Sweet taste of success ... David Koch knows how to get a slice of the cake. Picture Gregg Porteous, cake by SweetArt. Picture Gregg Porteous, cake by SweetArt. Source: News Corp Australia

Great Aussie companies have generated wealth for millions of people through share price growth and rising dividends over many decades.

A $5000 investment in The Commonwealth Bank or Woolworths 20 years ago is now worth more than $50,000, and for biopharmaceutical giant CSL it’s worth a massive $500,000. Dividends paid by all three have increased tenfold in that time.

But where do you start, how much does it cost and what should you buy? Here’s our guide to taking a piece of the Aussie share cake - and eating it too.

A slice of Australia ... Great Aussie companies have generated wealth for millions of people over many decades. Source: News Corp Australia

HOW TO START

For a minimum investment of $500 you can own a slice of any company listed on the Australian Securities Exchange.

The ASX has a free guide, Getting Started in Shares, which can be downloaded at asx.com.au and is packed with information about the buying and selling process, dividends, tax, stockbrokers and costs.

“The sharemarket is just like a fish market, a fruit market or a cattle market. It is a place where buyers and sellers come together to work out a price for something by bidding for it,” it says.

You can access the sharemarket directly through an online or full-service stockbroker, financial planner or self-managed superannuation fund. Most people indirectly own Australian companies through their super funds, which hold about a quarter of their assets in Aussie shares.

WHAT TO BUY

Sticking with Aussie icons has paid off nicely in the past and experts reckon it will in the future.

While newer players such as realestate.com.au and other internet stocks have been strong performers in recent years, Catapult Wealth director Tony Catt says good long-term value lies in “some of the old names” such as BHP Billiton, the Commonwealth Bank, Brambles, Amcor, Lend Lease, CSL and Computershare.

“They are great Aussie companies doing great things here in Australia and globally,” he says.

“I still think Telstra is going to be a very, very good company over the next 10 to 20 years.”

Rivkin Securities chief investment officer Shannon Rivkin’s top tips include AMP and Woolworths.

“AMP is a company with great exposure to the superannuation industry which will continue to grow at above-GDP levels, and a CEO who is finally putting his mark on the company,” he says.

“Woolworths is a long-term must in any portfolio. The stock has recently been sold off dramatically on concerns about the company’s margins and competition.”

‘A long-term must in any portfolio’ ... Shannon Rivkin says Woolies stock has been sold off dramatically on concerns about the company’s margins and competition. Source: AFP

WHY NOW?

Catt says low oil prices will benefit most businesses, the Aussie dollar’s weakness helps our exporters, and interest rates should stay low for another two to four years.

“I think we couldn’t ask for a better set of conditions to kick off the next few years,” he says.

Rivkin CEO Scott Schuberg agrees that the low dollar, energy prices and interest rates are supportive of Aussie shares. He says if China’s economy stays solid, Australia’s market “could be in for a disproportionately-positive run versus that of the UK and US”.

MoneysaverHQ columnist David Koch agrees.

“Australia is a proven investment performer; it has a strong economy, a stable government and we’re on the edge of the emerging powerhouse of the next 100 years - Asia,” he says.

For more of Kochie’s insights on the Australian economy turn to page 2.

WHAT IT COSTS

Full-service stockbrokers charge from $120 a trade, including their recommendations.

Online brokers such as CommSec charge about $20-$30 without one-on-one advice.

Financial planners can help you build investment portfolios and their hourly rate is typically $300.

When buying or selling, remember that transaction costs eat into your returns, so it’s usually best for each trade to be at least $2000.

SHARING THE LOVE

People with small sums can spread their dollars across many companies by investing in an exchange traded fund or listed investment company (LIC), which hold a range of stocks rather than just one.

Catt says Argo Investments and Australian Foundation Investment Company are two iconic LICs. Argo was once chaired by Sir Donald Bradman — you don’t get much more Aussie than that.