I had no idea what investing was or where to start. I had some savings but wasn’t sure what to do with them. After meeting with Josh and running through different ideas that would suit my needs, I learnt about investing and got excited about making my money work for me. I discovered that just like seeing a financial adviser, you don’t need a lot of money to begin. But you do need to start somewhere, so why not here…
Before you start to consider investing as an appropriate option, you need to ensure you have covered the basics and have some additional money you won’t need in the short-term. Once you have ticked off on your money basics then its time to consider your investing options.
So, what are the basics?
- Your income exceeds your expenses with some money left over, if not try these challenges to get your spending in order
- You only have good debt; meaning no credit cards or Afterpay people!
- You have an emergency account, check out how much you should have here
- You understand the costs of investing
- You understand what you want to achieve and in what time frame
- You are comfortable with a level of risk that suits the above
While some investments, such as property, can require a hefty deposit, there are others, including managed funds and shares which you can access with a much smaller amount of money. It’s never too early to start saving or learning to invest. The sooner you start the better. Here lies the 8th wonder of the world…. Compound Interest!
He who understands it, earns it… he who doesn’t… pays it.” Albert Einstein
So how does it actually work?
There are many different ways to start investing, so let’s run through some of the most commonly discussed ways.
Investing in direct shares i.e. Telstra, Woolworths, ANZ etc. you can only purchase in increments of $500 as a minimum. You also need to be share savvy and know which shares you want to buy, when, how much and when to sell.
Investing on an online trading account This is technically a brokerage service that will allow you purchase your direct shares. Minimum purchase is still the same as above. Pro- all your shares are held in one online platform which can make them easy to manage.
Investing in Managed Funds directly For those who aren’t Bobby Axelrod (if you haven’t watched Billions… get amongst it) and aren’t analysing spreadsheets and picking stocks then managed funds are an awesome way to start investing and get access to diversified portfolios. A managed fund allows you pay someone, like Bobby, to manage a fund that buys/sells shares on your behalf…. Happy days! Catch is, buying Managed Funds directly starts in increments of $25,000. Con- high starting base and with no option for small ongoing increments Pro- you have a professional investing on your behalf.
Investing in Managed Fund on a Wrap Platform Now for those of us who don’t have a sneaky $25,000 to invest every month, never fear, Wrap Platforms are here. These bad boys are an administration service that will allow you to purchase much smaller increments. Usually starting at around $1,000, as long as you contribute ongoing monthly amounts of around $100 you should meet their requirements.
Micro Investing in Managed Funds Another cool option you can consider is micro-investing using apps like Raiz (formerly known as Acorns), which will invest spare change automatically from everyday purchases into a diversified managed funds.
If you are keen as beans to start investing, then focus on building your savings and getting in good savings habits. So get serious about your future and start today by eliminating bad debt, use a high interest savings account to build up enough to start investing and trust me, you won’t look back. The hardest part is starting.
Make sure you research what the options are, understand your comfort level with investing and talk to someone if you are still unsure.
If you think you need a lot of money to start investing, and you keep putting it off till you save that little bit more, then it’s time to readjust your thinking. Investing shouldn’t be hard, there is a lot of information out there and if you’re ready to take the leap and not sure how to start, we are more than happy to help.
