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How to Open and Use a Brokerage Account in Australia

By Will Ellis
Last Updated on January 3, 2024

It can be daunting if you’ve never opened a brokerage account. However, it is essential for investing in Australia. A brokerage account is vital in building wealth over time, so finding reliable online stock brokers is necessary.

Many brokers in Australia cater to different trading abilities. Before you even begin to search the market for what’s out there, you need to determine what you plan to do with the account.

Some people keep all their investments in one account, whereas others like to have multiple accounts set up with different online brokers to separate their assets.

Each trader’s investment journey is different, and since you’re looking to open a broker account to gain access to share trading platforms, we assume this is your first time trading in Australia. In this article, you’ll learn how to open and use a brokerage account in Australia and explore all aspects.

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Table of Contents:

What Is a Brokerage Account? 🔎️

A brokerage account allows you to place orders on a trading platform like the Australian Securities Exchange (ASX). A brokerage account is predominantly known as a share trading account in Australia. The account lets you buy and sell shares and exchange-traded funds (ETFs) on trading platforms.

You will need a share trading account to buy and sell assets, including on the Australian Stock Exchange. The broker acts as a third party that deals with all the behind-the-scenes of a transaction. So, you’ll add funds to the account and place the transaction you want, and they’ll transfer and receive the funds on your behalf. The brokerage is the custodian of the securities in your account.

You can store funds in the account. All of your incoming and outgoing are from a brokerage account. The account helps you reach a savings goal or put aside money. With a brokerage account, you can:

  • Buy and sell: Start trading stocks, mutual funds, ETFs and other assets. Brokerages act as third parties dealing with the technical stuff involved with trades. For example, if you want to buy a particular asset, the platform will pair you with an eligible trader who is selling the asset. You must initiate the trade, and the broker will deal with the rest.
  • Create long-term growth: Investments with your brokerage account can generate long-term returns. You may earn dividends on the shares, or your initial trade value may increase over time, so you’ll make a profit when you decide to sell shares.
  • Set aside money: Having an account for your investments can help you set aside money for the future; whether you’re creating your retirement fund or have a goal to work towards, you can save money in a separate account from your bank account.
  • Learn about investing: You’ll gain access to tools, strategies and investment research. Some brokers may support new traders finding their feet with a helpful customer service team.

If you’re a beginner or casual trader, for example, using a brokerage account can provide you with support from customer care; learn about investing from the broker through the information it provides.

What Are the Different Types of Brokerage Accounts?

There are different types of brokers and brokerage accounts available. Which account you need and which broker you should look for will depend on your trading needs.

The different types of brokerage accounts and brokers are as follows:

  • Full-service broker: Full-service brokers will guide you throughout the entire process of investing, from developing investment plans, executing transactions, investment monitoring, seeking out investments in markets and more. Institutions, families, wholesale clients and individuals often use full-service brokers. If you want to do the minimum and would instead have a third party take the burden from you, this is a type of broker to consider.
  • Discount broker: For investors who want a more hands-on approach and do most of the investing themselves, there is the option of a discount brokerage. Discount brokers typically have lower fees than full-service brokers but may also come with fewer features.
  • Cash brokerage accounts: A basic trading account that you deposit money into to purchase stock. Cash accounts can be full-service or discounted. Cash accounts can be limiting, and you must deposit cash to start trading.
  • Online brokerage accounts: If you want to take control of your investments from home or on the go with your smartphone, online brokers come with various research and analysis tools to help you make informed decisions. An online broker may charge a per-transaction commission.
  • Margin accounts: The broker acts as a lender, and you borrow money to start trading. Borrowing funds (margin trading) enables you to make more advanced trades, like short-selling a stock. You will have to pay interest on the loan, and some brokers may ask for an immediate deposit of funds if the account balance falls below the required amount.
  • Robo-advisor: Robo-advisor accounts differ from a brokerage account, but you must know the difference. Robo-advisors select investments without human participation. They’ll use data and algorithms and make investment decisions for you.

This article focuses on online brokers and online share trading platforms, but we mentioned the above to show you how extensive brokerages are.

Brokerage Account Features to Look Out for ➡️

There is much more to online brokers than facilitating trades, and there are various features brokers tend to have that help traders navigate online trading platforms. When deciding which brokerage to use, you should look at how feature-rich the platform is and what it has to help your trading journey,

Consider looking at the following features:

  • Trading platform: All brokers offer a trading platform for their investors, either their own or a third-party system. So, you can hold your account and trade all with the same provider, making the overall trading experience more seamless.
  • Security: Always remember the security of your funds and personal information when choosing the right broker. Even if it’s an online share trading platform that is ASIC-regulated, trading platforms have to follow Australian regulation laws. Regulated brokers and exchanges will protect you if anything untoward were to happen. Look at the security measures on the platform, like two-factor authentication for accessing your account, for example.
  • Mobile app usability: If you want to trade Australian stocks on the go, ensure the stock trading platform is mobile-friendly. The app should be easy to navigate and be similar to the online or desktop versions. You should be able to check your account and buy and sell shares on an accessible, user-friendly app.
  • Available resources: The best share trading platforms will promote investing knowledge, with libraries of educational resources to help you with your investment journey. Educational resources are ideal for all investors, including casual investors and experienced. Beginners can learn something new, and experienced investors can brush up their knowledge.
  • Investment options: To help your investment portfolio grow, consider a platform with plenty of investment opportunities. Look for international market access if you trade in more than Australian stocks.
  • Customer service: Most brokers in Australia have a dedicated customer service team to help you with any platform needs. Consider the best way to contact support if it ever comes to it. For example, most platforms offer email, live chat, and phone support during business hours.
  • Automatic trading capabilities: Intuitive platforms can be helpful for beginner traders, as you can set up trades and strategies and have the platform conduct them automatically. Automated trading is optional, but if it interests you, look for an online broker.

Naturally, as you learn more about trading platforms and brokerages, you will discover which features you prefer and which fit your trading style best.

Brokerage Fees You Can Expect 💰️

There are different fees that you may pay when using a brokerage account. However, when you initially open one, they tend to be free, but this isn’t always the case. You won’t have to pay an initial account opening fee; however, it may cost you to hold capital in the account. Some brokers may typically charge an opening brokerage fee or offer incentives such as a monetary bonus or no-joining fee.

Some brokers offer a $0 commission trade, meaning no percentage of your trades will be from the platform. However, there will still be other trade-related fees. When looking for the most suitable broker, check out their fee schedule before you apply under the costs involved. Not only will you be able to price how the account will cost you, but you will also be able to see many different trades and asset costs.

What Do You Need to Open a Brokerage Account?

Due to Australian laws around investing, to open an account, you need to provide the broker with certain information, such as:

  • Proof of address: You must share your address and tax file number information. You can use payslips or any recent government documents. You may need to provide financial tax statements.
  • Proof of identity: Anything related to investment will require proof of identity. You can use a driving licence, passport and Medicare card. The broker may take a few days to identify you correctly, but the process is relatively simple.
  • Contact information: You will be required to share contact information, like your email address and phone number, in case the broker ever needs to contact you.

In other places around the world, you can remain an anonymous trader. However, in Australia, that’s not the case. You will need to provide personal details to trade here.

Who Can Open an Account With an Australian Broker? 🤔️

To apply for Australian brokers, you must be over 18 and a resident of Australia. You must provide personal information like your name and age with proof of identity and address. If you’re using overseas trading platforms, some may allow you to trade anonymously, as different countries have various regulations on investments and know-your-customer (KYC) policies.

Benefits and Drawbacks of Using Brokerage Accounts

Most exchanges require you to have some form of account for your investing, but it’s not always needed, especially if you’re trading on international markets. We’ve compiled a list of all the benefits and drawbacks of using a brokerage account.

Benefits ✅️

  • Portfolio diversification: You can invest based on your risk tolerance and financial goals. Most brokers allow you to hold various asset classes in one account so you can oversee them from one platform and grow them as and when you need them.
  • No contribution limits: Most brokers allow you to add as much capital to your account as possible.
  • Relatively easy to open: Applying for an account isn’t complicated. You just need to sign up online, provide the necessary documents and wait a few days to be accepted.
  • Withdraw funds whenever: You can withdraw and deposit money anytime, as you’ll have 24/7 access to your brokerage account.
  • Protection if the platform is registered: If your chosen broker is registered and regulated by ASIC, you will receive protection on your investments if the company shuts down.

Drawbacks ✅️

  • Investments are taxable: In Australia, all investments are taxable. So, when filling out your tax return at the end of the financial year, you must declare any earnings made from your investments.
  • Risks: Investing is risky, and you can lose money as quickly as you make it. However, there are things you can do to minimise loss, like stopping loss orders and more.
  • Brokerage fee: Some brokers charge a brokerage fee and other fees included with transactions. You pay more than just for the investment. With a broker, additional charges are included. Choose a transparent broker with all the fees on their platform to avoid hidden fees.
  • Minimum deposit and balance: Most brokers require a minimum deposit to open the account. Additionally, you may need to keep a certain amount of capital in the account to keep the account open.

How to Open a Brokerage Account ➡️

Now that you know what a brokerage account is and what documents you need, it’s time to dive into how to open one. You can open an account in six simple steps:

  1. Decide your preferred trading: Some brokers specialise in stocks or leveraged trading. You need first to set out your investment objectives and how you plan to get there. If you want to buy and sell shares, stocks and other commodities, most platforms will allow you to do so.
  2. Choose a broker: If you want to buy and sell shares, stocks and other commodities, most platforms will allow you. Compare the different brokers until you find the one best fits your trading style.
  3. Find all the necessary documentation: Preparing the previously mentioned documents for opening an account before applying to platforms will save you time. You may have to scan or take photos of the papers to give to the online broker.
  4. Apply to online brokers: Once you’ve chosen your broker and have the correct documents, you can apply for a brokerage account.  Verification can take a few days, so don’t expect to start investing immediately.
  5. Link your bank account: Once the account is open, you will need to link your bank account. There may be a minimum deposit required. Usually, if there is a minimum deposit, it starts from $500. Once your funds are in the account, you can scope your first trade using the platform features.

Can You Open More Than One Online Trading Account?

Yes. Many advanced investors have multiple trading accounts. Some brokers offer exclusive assets, so investors join to benefit from those opportunities. Equally, some investors like to separate their assets so they’ll have one for their shares, another for their ETFs and maybe another for managed funds.

It is up to you how many accounts you have. If you come across brokerages that are free to open, apply to a few to find the right fit. However, you may have to pay a minimum deposit to open an account. If you’re entirely new to investing, consider finding a standard broker with a platform that offers multiple asset classes to keep everything in one place until you’re more experienced and ready to branch out.

How to Choose the Best Online Brokers as an Australian Trader 🇦🇺️

You may be wondering what factors to consider when choosing the best online brokers, so to help you with this, we’ve compiled a list of suggestions below:

  • User experience: Investment platforms get complicated the more features they have and the more advanced trades you make. So, choose a brokerage platform that suits your trading style and level. A user-friendly platform can make investing much more accessible, especially in the early stages of your journey.
  • Fees: If fees are essential to you, compare the share trading platform and see what account fees the online brokers offer. You may be looking for a low-cost brokerage, but just because something is a low price doesn’t mean it is necessarily better. So, consider other features as well as low fees.
  • Data and live pricing: Although you can directly go onto stock markets to see data and live pricing, it is handy when a broker has it built into their platform. So you don’t have to keep switching tabs or websites; you can access market data from the platform you hold your account and trade on.
  • International markets: If you’re looking to trade stocks or ETFs on global markets, consider a platform that allows you to trade on various international markets and the Australian stock market.

How to Use an Online Brokerage Account 📖️

Using a brokerage account is pretty simple; once your application is accepted, you should be free to explore the platform as you see fit. We recommend you get to know the platform before you invest any money. Explore all the features, learn to read the charts and get to know the broker you’ll be making transactions with.

To help ease you into your first investment, you will learn how to start your first trade on a brokerage platform in the following five steps.

1. Choose Your Online Broker

We’ve covered this already in the article, but the kind of accounts and online trading platforms you use can significantly impact your investing experience. You should compare share trading platforms and consider the following factors:

  • Transparency: No investor likes hidden fees, so find a transparent platform with all the costs associated with the account and transactions made using the account.
  • Accessibility: User-friendly interfaces make trading a lot easier. Navigating through a platform with an innovative UX will improve your overall experience.
  • Availability: A platform can’t have every single asset to offer. However, if you want to invest with a particular investment in mind, you should search for a broker that provides access.
  • Reliability: Always check you’re using a secure platform. You must ensure it’s safe and well known and protest its investors.

2. Open an Account

You need to open an account after comparing and deciding on a brokerage platform. Once you’ve shared all the information with the broker, sent over any necessary documents and linked your bank account platform, you’ll be ready to use the account.

3. Research Desired Assets

Utilise platform tools and features to discover trading opportunities. Do as much research as possible about the asset you want to invest in. Learn about the investment, how it is traded, and individual asset details. For example, suppose you want to invest in AMD shares. In that case, you’ll want to know background information on the business, past market behaviours, asset value, and current price and see if there’s any noise online about the asset from other investors.

It would be best to have your investment plan ready for your first trade, and you could create objectives and strategies to help achieve your goals. Sticking to a plan can help you stay focused, especially since this is your first trade on the platform; you don’t want to do too much at once.

4. Buy and Sell Assets

You can build your investment portfolio after completing the necessary research and investment plan. You can search for your desired asset and enter into the platform how much you want and want to invest.

For your first transition, start small to reduce the risk of loss. If you start big and lose big, you may be disheartened. Make small investments to begin with and then build up your portfolio. As you start making more investments, your portfolio will grow. We recommend investing in several different assets rather than putting all your money into one. Diversifying your portfolio reduces the risk of all your capital plummeting.

Start with low-cost investments to try buying and selling assets and get used to the platform’s process. Each broker will have a different interface, so getting used to buying and selling early on will help you build the habit. Remember to stick to your plan and don’t make any irrational decisions, at least not early on in your journey.

5. Check Your Investments

Once you’ve made your first investment purchase, you can see it from your account. The brokerage will have a feature that will allow you to track the progress of your investment. You can leave it for a while or check back on it regularly.

You can withdraw and deposit money anytime, as you’ll have 24/7 access to your brokerage account. You can do so anytime if you wish to cash out your investments. However, check with your broker to see if there are any charges or limitations. Online brokerage accounts are usually quite flexible.

Final Thoughts 💡️

Using a broker that meets most, if not all, of your investment needs is ideal, especially if you’re starting. Australia has a variety of share trading platforms for you to start investing in; it just depends on your trading style and investment objectives.

If you’re unsure if you can afford to invest or need help with personal finances, please seek a financial advisor before investing your money.

Frequently Asked Questions

What Is Needed to Open an Australian Brokerage Account?

Due to Australian laws around investing, you need to provide the broker with certain information, such as proof of address, identity, tax file number, and contact information, to open a brokerage account. In other places around the world, you can remain an anonymous trader. However, in Australia, that’s not the case.

What Is the Minimum Amount Needed to Open an Online Brokerage Account?

Usually, there is a minimum deposit, and it starts at $500. Once your funds are in the account, you can scope your first trade using the platform features. Some brokers require you to maintain a minimum balance; you could be charged if the balance falls below. Check with your broker to see if a minimum deposit is needed, as not all brokerages require one.

Can You Withdraw Money From a Brokerage Account?

You can withdraw and deposit money anytime, as you’ll have 24/7 access to your brokerage account. You can do so anytime if you wish to cash out your investments. However, check with your broker to see if there are any charges or limitations. Online brokerage accounts are usually quite flexible.

What Is an Online Brokerage Account?

Online brokers allow you to take control of your investments from home or on the go with your smartphone; online brokers come with various research and analysis tools to help you make informed decisions. An online broker may charge a per-transaction commission. These brokers usually come with trading features like an online platform, market analysis, various assets to trade and different trade and transaction types.

Can Non-Australian Residents Use the Australian Securities Exchange?

To trade on the ASX, you will need a brokerage account that participates in the exchange. However, international brokers may not have access to all ASX features or assets. You may find the selection is limited in comparison to an Australian resident.

How Can a Beginner Invest in Shares?

  1. Choose your broker and compare share trading platforms.
  2. Open an account online, send over any necessary documents and link your bank account platform.
  3. Research as you can about the asset you want to invest in. Learn about the asset and its past performance.
  4. Add money to the account and start buying shares.
  5. Track the progress of your investment. You can leave it for a while or check back on it regularly.

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