Once you understand what shares are, the next question is a practical one: how do you actually buy them? The process in Australia is straightforward and can be done entirely online, but there are a few decisions and details worth getting right the first time — particularly around which broker you use and how your shares are held.
This guide walks through the whole journey, from choosing a platform to placing your first order and understanding what happens after you hit “buy”. If you’re still working out the fundamentals of shares, ETFs and risk, start with our pillar guide on how to invest in shares in Australia.
Step 1: Choose a Broker
You can’t trade directly on the ASX — you need a broker (an online trading platform) to place orders on your behalf. Brokers differ on fees, features, and how they hold your shares, so this is the first real decision.
The main things to weigh up:
- Brokerage fees — the cost per trade, often a flat fee (say a handful of dollars for small trades) or a percentage.
- CHESS-sponsored vs custodial — whether shares are registered in your own name or held by the broker on your behalf.
- Market access — ASX only, or international markets too.
- Extra features — fractional shares, automated investing, research and reporting tools.
We compare the leading options in detail in our guide to the best trading platforms and brokers in Australia. Before you commit, it’s also worth understanding the ownership model, which we cover next.
Step 2: Understand CHESS-Sponsored vs Custodial
This is the detail beginners most often overlook. Australia has two main models for holding shares:
- CHESS-sponsored — your shares are registered directly in your name on the ASX’s settlement system, and you receive a Holder Identification Number (HIN). You are the legal owner on the register.
- Custodian model — the broker (or a custodian it uses) holds the shares on your behalf, and your ownership is recorded in the broker’s own system.
Both are legitimate and widely used, but they differ on ownership, portability and what happens if the broker fails. Because it affects how easily you can move your holdings between brokers, it’s worth understanding before you open an account. Our full explainer, CHESS-sponsored vs custodian, lays out the pros and cons.
Step 3: Open Your Account
Opening a brokerage account is much like opening a bank account online. You’ll typically need:
- Photo ID (driver’s licence or passport)
- Your tax file number (TFN) — not compulsory, but without it tax may be withheld from dividends
- An Australian bank account for funding and receiving proceeds
- Your personal details and address
For CHESS-sponsored accounts, you may also complete a sponsorship agreement and be issued your HIN. Verification is usually automatic and can take anywhere from a few minutes to a couple of days.
Step 4: Fund Your Account
Once approved, transfer money from your bank account to your brokerage account or linked cash account. Some platforms let you fund a trade directly at the point of purchase; others require cleared funds first. Bank transfers can take a day or two to clear, so allow time before you plan to trade.
Step 5: Place Your First Trade
Now the actual buying. Search for the company or ETF by its ASX ticker code (for example, a three-letter code), and you’ll see the current price and an order screen. You’ll usually choose between two order types:
- Market order — buy immediately at the best available price. Simple, but the exact price isn’t guaranteed.
- Limit order — set the maximum price you’re willing to pay. The trade only executes if the market reaches your price, giving you control but no guarantee of filling.
Enter the number of units (or dollar amount, on platforms that support it), review the estimated cost including brokerage, and confirm. That’s it — you’re a shareholder.
A Simple Worked Example
Say you want to buy an ASX-listed ETF trading at $100 per unit, and you place a market order for 10 units:
| Item | Amount |
|---|---|
| 10 units at $100 | $1,000 |
| Brokerage (example flat fee) | $5 |
| Total cost | $1,005 |
Your cost base for tax purposes is the full $1,005 including brokerage — worth recording carefully for when you eventually sell.
Step 6: Settlement (T+2)
When your buy order executes, the trade is confirmed instantly, but the actual transfer of shares and money — settlement — happens two business days later. This is known as T+2 (trade date plus two). You’ll need cleared funds available to cover the trade by settlement. Once settled, the shares appear in your holdings and, for CHESS accounts, on the ASX register under your HIN.
Choosing What to Buy First
The mechanics of buying are easy; deciding what to buy is where beginners often freeze. A common and sensible starting point is a single broad ETF that holds hundreds of companies at once, giving you instant diversification without needing to research individual stocks. From there you can add a global shares ETF for international exposure. Piling your first $1,000 into one small company you read about online is how many new investors get burned — spreading your money across many holdings is far safer. Our guide to the best ETFs in Australia explains how to pick a suitable core fund, and ETFs vs managed funds covers the alternatives.
After You Buy
- Keep your records. Save every trade confirmation. Each parcel has its own cost base and purchase date, which you’ll need at tax time.
- Watch the 12-month mark. If you sell shares held for more than 12 months, individuals qualify for the 50% CGT discount, halving the taxable gain. See CGT on shares for the full picture.
- Consider reinvesting dividends. Many companies and ETFs offer dividend reinvestment plans (DRPs) that put payouts straight back into more units.
Common Beginner Mistakes
- Trading too often. Every trade costs brokerage, and frequent buying and selling rarely beats a patient, diversified approach.
- Putting everything in one stock. Concentration is the fastest way to a painful loss. Consider a broad ETF for instant diversification — see our guide to the best ETFs in Australia.
- Forgetting settlement timing. Not having cleared funds by T+2 can cause failed trades and fees.
- Ignoring the ownership model. Choosing a custodial broker without understanding it can complicate transferring holdings later.
This article is general information only and not financial or tax advice; consider your own circumstances and speak to a licensed adviser or the ATO before acting.
Buying shares is genuinely quick once your account is set up. The bigger decisions — which broker, which ownership model, and what to actually invest in — are where the real thinking happens. For a broader view of building a portfolio, return to our pillar on investing in shares in Australia.