So you’ve done a budget, earn more than you spend and have some ‘spare cash’ just sitting in the bank. Or maybe you’ve got a savings target you’re working towards. The good news is that with investing, ‘spare cash’ can work harder to help you achieve your financial goals. And even better? You don’t always need a pile of money to get going.
Where to start
You’ll need to understand how much risk you’re comfortable taking, which will help you decide the right type of investment for you. For example, you may feel more comfortable investing in real estate as opposed to shares, which can be more volatile. Next, you need to do your research into different types of investments and the associated costs.
What are the costs?
Different types of investments have different costs, but most do incur some sort of transaction fee, commission, or other expenses. By understanding the costs, you’ll have a better idea of how much money you can make from an investment. Here’s a snapshot of some common types of investments and what you’ll need to get started.
Investing in real estate
How much deposit do I need for a home loan?
Generally you’ll need a 20% cash deposit to buy your first home or investment property. So if a house is $800,000, you’d need $160,000.
What are the other costs?
When buying or selling property, you may also have costs to pay like a real estate agent commission, property inspections and stamp duty.
Need to know
Real estate prices can rise and fall so it’s a good idea to think of property as a medium-to long-term investment.
More info
Read up on building a property portfolio here.
Investing in shares
What types of shares can I invest in?
A CommSec Share Trading Account gives you a fast, simple and affordable way to buy and sell Australian shares. You could also open a CommSec International Shares Account, which lets you invest in leading global markets.
How much do I need to start investing in shares?
The starting investment amount will vary according to the type of account you open – but as a guide, the minimum investment for a CommSec Share Trading Account is $500.
What are the ongoing costs?
When you buy or sell shares, you will have to pay a brokerage fee, in addition to the amount of money you spend on the shares themselves. Each individual transaction incurs brokerage, meaning if you buy shares in four different companies, you will have to pay four different lots of brokerage fees. Similarly, if you buy shares in a company and then sell those shares two years later, you would pay a brokerage fee on both occasions.
Investing in ETFs
What are ETFs?
ETF is short for exchange-traded funds. They are shares or other securities grouped together by a theme such as Global 100 or Sustainability Leaders. Buying ETFs allows you to diversify your investments and is generally considered to be a lower-risk way of investing in the stock market.
How do I get started?
With CommSec Pocket you can invest in a range of 10 themed ETFs. It’s great for first-time investors as the start-up cost is low, and you can learn about the market as you go.
How much do I need to invest in ETFs?
All you need to get started with CommSec Pocket is $50. You can set up regular investing amounts or do one-off trades.
Are there any other costs?
There are no account keeping fees for CommSec Pocket and you only pay $2 each time you invest or sell up to $1,000. If you do a trade of more than $1,000 the brokerage fee is 0.20%. The ETFs also incur an annual management cost, which is generally not an out-of-pocket fee but included in the unit price of the ETF.
More info
Before you decide on an investment type for your money, check out this handy Rates and Fees chart to understand all the associated costs of investing with CommSec.
Important information
Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited (formerly Chi-X Australia Pty Limited), a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.
This information is not advice and is general in nature. The information has been prepared without taking account of the objectives , financial situation or needs of any particular individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to the individual's objectives , financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the CommSec Terms and Conditions, Product Disclosure Statements, Best Execution Statement and Financial Services Guide, and should consider them before making any decision about these products and services.
Past performance is no guarantee of future performance.