'How much money do I need to start?' All your investing questions, answered by an expert.

You’ve heard the too-good-to-be-true stories about investing in the share market. You’ve heard all the horror stories. And with anecdotes ranging from one extreme to the other, you’ve probably parked your investing ambitions to the side, even though being a total boss over your money is a major goal of yours. 

Yeah… us too.

“I've had these conversations with my own girlfriends who say they don’t know anything about finance or investing. They go, ‘I don't know what I'm doing’, or ‘I'm a bit scared’, or they're unsure how to get started,” says CommSec market analyst Laura Besarati.

“But my number one tip is to start as soon as you can, even if it’s a little bit of money that you’re putting into the share market. That little bit of money, the longer you have it in there, the greater the opportunity you have to grow your wealth over time. And I guess that’s what we all want is to have more money, so why not start today?”

Here, Laura answers all of our questions, so that we can confidently make that first investment.

But first, what exactly is the share market?

If the words “share market” conjure images of Leo in The Wolf of Wall Street, you can pause right there (unless replaying images of Leo is your happy place). Laura says it’s more like a grocery store.

“Essentially the share market is a marketplace where you can buy and sell things, so think of it as a grocery store. You go to the grocery store, you pay money and you get something in return, whether it be milk, eggs, bread, or whatever it may be. It's the same thing in the share market,” says Laura.

“You're paying money and you're buying a share of a company, so it's just a different kind of marketplace. And in that marketplace, if the company's doing well and you own shares in that company, your investments will grow. So if you put in $50, and the company grows, now your shares are worth $60, for example, but it could go the other way as well.”

Laura says learning the basics of the share market is essential, but to be okay with not knowing everything. “There's always so much to learn. It's sort of endless,” she says. “Even for me as someone who's worked in the share market for a long time, I don't know everything. But if you know the basics, then it will give you the confidence to start.”

If you love podcasts, she recommends listening to the CommSec Invest series, hosted by Mamamia alumni Jamila Rizvi. “It's eight short episodes that teach you everything you need to know about how investing works, demystifying the share market and making it pretty much accessible for everyone.”  

Another great resource is Stock’d, which has information catered to newbie investors –  from buying and selling to research and risk – while the ASX is the go-to for learning about listed companies. “There's also an ASX share market game, which simulates the share market without actually having your real money in it,” says Laura.

How much money do I need to start investing?

Great news: it’s nowhere near as much as you think. “We need to debunk the misconception that you need a lot of money to start investing because you don’t,” says Laura. “So with CommSec, for example, you can invest with as little as $50.” That’s less than three months of Netflix or the average haircut (thanks cozzie livs).

“You can also wait to save up a little bit of money [to invest], but always make sure you have an emergency fund on the side. Don’t just throw all of your money into the share market.”

So, as a new investor, what can I invest in?

“There are so many investment options when it comes to the share market, but if you want to keep things basic, you'll probably buy a share in a single company, or an ETF (short for Exchange-Traded Funds), which is a basket of shares already made up for you, nicely packaged up,” says Laura. “You can essentially buy an ETF in whatever you're interested in – it might be the tech sector, it might be sustainability or healthcare. There are so many options.” 

Other types of investment include managed funds, bonds and company options, but Laura says some of these are “for more experienced investors” or could require a larger sum of money to get started.

What are common mistakes newbie investors make?

Laura says the first common mistake to avoid is investing all your money in one company. “How the market works is that one part might be going up while the other part's going down,” she says. It’s why spreading the risk is important. “For example, you can have some shares in the finance sector, some in tech, and then some in Australia, some in other countries, to help create diversification and manage risk.”

Another red flag to steer clear of is an online trend. “You don't want to look at Reddit or TikTok as credible [sources], because it’s usually not going to be. We saw it happen with GameStop – the shares went up and then they quickly went down,” says Laura.

“So, invest logically, avoid using emotion, don't jump on the trends and make sure you’re using resources that are credible.”

Learn the basics about investing with CommSec, Australia's leading online broker, and get started here. 

This information has been prepared without taking into account your objectives, financial situation or needs. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to their objectives, financial situation or needs, and, if necessary, seek appropriate professional advice.

Feature Image: Mamamia/Getty.