Invest in ASX Australia | Investing in ASX Beginner’s Guide 2021
Investing in the ASX is a great way to gain exposure to the price movements of the ASX 200 index. But what is the ASX 200 and how do you invest in it?
The ASX 200 is a stock market index that covers 200 large-cap businesses that are listed on the Australian Stock Exchange. Learn how to trade and invest in the ASX 200, as well as what factors influence the index’s performance.
#1 Broker to Invest in ASX – eToro
Investing in ASX Australia – Beginner’s Guide 2021
Investing in ASX starts with a top-rated, regulated online trading platform. But with so many CFD brokers out there, how do you choose the right one that suits your trading needs?
After reviewing the best online brokers out there, we found that eToro is the safest and cheapest option for beginner traders.
- Step 1: Create an eToro brokerage account by clicking the ‘Join Now’ button on the eToro website. Choose a username and password and provide a valid email address.
- Step 2: Verify your Account – Verify your eToro account by uploading a copy of your passport or driver’s license as well as proof of address (a copy of a bank statement or utility bill).
- Step 3: Make a $50 minimum deposit via a credit/debit card, a bank transfer, or an e-wallet.
- Step 4: Invest in ASX – Click ‘Trade’ after searching for the name or ticker symbol of the asset you want to invest in. Click ‘Open Trade’ after entering the amount you want to invest to start gaining exposure to the Australian market.
Where to Invest in ASX – Top CFD Brokers Australia
In this section of our Investing in ASX guide, we’ll cover three of the best brokers to consider in 2021, offering the lowest fees, safest platforms, and fastest trade executions.
1. eToro – Best Global Forex and CFD Broker Australia
eToro, which was launched in 2006, boasts a user base of over 20 million and has become one of the leading social trading platforms across the board. The eToro user interface is really easy to navigate. There are tons of trading tools to use including copy trading features and ProCharts. Best of all, eToro supports commission-free trading.
eToro serves clients in over 120 countries, including Australia, and is regulated by the Australian Securities and Investment Commission (ASIC), CySEC, and the UK’s FCA.
Investing in ASX with eToro
With an eToro trading account, there are two ways you can gain exposure to indices:
- Stock Index CFDs such as the SPX500, AUS200, and UK100
- You can buy index fund ETFs such as the SPDR S&P 500 Index and the iShares FTSE 100 UCITS ETF without paying a penny in commission.
Since eToro facilitates fractional share trading you can invest in a percentage of a whole ETF or stock index CFD with a minimum investment of just $50.
Investing in ASX via Stock Index CFDs
You can search for a specific stock index CFD such as the SPX500, UK100, and the AUS200 via the search bar at the top of the dashboard.
Alternatively, you can browse through 13 stock indices by clicking on the ‘Discover’ tab from the navigation bar.
Buy Index Fund ETFs with 0% Commission
eToro gives you access to a wide range of 256 ETFs (exchange-traded funds), covering many index funds such as the SPDR S&P 500 ETF and iShares Core FTSE 100 UCITS ETF.
Investing in ASX versus Trading the ASX 200
You can trade the ASX 200 via financial derivatives such as contracts for difference. A CFD lets you speculate on the price of the ASX 200 either increasing or dropping as it tracks the price of the benchmark index.
When you trade ASX 200 through CFDs you’ll be opening leveraged positions. Leverage lets you stretch your investing capital to gain greater share market exposure while only having to commit an initial margin. Nevertheless, leverage can amplify both potential losses and profits.
On the other hand, you cannot invest directly in the ASX 200 because it’s an index, as opposed to a tangible asset like stocks or commodities. But, you can gain exposure to its price movements by investing in ASX 200 ETFs or individual stocks listed on the ASX 200.
68% of retail investor accounts lose money when trading CFDs with this provider.
Copy trading is arguably eToro’s best feature for beginners. CopyTrader is one of the most iconic features eToro has to offer.
CopyTrader is the main driver behind social trading, allowing you to see what real people are doing in real-time, discover and follow investors you like, as well as imitate their trading strategies with a few clicks.
What is CopyTrader?
One of the main reasons the platform is regarded as one of the leaders of the fintech revolution is CopyTrader and CopyPortfolios. The CopyTrader tool’s basic concept is straightforward: select the traders you want to replicate, pick how much you want to invest, and copy everything they do automatically in real-time from the comfort of your own home.
The CopyTrader tool from eToro is a game-changer in the online trading sector since it allows you to build an investment portfolio based on real, tried and tested investment strategies.
Keep the following minimums and maximums in mind:
- The minimum deposit required to invest in a trader is $200.
- The maximum number of traders you can replicate at once is 100.
- $2,000,000 is the maximum amount you can invest in an expert trader.
- The minimum trade size is $1, and the deal will not open if the corresponding amount in the copier’s account is less than $1.
What are CopyPortfolios?
CopyPortfolios can be broken down into three main groups:
- Top Trader CopyPortfolios are made up of the top-performing traders on eToro.
- Market CopyPortfolios are pre-built portfolios of CFD stocks, commodities, or ETFs that follow a specific theme.
- Partners CopyPortfolios – pre-built CFD portfolios created by eToro’s affiliates including Tipranks, a stock analyst software firm; WeSave, a French robo-advisor; and Meitav Dash, a multi-billion dollar investment house.
This unique, passive approach to investing helps traders diversify their portfolios, reducing long-term risk, and maximising current market opportunities. Each CopyPortfolio is rebalanced regularly.
Is eToro safe?
eToro is fully regulated by several top-tier financial authorities including the UK’s FCA (Financial Conduct Authority), CySEC (Cyprus Securities and Exchange Commission), and ASIC (the Australian Securities and Investments Commission).
On top of that, eToro offers negative balance protection and holds all client funds in segregated bank accounts. You’ll also have the option to set up 2FA on both the web-based trading platform and the mobile app.
Fees and Commissions
eToro is one of the best discount brokers out there. This means you’ll be buying and selling stocks and ETFs without paying a penny in commissions. When it comes to CD trading you will face overnight financing fees. Furthermore, when it comes to forex trading the only fees you will…