Young Guy with a Bit of Money - Shares/Property? What to Do?

Lactiv8newbs on 31/05/2016 - 19:58

Hi Guys,

Very long time lurker and first time poster. I’m a Full Time Uni Student studying Accounting and Finance. I work Part Time in Retail Banking for one of the big 4 banks. I want to know what to do with my money. Below is a snapshot of my financial situation:

Age; 20
Savings: $50k
Income: $1400 a fortnight after tax ($42k p.a before Tax)
Super: $5k
Assets: Just an old Toyota Camry
Thoughts: Would love to get into Property Market (But appears out of reach for at least the next 1 year). I want to speed up my savings process by getting into the share market. Willing to throw $5k into shares….yet to do my research. I’ve got a Savings account at 3% with ING at the moment which helps a tiny bit.

Note: Im working on a start-up with some uni friends at the moment but this won't affect the picture until at least 6 months - a year down the track.

Input/Advice/thoughts? Anything I should keep in mind?

Financial

Comments

  • ahly92 on 03/06/2016 - 08:19
    +2

    Good work mate. I'm also in uni (but 21 😉) I have started share trading this year after a couple of years playing around demo's and trading platforms. At one stage I was -40% but as I believed in the potential of the stock I hold and had done ALOT of research into it I'm currently 200% profit :) with 5k u won't get far in mid-large stocks making max of 10% return. I would recommend small cap shares. However it's crucial to have a diverse portfolio.

    I have 3 stocks in my portfolio 1 is at -70% (with 50% of my money) another at 25% (with 20% of my money) and the gold bagger I've belived in is at 250% (30% holding).

    Initially I had all my holdings in the negative one and when it fell I was deveseataded but THIS tought me a lot about trading, entry points and trends in the charting. From this I devised a strategy noting down 15-20 potential stocks, researched into each and (with luck) went with the other two.

    I would recommened staying off HotCopper ull get sucked into over hyped and downrampers that will lose u money. It's only good for for seeing which shares are hot and then research into them. Also start with $1000 play around to get a feel for trading and charting .

    I use commsec. If u Google 'commsec free trading offer' ull find they have a promotion where for 600$ worth of trades free.

    As for startup that's the way to go for the future. I too am working on 2 startups but still in the planning stages. Apart from technical and legal advice from a couple of friends I still haven't found the right partner so it's been slow, but i will present my startup in a competition held at my uni (melbuni) so hopefully I win and get backing and funding…also need to increase my GPA so study study study!

    Final note: if ur keen on trading and getting insights into charting and potential stocks I am currently part of a very very smart and helpful trading group on Facebook. (Related to my share that I hold) if u wanna join hive me a pm and I'll give u the link.

    All the best for ur future.

    • pyro love bird on 03/06/2016 - 18:34

      Hey man, I'm actually looking into start-ups as well, if you don't mind me asking, what sort of field were you looking of going into?

      • ahly92 on 03/06/2016 - 18:38

        np :)

        1. Digitalising Education
        2. Ride sharing
        • pyro love bird on 03/06/2016 - 21:46

          Similar ideas to something like Khan academy and Uber?

        • ahly92 on 04/06/2016 - 06:59

          @pyro love bird:

          nooo nothing similar.
          I can't go into detail as someone might snatch my idea. For you to be successful you have to have something unique that others have not thought off or as in the example of UBER try and make something that has been shown to work and successful be used in another way. What about you? you stated that you are looking into start-ups.

        • pyro love bird on 04/06/2016 - 15:17

          @ahly92:

          I completely understand, all good, but it sounds like you've got yourself a good idea, I say go for it! Yeah, I was looking into startups as well, mostly in the hospitality industry as it seems that Melbs is the best place to be when it comes to food. With that said though, there will be long hours trying to work things out and such. But I'm pretty much open to anything, if it seems like a good idea and the investment seems worth it, I'll probs have a good look at it.

          I'm really intrigued with your share trading side of things though, I've been looking into it, but I've chickened out so many times, it's so risky!

        • ahly92 on 04/06/2016 - 15:28

          @pyro love bird: haha the idea sound great but tooooo busy to actually do anything on (Uni exams) will prob sit on it for a while.

          As for stock trading…VERY Risky, but if u have spare cash, even $500 (minimum i think) u can play around with commsecc free trades to get a feel for how it all works, when to buy, analyze graphs and know when to sell to buy back again, ill pm u a very friendly and helpful chatroom for trading (mainly abut XPED which is the share that i am rooting for) ask away any q's u like have a look at other stocks discussion thread to get insights into other stocks.

        • pyro love bird on 04/06/2016 - 15:29

          @ahly92: Heya, thanks man :) I'm actually in the middle of exams myself.

        • bargainbargain on 04/06/2016 - 19:24

          @ahly92:

          can you pm me the friendly and helpful chatroom for trading too. cheers

  • Ion on 03/06/2016 - 09:06
    +6

    Mate, when are working full time and you only get 20 days/year holiday, you will seriously regret not travelling. Listen to me. I was in your position. I had over $150K saved up at 24. I used to work 50 hours a week. One day, I was jogging and was hit by a car. Broke a few bones. It hit me then that life can end at any moment. Nobody can tell you what is going to happen in the next day, next hour or even the next minute.

    I spend around 3 months a year traveling now. I earn a lot less and I don't have much savings. But I don't care.

    • rgr on 03/06/2016 - 12:45

      but then what about retirement and emergency situations?

      • Ion on 03/06/2016 - 20:51

        Well i don't have $150K saved but I do have enough for emergency funds. I'm only 30 and not worried about retirement. Yes, some people have a goal of early retirement but it's not feasible in Australia. The cost of buying a house is just too high for it. It's a concept that works in the US perhaps where you can snag a decent property for $300k or less.

        You are better off finding a job that you will happy to do for 50 years instead.

        • rgr on 04/06/2016 - 10:52

          thanks for your insight. it's very interesting to hear about someone who managed to gather big money at that age and then come around to realising how fleeting life can be and take a different path to life. im 25 now and my main goal is to sock away as much as possible to getting my own place with minimal debt but there's no value in the market and im constantly asking myself whether or not to abandon the goal and take a different approach.

  • goonsta on 03/06/2016 - 09:36
    +2

    If you're looking for investment purposes I'd avoid property right now unless you find something under market value and dirt cheap (less than 240k) You don't really have the income to cover larger issues that could occur like dodgy tenants, covering a mortgage + rent if the property is vacated for extended periods of time without it affecting quality of life.

    Also, remember a car is a disposable asset, its value will reach 0 at some point (yes there are exceptions but not in this situation) .

  • ggkfc on 03/06/2016 - 09:39
    1. all on red at the casino
    2. buy bitcoins.. to the moon!
  • txb on 03/06/2016 - 09:53
    +1

    A Random Walk Down Wall St by Burton Malkiel.

  • frostman on 03/06/2016 - 10:58

    Bro how the hell did you get 50K at 20yrs old with an average income salary?

  • GateheaD on 03/06/2016 - 11:38

    use stockspot.com.au and let an AI invest for you (gold, Vanguard, etc)
    Im up 5.8% for the past calendar year but i'm set for very risky

  • [Deactivated] on 03/06/2016 - 12:33

    Firstly, well done on your progress so far!

    Secondly, I hope I don't sound like a broken record recommending people read this guy, but at age 20 with 50k in savings, and a good savings habit, you're a perfect candidate for maximising your income and not just investing, but aiming for early retirement/financial independence.

    Have a read of this:

    http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-…

    It's not about finishing work early so you can laze around or just go on endless holidays. Its building enough savings to let it work passively for you so you can pursue your passions/startups/travel etc without having to be answerable to anyone else.

    Good luck with your decisions!

  • Xastros on 03/06/2016 - 14:51

    Thing to keep in mind. Shares should be seen as a long term investment. If you know you will need the money in 6 months for a start up or 12 months to buy a property then shares are not suitable. You could buy some shares and quite easily your investment could be worth less in 6-12 months time depending on volatility. You need to be able to hold it out.

    • activ8newbs on 03/06/2016 - 15:54

      very valid and perfect point.

      That advice is relevant to me. I'm almost certain that I'm not going to be investing in shares at the moment.

      • Ion on 03/06/2016 - 20:54
        -1

        You can hold 5-10% in ETFs that may (or may not) boost your returns. ING only returns 3% before tax. Holding some ETFs may boost it to 3.5%.

        • Xastros on 05/06/2016 - 04:19

          Yes but is that extra 0.5% (maybe) worth the risk of having to pull your money out at a time when your capital value potentially down 10-20%? No one has a crystal ball but you should invest in something with a suitable investment timeframe for your circumstances.

  • drillvoice on 03/06/2016 - 16:14
    +1

    I'm in a similar position to you but perhaps a few years on - I'm now 25 but built up savings through my uni years.

    re: financial advice, I think lots of what is here is better than what I could offer, but I'll make 2 points:
    1) There are excellent non-financial investments to be made. I have spent around $8000 on different post-secondary education options, both of which have been amazingly rewarding for me personally, but also professionally. There are investments out there that will make you more than any financial investment. I'd also add friendships to this - you can't buy friends, but you can be generous with your friends, and people can appreciate that.

    2) I would be a bit wary of the ETF stuff listed here. It all looks pretty good and I'll consider it myself but lots of these 'typical' funds would have a high level of exposure to fossil fuels. There's a growing amount of speculation in financial markets that fossil fuel investments are overvalued. You might do better looking at funds that exclude or limit exposure in this way.

    • Thenarrator on 05/06/2016 - 00:39

      how do you be generous to friends? not a troll question

      • drillvoice on 05/06/2016 - 18:38

        I think a simple and obvious option (though not necessarily the best option) is just at every opportunity where there is a shared cost, make a strong genuine effort to pay it all yourself: a restaurant bill, tickets for a movie, petrol for a shared journey. In some cultures this is absolutely the done thing.

        Another option is just - whenever a friend is doing anything like a favour for you, show your appreciation in some way. Now, that doesn't have to be through spending money, but if you don't have time to bake them cookies or help them with their garden, then there are plenty of gift-gestures that you can use. And this of course is true too if you're heading to their place for dinner etc.

        These things may be obvious to some, but they haven't always been so obvious to me.

        • Thenarrator on 05/06/2016 - 19:37
          1. Since making the changes noted above, what have been a noticable positive change for you?
          2. When you help a friend, do you expect something in return? ( i do and I think this is the only way to ensure these gestures remain sustainable. Its important to give and take.. Giving too much makes it one sided and in a nutshell, useless, if a friend never returns a favour)
          3. I know this is very prominent in asian culture. Do you think australians value this same guesture? noting that If it doesnt, it will impact on statement (2).
        • drillvoice on 09/06/2016 - 09:19

          @Thenarrator:

          1) I think it's hard to say exactly. I generally feel better myself - generosity has been shown to make the giver feel happier and healthier.
          2) I don't think it's about expecting something in return. I think for me it's about recognising that I get a lot out of the friendship anyway, so it doesn't hurt to put more in.
          3) I think the gesture can be valued more when it isn't as much part of the culture. I think in general Australians have a sense of who is generous, who's in the middle, and who is cheap.

      • watwatwat on 28/06/2016 - 22:25

        Handjobs.

  • Ivan Krazy on 03/06/2016 - 17:09
    -1

    Shares are not a great investment return compared to real estate.
    I suggest to the OP to possibly look at the property market sooner (while the interest rates are at their record lows) and use some of those funds in travelling!

    Ps. I am no financial advisor so please do not take only my opinion into consideration

    My experience has been very lucky and fortunate. My mum is currently on pension and gave me the house under my name to pay off so only paying a third of the valuation of the property as she was struggling to pay off the loan and the advice we received from the lawyers (it's complicated). Recently bought a new car and placed it against my home. I am looking after my mum by paying all the bills/mortgage/rates etc and she helps out with food. Now my aim is to pay off the home within 10 years (paying more than double the required payments per month) and use this property as an investment/equity so I can buy a better home. I am 24 years old and recently graduated from uni last year.

    • catbug on 04/06/2016 - 03:17

      Well done mate :) hope you pay it off soon!

      • Ivan Krazy on 04/06/2016 - 08:09

        Thanks :) Yeah that is my main goal at the moment to get that down to zero. But I love travel so sometimes I'll just go to enjoy. :)

  • wackedupwacko on 03/06/2016 - 18:21
    +1

    As someone that is studying accounting and finance, you should be able to understand the financials and basics of stocks to be able to invest in that without major hassles.

    Now if you're investing in stocks you have a few decisions to make.

    1) What amount of money are you prepared to lose (say you're comfortable with a loss of $5000). Put that much into the account and start researching into what you want to trade.

    2) What is your risk appetite? ASX has a wide range for different risk/rewards ratios. If you're trying to turn that $5000 into $10 000 or $50k+ then you need to look at the speculative market, dig through a lot of crap and bs that exist to find gems (and yes they exist). If you're just looking to park your money somewhere better than the bank, look at some blue chips that have been paying decent dividends.

    3) Decide on exit strategies (very important - and costly lesson for myself) and stick with it. For example: free carry at 100% exit completely at 300% could be something you decide on for risky stocks (in other words, when it doubles you sell half so essentially your cost is covered and you're now playing on profits). Stop loss at 15%. (Becareful with stop losses - manipulators on the market will intentionally sell down to trigger these).

    Personally, I don't think you'd have a worthwhile RoI if you only invest say $5000 into a fund or dividend generating stocks. You're likely to make 5-10% more a year than parking the money in a bank (at best) which at the end of the day is anywhere from $250 - $500, substantial but probably not worth the effort (the time you spend researching the funds, shares might even earn you more than that if you just straight up worked). Short term or Medium Term investments on stocks with potential is my personal appetite which can net you good gains withing 1-6months. The downside is that you need to look into these carefully, spot the gems from the duds.

    Good luck to whatever you decide and remember to always Do your own research.

  • sparkanum on 04/06/2016 - 09:43

    Lots of people are mentioning shares or etfs, noting the point that you're young so high risk is a good option.

    The "being young" part of that advice implies you have a long timeframe to invest. High risk is a good strategy if you have a long timeframe, as you become less concerned with the volatility of high risk options and can ride them out for better expected returns long term.

    I'm not sure if that's you, though. It read from your post like you want to buy property in a year and might need capital for a business venture. A one year timeframe isn't so great for stocks and etfs.

    Sure - you might still make a lot of money - but it's risky, and also potentially expensive transactionally. Not saying not to go down that path, but just make sure you understand your liquidity needs before you do it.

    Hope that helps.

  • Marcsie on 04/06/2016 - 16:12

    I just wondering how could you save $50,000 at the age of 20 ?

    • -.- on 04/06/2016 - 16:53

      The short and simple answer is a good paying job, one that's not in hospitality or retail (unless you are a manager). Something part-time related to finance, business, marketing, PR, IT etc. should pay at least $25/hour. After that, it's a lot of juggling with uni work (I've done it myself), and before long you'll have tens of thousands of dollars in the bank. Getting scholarships at uni also helps, as does short-term trading/investment. That's assuming you haven't worked during high school. If you're worked during high school you should probably have 10k by graduation.

      The other side of things is keeping expenses very low. Bringing lunch from home instead of eating out, limiting nights out, living with parents etc.

      So it's certainly doable, but you need to be lucky to spot opportunities and be well connected. I got my first job at a bank through a high school connection. Alternatively, you can secure long-term internships/cadetships with a number of large companies. They would pay in excess of $35k a year.

      • pyro love bird on 04/06/2016 - 19:27

        You don't even really need a good paying job to be honest. I worked crazy hours along with school, and am doing moderate hours with uni and you can save up a whole bunch. Because I've kept busy between work and uni, I don't really go out, which saves money.

  • frondono on 04/06/2016 - 22:31
    -1

    Hey mate you probably want to have a look at investing a percentage of your portfolio in cryptocurrrency or related products and projects, in particular Bitcoin, Ethereum (Ether), Digix DAO, The DAO, Lisk

    Being a finance guy, this is seriously just the beginning, I'd probably look at also studying as much about it at uni, if your uni has related courses.I think you will get some pretty solid long term gains and potentially get on to the next google in terms of investment potential.

    A good way to start out is to buy bitcoin with coinjar and transfer it to an exchange e.g. poloniex to exchange into crypto or tokens

    There's a few good subreddits related to it e.g. r/ethtrader

    • Guke on 16/01/2023 - 00:51

      wtf

      • Guke on 16/01/2023 - 00:52

        bro got downvoted too 💀…. bro i wish I was given this advise

  • Thenarrator on 05/06/2016 - 00:40

    what start up are you doing. is it it related?

    • activ8newbs on 05/06/2016 - 01:02

      The start up is completely unrelated

      Can't talk about it too much at the moment though.

      It's in hospitality industry.

      Once launched we'll come to Ozbargain first!!

  • brettd on 05/06/2016 - 10:38

    There's a lot of varied investment advice here that covers most things so I won't suggest much just let you know what I would have done differently with 20/20 hindsight from a very similar position as you (same money at 21, eng/comm degree).

    Biggest thing I would have changed is do foreign exchange at uni, youth is definitely the most valuable investment and spending some money (~10-20%) on travel while you're young is something that gets harder and harder to do later. A few months travel backpacking after uni may also substitute.

    I'm 28 now so 7-8 years ago was the GFC which scared me off shares but was also the best opportunity to buy during the recovery. Note that this period has been basically a once in a century boom so it was hard to not make money during this time on shares or property (shares have since had a bumpy ride though).

    Those are the 2 things I would have changed (in that order). I don't really regret not buying property earlier (saved for the type of house I wanted long term instead and eventually got it).

    One thing that has worked well is investing in yourself, this doesn't just mean degrees/courses, but can be fitness, hobbies, finding work you enjoy, working to your strengths (or on your weaknesses), or even start ups These things yield benefits in sometimes unexpected ways.

    My take on the share market is it is about information (think efficient market hypothesis), whether that is from additional analysis, hot tips or whatever either way it is generally going to take a fair amount of time/effort to generate a reasonable return. I dabbled a bit with no big effort and lost a little but it taught me you need to pay attention to what you do.

    • Ultramup on 05/06/2016 - 13:06

      probably in the exact same situation you were in. Comm/eng student with some savings about to grad. Did you end up finding a role that used both comm and eng knowledge?

  • activ8newbs on 27/06/2016 - 18:49
    +1

    MOD: Please add this to my body text as an edit. I can't figure out how to edit <Noob>.

    Final outcome!!!

    First of all, everyone, thank you so much for ALL the responses and your invaluable feedback. I was gobsmacked to see how many of you generous people took out some time to reply. Sorry to those who i didn't invididually reply to.

    My circumstances have changed slightly. My old man is willing to come to the party and use a property as collateral which will help me reach my target deposit ($60k) sooner rather than later. I will still be holdng up on the purchase of a car, until I'm satisfied with my financial position after the initial property investment. Also, I decided to take up the feedback and went for a quick holiday up to Cairns (Super fun but unfortunately fairly expensive too - Spent $1300 in 5 days). Also, ETF's and shares were ruled out for me - at least for the next few years as I'm in need of liquid cash for the property investment.

    Thanks once again everyone.

    Warm regards!

  • [Deactivated] on 30/06/2016 - 20:48

    Advice is save the money for investing in the startup in 6-12 months.

    Shares are great too.. as others have mentioned.. ETF funds are a good way.. potentially VAS as fees are low.

    maybe half in VAS, half in a bank account ready to invest in your startup where you can really see the potential gains…

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