How to Buy Shares in Your Self Managed Super Fund (SMSF): 5-Step Guide

  • Sonny RahimSonny Rahim
  • Updated Dec 19, 2022

  • Mate Checked

    This information has been reviewed by our SMSF Mates before it was published as part of our review process.

Superannuation investors have not typically had much control over where their funds are invested over the years. Bog-standard industry super funds or retail super funds only offer investment options like defensive, balanced or high-growth, which provide little ability for the investor to customise the assets within their portfolio, beyond splitting them across the various investment profiles above. If you wanted to invest in a company like the Commonwealth Bank (CBA) directly, you could forget about it with a regular super fund which is why more investors are opting for a self-managed super fund (SMSF) now more than ever before.

Nowadays, people are looking for more control over how their retirement savings are managed. If you think about it, an SMSF is the best place to start because you have total control over what assets are within the portfolio and when to buy and sell. The attraction of owning shares in a quality company like CBA is obvious and is not possible unless you have an SMSF.

There are countless ways investors can buy shares these days, through one of the many online brokers. If you’re looking for silver service, you can choose to buy shares through a full-service stockbroker, but this comes at a price. Some large companies allow investors to purchase shares directly through the company as well.

While buying shares is a relatively straightforward and simple process, let’s not forget that the first time you pull the trigger is a significant milestone in your investment journey. Some SMSF investors choose to buy shares online through an online broker like Interactive Brokers, which offers competitive pricing on share purchases. Until you get the hang of this process, it can be a bit daunting, so we are looking to cover the key points of how to buy shares in the article below with everything from different order types to the best broker.


Interactive Brokers Review - SMSF Mate


Step 1: Select which stockbroker you are going to use

Stockbrokers come in many different shapes and sizes, and the type of service each one offers can be very different, included their fee structures. If you’re the kind of investor looking for more of a tailored approach to investing, then a full-service stockbroker might be for you. This relationship will usually include research and analysis on companies the stockbroker follows as well as deal-flow, which includes things like initial public offerings (IPOs), capital raisings and the like. All this knowledge and insight comes at a cost with some full-service stockbrokers charging $80-120 commission per trade, so it’s not for everyone. 

Perhaps the most common way to buy shares is through an online stockbroker or brokerage account. Fees are much lower, but you’ll have to do it yourself for the most part. Once the account is opened and ready to trade, you will have to fund your account, after that, you can purchase shares in a company at the click of a button.

The process of opening an online brokerage account is very similar to opening a bank account in the sense that you will have to provide some personal information, identification and proof of address. Once the account has been approved, you will then have to fund the account which can be done by bank transfer. When the funds have been credited to the account, you are ready to place your first trade.


Step 2: Decide which shares you are going to invest in

Now that your stockbroking account has funds in it, you are ready to start looking for an investment opportunity. The motivation to invest in a particular company can come from many different places or experiences as a consumer. Micro and macroeconomic factors play a part in a company’s share price performance as well as the monetary and fiscal policy which the central bank and the government control. 

Flashing prices and live market data may seem overwhelming in the beginning, but it’s essential to try and avoid this noise and consider purchasing shares in good quality companies that you may want to own for the long term.

There are countless approaches you can take to invest in the share market, and some of the most famous long-term investors have proven that analysing a company’s fundamentals is an excellent place to start. One of the best places to look for investment opportunities is which provide SMSF investors with up-to-date information on the ASX market, share prices, charts and index performance data all in a digestible format. Market Index offers many helpful tools, tips and resources which will help you to analyse and invest with confidence.

Have a look at the company’s annual report which you can find on the ASX website along with all other important information that the company has released recently. This information will give you some vital information about what the management staff think of the company and where it’s going. 

You can also dive into the financial numbers, which can help you consider if the company is being run well. Your online stockbroker can also provide tools and tutorials on how to analyse shares, and some even offer seminars and information events to help you on your investment journey.


Step 3: Plan how many shares you wish to purchase

Before entering your first share market order, deciding on how many shares to buy and at what price is important. If you are new to the process, it’s probably best to start small and work your way up from there. If you have an overall budget in mind for an investment in a particular company, you could think about spreading out your purchases over a period of days or weeks and gradually building a position in the company. This process is called dollar-cost averaging, which simply involves investing an amount of money at various intervals over some time, regardless of whether the share price is up or down. 

The use of the dollar-cost averaging purchasing strategy does not necessarily mean investments will be better or worse off and certainly does not protect you from falling share prices. What it does, however, is counters the emotion of investing normally by adopting a systematic and incremental approach based on the principles of asset allocation

This strategy provides investors with a straightforward approach to steadily allocate their capital without being overly concerned about day-to-day market volatility. Investors with long-term investment horizons with a disciplined approach to continue investing even during the most volatile periods, it’s a strategy worth considering.  

Step 4: Place the order for your shares

The two most common order types which all share investors should understand are the market order where you will buy or sell at the current market price, or a limit order where you will buy or sell at a price that you specify. 

Market Order

A market order is an order to buy or sell shares straight away at the current market price. Assuming the market is currently open when you execute a market buy order, you will receive a price at or close to the current offer price. The offer price means that there are sellers at a certain price for a certain number of shares. You will be buying directly from these sellers, usually on a first-come, first-serve basis. The same goes for when you execute a market sell order, only you will be selling into the buyers orders.

Market orders are perfect for investors that wish to execute an order quickly and without delay. If you aren’t overly price-sensitive for the price you pay or sell then a market order is for you. You will never know exactly what price you are going to pay until the trade has been completed which is an important consideration, especially during times of market volatility where your order may end up getting filled at a much different price to when you clicked the button. 

Worth noting: market orders can’t guarantee you a certain price, but they can guarantee that your order is executed immediately. It’s the right order type if you don’t want to miss an opportunity to buy or sell and aren’t too fussed with the price you pay or receive.

Limit order

Limit orders provide investors with control over what price the trade is completed. You are telling the market that this is the price that I want to buy or sell at and nothing will happen unless the price trades at the level you have set. If the share price of a company is trading a $55 per share, but you only want to pay $50 per share, a limit order for $50 can be placed and will not be completed unless the price falls to $50 per share. The same goes for selling your shares at a certain price. You simply set the limit order at the price you wish to sell, and nothing happens until the price trades at that level. 

To reiterate, a limit order is a pending order which allows you to buy or sell your shares at a certain price in the future. Once the price of the shares trades at your chosen level, your order will be completed but not until another party has purchased your shares. 

What are the two types of limit orders?

A buy limit order enables you to purchase shares at or below the current market price, and it will ensure your order is completed at the price which you specify. You must ensure a buy limit is placed at or below the current market bid or buy price; otherwise, the order will not be placed. 

A sell limit order allows you to sell shares at or above the current market price and will ensure you receive a higher price than where the market is currently trading. All limit orders, buy or sell are queued on a first-come-first-serve basis, which means when you place your order, you are joining others in the queue at the price level you specify. These order types do not guarantee your trade will be completed, partially or even at all, which is an important consideration. 

Worth noting: limit orders can sometimes cost investors more in commission due to the possibility of a partial order being completed. They do offer potential price improvement which can justify the added expense, but it’s worth crunching the numbers and considering all the points above before using this order type.


Step 5: Manage your investment portfolio

Purchasing your first lot of shares is the very first step in your lifelong investment journey. It’s important to remember that successful investing is challenging and even the professionals have a hard time of it from time to time. There’s no better way to learn than to do it yourself so try to focus only on the things you can control – like how much risk you take, how long your investment time horizon is and what you are investing in and why. Short-term market fluctuations and the occasional bout of volatility are all part of the fun, and they will often provide some great opportunities to buy shares which can be a little counter-intuitive. 

The team at SMSF Mate think Interactive Brokers are worth considering among others for your online stockbroking account. Check out our comprehensive review here.


FAQs for buying shares

How do I know when shares are good value?

Looking at only the price of shares is only one piece of the puzzle regarding the company you are investing in. The share price today tells us what investors are prepared to buy or sell the shares for, not the actual value of the company or where the share price is going in the future. If a company appears to be cheap compared to its historical share price, this doesn’t mean it’s good value. The adjustment in price might mean that the company is less competitive now than it once was. With that being said, there are many ways to find shares that are undervalued, and the best example of this is during a broader market sell-off or downturn. Shares are sold off because the price falls and not due to a change in the company’s outlook or profitability which can provide opportunities.

How do I know when to pull the trigger on buying shares?

That’s the million-dollar question, and the fact of the matter is that no one ever really knows when the perfect time to buy shares is due to the variety of influencing factors in the market. Even the strongest companies can be impacted by new technology or competition. The price of oil can quickly fall, making airlines more attractive and vice versa. By taking a long-term view, the time to buy shares in good quality companies is any time you have the capital available. If you are invested throughout the market cycle, you will be sure to capture the upside when it comes eventually.

What shares should I buy if I am a beginner?

The team at SMSF Mate thinks investing in index funds and ETFs provide many benefits as they are a low-cost way to get exposure to the overall market in a given region of the world. This approach also provides the added benefit of diversification as an index fund, or ETF holds many different securities which don’t have the single-stock risk of buying just one company. If you are new to investing in shares, then it is often suggested to focus on blue-chip shares in the ASX200 index. Any company in the index is one of the largest 200 listed companies in Australia, and they usually have a long track record of delivering value to shareholders. Some of these companies include the likes of Commonwealth Bank of Australia (CBA), CSL Limited (CSL), BHP Group (BHP) and Woolworths (WOW) to name a few.

How do I know how many shares to buy?

The exact number of shares you buy is determined by the total dollar amount you wish to invest at any one time. Each company’s share price varies so you will have to calculate the number of shares you wish to purchase each time to ensure you have enough funds available in the account. We discussed dollar-cost averaging above, which is a popular way in which people actively invest over some time, rather than all at once. Another consideration to make is how your portfolio is allocated and if there are biases towards certain sectors or companies. If the bias is intentional, then this is great, but if you are hoping to have a diversified portfolio, then you may have to consider how your next purchase fits in with the existing investments.

When is the best time to sell my shares?

Buying shares should be considered a long-term investment of around 5-10 years which is around the time of a market cycle. When the economy is contracting and times are tough, it’s generally a good idea to invest your capital and look to sell when the economy has improved, and economic prosperity is more evident. A good example of this is the time between the 2000 Dot-com bubble and the 2008 Global Financial Crisis. In between these two periods in the market cycle, there were some great opportunities to buy shares and sell them.

Further reading: Charting for self managed super fund investors

General Advice Warning

Sonny Rahim

Premia Private

Sonny Rahim is a finance professional based out of the Greater Perth Area. He is the director and founder of Premia Private, a multi-faceted finance business with advisory divisions and expertise in the areas of Strategic Planning, Wealth Management, Investment Management, Debt and Personal Insurances. Sonny is one of the founders of SMSF Mate.

Sonny studied in the Private Markets Investment Programme at Saïd Business School, University of Oxford and also participated in the Oxford Entrepreneurship Venture Finance. He also completed a Bachelor’s Degree, Commerce (Accounting and Finance) at Curtin University in Western Australia.

As well as being a founder and managing director of the Premia Financial Group, Sonny has worked as an investment fund manager and a chartered accountant. He sits on the board of Ronald McDonald House Charities Western Australia.

You can find out more about Sonny or connect with him on Linkedin here:

Or visit his website here:

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  • SMSF Mate is a unique website because it has ideas about how to approach SMSFs, insurance and other financial topics that come straight from first hand experience. It's much more useful than what you find on all the other financial websites that just offer generic info that you could easily get on the ATO's website. It's also nice to know there's no financial incentive behind the information, it's legitimately there to help people understand self-managed super funds and how to get the most out of them, not to get an affiliate commission from a broker or other financial services provider. The investment product information is also incredibly useful, I've never seen this kind of functionality on any other website that let's you look at such a wide range of products, sort by what info is most interesting or important to you, and subscribe to updates for different funds and financial products all in one place. Definitely worth checking out if you own or are considering an SMSF!

    David G, Self-Employed, SMSF Owner
  • SMSF Mate provides a unique insight into superannuation and financial topics in a way that is easier to understand than conventional websites. The colloquial nature of the site makes it easy to understand and they often speak about complicated topics in lamens terms so I can wrap my head around them. The investment product information is a great way to research funds that I am interested in investing in with my SMSF and there is a lot of helpful information on the site for better structuring my investment portfolio. In comparison to other websites which offer similar information, SMSF Mate excels as the information is free to access whereas many other sites charge a subscription fee for the same thing. Overall, I think SMSF Mate is a great resource for SMSF trustees and is worth looking at for a variety of super-related topics. Thanks.

    Tim B, Business Owner, SMSF Trustee