Forget property: Here’s where Aussies are pouring $7 billion a month

OpinionMoney contributorOctober 31, 2026 — 5:01amOctober 31, 2026 — 5:01amDo taxation changes have you thinking of investing in an exchange-traded fund (ETF)? You are not alone – in September, Aussies poured nearly $7 billion into ETFs, according to Betashares’ latest 2026 ETF Review. That means pretty soon a record $400 billion will be invested.As the shine comes off property investing thanks to negative gearing ending for all but new builds, market investments are looking more attractive.Rather than buy a handful of stocks and take concentrated company risks, many investors prefer to buy an ETF over an index that provides exposure to hundreds of stocks.Simon LetchAnd ETFs allow even the most novice investor cheap, easy and diversified access. They are bundled investments in a particular industry or market, and you buy and sell them like regular shares.So, of the more-than 500 ETFs available for purchase in Australia, how do you choose? You start with you.What is your investment appetite?Factors very specific to you will determine your shortlist. Chief among these are your age and ‘stage’. It’s not advisable to invest in shares if you want to be able to access the money – in other words, sell – in fewer than five years.This is known as your investment horizon. The value of shares can fluctuate – and has been fluctuating – significantly. Though you can still pick the wrong five years, the theory is this gives your investment the time it might need to recover.But think cautiously before investing, say, money that is destined for a house deposit. The exception is the ability to save for a house deposit in super under the Australian First Home Super Saver scheme because this, in fact, comes with a decent, deemed investment earnings rate of 7.51 per cent for this quarter.The next consideration is your other investments, if you have some.What is in your existing portfolio? The real beauty of an ETF is that you can add it to your asset mix, or what’s known as your asset allocation. Balance it, if you like.In general, you can cope with carrying more growth assets when you are younger, and you might reduce the percentage you hold in such assets as you get older. The reason is that five-plus-year time horizon we spoke about earlier.An ETF that gives you exposure to the whole Australian sharemarket, for example, could be a good addition to your portfolio. Or you might need to up your investment in bonds, which are a fixed-income asset that can anchor it against volatility. You can even buy ETFs over different commodities and currencies.The other facet to your investment mix is whether your existing share investments are weighted towards growth or whether they are weighted towards income. A balance of this can also help protect a portfolio from volatility in the share price itself.And given the capital gains tax changes coming in from July 1, 2027 apply to all assets including shares, you may decide to add extra income-producing shares.Get diversification happeningThe next level of diversification is across industry and even international markets. Let’s start with the latter. Australia represents only about 2 per cent of the world’s stock markets, so is it beneficial to hold all your investments in it?It can be argued – validly – that this is not diversification, but concentration, and it leaves you vulnerable to the vagaries of our market, such as the local economy and changes to trading conditions, including tax changes.One of the further appeals of ETFs is that they’ve been engineered over a bunch of international markets. You can pick countries and usually buy the ‘whole’ market, so an ETF over the index of leading shares.In Australia in particular, though, being the economy and environment that you know and call home, there may be particular sectors in which you choose to invest.Activate your in-built investment radar Everyone has one of these – you just need to switch it on. Think about what you observe in the normal course of your life. What businesses and strategies are working and what are not?Are supermarkets going gangbusters in the cost-of-living crisis, rather than restaurants and entertainment venues? Are DIY renos flavour of the month, as the cost of tradies and building firms soar?What about our ageing population? What sectors might be set to benefit? Of course, there are all sorts of analysis on industry outlooks available. But beyond the macro-level of choosing where you want to invest, there’s the micro – and this same observation technique works to buy individual shares.That yoghurt or Mexican chain that has lines around the block? Is it a public company, which means it’s available for investment? Or, perhaps, is it about to float and become one?Happily, you can make these types of individual investment plays when you have ETFs as the foundation of your portfolio, with the instant and automatic diversification they provide.So, with an idea of what broad market exposure you want from ETFs, and why, where can you buy them?The largest manufacturers of ETFs in Australia are Vanguard, Betashares, iShares and VanEck. And a typical feature of most ETFs is their low fees, although the more complicated, and sometimes overseas ETFs, may be more expensive.Just remember that the whole point of an ETF is usually to mimic and mirror the returns of a market – these are index tracking ETFs. So don’t expect such an ETF to outperform it. But your criteria should be returns as close as possible, after fees, to the index or industry it’s supposed to replicate.Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at nicolessmartmoney.com. Follow her on Facebook, X and Instagram.Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.From our partners