As you start your investment journey, here are our three tips to make sure you are investing in the right assets, no matter your age.
Investing is often seen as something for the wealthy or for those who start young, but the truth is, it’s never too late to make your money work for you. In fact, starting today, no matter your age or income, is one of the smartest financial moves you can make. Here are three accessible ways to begin investing that can set you up for a more secure future.
1. Start with a Managed Fund or Exchange-Traded Fund (ETF)
If you’re new to investing, diving into the stock market alone can be intimidating. Managed funds and ETFs offer a beginner-friendly way to start. A managed fund pools money from multiple investors and is managed by a professional. An ETF is similar, but it’s bought and sold like a stock on the exchange. Both options allow you to invest in a diverse range of companies, assets, or bonds without needing in-depth knowledge.
ETFs, in particular, have become incredibly popular in recent years due to their low costs, simplicity, and flexibility. For example, you can buy an ETF that tracks the ASX 200, which includes the 200 largest companies in Australia. This gives you broad exposure to the Australian market and, by holding a diverse portfolio, reduces risk compared to investing in a single stock.
A great advantage of managed funds and ETFs is the ability to invest with relatively small amounts. For example, some online platforms in Australia allow you to start investing with as little as $500. Over time, you can contribute more as you’re able, building your investment portfolio steadily.
2. Consider Micro-Investing Apps
If the idea of investing still feels out of reach, micro-investing apps offer an easy, low-risk entry point. These apps allow you to invest small amounts regularly – sometimes even your spare change. In Australia, options like Raiz and Spaceship offer unique approaches to investing with small sums, ideal if you’re hesitant to commit a large amount or if you’re still learning the ropes.
Raiz, for example, rounds up your everyday purchases to the nearest dollar and invests the difference. Over time, these small contributions add up and are invested across a diversified portfolio. Spaceship, on the other hand, focuses on innovative global companies like Apple, Tesla, and Google, allowing you to invest with as little as $5.
Micro-investing apps are fantastic for building the habit of investing. While the returns may be small initially, it’s an easy and low-pressure way to get started and build confidence in investing. Just remember to check the fees, as these can sometimes eat into your returns if you’re only investing tiny amounts.
3. Look into Property Syndicates or Real Estate Investment Trusts (REITs)
For those who have an interest in property but can’t afford to buy real estate outright, property syndicates or Real Estate Investment Trusts (REITs) offer a practical alternative. In a property syndicate, multiple investors pool their funds to collectively purchase property assets, which could include commercial, retail, or industrial properties. The returns are distributed among the investors based on their initial contributions.
REITs work similarly but are traded on the stock exchange, allowing you to buy and sell shares as you would with regular stocks. Australian REITs (also called A-REITs) invest in property portfolios and provide dividends from the income generated by these properties, making it possible to gain exposure to real estate without needing to buy property directly.
Property syndicates and REITs are especially attractive to older investors who may prefer a more stable asset class than stocks. However, remember that like any investment, they carry risks – property values can fluctuate, and rental incomes aren’t always guaranteed. But with the right research and diversification, investing in real estate through REITs or syndicates can be an excellent addition to your portfolio.
Take the first step
Starting to invest can feel daunting but taking that first step is crucial. Regardless of your age, making a commitment to growing your wealth over time can change your financial future. By choosing a managed fund or ETF, exploring micro-investing apps, or venturing into property through syndicates or REITs, you’re setting yourself up to build wealth in a sustainable way.
Remember, consistency is key. Even small, regular investments can significantly grow thanks to the power of compounding. Educate yourself, seek advice if you need it, and avoid the temptation to chase quick wins – smart investing is about patience and planning for the long haul. By starting today, you’re already ahead.
Take advantage of another investment type we all have by learning how super funds can create passive income streams. And discover how does your super fund stack up with our comprehensive guide!
