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How to start share investing with $1000


Published September 2019

Want to dip your toe into the sharemarket? You’ll be happy to hear that $1000 is enough for you to give it a try.

 

It’s relatively simple to start trading shares. In fact, you’re probably already a share investor – even if you’re not aware of it. Your superannuation fund invests in various investments, such as shares, in order to grow the money sitting in your super account.

But, if you’re reading this, you’re likely looking for investment ideas outside of your super. If you’re curious about how to start investing with $1000, there are a few investment options to get you started.

What to think about before you start investing

Make sure you’re in a stable financial position

While share investing may offer the potential for good returns, there are risks that could see you lose some or all of your investment. The money you invest should effectively be a surplus of cash that you’re willing to part with, like extra savings or a bonus from work.

Think long term

Share investing can be a great option if you’re looking for a long-term investment strategy. The market tends to fluctuate, but over a decent stretch of time it generally provides reasonable returns. An initial investment of $1000 can grow substantially over five to 10 years – often a lot more than you’d get from your regular savings account.

Before you get started, reflect on your financial goals and why you want to get into share investing. Are you looking to make short-term gains or are you in it for the long haul? If you’re hoping to generate a house deposit in the next few years then shares are unlikely to deliver on your goal.

Investing in shares with $1000

When you buy into a company or listed fund for the first time on the Australian Stock Exchange (ASX) you need to purchase at least $500 worth of its shares. If you then want to add to this holding there is no minimum amount. International exchanges like the New York Stock Exchange, NASDAQ and London Stock Exchange don’t have a minimum purchase amount.

With a little over $1000 plus brokerage costs you could buy shares in two different companies on the ASX. As an example, Woolworths shares could be selling at $35 each and Qantas Airways shares might be selling at $6 each. That means you can buy 15 shares in Woolworths for $525 (noting the $500 minimum purchase) and 85 shares in Qantas for $510, making a start to your investment portfolio with a bit of diversification.

If you’re starting with $1000 think about investing in companies you understand and feel comfortable with. Starting out your share-investment journey with companies you know can make the whole process feel a little less overwhelming.

Just ensure you consider the fees (brokerage) you need to pay every time you buy or sell shares. 

Differing performance of $1000 over the past 5 years*

The following examples are not an indicator of what will happen in the future but do show how differently companies have performed over time.

For example, as shown in the graph below, Qantas shares were selling at a price of $1.31 (as at July 25, 2014). Investing in 760 shares then would have cost $995.60 plus brokerage. After five years (as at July 24, 2019) these shares were selling at $5.79. These 760 shares are now worth $4400.

 


Source: Generated in the ANZ Share Investing platform

 

By comparison, as shown in the graph below, shares in retail group Wesfarmers (owner of Bunnings and other chains) were $29.96 (as at July 25, 2014). Investing in 33 shares would have cost $988.68 plus brokerage. Five years later the price of these shares is $39.30 (as at July 24, 2019) meaning that the value of the 33 shares would be $1,297.

 

Wesfarmers 5 year share performance

Source: Generated in the ANZ Share Investing platform

 

Another example as shown in the graph below is AMP, which 5 years ago was selling at $5.52 (as at August 20, 2014). At this price it would be possible to buy 180 shares for $993.60 plus brokerage. Five years later these shares are priced at $1.79 (as at August 19, 2019) and the 180 shares are worth $322.20.

 

AMP 5 year share performance

Source: Generated in the ANZ Share Investing platform

 

While the above examples do not take into account dividend payments and only show the performance of the price of the shares, it becomes obvious that companies can perform very differently and that while good gains are possible, there is also the chance of investment losses.

What other investment options are available to me?

Exchange-traded funds 

Exchange-traded funds (ETFs) are a bit like shares in that they can be bought and sold on the stock exchange, you’ll also need a minimum of $500 to start. They’re also somewhat similar to managed funds, as you can invest in several asset classes or companies in a single trade. For example, you might put your money into an ETF that focuses on investing in property, such as VanEck Vectors Australian Property ETF, the five-year performance of which can be seen in the graph below. This ETF value increased by 52% over the five year period. 

Van Eck 5 year share performance

Source: Generated in the ANZ Share Investing platform

 

Or, you might opt for an ETF that tracks in a certain currency, such as BetaShares Strong Australian Dollar Fund. This ETF decreased in value by 29% over the five year period, as shown in the graph below. 

 

Beta Shares 5 year share performance

Source: Generated in the ANZ Share Investing platform

 

Find out more about ANZ’s exchange-traded funds (ETFs)

Managed funds

A managed fund is another option if you’re looking to invest $1000. A managed fund pools money from individual investors which is then managed and invested by a professional. The manager will make decisions on the fund’s behalf.

Most managed funds will require a minimum amount of initial investment. There are some managed funds on the market that will accept $1000 as your initial investment as long as you then make regular fund contributions of $100 or more per month. 

Find out more about managed funds with ANZ

Ready to start investing?

At ANZ we offer the perfect solution for beginner traders. Our standard platform provides all the necessary tools you’ll need to get started, including comprehensive research, ASX announcements and Dow Jones news, as well as live support.

Opening a share trading account with ANZ is easy. Simply apply online, deposit funds into your share trading account, and start trading. 

For further information on ANZ Share Investing read answers to our frequently asked questions.

 

*ASX close prices

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The ANZ Share Investing service is provided by CMC Markets Stockbroking Limited ABN 69 081 002 851 AFSL 246381 (CMC Markets Stockbroking), a Participant of the Australian Securities Exchange (ASX Group), Sydney Stock Exchange (SSX) and Chi-X Australia (Chi-X) at the request of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ). Disclosure documents relating to ANZ Share Investing products and services are available on anzshareinvesting.com or by calling us on 1300 658 355. ANZ is the issuer of the ANZ Cash Investment Account, ANZ Share Investment Loan and ANZ V2 PLUS Account. The obligations of CMC Markets Stockbroking are not guaranteed by ANZ. CMC Markets Stockbroking and ANZ are not representatives of each other.

Past performance is not a reliable indicator of future performance. This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. You should consider the appropriateness of the information, having regard to your objectives, financial situation and needs.