FTSE 100 Investing – How to Invest in FTSE 100 for Beginners Australia
The FTSE 100 – known affectionately as the ‘Footsie 100’ – is the UK’s leading stock market index. It features the 100 biggest UK companies listed on the London Stock Exchange with a total market capitalisation of over £1.8 trillion. Since the Covid shock that hammered all stock markets in early 2020, the FTSE 100 has risen in value by 40% – from a 5-year low of 5,1920 to float just above the 7,000 mark for much of Summer 2021.
In this guide, you will learn how to invest in FTSE 100, what investment instruments you can use, as well as review the top brokers available from Australia (and worldwide) which allow you to get started in seconds.
#1 FTSE 100 Investing Platform – eToro
FTSE 100 Investing – How to Invest (Step-by-Step Guide 2021)
To get investing, you will need to use an online broker. Follow this simple four-step strategy to invest in the FTSE 100 from Australia:
- Step 1: Open an eToro account: Go to eToro.com. Click the ‘Join Now’ button. Fill out the box onscreen with a username, email, and password. Read the legal documents supplied, and tick the acknowledgement boxes. Click the ‘Create Account’ button. You are on your way!
- Step 2: Verify your Identity: As with all reputable brokers, you will need to provide proof of identity as well as proof of address to invest with eToro. This need not take long. And it does mean you can be sure that you are dealing with a respectable broker. You will need a scan of a valid passport/driver’s license/ID card as well as a financial bill with your home address on it. Use your passport to get verified fastest.
- Step 3: Fund your account: Click the blue ‘Deposit Funds’ button. eToro accepts AUD via credit/debit card, PayPal, and bank transfer via POLi. No deposit fee is charged.
- Step 4: Invest in the FTSE 100: Click the ‘Trade Markets’ or ‘Discover’ button on the left toolbar of your screen. Choose from lists of ‘stocks’, ‘ETFs’ and ‘indices’ on the top toolbar. Press ‘Trade’ to review your transaction options.
Where to Invest in the FTSE 100 – Top FTSE Brokers Australia
Many online brokers are limited in the clients they serve because of geographical restrictions. Many big US brokers, for example, may only deal with clients in the US and Asia Pacific. Some UK brokers which deal with the FTSE may only serve UK clients. If you are investing from Australia, you need a broker who takes AUD as a deposit currency. Here are three brokers with good reputations that allow you invest in the FTSE 100 with AUD:
1. eToro – Best Overall FTSE 100 Broker
eToro has a great reputation globally for beginner-friendly investing. 20 million investors from over 120 countries are signed up with eToro. Compared to exchange sites and even other brokers, eToro offers a very simple user interface and a fee structure that is easy to understand. eToro charges no commission on stock trades.
FTSE 100 investment options
With eToro, you can use AUD for FTSE 100 investing stocks commission-free, as well as trade off the FTSE index directly and invest in an ETF that tracks the index.
Trade FTSE 100 stocks directly
With eToro, you can browse stocks by the sovereign index they are included on:
eToro gives you 300 UK stocks (including FTSE 100 stocks) to choose from. You can leverage your trade to double the number of gains or losses you accrue.
Most importantly, you can buy FTSE 100 stocks commission-free with eToro from Australia (but a spread fee will apply). Brokers generally use spread fees to cover their costs. A spread fee means that there is a small spread between the price you can buy at and the price you can sell at. Spreads with eToro for FTSE 100 stocks are not punishing, but spreads for cryptocurrencies, for example, can be relatively high.
You can go short on FTSE 100 stocks too. This will mean that your trade does not involve buying or selling the stock direct. Rather you will enter into a Contract-For-Difference (CFD) with eToro. This means you do not actually own the underlying stock for the duration of your trade. It could not be easier to enact, as eToro does it all for you:
Trade the FTSE 100 index directly
You can trade the FTSE 100 index directly with a CFD. You will need a minimum of $200 USD. You can go short on the index, or go long. And you can gear your investment by up to 100x. Leveraging your investment in this way can lead to astonishing gains off small movements in the index – as well as serious losses, so eToro gives you the option to set a stop loss:
Invest in an FTSE 100 ETF
eToro has a selection of 250+ ETFs to choose from. ETFs are ‘Exchange Traded Funds’. ETFs are like mutual funds, which invest in a number of stocks – or a single stock market index – in one go. But, unlike mutual funds, most ETFs are not actively managed by a fund manager. This means they are cheaper to run, and you get more bang for your buck. You can usually buy into an ETF commission-free with eToro (depending on which country you are trading from, and which exchange the ETF is on). Note that with eToro a CFD fee of 0.09% will apply if you decide to go short on an ETF.
You can invest in the FTSE 100 with eToro with the iShares Core FTSE 100 UCITS ETF.
When you invest in ETFs, you may see the acronym ‘UCITS’ a lot. This means ‘undertakings for the collective investment in transferable securities’. UCITS means this investment instrument is regulated by the EU (amongst others possibly).
eToro is always presenting new ways to make investing easier. Two eToro innovations include CopyTrader and CopyPortfolios.
CopyTrader is eToro’s proprietary system for copy trading. With some brokers, you can access big copy trading platforms like ZuluTrade and DupliTrade. With Etoro, you can copy other traders free of charge. You can review their performance as well as their risk rating. And you can allocate some of your funds to be used by the CopyTrader software to match their trades in real-time. Copy trading is a great way for beginners to a) reduce risk and b) learn how to invest.
eToro CopyPortfolios cluster stocks around investment strategies, themes and sectors. They allow you to invest in many stocks at once, thus spreading risk. Investing in a CopyPortfolio means the funds you allocate will be used to trade in a certain way. Most CopyPortfolios aim to buy and hold, but some transactions will take place. A spread fee will apply to each transaction that is automatically enacted on your behalf.
A minimum investment of $1000 is required to invest in an eToro CopyPortfolio.
- In Australia, eToro is regulated by the Australian Securities and Investments Commission (ASIC).
- In UK, the Financial Conduct Authority (FCA) regulates eToro.
- The Cyprus Securities & Exchange Commission (CySEC) covers regulation in Cyprus.
eToro capital is held independently of eToro investor funds.
|Fee Type||Fee Amount|
|Commission Fee||0% (for UK and European investors)|
|Inactivity Fee||$10 monthly fee applies after 1 year of inactivity|
- 3 ways to trade FTSE 100: stocks, CFD index trading and ETFs.
- Regulated by CySEC, FCA and ASIC.
- eToro takes AUD, with many deposit options.
- CopyTrader – learn the ropes and spread your risk.
- CopyPortfolios – explore eToro’s expert trading strategies.
- 20 million investors use eToro.
- Fully transparent fee structure.
- No support for MT4 or MT5 platforms.
- No telephone helpline.
67% of retail investor accounts lose money when trading CFDs with this provider.
2. AvaTrade — Best MT4 & MT5 Broker for FTSE 100 Australia
AvaTrade is a good choice for Australians wanting to trade off the FTSE 100 using CFDs. CFDs are not for novice traders because they involve trading off margin. eToro is a safer option for beginner investors because it offers conventional trading of FTSE stocks without having to use leverage or a margin account arrangement.
AvaTrade offers a dedicated Australian website and two ways to invest in the FTSE 100: CFD stock trading and CFD index trading. What’s more, AvaTrade offers AUD deposits via bank transfer/credit card (but not e-wallets). No FTSE 100 ETF is offered, but a selection of other 60 ETFs is provided to trade-off.
Regulated in 7 global jurisdictions and established in 2006, AvaTrade has developed a reassuring reputation for safe CFD trading. AvaTrade boasts a user-base of 200,000 investors worldwide. Many investors are drawn to AvaTrade for the wide selection of trading platforms available, including MT4, MT5 and copy trading giants DupliTrade and ZuluTrade.
FTSE 100 Investment Options
AvaTrade offers 600+ stocks for going long/going short as CFDs. No commission is charged, but a spread fee of 0.13% applies. Leverage is set at 5:1. Search for FTSE 100 stocks in the AvaTrade toolbar.
You can trade off the FTSE 100 index direct with AvaTrade via a CFD. Leverage is set at 20:1. A spread fee applies of 0.5 over market. 30 other stock indices are available for trading.
AvaSocial is AvaTrade’s mobile-based app. The focus is on social and copy trading for beginners. It offers plenty of chat and advice and a pleasant investing experience for the newbie. AvaOptions is for far more experienced investors who want to dabble in options; if you need to ask what financial options are, you should not go anywhere near it! Financial options, which are instruments based on the future price of assets, are not an area for beginners.
AvaTrade is regulated by the Central Bank of Ireland, the Cyprus Securities and Exchange Commission, the Financial Services Agency of Japan, the Financial Sector Conduct Authority in South Africa, the Israeli Securities Authority, the British Virgin Islands Financial Services Commission – and, most importantly for Australians, by the Australian Securities and Investments Commission.
|Fee Type||Fee Amount|
|Inactivity Fee||$50 per quarter after 3 months inactivity|
- Global regulation.
- Takes AUD.
- FTSE 100 stocks as CFDs.
- Direct FTSE 100 index CFD trading.
- Serves many trading platforms (unlike eToro).
- 60+ ETFs.
- Only CFD trading and margin account.
- Leverage levels cannot be changed.
- Worst non-activity fees compared to eToro and Capital.com.
- No FTSE 100 ETF.
71% of retail investor accounts lose money when trading CFDs with this provider.
3. Capital.com — Established Broker for FTSE 100
In September 2021, regulated brokers Capital.com moved into the Australian market, opening an office in Melbourne. Capital.com already has 230,000 users and a strong reputation for stocks, commodities and forex trading.
Capital.com takes AUD in the form of bank transfers, Visa/Mastercard/Maestro and Apple Pay.
Like AvaTrade, Capital.com offers CFD trading only. This means it is not suitable for beginners because leverage is built into your trades automatically. eToro is a far better bet for newbies because you can buy into FTSE 100 stocks direct, without having to use a margin account.
FTSE 100 Investment Options
With Capital.com, you can trade in FTSE 100 and other UK stocks as CFDs. CFDs mean you can go long and go short, as well as leverage your trades. Capital.com charges competitive spread fees on stock transactions, but no commission. Spread fees vary per share. For example, a spread of 1.1% applies to Rolls Royce shares:
Note that, because Capital.com offers stock trades as CFDs, a small overnight fee applies.
With Capital.com, you can also trade off the FTSE 100 index direct.
Capital.com offers 100+ ETFs, but none relate directly to the FTSE 100. A strong choice of leveraged and shorting ETFs, mostly focussed on the US, is offered. No less than 6 Clean Energy ETFs are on offer too.
Capital.com offers a wide choice of investment instruments, including commodities, forex, stocks, indices and cryptos. Its Investmate learning platform is impressive. The interface is a little daunting at first, but the charting tools are good.
Capital.com is regulated by the Australian Securities and Investments Commission (ASIC) in Australia, the Financial Conduct Authority (FCA) in the UK, the National Bank of the Republic of Belarus (NBRB) in Belarus and the Cyprus Security and Exchange Commission (CySEC) in Cyprus.
|Fee Type||Fee Amount|
- Regulated in Australia, Cyprus, UK and Belarus.
- Takes AUD.
- Can trade FTSE 100 stocks.
- Can trade the FTSE 100 direct as an index.
- Wide choice of assets across investment instruments.
- Great CFD leveraging and margin options.
- No FTSE 100 ETF.
- CFD trading and margin account only.
76.7% of retail investor accounts lose money when trading CFDs with this provider.
Invest in the FTSE 100 from Australia– Broker Price Comparison
|Broker||Commission||Deposit Fee||Withdrawal Fee||Inactivity Fee|
|eToro||0%||$0||$5||$10 monthly (after a year of inactivity)|
|AvaTrade||0%||$0||$0||$50 per quarter (after 3 months inactivity)|
Different Ways of Investing in the FTSE 100 from Australia
You can invest in the FTSE 100 by buying stocks direct, investing in an ETF via an ETF trading platform that tracks the FTSE 100, or trading the index direct using a CFD.
Investing in the FTSE 100 from Australia – What are the Risks?
The safest way to invest in the FTSE 100 is to invest in an ETF (like the iShares Core FTSE 100 UCITS ETF offered by eToro) which tracks it.
The great advantage of investing in a whole stock market index at once is that you are reducing risk. Instead of investing in one stock alone, you are investing in a hundred (in the case of the FTSE 100). That means that your investment is protected in the event of a single stock taking a serious price tumble.
ETFs offer low expense ratios compared to mutual funds and do not generally attract commission fees.
Trading platforms off the FTSE 100 direct using a CFD is a lot riskier because the temptation is to day-trade as well as leverage your position. It is better for beginners to avoid day-trading.
The middle route in terms of risk is to invest in a clutch of FTSE 100 investing stocks. Even if you invest in a single FTSE 100 stock, its risk rating will not be high. That is because, by definition, you will be investing in one of the top 100 biggest companies in the UK.
To give you an idea of the quality you are getting into when you invest in the FTSE 100, below is a list of all 100 heavyweights listed. We bet you recognise a few names!
3I Group, Aberdeen, Admiral Group, Anglo American, Antofagasta, Ashtead Group, Associated British Foods, AstraZeneca, Auto Trader Group, Avast, Aveva, Aviva, B&M European Value Retail, BAE Systems, Barclays, Barratt Developments, Berkeley Group Holdings, BHP Group, BP, British American Tobacco, British Land Co, BT Group, Bunzl, Burberry Group, Coca-Cola HBC, Compass Group, CRH, Croda International, DCC, Diageo, Entain, Evraz, Experian, Ferguson, Flutter Entertainment, Fresnillo, GlaxoSmithkline, Glencore, Halma, Hargreaves Lansdown, Hikma Pharmaceuticals, HSBC Holdings, Imperial Brands, Informa, Intercontinental Hotels Group, Intermediate Capital Group, Intertek Group, International Consolidated Airlines Group, ITV, JD Sports Fashion, Johnson Matthey, Land Securities Group, Legal & General Group, Lloyds Banking Group, London Stock Exchange Group, M&G, Meggit, Melrose Industries, Mondi, Morrison Supermarkets, National Grip, Natwest Group, Next, Ocado Group, Pearson, Pershing Square Holdings, Persimmon, Phoenix Group Holdings, Polymetal International , Prudential, Reckitt Benckiser Group, Relx, Rentokil, Rightmove, Rio Tinto, Rolls-Royce Holdings, Royal Dutch Shell Plc ‘A’, Royal Dutch Shell Plc ‘B’, Royal Mail, Sage Group, Sainsbury, Schroders, Scottish Mortgage Investment Trust, Segro, Severn Trent, Smith & Nephew, Smith, Smiths Group, Smurfit Kappa Group, Spirax-Sarco Engineering, SSE, St. James’s Place, Standard Chartered, Taylor Wimpey, Tesco, Unilever, United Utilities, Vodafone Group, Whitbread, WPP Group.
FTSE 100 companies are not too big to go bust. But they are certainly far more stable investment options than smaller companies and, of course, crypto.
How to Invest in the FTSE 100 with eToro
Here’s your four-step strategy to invest in the FTSE 100 with eToro:
Step 1: Open an account with eToro
- Go to eToro.com. Fill out the short form below. Press the blue ‘Create Account’ button.
67% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Verify your account
You will need to verify your account before you can start investing in the FTSE 100. eToro welcomes clients from Australia, as well as 120 other countries.
You will need to upload a scan of a document proving your identity, as well as your address. You can use an ID card/driver’s license for proof of identity. But for quick verification, upload a scan of your passport.
For Proof of Address, supply a scan of:
- Gas/water/electricity/internet/phone bill.
- Letter from your local municipality/council.
- Credit card/bank statement.
- Tax bill/letter.
Step 3: Fund your account
When you have received an email from eToro confirming that your account is verified, you are ready to deposit funds.
Do not deposit funds until your account has been verified. At the bottom left of your screen, press the blue ‘Deposit funds’ button. This brings up the window above.
Australian dollars (AUD) is one of 15 currencies that eToro accepts.
Type in how much you want to put into your eToro account. Make sure you have selected the correct currency in the right pull-down box. Select your preferred payment method. Press the blue ‘deposit’ button.
Step 4: Invest in the FTSE 100
Now you have funds in situ with Etoro, you can start investing in the FTSE 100. At the left of your screen, press the ‘Trade Markets’ or ‘Discover’ button (depending on the browser you are using). This allows you to review your investing options by instrument. Check out the category toolbar:
For FTSE 100 stocks, press the ‘Stocks’ button. Then search via the ‘Exchange’ button for stocks listed in London. 300+ are available.
To review your purchase options, click on the stock’s logo and then press the blue ‘Trade’ button that comes up on the right. You can then decide to go long/go short, set a stop loss and take profit point as well as leverage your transaction.
To review ETFs, press the ‘ETFs’ button. As with stocks, click on the ETF’s logo to proceed.
To trade off the FTSE 100 direct as an index, press the ‘indices’ button. Select the FTSE 100.
eToro wins hands-down when it comes to finding a broker suitable for investing in the FTSE 100 from Australia. That’s because eToro offers (at least) 3 ways to invest in the FTSE 100 and accepts AUD as one of its 15 main deposit fiat currencies. eToro has a great reputation as a beginner-friendly broker, thanks to its transparent fee structure and easy-to-use interface.
AvaTrade and Capital.com offer a good range of FTSE 100 products and both accept AUD. These brokers attract a smaller, more experienced clientele, and would suit the investor looking to explore different forms of CFD investment.