of eToro investors, around 80% of traders actually lose money when actively trading the stock market.2
31% of Australians have invested in shares, according to our consumer sentiment tracker. 38% of men said they have invested while only 25% of women have invested in shares or cryptocurrencies.
ETFs, or exchange-traded funds, are a convenient, low cost way to diversify your portfolio while also benefitting from the performance of the stock market.
ETFs are funds that give you exposure to multiple assets in a single investment.
For example, an ASX 200 ETF will invest in the 200 largest companies on the Australian Securities Exchange (ASX).
As a result, ETFs can be less risky than buying individual shares because you're not fully exposed to the performance of a single stock.
Of course, like with stocks, it's still entirely possible to lose money on ETFs.
In 2022 for example, the S&P 500 lost 18%. Any ETF that tracked the S&P 500 during that time would have therefore recorded a similar loss.
Like stocks, the minimum investment for an Australian ETF is $500, but will be lower for international ETFs.
A high interest savings account is an extremely low risk investing option that can still offer attractive returns.
However, the return you'll receive on a high interest saving account can vary quite a lot based on current interest rates.
When interest rates are high, you'll receive a better savings rate on your money, but when interest rates are low, your savings rate will be lower.
In Australia, any cash you leave in a bank or savings account is protected by the government up to $250,000. In the rare event that your bank collapses, your money will be safe.
While high interest savings accounts are effectively zero-risk, there is an opportunity cost to not investing in an asset with a higher potential return. This will also be the case in periods of high inflation. If you're earning 4% p.a. on your savings account, but inflation is 4.5% p.a., your money will actually be losing value in real terms.
If you're prefer to take am even longer-term view to growing your wealth, you may want to consider making additional contributions to your superannuation account.
When you make contributions to your super from after-tax income, the government does not tax the contribution up to a certain threshold because it's already been taxed.
If you end up making post-tax contributions to your super and meet the income requirements, the government will even add to your super by matching your contributions, to a maximum of $500.
If you're looking to invest money on behalf of your child, it's likely you'll have a longer time horizon for your investment.
This means you might want to consider a passive, lower risk investment like an ETF. The main benefits of an ETF is that it's a relatively low-cost way to invest in the stock market and doesn't require constant monitoring.
Popular ETFs like the S&P/ASX 200 index has averaged a return around 8% per year over the last decade3.
Those that are less familiar with the market might think shares are only for wealthier people.
And while it is conventional wisdom to never invest more than you can afford to lose, how much you need to invest is actually less than you might think.
With the introduction of newer brokers to the market, you can now trade from as little as 1 cent. However, if you are buying Australian shares and you want CHESS-sponsored shares, you'll need to invest a minimum of $500.
"$1,000 is more than enough to invest, especially if you're just starting out on your investing journey. However, it's important that you continue to invest over time in order to maximise your potential returns."
When it comes to signing up for a new broker, there are a couple of things you might want to keep in mind:
The answer to this will depend on how long you can afford to have your money locked away for. While current savings rates are higher than inflation, the current rate of inflation means you're not getting much in real returns, even if you leave your money in a high interest savings account.
For example, if you left your $1,000 under your mattress since 2000, thanks to inflation, in 2024, that same $1,000 would buy roughly 53% of what it used to. As such, your purchasing power has gone down by almost half.
And those 24 years were considered for the most part to be a low inflation environment. As it currently stands, we are in a high inflation world where Australia's inflation rate is much higher than the targeted rate of 2-3%. This means your money buys less every year.
However, you should never invest money that you need over the short term. This is because prices fluctuate over time. Unfortunately, this could mean when you need your money, your investment is actually worth less than when you started.
If you have a long time horizon, shares and ETFs can be a good investment. Can you afford to wait for a year or more to get a good return on your investment and are you prepared for the possibility of losing your investment entirely?
If you want guaranteed returns without the risk, look at high interest savings accounts and term deposits. Both earn you interest as long as you have money in the account. Term deposits will require you to lock away funds for some time, but high interest savings accounts let you access your money as needed.
Before you start investing, you should consider the following to help get a sense of how you'd like to invest:
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CHESS sponsorship allows you to directly own ASX listed shares in your own name, but it comes with some drawbacks. Find out if it's right for you.
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