How to Buy ASX Shares as a Beginner: A Practical Guide

This Is Investing provides general information only. This is not financial advice. Always consider your personal circumstances and speak with a licensed financial adviser before making investment decisions.

Buying ASX shares is simpler than most people assume. You need three things: a broker account, some money, and a rough idea of what you want to buy. Here’s the practical guide to getting started.

Step 1: Choose a Broker

A broker is the intermediary between you and the ASX. You place a buy order through your broker; they execute it on the exchange. You’ll need to open and verify an account before you can trade.

The main options for Australian investors:

Stake: No brokerage on ASX trades in the first month, then $3 per trade after that. Clean interface, good for beginners. Also offers US market access.

Pearler: Designed for long-term, passive investors. Supports automatic investing (recurring purchases on a schedule) which is useful if you want a set-and-forget approach. Brokerage is around $6.50 per trade.

CommSec: The biggest broker in Australia by user count. More expensive ($10–20 per trade depending on order size) but integrates directly with Commonwealth Bank accounts. Good if you’re already a CommBank customer and want everything in one place.

SelfWealth: Flat $9.50 brokerage per trade regardless of order size. Makes more sense for larger individual trades.

For most beginners making small, regular purchases, Stake or Pearler are the most cost-effective.

Step 2: Open and Verify Your Account

All Australian brokers require identity verification (a driver’s licence or passport) and a Tax File Number. The process takes 5–10 minutes online and usually clears within 24–48 hours.

You’ll also need to link a bank account to fund purchases and receive any cash dividends.

Step 3: Understand the Basic Order Types

Market order: Buy at the current available price immediately. Simple, but you might pay slightly more than the last quoted price if the market is moving.

Limit order: Set the maximum price you’re willing to pay. The order only executes if the stock trades at that price or lower. More control, but your order might not fill if the price doesn’t come down to your limit.

For beginners buying established ASX companies with high trading volume (like the Big Four banks or BHP), market orders are generally fine.

Step 4: Know What You’re Buying

Before buying any share, you should understand:

• What the company does: How does it make money?
• Why it’s a reasonable price: Are you buying because the company is good value, or just because you’ve heard the name?
• What your time horizon is: Are you holding for 1 year, 5 years, or 20 years?

If you can’t answer these questions, the simplest alternative is an index ETF (like VAS, which tracks the ASX 300) rather than individual shares. ETFs spread your money across hundreds of companies automatically and have very low management fees.

Step 5: Place Your First Trade

Once your account is funded:

1. Search for the company’s ASX ticker code (e.g., CBA for Commonwealth Bank, BHP for BHP Group)
2. Select “Buy”
3. Enter the number of shares or dollar amount
4. Choose market or limit order
5. Confirm

Your shares will appear in your portfolio once the trade settles, typically on T+2 (two business days after the transaction).

The Costs to Know

Brokerage: The per-trade fee charged by your broker. As above — $0–$20 depending on broker and order size.

CGT (Capital Gains Tax): If you sell shares for more than you paid, the profit is taxable. Shares held for more than 12 months receive a 50% CGT discount for Australian residents.

Dividends: Most ASX companies pay dividends twice a year. These are taxable as income. Fully franked dividends come with franking credits that offset your tax liability.

The Beginner Mistake to Avoid

The most common beginner mistake is watching your portfolio every day and reacting to short-term movements. Share prices fluctuate constantly — a 3% drop in a week is noise, not a signal. Long-term investing requires ignoring most of this.

Decide your strategy before you invest, write it down, and don’t change it based on headlines.