How To Start Investing In ETFs In Australia 2020 - Step By Step Beginners Guide To ETFs On ASX

Beginners guide to investing in your first ETF (Exchange Traded Fund) in Australia. Learn what you need to consider when buying your first ETF on the ASX and follow along with this step by guide for investing in low cost index funds in Australia for beginners.

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What exactly is an ETF, well it stands for Exchange Traded Fund, and an ETF is really just a simple way for you invest in a whole group of companies by only needing to purchase a single share, rather than needing to purchase individual shares in every single one of those companies.

ETFs come in two overarching types, passively managed or actively managed, and depending on whether an ETF is passive or active will determine how investments are allocated within an ETF.

So now you know that passive ETF investing is a good strategy but to actually get started with investing in ETFs, well you need to actually do this via the stock market. Hence the name Exchange Traded Fund. And in order to start investing via the stock market you need to sign up for a stock brokerage account.

Now that you have a brokerage account and have access to the stock market, all you need to do is deposit your funds into your account and then decide which ETFs to buy. Now there isn’t a single best way to do this but one of the most popular strategies is using this thing called the 3 fund portfolio. The 3-fund portfolio is a portfolio modelled on the idea of maximizing simplicity, diversification, and flexibility. The simplicity allows you to understand and manage your own investments, the diversification helps you lower the risk of any single asset's under performance becoming catastrophic, and the flexibility allows you to set an allocation that suits your circumstances and financial stage of life.

So now you know how to actually get started with ETF investing in Australia, however like I mentioned it must be a long term strategy, and as part of a long term investing strategy you need to hold and keep buying more units of the ETFs over time. This is currently my strategy and every month I purchase more units of ETFs because I totally recognize the benefit of the diversification and the stability of doing this long-term for a relatively low cost.

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