How to start investing in ASX shares with just $500

Most Australians think they need to save thousands of dollars before they can start investing in the share market.

That is simply not true.

With as little as $500, Australian investors can buy shares in some of the country’s most successful companies or get instant diversification across 200 businesses in a single trade.

The key is knowing where to start, keeping costs low, and giving your investment time to compound.

Here is a practical guide to getting started with $500 today.

Step one: choose a broker

Before buying any ASX shares, you need a brokerage account.

Most major Australian online brokers, including CommSec, Selfwealth, Stake, and CMC Invest, allow investors to open accounts with no minimum deposit.

Brokerage fees typically range from $5 to $19.95 per trade depending on the platform.

For a $500 investment, keeping brokerage below $10 is important, as a $19.95 fee represents 4% of your investment before you have even bought a single share.

Stake and Selfwealth both offer competitive flat-fee brokerage that suits investors starting with smaller amounts.

Option one: the diversified approach with A200

For a first-time investor with $500, the single best option on the ASX, in my opinion, is arguably the Betashares Australia 200 ETF (ASX: A200).

One unit of A200 provides immediate exposure to 200 of Australia’s largest companies, including Commonwealth Bank, BHP, Wesfarmers, CSL, and Macquarie Group, without the need to research or pick individual stocks.

The fund charges a management fee of just 0.04% per annum, the lowest of any Australian shares ETF available on the market.

That is $0.20 per year on a $500 investment, a cost so low it barely registers over a long investment horizon.

Since its inception, the ASX200 index has returned approximately 8.53% per annum, including dividends.

Distributions are paid quarterly in April, July, October, and January, giving even a small investor a genuine income stream from day one.

For a beginner investor, A200 removes the hardest part of investing: deciding which stocks to buy.

Option two: a blue-chip large-cap like CBA

For investors who want to own shares in a single well-known Australian company, Commonwealth Bank of Australia (ASX: CBA) is one of the most widely held stocks in the country.

CBA is Australia’s largest bank by market capitalisation, operates the most downloaded financial app in Australia with more than 8 million active users, and has grown its fully franked dividend every year since 2021.

CMC Invest forecasts CBA will pay a fully franked dividend of approximately $5.15 per share in FY2026. This implies a grossed-up yield of approximately 4.6% at current prices, including franking credits.

CBA shares currently trade at approximately $160, which means $500 buys approximately three shares with change left over.

Although not a large position, it is a start. And the habit of investing regularly, buying two or three CBA shares each month, is how long-term wealth is built.

It is worth noting that CBA trades at a premium valuation of approximately 26 times earnings. This may limit the near-term upside compared to some other options.

However, for a first-time investor who wants to own a household name they understand and trust, CBA is a reasonable starting point.

Option three: commodity exposure through BHP

For investors seeking exposure to global commodity markets and the AI and electrification megatrends driving copper demand, BHP Group Ltd (ASX: BHP) offers a compelling entry point.

BHP shares currently trade at approximately $61.20, meaning $500 buys approximately eight shares, the most units of the three options in this article.

For the first time in its 136-year history, copper earnings exceeded iron ore contributions at BHP in the first half of FY2026. This is because the copper price has surged above US$13,000 per tonne due to demand from AI data centres and electric vehicles.

The fully franked dividend offers income investors a strong yield alongside commodity price optionality.

BHP has pulled back slightly from its all-time highs, which improves the entry point for new investors.

Morgan Stanley carries an overweight recommendation on BHP shares with a price target of $67.50, implying some upside from current levels.

The most important thing: start

The hardest part of investing is starting.

Every month that passes without investing is a month of compounding returns lost forever.

A $500 investment in A200 ten years ago, with dividends reinvested, would be worth approximately $1,130 today based on the index’s historical return of approximately 8.53% per annum.

The same $500 invested every month over that period would have grown to approximately $92,000.

That is the power of compounding over time, and it starts with a single $500 trade.

The post How to start investing in ASX shares with just $500 appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.