One of the most frequently heard bits of advice about investing sounds similar to this, “Be sure to start investing while you are young.” This is excellent advice. However, not everyone, regardless of age, knows how to go about investing.
Because you are dealing with your future, you should know about investing before you start. Our guide will give you an overview of investment and where different age groups should put their money. However, for a personalised look at investments, working with a financial professional is a good idea.
Steps to Get You Started in Investing
1. Determine Your Goals
Having your goals clearly in your sights is an excellent place to start your investment journey. Ask yourself questions like:
Is your objective retirement, or do you have short-term goals?
Are you planning on being hands-on with your investments?
Do you know of any industries where you are not comfortable with investing your money?
2. Decide How many risks You Can Tolerate
Investing is not guaranteed to make you money. If you know that every dip in the market will stress you out, you may want to consider a robo-advisor that operates on algorithms, not emotions. Additionally, put your money into funds that are not volatile and diversified. Spreading your money into different areas protects you if a specific sector goes down.
3. Set Your Timeframe
The amount of time you will be participating in investing will dictate how much risk you should consider.
If you’re nearing retirement, typically, a low-risk investment, such as bonds, is the way to go. You would earn less, but the risk is much lower than speculative stocks or crypto.
If you’re younger, you have a long way to go before retirement, so you might want to consider setting aside some funds for riskier investment options. If you diversify and invest in speculative stocks or crypto, you can profit significantly or lose your money.
4. Choose Your Level of Assistance
If you are a beginner in investing and prefer a do-it-yourself approach, numerous platforms have tools for easy research. Alternatively, consulting with a financial investor or using a robo-investor will make investing much easier.
5. Choose the Type of Investment
You can choose from a few different types of accounts depending on your situation and financial goals.
Individual Accounts – These are the most common type of account. There are no limits to what you can invest, but the earnings are taxable.
Self-Managed Super Fund or SMSF – Managing your super fund gives you a tax advantage because the tax rate is 15%, which is much less than most marginal tax rates. However, SMSF includes costs associated with the account as well as legal and compliance obligations. Some investors feel the biggest drawback with an SMSF is that your money is no longer professionally managed.
6. Open an Investment Account
Typically, you can choose between two types of accounts. This may vary depending on who is managing your money.
Robo-Advisor – The robo-advisor is ideal for those who prefer an algorithm making decisions based only on given data.
An Account with an Online Broker – This method is best for those who want to be in charge of their trades and investments.
7. Open and Fund Your Account
Once you have the funds in your account, you can begin your investment journey.
A Half-Dozen Ways to Invest Your Money in 2023
All investors have their comfort zones. Here are several ways to invest based on your preferences.
If You Want to Control Your Portfolio – Shares offer you a variety of options making diversification easy. Contact an online broker to get started.
If You Are Just Starting to Invest – Micro Investments are a rising option that can simplify the investment process. Micro investments work by allowing you to make small contributions over time into an investment portfolio frequently. This gives you the potential to earn more than if you put the same amount of cash into a savings account. You can get started by downloading one of the Micro Investing Apps available.
If You Prefer Simplicity – Using a high-interest savings account is an almost effortless way to grow your money. Banks will pay you for storing your money with them. While your return rate may vary, your deposit is guaranteed by the Australian government up to $250,000. You can go online or visit a bank to get started.
If You Want to Be a Hands-off Investor – A robo advisor might be ideal for you. Your moves are made based on an algorithm along with your preset parameters, so you control the level of risk. To set up a robo advisor, contact an online broker.
If You Have a Large Amount of Money to Start Investing – Property is an excellent way to invest a large amount of money, and it has been a popular option for Australians for decades. To start, do your homework and research locations or work with an agent to purchase your investment property.
If You Are a Risk-taker – Cryptocurrencies are not a new option for investing, but they are more mainstream than ever. New coins and currencies are arriving on the scene regularly. Make no mistake about it. Crypto is a high-risk/high-reward investment. This is not for the faint of heart. Because crypto is not regulated, you can lose your entire investment. You can visit a crypto exchange or a broker to start investing in cryptocurrencies.
Investing can be a path to wealth building, but nothing is guaranteed. The greater the reward, the bigger the risk involved. To protect the funds you are investing, try:
Diversification – To avoid losses because of a volatile market, your best choice is to invest across different geographical locations, investment classes, and industries. Avoid being tied to any single sector or type of investment.
Stay Disciplined – Keep focusing on your long-term goals so you do not overreact to market fluctuations. Patience, vision, and discipline are vital for investment success.
Work with What You Can Afford to Lose – When you start investing, seeing initial gains and wanting to funnel more money into your investments is tempting. However, a measured course of action is the best way to avoid significant losses.
Invest in Low-Cost Index Funds – Index funds can help you benefit from the long-term growth potential in the market. Rather than choosing individual stocks, your index funds look over how the market performs as a whole. Overall, index funds are a less costly way to invest in the stock market.
Work with a Financial Advisor – Perhaps you are new to investing or would like to branch out into unfamiliar territory. Working with an experienced financial professional is a wise choice. Their guidance can keep you from making huge mistakes and help you grow wealth.
If you would like more information about financial guidance, reach out to us at Freedom Wealth Services. Our team has over 100 years of combined experience and since 2017, our organisation has helped hundreds of clients reach their financial goals. Freedom Wealth Services is not beholden to the big banks, or other large finance conglomerates as a self-licensed firm. We operate to serve each of our client’s best interests and pride ourselves on our ability to listen to your goals and help you reach them.
*General Advice Warning – “Any financial product advice is provided by Freedom Wealth Services Pty Ltd AFSL 502934 The advice provided is general and is not personal financial product advice. The advice provided has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of it regarding your objectives, financial situation and needs. You should carefully read and consider any Product Disclosure Statement (PDS) that is relevant to any financial product that has been discussed before making any decision about whether to acquire the financial product.”