Building a competitive Tau army doesn't leave you a large set of choices. But this is still an effective Codex in 5th edition if you take the right units and pay close attention to your tactics.
Let me just get this out of the way straight off - don't take an Ethereal!
A Commander is a mandatory choice in every Tau army so add him to to your list. Keep him cheap to start - plasma gun, missile pod and multitracker (known as the "Fire Knife" configuration) is always a good option. The Airborne Fragmentation Projector is also a nice buy. Targeting Arrays can be a good way to spend any spare points.
You need Crisis Suits. They are the workhorse of the Tau army, able to pop transports and deal with the big threats in your opponents army. In addition to your commander you are going to need _at least_ two.
At this points level I don't think there is any other option other than to take the "Fire Knife" configuration because of it's versatility. I'd suggest taking the multi-tracker and the targeting array. You also have the option to take drones - a couple of gun drones can really help against instant death missiles and the like. Make sure they have a cover save.
Skip the Stealth Suits, they are less effective then their Crisis counterparts. Definitely not a unit for the beginner.
You must take a single squad of Fire Warriors, so go out and grab yourself a box now. See here for my previous article on these guys - my recommended way to field them is to take a squad of 6 in a Devilfish (the disruption pod cover save makes this a survivable unit - especially when you keep it in reserve).
Now you need to make a decision - do you hate Kroot so much that you refuse to field them? If yes, you need another Fire Warrior squad (or you can just buy another Devilfish to hold the other six models). Otherwise, get yourself a box of Kroot - actually I would recommend grabbing two boxes as they are cheap in points and very useful. 24 Kroot cost about the same as 6 Fire Warriors in a Devilfish. A few Kroot Hounds are a good addition if you have the cash, but not necessary.
I find it difficult to make room for any Fast Attack choices in a small starting force, instead spending my points on crisis suits and heavy support. There are two good selections available - Pathfinders with markerlights, and Piranhas with fusion guns.
Piranhas bring close range (but inaccurate) melta to the table, but their primary purpose is to block the opponents lanes of travel, hopefully buying an extra turn of shooting for the rest of the army. They are a must-have in larger Tau armies and a good inclusion at this points level.
Pathfinders can be used to power up the effectiveness of your shooting units. They are useful and versatile. Just take a small squad of four or five to start.
Finally you need to take something from Heavy Support, because that is where the railguns come from! At Strength 10 and AP1 there isn't much out there that competes with a railgun for the prize of best long range anti-tank.
You have the choice between a squad of Broadsides or a Hammerhead tank - and both have their good points. The Hammerhead is very hard to kill (with the disruption pod cover save and AV 13) and also provides great anti-horde in the form of a Strength 6 AP 4 large blast. Broadsides bring reliability and more shots at the same price - but lose in versatility. Shield drones make the unit very survivable - just watch out for morale tests!
I prefer to take a Hammerhead as at low points totals you wont run into much AV 14, and the large blast provides much needed anti-horde. The good news is that at higher points totals most Tau armies take a combination of the two, so whichever you choose is going to be a staple in your army as it grows.
Lets put all of the above together and come up with a 750 point army.
Hybrid Tau 748
Shas'el - plasma gun, missile pod, targeting array, hard-wired multi-tracker, hard-wired drone controller, 2 gun drones 117
2 Crisis Suits - plasma gun, missile pod, 1 multi-tracker, 1 targeting array 129
6 Fire Warriors - devilfish, disruption pods, multi-tracker 155
13 Kroot 91
13 Kroot 91
Hammerhead - railgun, disruption pod, multi-tracker, burst cannons 165