Stock Market Investing: Shares, ETFs and Managed Funds Explained
Introduction: Investing in the Share Market—Made Simple
Ever thought about investing in the stock market but felt too overwhelmed to start?
You’re not alone.
With all the jargon—ETFs, dividends, brokerage, managed funds—it’s easy to feel like investing is reserved for finance professionals or wealthy retirees. But the truth is, stock market investing is one of the most powerful ways everyday Australians can grow wealth.
This guide is here to demystify it all.
You’ll learn:
- What shares, ETFs and managed funds actually are
- The pros and cons of each investing style
- How to buy them (without the confusion)
- How dividends and franking credits work in your favour
- How to invest smartly, even if you’re busy
And if you’re ready to take the next step, we’ll invite you to book a free chat or attend our next live investing webinar—specifically for beginners.
Let’s get started.
What Are Shares?
When you buy a share (or stock), you’re buying a small piece of ownership in a company. That means:
- You own part of the business
- You can earn a share of its profits (via dividends)
- Your investment value can grow (or fall) based on performance and investor demand
Example:
Buy 100 shares of Woolworths (ASX: WOW) at $35 each = $3,500 investment
If the share price goes up to $40, your investment is now worth $4,000.
If Woolworths pays a $0.90 dividend, you receive $90 in income.
Owning individual shares can be exciting — but also volatile. That’s why many investors prefer diversified investments like ETFs or managed funds, which we’ll explore shortly.
What Is an ETF?
An Exchange-Traded Fund (ETF) is like a basket of shares you can buy with a single click.
Instead of picking one company (like BHP), an ETF might hold the top 200 companies in Australia (ASX 200). When you buy the ETF, you own a slice of all of them.
Benefits of ETFs:
✅ Diversification – One ETF can give you exposure to hundreds of companies
✅ Lower cost – Most ETFs have low annual fees (often under 0.50%)
✅ Transparency – You can see what’s inside
✅ Easy to buy/sell – Traded on the stock exchange just like shares
Popular ETF Examples:
- VAS – Tracks the ASX 300 (Australia’s largest companies)
- IVV – Tracks the S&P 500 (US top 500 companies)
- VGS – Offers global exposure
- A200 – Tracks the top 200 Australian companies (similar to VAS but with lower fees)
If you’re short on time and want a simple, set-and-forget investment, ETFs are one of the best tools available.
What Are Managed Funds?
A managed fund is similar to an ETF in that it pools money from many investors, but:
- It’s managed by a fund manager (either active or passive)
- You buy in directly through the fund, not on the stock exchange
- They may have higher fees (especially for active funds)
- There may be minimum investment amounts (often $5,000+)
Key Differences:
| Feature | ETF | Managed Fund |
| Traded on exchange | Yes | No |
| Entry cost | Low (as little as $5–$100) | Often $5,000+ minimum |
| Fees | Low (0.1–0.5%) | Higher (0.5–1.5% or more) |
| Liquidity | Instant buy/sell | May take 2–7 days |
| Best for | Passive, low-cost investing | Customisation, active management options |
If you’re new to investing and want flexibility, low fees, and simplicity, ETFs usually win.
Direct Shares vs ETFs vs Managed Funds
Let’s compare the three side-by-side.
| Feature | Direct Shares | ETFs | Managed Funds |
| Risk Level | High (depends on company) | Medium (spread across many stocks) | Medium–Low (varies by fund) |
| Diversification | Low | High | High |
| Time Commitment | High (you pick, monitor) | Low (set-and-forget) | Low–Medium |
| Cost to Start | From ~$500 per share parcel | From ~$5 via micro-investing apps | Typically $5,000+ |
| Control | Full control | Moderate control | Less control |
| Good for… | Experienced investors | Beginners & busy families | Long-term, strategic investors |
How Do Dividends Work?
Many Aussie companies pay dividends – regular income paid to shareholders from profits.
Dividends are usually paid twice a year, and may come with franking credits (a tax benefit unique to Australian shareholders).
Example:
- You own 1,000 CBA shares
- CBA pays a dividend of $2 per share = $2,000 income
- If it’s fully franked, you also receive a tax credit for the tax CBA already paid (e.g. 30%)
What Are Franking Credits?
Franking credits reduce your tax bill or even result in a refund, because the company has already paid tax on the profits it distributed.
This makes Aussie shares with high dividends (like the banks or Telstra) especially attractive for income-focused investors.
Choosing a Brokerage Platform
To buy shares or ETFs, you’ll need a brokerage account.
Here are some of the most popular options in Australia:
| Platform | Best For | Notes |
| CommSec | Beginners & ASX investors | Trusted, owned by CBA, higher fees |
| SelfWealth | Low-cost ASX investing | Flat fee per trade, no commissions |
| Pearler | Long-term ETF investors | Great for automating investing |
| Sharesies | Small, frequent investments | Invest from as little as $5 |
| Stake | US & global shares | No ASX access (yet) |
When choosing:
- Look at fees (some charge a % or flat fee per trade)
- Make sure they offer the investments you want
- Consider user experience, reporting, and features
💡 Pro tip: If you’re investing monthly, choose a platform with low or no brokerage fees for recurring trades.
Common Myths That Hold People Back
❌ “You need a lot of money to invest.”
✅ You can start with as little as $5/month using micro-investing platforms.
❌ “The stock market is like gambling.”
✅ Long-term investing is based on ownership, growth, and compounding — not luck.
❌ “I don’t have time.”
✅ With ETFs and automated investing, you can grow wealth on autopilot.
❌ “It’s too risky.”
✅ All investing carries some risk, but diversification + time = reduced risk.
Tax Tips for Aussie Investors
- Use franking credits
Aussie companies that pay franked dividends offer a tax refund or offset — especially valuable in lower income years or retirement.
- Hold for over 12 months
Shares and ETFs held for more than a year attract a 50% discount on capital gains tax when sold.
- Keep good records
Platforms often provide annual reports. Keep track of:
- Buy/sell dates and prices
- Dividends received
- DRP (Dividend Reinvestment Plans) shares added
An adviser or accountant can help you invest in the most tax-efficient way.
How to Start Your Share Market Journey
If you’re ready to get started, here’s your beginner’s action plan:
✅ Step 1: Get Clear on Your Goal
Are you investing for retirement? Kids’ education? Financial freedom?
✅ Step 2: Choose Your Style
- Want control? Consider direct shares.
- Want simplicity? Start with ETFs.
- Want customisation? Explore managed funds.
✅ Step 3: Open an Investing Account
Pick a platform and verify your identity. It usually takes less than 15 minutes.
✅ Step 4: Invest Regularly
Automate contributions (e.g. $200/month) and stay consistent.
✅ Step 5: Track Progress & Stay the Course
Markets go up and down. Focus on long-term results, not short-term noise.
Final Word: Investing Doesn’t Have to Be Complicated
You don’t need to know everything about the market. You just need:
- A clear goal
- The right tools
- A commitment to show up consistently
Shares, ETFs and managed funds all offer paths to long-term wealth. The key is finding what suits your life, your goals, and your personality.
And when you get the right support?
Investing stops being intimidating—and starts being empowering.
Let’s build your wealth, one smart move at a time.
Book Your Free Investing Chat
Still unsure which option is right for you?
We’ve got an easy next step:
We’ll help you:
- Understand your options (shares, ETFs, managed funds)
- Choose the right platform
- Set your investing goals
👉 Book Now
Bonus: Download Our Investing Decision Guide
We’ve created a decision guide to:
- Have a snapshot of the different types of investments
- Which investments might suit you based on your goals
- Know you next steps tp take action
