10 Ideas for Small Investment Opportunities in Australia

When we discuss investments, it seems that property gets the lion’s share of attention. However, what do you do if you want to ensure your future financial stability without spending thousands of dollars? The answer is looking into small investments. We’ll share the best ones in this article.

Benefits of Making Small Investments

People typically invest based on what they can afford. Even if you can’t afford to make huge financial investments (or you don’t want to), small investments have many perks. Here are a few:

  • An easy introduction to investing – You might still be unsure of your risk tolerance, or you haven’t figured out your risk capacity. Small investment opportunities allow you to ease your way into the process.
  • They have low requirements – These activities usually involve low minimum deposits and low transaction fees.
  • They encourage consistent investing – You can master the power of compounding interest and make investing into a regular thing.
  • They work – Despite seemingly low profits, you can actually increase your profits and generate good earnings. The key is to pick the right strategies and be patient.

1. Options

Options can be traded on a variety of underlying instruments. Depending on what you feel most confident in, you can trade stocks, stock indexes, currencies, futures, exchange-traded funds, commodities, or bonds options.

The great thing about options is that you can win in any market situation. You can adjust your strategies and invest when the market goes up or down.

AdvantagesDisadvantages
  • Simplicity
  • Good risk/reward ratio
  • Unique strategies
  • Low capital requirements
  • Financial leverage
Lower liquidity
Higher spreads

2. Shares

Shares are like small parts of a company. When you invest in them, you essentially own part of the company whose stocks you bought and become a stakeholder.

Shares are a versatile instrument: you can invest long-term, adjust the trade size, choose between thousands of shares available to you, etc. Before investing, remember that although they offer the highest return, they also offer an equal amount of risk.

AdvantagesDisadvantages
Capital gains and dividendsEasy to buy and sellGrow with the economyStays ahead of inflationLots of choicesComplicated and takes time to researchHigher risksEmotional ups and downs

3. Savings Accounts

Most banks have benefits for clients that make deposits and avoid withdrawals. The longer you leave money there, the more interest will accumulate.

This option is the simplest one on this list. It is extremely transparent and requires little effort from a client. However, investing in a savings account isn’t a fast-track way to get wealthy at all.

AdvantagesDisadvantages
Access and availabilityProtection via insuranceHigh liquidityEasier to automateAccrues interestMinimum balance requirementsSubject to inflationWithdrawal limits

4. Term Deposits

Term deposits are fixed-term investments, which in many ways, are similar to a savings account. However, the main difference is that investors aren’t allowed to make withdrawals before a specified time. The maturities range from one month to a few years. The interest paid is slightly higher than on regular savings. 

AdvantagesDisadvantages
No feesFixed interest Guaranteed by the government Low maintenanceImpulse spending controlReturns may be substandardLess flexibilityNo benefits from market rises

5. Managed Funds

A management fund is maintained by a professional manager who makes a variety of investments. As an investor, you delegate the responsibility to pick the actual types and the mix of investments. Therefore, your profits depend on the competency of the manager you choose.

AdvantagesDisadvantages
Diversified across multiple market sectorsReduced riskProfessional portfolio managementConvenienceHigh liquidityFees for fund managementReturns depend on the managerTax inefficiency

6. Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) are traded as a collection of securities, such as stocks, and often track a certain index. However, the instruments aren’t limited to shares. As the name suggests, they are traded on exchanges, and the prices change all the time.

AdvantagesDisadvantages
Instant diversificationLimited capital gains taxSector investingLow feesImmediately reinvested dividendsLow volatilityRisky productsLack of rebalancing

7. Real Estate Investment Trusts (REITs)

A REIT is a company that owns, operates, or finances some income-generating real estate. By purchasing shares through a broker, you’ll own a fraction of this company. Makes sure to check the REIT’s management team and track record. Overall, it’s a reliable, steady form of income for investors, but the downside is that capital appreciation can be minimal.

AdvantagesDisadvantages
High cash dividendsProfessionally managed propertiesNo restrictions for foreignersSecured by long leasesTransparencyGrows at a slower paceProperty taxesMay rely on debt

8. Cryptocurrencies

Investing in encrypted and decentralized digital currencies is considered an “alternative” option. However, cryptocurrencies have a lot of potential, especially if you pick a good one. Other than that, it’s very easy – you just go to the crypto exchange and buy an asset.

AdvantagesDisadvantages
Significant potential for appreciationAccessible anywhereAnonymity and autonomyOpportunity to play leverageInstant transactionsLack of knowledgeTheft risksUncertainty

9. P2P Lending

Also known as crowdlending, peer-to-peer lending is based on matching lenders and borrowers through online services. So, investors (or lenders) perform the role of a financial institution and collect interest. If you choose the right service, you can make a good return on investment.

AdvantagesDisadvantages
High returnsFast and convenientYou can withdraw money at any timeLower interest ratesPotential to be tax-freeCredit riskNo insurance/government protectionLegislation may shut it down or not permit it

10. Gold

Everyone knows about it. Gold is the most popular investment of all precious metals. For individual investors, it can take the form of purchasing gold bars or coins. For more sophisticated investors, there are gold futures and options. Historically, we’ve seen rises in demand not only in emerging market economies but also during times where there is financial uncertainty.

AdvantagesDisadvantages
Holds its value over a long period of timeIdeal hedgeHighly liquidRequires no maintenanceOffsets inflationLow returnsSubject to price correctionsNo dividends

Key Takeaways

As a beginner investor, you have a wide range of opportunities. Looking at this list alone, you can pick a couple of different financial assets that suit you personally. Make sure you research all the pros and cons of your choice before you invest.

Our recommendation is to look into options as a business investment. The biggest perk of investing in options is that it’s much simpler than other financial instruments, especially stocks. They don’t need complex analytics, so you’ll quickly work out how to trade them.

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