How to Choose the Right Australian Stocks for Your Portfolio

How to choose the right Australian stocks for your portfolio? Choosing the right stock for your portfolio on Australia’s stock market includes assessing the market deeply, identifying the sector, reviewing the essential fundamentals, and checking the charts regularly. 

Choosing the right Australian stocks for your portfolio is one of the key factors to achieve long term goals. Unfortunately, most beginners commit mistakes at this initial step. Let’s see what are the criteria for Australia’s stock market to build a strong base for your business! 

How Many Shares Do You Need for a Strong Portfolio?

Deciding how many shares do you need for a strong portfolio is not straightforward. Usually, 15-25 shares are enough for supporting a beginner’s portfolio in a long term race of benefits. 

If you have shares up to 25, you have the opportunity to unlock the diversification goals. 

Read more: Beginner’s Guide to Investing in the Australian Stock Market

What Does Diversification Mean?

Diversification in Australian Securities Exchange means spreading your shares in different sectors rather than investing larger amount in a single market. Playing the game of diversifying in ASX opens up the opportunities to explore more than one markets. 

Moreover, you will not be wiped out of the market if one or two shares fail to perform. This way you can minimize the risk of loss on your ROI. 

Start Smaller and Build Up

If you are just stepping into the world of ASX, it’s not wise to invest a huge amount at once. Rather it’s good to purchase minimum stocks at the start and then building up more and more with the return on your investment. 

When you invest in any stock without deeply diagnosing its ins and outs, the risk of loss shoots like a rocket. So, always try to start smaller and then build up stocks with your profit over the time. 

Stay Up-to-Date With Economic and Market Changes

You should always stay up-to-date with the economic situation and market changes within ASX to analyze the market deeply. If you invest without properly considering the ASX fluctuations, you can suffer a lot. 

Different means like ASX news websites, news aggregators, podcasts, and social media can help you in this regard. So, always keep an eye on all these forums of ASX to make an informed decision about your investment. 

Factors to Consider to Buy the Right Australian Stocks for Your Portfolio

Remember the overall economic condition of the country largely impacts the ASX. So, the process of choosing the right Australian stocks for your portfolio should be time taking. Don’t take a decision in hurry; otherwise, you may have to face opposite results. 

Here are the most crucial factors to consider when purchasing stocks for building your base in the industry; 

Define Your Goals

Your investment goals for ASX greatly impact the decision of investing in any of the ASX stock. So, always define your goals before making a decision for investment. 

Your Risk Tolerance Capability

You should know that some stocks are riskier than others within ASX. So, all these are not for the same person, as different persons have different risk tolerance capability. That’s why it’s important to analyze your risk tolerance before stepping into the stock market. 

Time Management

Time management is another key determining factor to decide which stock is perfect for you. That’s why focus on your planning more than investing. Some stocks are perfect for short term investments while others are ideal for long term goals. So, define your goals, make a solid plan, and then take a step to invest in any of the ASX stock. 

Research the Market Deeply

The more you research within the market, the more effective investment plan you will build for your portfolio. So, always consider the market financial statements, analyst reports, and talk to experienced investors to get an insight in the market. 

Australian Stocks That You Can Consider for Your Portfolio

As discussed above, Australian stock market has different stocks that have different risk probabilities. And comparing different stocks will help you land the best investment for your portfolio.

Here are some of the most reliable ASX’s stocks to invest in; 

1- CSL Limited (CSL)

CSL is a leading stock in the biotechnology industry all over the world. CSL holds the record of the maximum profitability and growth in the industry of plasma therapy, vaccines, a d other pharmaceutical products. 

As biotechnology products are in demand these days, so investing in such a stock is really beneficial. 

2- Commonwealth Bank of Australia (CBA)

CBA is another one of the leading stocks in Australian exchange. This banking lineup provides services to different Australian businesses and individuals. 

If you are looking for a loyal growth based banking stock in ASX, CBA is the best option for you. 

3- Australian Wesfamers Limited (WES)

WES is the best stock in ASX market for you if you are interested in retailing, insurance, or mining. The business options that Wesfamers offers include Coles supermarket, warehouses, and Kmart. It’s one of the best options to grow your portfolio in coal or mining industry. 

4- Woolworths Group Limited (WOW) 

Woolworths is a leading name in Australia’s supermarket chains. It has a strong record in the industry of Big W, Dan Murphy’s, and Woolworths Supermarkets. It’s also a rewarding option in ASX industrial arena. 

5- Fortescue Metal Group Limited (FMG)

Like other leading groups in different industries, Fortescue is one of the prominent names in iron ore producing industry. You can trace the iron mines of Fortescue in Western areas of Australia. If you are interested in a low cost ASX stock, FMG is the best option for you. 

Balancing Act: Finding Your Optimal Diversification in ASX Stock Investments

In the ASX market, you will find conservative, balanced, and growth return profile allocation options. So, choosing the right allocation option for you depends on your goals, age, and time plan for investment. 

A conservative portfolio is less risky, so it’s the best option for beginners to build an optimal diversification on the ASX stock market. 

Why do diversified portfolios return better than individual investments?

Research shows that diversified portfolios provide better returns than individual investments. It’s due to the fact that different industries perform differently, so the risk of loss minimizes to a great extent. So, adopt the diversified portfolio rather than investing in single stock to prevent loss. 

How can ETFs help you diversify?

If you’re the type of investor who is not much concerned about the diversification of the stock exchange stocks, investing in ETFs is the best option for you. If you’re interested in diversification, ETFs will help you in this case too. 

Here are different diversification options for you if you love invest in ETFs; 

  • Index ETFs

Index Exchange Trade Funds is the simplest ETF type that includes mirroring the performance of the largest companies registered on ASX. ASX 200 is an example of index ETF that holds the top 200 companies in single basket. So, investing in single ETF stock is the best way for beginners to gain quick diversification. 

  • Theme-Based ETFs

Theme based ETFs include those companies that globally fulfill all the ethical and sustainability needs. Such stocks are also the best options for beginners to put their eggs in different baskets without any risk or headache. 

Moreover, such a stock is the best alternative to investing in more than one individual stocks in the ASX market. 

  • Set and Forget

If you want to grab shares of up to 2000 industries on a single forum, ETFs are the best for you. Simply invest in ETFs and forget. Your surely and securely earn a handsome ROI. This way ETFs will minimize the risk along with reducing your tension for managing more than one stocks at a time. 

Where Should You Invest $1,000 Right Now?

If you have an investment up to $1,000 and are interested in ASX market, there are different options for you. You can invest in any of your favourite market’s shares. ETFs are the most secure investment for beginners. 

However, if you are lover of some othe markets like medical, biotechnology, real state, etc., ASX has options for you. But be sure to investigate all the ins and outs of each individual stock before finally taking step towards investment. 


In conclusion, choosing the right Australian stocks for your portfolio is very important. Otherwise, you may have to suffer a remarkable financial damage in no time. Moreover, chances are there that you can’t make the expected progress if you invest in wrong stocks for your portfolio. 

You should know that there are different factors that affect choosing the right stock to build your portfolio. So, always explore the market deeply and compare it with your interest plus goals. Then make a final decision after a thorough investigation. 


What percentage of Australian shares are in the portfolio?

In total, 51% Australian have investments somewhere in the industry. About 58% of the investments in ASX market are in exchange shares. While 20% investors invest in ETFs to build their portfolios. 

Should I invest in Australian or international shares?

The latest survey shows that Australian shares benefitted the investors by giving off about 9.1% return on their investment. However, international shares given 7.6% return that is lower than the local investments. So, it’s important to level your investments by investing in both international and local shares to minimize the risks. 

What is the average rate of return on Australian shares?

The average return of the Australian shares in ASX market ranges between 9% to 13%. However, it’s an average and the short term results may differ largely. There may be negative, positive, or flat return when you consider Australian shares as short term investment. 

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