Investing in shares is a powerful and simple way to build wealth and reach financial independence. But to do that, we need to learn how to buy shares.
This guide will show you how to buy shares in Australia for the first time using an online broker. Buying your first shares can be a bit scary, which is exactly why I created this beginners guide.
I break it down step by step (along with screenshots) so you know exactly what to do along the way.
You’ll also learn the important things to do after you’ve bought your first parcel of shares (stuff that other guides ignore). Things like taxes, dividends, and some other FAQs at the end.
Okay, let’s get started!
Free Resource: By the way, I created a spreadsheet for tracking my passive income over time as a way to plan my finances and watch my progress. You can get it below.
The first step in buying your first shares is opening an online brokerage account – an online platform where we can buy and sell shares. Think of it like a grocery store for shares.
It doesn’t matter all that much which broker we choose, since we can buy the same shares at each place.
Having said that, as a beginner you want a broker which is easy to use. And you definitely want one that charges low fees.
The screenshots and instructions below show you how to buy shares using Pearler. But you may wish to use another low cost broker like SelfWealth or CMC Markets.
Don’t worry, the process is similar whichever broker you choose. And if there are any issues, you can always contact customer service.
If you would like to sign up with Pearler, use the code COMMUNITY for free brokerage credits to get started. To be clear, this is not an affiliate link and I do not receive any payment if you choose to sign up.
To open your account, simply sign up and fill in the information required to get started. By the way, click any of the images in this guide to expand them.
And just so you know, the interface will change slightly over time, so these images may not be totally current at the time you sign up. The general process will be the same though 🙂
After that, you’ll get an email giving you access to the platform.
From there, you jump on and finish off the application process, where some ID checks and account verifications are required.
Yes, it’s boring, but it’s super important since we are buying assets here! In comparison to the paperwork associated with buying property, this is a total breeze 😉
Besides, you only have to do it once. After that, you’re up and running as a long term investor!
Shortly after your account is created and details are verified, you’ll be able to transfer money into your new brokerage account to start investing.
In the background, the ASX will issue you a Holder Identification Number (HIN). This is how your ownership of shares is recorded electronically. You’ll get a letter in the mail about this too.
While there’s no minimum required to invest in most cases, it’s best if you can invest at least $500 each time because of brokerage. Preferably $1,000 or more.
Here’s why: If you invest $500 and pay $9.50, almost 2% of your purchase went to fees. But if you invest $1,000, less than 1% of purchase went to fees.
To fund your account, on the Pearler Dashboard you simply hit Deposit Cash. Like this…
Then type in how much you want to transfer into your Pearler account.
Your bank account details are confirmed during the signup process, making each investment even easier. (This is partly how Pearler is able to offer Autoinvest… more on that later.)
Within a couple of days, your new account will be fully operational and your transferred funds available in your Pearler account. You’ll get an email when the funds are ready.
Now, I’m sure you already have a rough idea of what you want to invest in. But if you’re not sure where to begin, a simple low cost index fund is a good option to get started.
For example, you can buy the top 300 Aussie stocks in one hit by buying the index fund VAS. Or the biggest 1500 global companies by buying VGS. I own shares in both of these funds.
Here’s how you can get started and find funds like this on the Pearler platform. I’ll take you through an example of how to buy VAS.
Click ‘manually invest’ and you’ll be taken to the Shares screen. On this page you can browse different shares, ETFs and LICs which are popular with other investors on the platform.
Because Pearler’s customers are typically long term investors focused on financial independence, the Popular ETFs category contains mostly low cost diversified funds.
To find VAS and other index funds, click on Popular ETFs. You can also search for a specific fund using the search bar at the top.
On the Popular ETFs page, VAS is one of the first funds that comes up. From here, you can click Buy.
Once you’ve selected which shares you want to invest in, click on the Buy button.
Which takes you to the following screen where you enter the amount you want to invest…
Type in the dollar amount you want to invest, hit Buy, then confirm your purchase. That’s it!
The platform shows you the current market price and how many units you’re able to buy, along with the total estimated cost of your investment. Once confirmed, your order is placed into the market.
By the way, it’s common for cash to be left over after your purchase, since you can only purchase whole shares. That’s okay, just put this money towards your next purchase!
Pearler uses ‘market’ orders by default to keep things simple (though you can choose to use a ‘limit’ order and decide your own price). If you invest in shares with plenty of buyers and sellers (index funds, LICs, and decent sized companies), market orders are perfectly fine and your order will be executed at the best possible current price.
Either way, it’s best to avoid putting in orders at the very start or end of the day. There tends to be less buyers/sellers at these times and prices can gap up or down a bit.
If you’re using Autoinvest (see Step 9), Pearler places your order at midday to avoid this problem.
When you buy shares, the order is typically filled very quickly. You then receive an email to say your purchase was successful.
Settlement technically takes 2 days, but the shares will show in your brokerage account immediately.
Shortly after purchase, a ‘Contract Note’ is sent to your email (proof you bought the shares). Make sure you keep this and related emails in a special folder.
Congratulations, you’re now an investor! This is a hugely important milestone and something to celebrate.
And this is also where many guides end. But there’s a couple of other important things you’ll want to take care of too.
Each fund or company you invest in use third parties for shareholder administration. These places are called Share Registries.
Here are the main ones in Australia: Advanced Share Registry. BoardRoom. Computershare. Link Market Services.
A week or two after buying your shares, you’ll receive a letter in the mail from one of the share registries.
The letter asks what you’d like to do with your dividends (credit into your bank or reinvest into more shares) and how you’d like to receive dividend statements and any company reports (paper or email).
You can always change these options in the future if you change your mind.
You’ll be asked to log on to their website and confirm your tax file number (which avoids tax being taken out of your dividends). Don’t worry, instructions are on the form, plus a number to ring in case you need help.
Make sure you keep any login info safe for the future, and check your details are correct.
Look, I’ll be honest – this bit is a hassle. But once you’ve set things up, it’s smooth sailing.
As you build your portfolio, you’ll want to keep track of it. Not just out of interest, but because you need to for tax purposes.
Each year you will likely receive dividends from your shares and need to declare this income at tax time. Also, if you sell your shares in the future for a profit, you’ll need to pay capital gains tax (CGT).
For these reasons, it’s important we keep track of our share portfolio. After doing it myself for a short while, I started using Sharesight.
It’s a fantastic portfolio tool, which is completely free if you have 10 holdings or less. Sharesight keeps track of all your dividends and franking credits, and you can run reports at tax time for income and capital gains.
You can learn more about Sharesight and sign up for an account here. For Pearler users, your brokerage account is easy to connect to Sharesight from the Portfolio page. Like this…
Once your account is linked with Sharesight, each transaction is automatically recorded in Sharesight (but it’s worth double-checking for accuracy anyway).
That means even as your portfolio grows and you add other holdings, all your income and capital gains are recorded for tax time with zero effort.
Setting it up this way saves a ton of time and energy trying to do everything manually.
There’s another way to make your investments even easier. That is, to automate your investing. Pearler was created with a feature that nobody else has: Autioinvest.
They’ve made it possible to invest in ETFs, LICs or shares, setting up a direct debit from your bank account.
So if you want to invest $1,000 on the first week of every month, into an index fund like VAS (or any other), you can set this up in your Pearler account to happen automatically!
You can also transfer smaller amounts and have Pearler automatically invest it once you reach a certain amount. And if there are multiple funds you want to invest in, you can setup automatic rebalancing too. (more info on how Autoinvest works here)
To use this feature, click on Autoinvest from the menu, and away you go. It’s pretty straight forward, and looks like this…
Many people like to manually decide where to invest each month. But others want their investing to be as easy and effortless as possible (and why not?).
Using Autoinvest, you set it up once and that’s it. You’ll be saving and investing each month without lifting a finger. No need to transfer money, put in orders, or even look at the market.
If that sounds good to you, check out Autoinvest. So passive a sloth could invest in shares!
Below are some of the most common beginner questions I get from readers.
If you haven’t already, make sure you check out my Getting Started page. There you’ll find a ton of helpful content on saving and investing, downloadable guides, and more FAQs.
CHESS stands for Clearing House Electronic Subregister System. This is the system used for settling trades made through the Aussie stock exchange (ASX).
When you open a brokerage account, you’ll get a Holder Identification Number (HIN), which ensures all holdings are recorded correctly on the CHESS system.
Each time you buy (or sell) shares, you’ll receive a statement in the mail like this to confirm the changes (paper, I know!).
If your broker is ‘CHESS Sponsored’ like those mentioned in this article, it means the ASX has a full electronic record and you own the shares.
Some brokers do it differently and they actually hold the shares on your behalf. So if something goes wrong with the broker, it’s less clear what happens to your shares. More info here.
Whenever you can afford to! Aim to save up a lump of $1,000 or more each time, then get that money invested.
I think the sweet spot for investing is once per month. It keeps you motivated and engaged, while building momentum and constant progress towards your goals.
Fees are deducted from the value of the fund automatically in tiny amounts on a regular basis. So there’s absolutely nothing to do – you won’t get a bill in the mail.
No, not all shares pay dividends. But most diversified funds do pay dividends. Index funds usually pay dividends every 3 months. LICs generally pay dividends every 6 months.
But the amount and timing will depend on the specific shares you’ve invested in. Check the company or fund’s website for more info.
I like to keep a running estimate of my annual dividend income, so I can plan and watch the progress over the years. I created a special spreadsheet for it which you can get below.
Franking credits are tax credits investors receive on dividends paid by Aussie companies.
If the company has paid tax, when it pays you a dividend, it will often come with franking credits attached.
At tax time, this reduces the amount of tax payable on your dividends and may even result in a refund, depending on your tax rate. Only Australian companies which pay tax in Australia can pass on franking credits to shareholders.
Yes, absolutely. Reinvesting your dividends into more shares helps keep your money working hard and builds your passive income snowball. You can do this in two ways…
Reinvest into shares of the same company, via a Dividend Reinvestment Plan (DRP). Or take the cash and reinvest at your own leisure into the same or another company.
Both options are great. DRPs can result in lots of tiny purchases, which can create a small tax headache later if you choose to sell. But if you’re using Sharesight, these can be recorded automatically, avoiding any headache.
I hope this guide has helped you learn how to buy shares as a beginner in a way that’s simple and easy to follow.
If you would like to sign up with Pearler, use the code COMMUNITY for free brokerage to get started. To be clear, this is not an affiliate link and I do not receive any payment if you choose to sign up.
If there is something you need further help with, feel free to email me – dave@strongmoneyaustralia.com – and I’ll do my best to assist.
If you get stuck during the signup process, simply reach out to your broker’s customer service for help.
I wish you all the best on your investing journey!
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Howdy Dave ,
Loving the new , fresh website and Aussie logo !!
Looking forward into reading the upcoming content , listening to the podcasts and referencing .
Take care
Thanks very much Jimmy, really appreciate that feedback mate.
Hi Dave,
This article is just perfect, well done! I’ve already recommended it to a family member who is interested in investing.
I know it’s beyond the scope of this article but I’d like to know more about the autoinvest feature. How smart is it? For example, if you set it up to auto invest once a certain value is reached does it just buy one parcel of the share that is furthest from your target portfolio? I’m hoping it doesn’t use multiple buys to try and rebalance the portfolio every time.
Thanks Shaz, and extra thanks for sharing 🙂
Autoinvest has multiple options. Choosing the share that is the furthest below your target is one of the options and the most commonly used one I believe.
This article is great Dave! I completely agree with how difficult explaining the mechanics of share purchasing to people who have never done so before. I tried and got myself in knots! Your article nicely explains the different ‘entities’ involved in the buying and selling of shares on the ASX like the CHESS sponsor and the Share Registry. I’ll definitely tell them to read this article!!
When I was first getting started, I naively assumed the ASX handled everything and was surprised to find out the Share Registry and the CHESS Sponsor were not the ASX but rather, separate parties entirely. Does anyone know WHY this current setup (or system) is the way it is?? I’m curious to learn about how the system has evolved in the way it has. On the one hand, things may appear inefficient, with layers of paperwork. On the other hand, perhaps the current system serves to protect buyers and sellers of shares… Is the Australian ‘system’ of buying shares on the ASX similar to other bourses around the world I wonder? Thanks again Dave; Excellent content as usual!!
Thanks Jeff!
Haha yeah it’s not much fun is it? Shares are simple enough, but the extra bits and pieces like share registries not so much!
I’m really not sure why it’s setup the way it is. It’s possibly to have extra layers of protection like you say. The share registries do make sense when you think about it – since companies can hardly field all incoming calls from shareholders wanting to update their personal details and other trivial tasks like that. But it would be nice if it was simpler.
CHESS allows brokers to settle trades but also acts as an official record of who legally owns the shares. It does nothing more than that really.
Share registries however are a different beast which undertake administrative actions, such as shareholders changing bank details, on behalf of a company. Originally companies maintained these records themselves but decided it was more efficient to outsource those procedures.
From chats I have had with a few contacts, it is expected CHESS notifications will be soon be electronic hopefully by the end of this calendar year.
Thanks SK. Makes sense, and would be fantastic to see the purchase notes become electronic! The paper statements they send out are a painful waste.
Thanks Dave, will be giving a printed copy is a gift to my daughter on her 18th!! Excellent and very clear
Wow that’s great, and a cool idea! I’m glad it’s helpful – thanks Jo.
Wow what a great summary of how to get started. Thank for creating and sharing it.
No worries Kay, glad you like it.
Although I don’t use Sharesight or any other third-party software to record my share holdings (I don’t care about performance or any of that distraction from investing), I’ll just throw out this thought. Make sure the Executor of your Estate knows where and how to get all the details. Morbid I know but no one can give a 100% guarantee you won’t be run over by a bus tomorrow.
Can take a lot of time – and cost – to reconstruct. There could also be a question of a third-party having the authority to access the details as well.
I have close to 1,900 records involving shares (and tax matters) going back many years but I have left clear instructions with my Will on where all the information is located and available.
That’s a thoughtful message, I appreciate you sharing that. Barefoot Investor created a list of stuff to get together for people on this topic, I’ll just leave the link here
All good Dave.
Unfortunately, many can get carried away with the mechanics of investing and overlook these sort of necessary administrative arrangements and don’t realise until probate is granted (which, in some cases, can take quite a while) no one has any legal authority to undertake any action, during which time a number of corporate actions can occur ( DRPs, Rights Issues, SPPs, etc)
An Enduring Power of Attorney may assist I believe.
What cheery post to start to off a weekend. 🙂
Thanks Dave, great article. I’ve forwarded it onto my sons as they were keen to know how to trade. You explain it very well.
I’m with ANZ who charge $19.95 per trade, so I intend to change to Pearler. I presume that I can transfer my existing shares to them.
Jeff
Cheers Jeff, it’s great you can help your sons start investing.
Yes that’s correct, you have the option of transferring shares across to Pearler so everything is in one place.
This brought a wry smile to my face. I have a Buy contract from 1995. For 500 shares the brokerage then was $100 plus stamp duty of $3.90.
Investors have really got it good now. Mind you, I’m no longer fussed over a $5 difference in brokerage but it does depend on how much you are investing at any one time I feel. For, say, a $10k amount, it isn’t material really.
Still hold those shares by the way
Haha nice! Sometimes I think the high cost of brokerage would make ppl behave better and question each buy/sell they make. But we’re now at ultra-low cost everything and investors are probably much better off overall.
Hey Dave,
When I use your link to register, I get an error as “Invalid invite code”
That’s odd. Thanks for letting me know! I’ll tell them there’s a bug and make sure they get you on-boarded properly 🙂
If ‘strongmoneyaustralia’ didn’t work, try ‘sma’ and let me know how you go.
Edit: Pearler told me it should be working now.
Hi Dave
This is so helpful, thanks! A Newbie question for you. I plan to use dollar cost averaging and invest the same amount each month. I want to invest in an index fund for Australian shares and another index fund for international shares. Is it best to buy one the 1st month and the other in the 2nd month and alternate? Or do you split the amount each month and pay the brokerage for 2 trades? Or am I overthinking it?
Good question Azza. I would personally buy one each month to save on brokerage and take it in turns. No need to buy both every month 🙂
Hi dave, Great article to assist newbies. Just to let you know pearler does allow you to buy via a limit order now if that is your preference
Cheers Gareth! Ah yes, good point – initially that was not the case. Thanks, I’ll update the article 🙂
Does Pearler let you reinvest the dividends or do you have to do this manually?
Choosing whether you reinvest your dividends doesn’t happen in a brokerage account. It happens with the share registries (the ones who handle the admin/dividend payments on behalf of funds/companies). So w when you get the paperwork for your holding, you can then log on to the share registry and decide whether to take part in the company/funds DRP (dividend reinvestment plan), if they have one. Hope that helps 🙂
Hi there Dave – I recently read your book (which is great) and have started exploring your website. My wife and I work in healthcare, live in Melbourne, have a 2 year old boy and some savings built up. We are in the process of trying to decide whether to buy a house (likely modest) or invest our savings… Having read your story around investing, we are interested in giving this a try, but wonder if the advice in your book and in this article still stand in the current volatile environment (high mortgage rates, high savings % rates, etc). I would love to know what your current thoughts are on investing and house buying, etc. It seems at present (June 2023), this is quite a bad time for house buying, but does that mean it is a good time to invest, and how is best? Thanks! Patrick
Hey Patrick, glad you enjoyed the book!
If you rememeber I focus mostly on the underlying principles of things, because the details like interest rates etc always change. If you can buy a property and make it affordable in the sense that you don’t give up all your spare money towards it and are still able to save and invest as well, then it’s probably a good move. But some people don’t really worry about owning a home so renting + investing will work better for them.
In terms of ‘good time’ or ‘bad time’, forget all of that. It’s all garbage the media spits out for stories. If you can afford a home and want one, then it’s a good time. In 10 years you won’t remember any of the current news stories. Likewise for markets and investing, the right time to invest is when you can afford to. Waiting for the right time is what causes people to become paralysed into doing nothing, while property prices and markets go higher over time.
Of course, I’m not making short term forecasts here, I’m simply encouraging you to focus on making long term decisions and deliberately ignore the short term environment. Hope that helps!
Thanks Dave – that seems like sensible advice! I guess I was also partly wondering whether some of these slightly ‘older’ articles were updated as new info came in – perhaps one option could be, rather then necessarily writing a new article, just to say (e.g.) ‘last updated May 2nd 2023’, or whatever. Looking at some of the previous comments it looks like you do sometimes update things, but appreciate you may not have the time!! Very much appreciating all the content as we try and catch up our knowledge – it can be really hard to get balanced/unbiased advice, as there seems to be so many vested interests (unsurprisingly) in this space. I wondered whether you followed any of Ramit Sethi’s work – I feel you two both have similar objectives or themes, if at least packaged in different ways! 🙂
It’s a good question. I don’t update a lot of things as I do try to write mostly about principles and basic guiding lessons rather than specifics based on the current environment. That’s because the details always change – interest rates, rents, market prices, wages, the cost of various things, etc. So rather I try to write in a way that teaches people how to think about a particular issue, so they can then understand how to navigate it for themselves into the future.
I’ve read Ramit’s book once, it wasn’t too bad, but I’m no superfan (he’s like a US Barefoot with popular messaging for the masses). Some of his stuff is writing is better than others. I have more in common with people like Mr Money Mustache, in that we’re happy to deliver harsh truths even if they don’t sound good, and catered more to non-beginners and those serious about a more rapid approach to FI. I recommend his blog too if you haven’t read any of his stuff.
I don’t know if you can give me advice on what I am going to ask you
I have just invested into VDHG which is a all in one fund.
My question is should I invest in other ETFS as well cos I am thinking I would be overlapping what I already have in VDHG.
So when I keep put extra money into investing should I be pouring into VDHG and just have the one portfolio or invest in others
I hope that makes sense 😊
Hey Sherrie.
I’m not allowed to give you advice, but the following is factual information. As you said, it’s an all in one fund and it’s extremely diversified. So investing in other diversified funds will definitely overlap with VDHG. This would suggest there’s likely to be no real benefit by adding more things, unless it is something genuinely unique of course.
Hi Dave,
I currently have some funds in a RAIZ account. I learned about RAIZ through the @Shes in the money” podcast. I have 2 questions:
Firstly, since your book was published in 2022, so you have any updated recommendations on which brokers to use? Like which ones have the lowest fees etc. ? Or is it the same as what you’ve recommended here in this page? (pearler/CMC/Selfwealth)
Secondly, I have a RAIZ account with some funds in it. I learned about RAIZ through the “She’s on the money” podcast.
Do you recommend that I withdraw these funds and transfer them all to one of your recommended brokers above? Since RAIZ is a micro-investing platform, would my returns be lower? They’re also charging $3.50 in fees per month.
Hey Julie. I can’t give you personal recommendations unfortunately. There’s also no ‘right’ answer to your questions.
Since my book was written, another competitive broker option is Vanguard, which is zero brokerage for Vanguard funds but comes with conditions/restrictions.
Micro investing is not a bad option if you’re working with pretty small dollar amounts to begin with. Ideally you will be able to increase your savings and open a proper brokerage account to begin investing more seriously, but nothing wrong with that for now. As for whether you close it, that’s up to you. The fees can add up if there’s not a lot in there to begin with, so it could make sense to withdraw once you’re up and running with your proper brokerage account.
Hope that’s useful.
Hi Dave,
Thank you for your feedback :). Yes I started off with a smaller amount in Raiz but I agree, I’d like to transfer it all to a proper brokerage account. Thanks again!
Hi Dave, Nicely put together explanation. Simple question. What are the considerations for establishing a Pearler (and sharesight account) in a couples name, versus having individual accounts, versus lower income earning spouses name. We would have under both unless there were specific considerations. Appreciate this might be more dependent overall financial strategy and FP / accountant advice. Just curious if you have a view when setting up such accounts.
Hey Steve, good question. To be honest, I lean more towards keeping it simple and just having a joint account as a couple (this is what we do). But it can depend on how big of a gap there is between the income of each spouse – sometimes having separate accounts or just one can make sense, but requires some long term thought and planning on what the most likely scenario is going to be over time.
Thank you Dave for passing it on! So blessed to learn the basic rudiments on investing which has always been a major headache for me.
My pleasure Wale, glad you found it helpful!
Hi Dave,
I’m not sure how but somehow I came across your blog after swiping through my phone. There are so much more information I wanted to keep reading on here which I’ll continue to do in the coming days. Thank you so much for your generosity. I appreciate that you try to be very helpful by responding to each comment and actually giving personalized replies rather than just standard which has also benefited me reading about other peoples situations and relating to some. I really feel your genuine passion in helping others. I might have questions to ask in the future but for now wanted to say this. Thank you once again!
Great to have you here Stephanie 🙂
Thanks for reading and glad you’ve found the posts (and comments) helpful. Feel free to reach out if you have Qs – on my contact page is probably best as I don’t catch all the comments.
In your step by step you don’t mention after joining there are three options to pick from when starting the process of choosing how you will invest with Pearla.
There is:
-Setup Shares and ETFs
-Setup Pearler Micro
-Setup Pearler US
If you could explain these options, the differences between them and pros and cons that would be great.
I noticed that you can get the global index fund VGS through the shares and etf setup option but should I choose the Pearler US to get more shares?
Sorry it’s changed a fair bit since this post was first published.
Shares/ETFs: Best suited for those making investments of $500 or more. Has the most flexibility, options + automation available.
Micro: Best suited for those making small investments and just wanting to test a little before investing more (say $10-$200 at a time).
US shares: Best suited for those wanting to invest in specific individual shares of US companies (Tesla, Disney, etc).
I personally just use the normal Shares/ETFs option + have no use for the others. Hope that helps.
Thanks so much for the response, that helps a lot!