Australians have access to a wide range of investments — from ASX shares and ETFs to property, bonds, and term deposits. Each type of investment has a different return profile, risk level, tax treatment, and role in a portfolio. Understanding the basics of each helps you make informed decisions about where to put your money.
1. Shares (Equities)
Shares represent ownership in a company listed on a stock exchange. When you buy shares in a company listed on the ASX (Australian Securities Exchange), you own a small slice of that business.
Returns come from two sources:
- Capital growth — the share price rising over time
- Dividends — a share of company profits paid to shareholders (often with franking credits in Australia)
Key features:
- Listed on the ASX — can be bought and sold during trading hours (10am–4pm AEST)
- Prices fluctuate daily based on company performance, economic news, and investor sentiment
- Higher potential returns than cash over the long term, but with higher short-term volatility
- Subject to capital gains tax (CGT) on profits and income tax on dividends
2. Exchange-Traded Funds (ETFs)
ETFs are funds that hold a basket of assets (shares, bonds, property trusts) and trade on the ASX like a single share. Rather than picking individual companies, an ETF lets you own hundreds or thousands of them at once.
Examples of popular Australian ETFs:
| ETF | What it holds | Ticker |
|---|---|---|
| Vanguard Australian Shares ETF | Top 300 ASX companies | VAS |
| Vanguard Diversified High Growth | 90% global shares | VDHG |
| Betashares Australia 200 ETF | Top 200 ASX companies | A200 |
| iShares Core S&P 500 ETF | 500 largest US companies | IVV |
ETFs are the most popular starting point for beginner investors in Australia due to their low cost, built-in diversification, and simplicity.
3. Managed Funds
Managed funds pool money from multiple investors and a fund manager invests on their behalf. Unlike ETFs, they are not traded on the ASX — you invest directly with the fund manager, and units are priced once daily (after market close).
Types of managed funds:
- Actively managed — a manager makes investment decisions trying to beat the market (typically higher fees)
- Index managed funds — track a market index passively (lower fees, similar to ETFs but not exchange-traded)
Active management fees in Australia typically range from 0.5% to 1.5% per year. Research consistently shows most active managers underperform their benchmark index after fees over the long term.
4. Property
Property investment in Australia involves buying residential or commercial real estate to generate rental income and capital growth.
Options for property investors:
- Direct property — buying a physical investment property
- Real Estate Investment Trusts (REITs) — listed on the ASX, allow exposure to commercial, industrial, or retail property without buying a building
- Property syndicates and unlisted trusts — pooled investment vehicles (often illiquid)
Australia’s major cities have historically delivered strong property capital growth, but entry costs are high (large deposits, stamp duty) and investment properties involve ongoing management effort.
5. Bonds and Fixed Income
Bonds are loans you make to a government or corporation. In return, they pay you regular interest (the coupon) and return your principal at maturity.
Types available to Australian investors:
- Australian Government Bonds — issued by the Commonwealth Government, very low risk
- State Government Bonds — issued by state governments
- Corporate Bonds — issued by companies, higher yield but more risk
- Bond ETFs — listed funds that hold a diversified portfolio of bonds (e.g., VAF — Vanguard Australian Fixed Interest ETF)
Bonds play a defensive role in a portfolio — they tend to be more stable than shares and can cushion portfolio losses during equity market downturns. However, rising interest rates reduce bond prices.
6. Term Deposits and Savings Accounts
Term deposits and high-interest savings accounts (HISAs) are cash-based investments offered by Australian banks.
| Feature | Term Deposit | High-Interest Savings Account |
|---|---|---|
| Return | Fixed interest rate | Variable interest rate |
| Access | Locked for the term (e.g., 6 or 12 months) | Generally accessible anytime |
| Risk | Essentially zero (bank deposit, APRA regulated) | Essentially zero |
| Typical rate (FY2025–26) | 4–5% p.a. | 4–5.5% p.a. |
| Tax | Interest taxed at marginal rate | Interest taxed at marginal rate |
These are ideal for short-term goals or money you cannot afford to lose. They are not suitable for long-term wealth building due to returns that may not outpace inflation over time.
7. Superannuation
Super is Australia’s compulsory retirement savings system. Your employer contributes 11.5% of your ordinary time earnings (FY2024–25), and you can also make voluntary contributions.
Super is invested in pooled funds that typically hold shares, property, bonds, and cash. The tax treatment is highly concessional (15% on contributions, 15% on investment earnings) making it the most tax-efficient vehicle for retirement savings. Access is generally restricted until preservation age (age 60 for most Australians).
8. Alternative Investments
Alternative investments include anything outside the traditional asset classes:
| Alternative | Access in Australia | Notes |
|---|---|---|
| Gold | ETFs (e.g., GOLD on ASX), physical | Hedge against inflation and market stress |
| Cryptocurrency | Exchanges (Coinbase, CoinSpot) | High volatility, not regulated like securities |
| Infrastructure | Listed infrastructure funds on ASX | Stable cash flows (toll roads, airports, utilities) |
| Private equity | Largely institutional — limited retail access | Illiquid, long-term |
| Commodities | ETFs and mining company shares on ASX | Oil, iron ore, agricultural products |
Which Investment Type Is Right for You?
| If you… | Consider… |
|---|---|
| Are just starting out | ETFs — simple, diversified, low cost |
| Have a short time horizon | Term deposits, HISAs |
| Want regular income | Dividend ETFs, REITs, bonds |
| Have a long time horizon (10+ years) | Growth-oriented shares or ETFs |
| Want super-efficient retirement savings | Maximising super contributions |
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Frequently Asked Questions
What is the safest investment in Australia? The safest investments are cash-based products — term deposits and savings accounts held with APRA-regulated banks. These are protected under the Financial Claims Scheme (FCS) up to $250,000 per person per institution. Australian Government Bonds are also considered very low risk.
Can I have multiple types of investments at once? Yes — in fact, holding a mix of asset types (diversification across asset classes) is fundamental to managing investment risk. A balanced portfolio might include Australian shares, international shares, bonds, and cash simultaneously.
Are ETFs better than managed funds? ETFs and index managed funds are broadly similar in their investment approach. ETFs trade intraday on the ASX and often have lower minimum investment amounts and lower management fees. Managed funds price once daily and may have minimum investment requirements. Both can be low-cost and effective — the right choice depends on your preferences and the specific fund.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.