Where to Start Investing When Relatively Young

knoxy1001 on 24/04/2019 - 14:06

Where would you start?

I’m 25 years old and want to get started investing.

I live out of home (no choice), paying off a car, other than that no debts.

Have about $500-$600/week left over, after rent, food, bills etc.

What would you look into? I know there’s not many “Set & forget” investments, but one that requires little input ideally.

Is there any other books you'd recommend?

Ive read the barefoot investor, rich dad poor dad etc, they All mention getting assets.

Have a few mates who’ve got first homes, but the bank of mum and dad is empty on my end and I’ve about 2k in savings so far.

I’m hoping for something I can put $100-250/week into, more as it’s available, less when it’s birthdays etc, that’s aside from a savings account that I can begin to make some form of income off. I know it won’t be anything huge, but something that in 5-10 years time is a good secondary source Of income, if it only pays for half a tank of fuel a month (although after 10 years, I'd be dirty about that…)

Happy to break down my spendings a bit more, but don’t see the point in putting $500/week into something and only having to pull it out every 2 months.

Current train of thought is save the minimum enquired for a vanguard mutual fund, buy into that, then invest the minimum weekly into that, along with any returns I get back into it.

Thanks,

Financial

Comments

jellykingdom on 24/04/2019 - 14:20

Are they still doing that First Home buyers savings account? The government backed one where they double your money. I mean you HAVE to buy a house with it then obviously, but still, you won't beat 100% return!
- knoxy1001 on 24/04/2019 - 14:32
  
  I. remember reading that that was cancelled a few years ago, definitely would've gotten into that pronto if it was going! would like to buy a house/flat in a few years.
spackbace on 24/04/2019 - 14:28

+7

paying off a car

Dump as much as you can on that loan, pay it off, then look at investing/saving

Not much point while you have a loan like that imo
- knoxy1001 on 24/04/2019 - 14:31
  
  +1
  
  Should've added, I'm a sub-contractor, so the car is paid off by the company, the company pays me. The car is a total tax write-off, it's not on my agenda to pay off early (claim depreciation etc)
  - spackbace on 24/04/2019 - 14:32
    
    +5
    
    Ugh well my advice would've been good otherwise 😂
    - knoxy1001 on 24/04/2019 - 14:37
      
      Yep, Definitely would've been good advice in most normal circumstances!
DarthAntz on 24/04/2019 - 14:35

+3

I'm ten years older than you.

One option is always going to be self-investment. Save your money, even in low interest, and set yourself up with your plan for using the money and the strategy to keep the money flowing in regularly. You are in turn maintaining your savings and developing a discipline. It wont be the highest % return, but you are learning discipline. When it comes to money, you're better off taking your own advice than relying on the advice of others, which dont consider your needs and situation.
I've invested in ASX in the last 10 years, but I'd be better off financially if I just stuck to the gradual increments of adding to my savings, and I would have a helpful amount of passive income in confirmed interest, compared to idle stocks. It was much easier to maintain a savings account.
I dont own a home and in my situation that has been an advantage.
The more you invest into the time, maths, planning and considerations, you'll learn a considerable amount in regards to money management, and be able to implement a lot more that you've learned from those books. Keep reading.
Thats my 2c, there's plenty of previous posts here in regards to investing.
- knoxy1001 on 24/04/2019 - 14:40
  
  Thanks for the advice, DarthAntz.
  
  I had an inkling it was going to go the way of "open an account you can't easily access, deposit a few hundred a week, forget about it, adjust your budget to suit the missing few hundred and check back in a few years to see what opportunities are available…"
  - dcep on 24/04/2019 - 15:28
    
    you need to beat inflation though
    
    3% savings interest still need to deduct tax which leave you peanuts or -ve after inflation
  - DarthAntz on 24/04/2019 - 16:59
    
    +1
    
    definitely have it easy to access, as monitoring and projecting your savings is part of the practice. As phunky's comment below, you're saving less than inflation and you'll be paying tax on your interest. On the plus if you maintain for 10 years, you have a healthy savings habit and money you can access anytime without needing a broker or paying fees to access
dust on 24/04/2019 - 14:40

+12

Invest in some cryptocurrency and then use the losses to offset future capital gains.
public-secret on 24/04/2019 - 14:50

+6

If you aren't currently banking with Ubank, start a Savings + Transaction Account with them. You could earn as high as 2.87 per annum if you manage to deposit $200 every month. This isn't really an investment tbh, but it could help you boost your savings little by little.
- knoxy1001 on 24/04/2019 - 14:53
  
  I'll look into that, thank you! I might go hunting down an offline bank, to help me resist temptation after a few pints to just "borrow" a hundred dollars for dinner hahaha.
  - inventel on 24/04/2019 - 18:04
    
    Learning the discipline of not "borrowing" from your savings is a great discipline to learn, but if you want to be able to force yourself to not impulse spend your savings, check out the Notice Saver product from Rabobank (recently rebranded from RaboDirect). The same as any other HISA except that to withdraw from it, you need to give a notice period (30, 60 or 90 days, depending on the product). But you can keep adding to it as you go. Rate for the 90 day product is 2.7%, but if withdrawing money for general purpose spending is a real problem, you'll definitely end up with more overall at 2.7%pa you can't access than 2.87%pa that you can access.
idonotknowwhy on 24/04/2019 - 15:13

+3
Where would you start?

Start by paying off that car loan. Whatever you're paying in interest on that loan, is a greater value than what you're likely to earn in the markets.

Ive read the barefoot investor, rich dad poor dad etc, they All mention getting assets.

That's good. If you enjoyed those books, give these a try (my favorite books on the topic):
https://www.amazon.com/Millionaire-Next-Door-William-Danko-e… and https://www.goodreads.com/book/show/1052.The_Richest_Man_in_…

When you're ready to invest (have paid off your debt), the first step is to save enough money in the bank for 3-6 months of living expenses.
This is important because in the future, if you're out of work and need money, you don't want to have to sell your assets. This is particularly important if you're in stocks, because when might the stock market be down? At the same time as the economy isn't doing well, ie, the same time you might be out of work.

Once you're ready to actually buy assets, I suggest you read this book:
https://www.amazon.com.au/Little-Book-Common-Sense-Investing…

My strategy is to buy into index funds via ETFs using selfwealth.
I generally recommend VDHG which you can buy into as an ETF on any broker platform. I recommend selfwealth because of the flat-fee $9.50 trades, and the 5 free trades via Ozbargain referrals.

So to summarise:

Keep reading books

Pay off your debt.

Build up a savings buffer.

After you've read a few more books, you'll probably know what you want to do.

P.S.

Have a few mates who’ve got first homes, but the bank of mum and dad is empty on my end and I’ve about 2k in savings so far.

Don't worry about what other people are doing, and stay away from crypto.
- scotty on 24/04/2019 - 16:25
  
  +2
  
  I generally recommend VDHG
  
  This. Turning on dividend reinvestment plan, and it's pretty much set & forget.
  - knoxy1001 on 26/04/2019 - 12:41
    
    Looks like solid returns over a 10 year timeline, can't argue with that.
- knoxy1001 on 26/04/2019 - 12:40
  
  No really interested in paying off the debt- the company I work for/own owns the car (tradesman) and the depreciation and interest on the loan are all a tax write-off, happy with where that is and the repayments.
  
  I'll read those books, thank you! hopefully they're available in .pdf online, ill start hunting.
  
  6 months of living sounds doable, ill work towards that, thanks.
  
  Thanks for the excellent advice, ill use it. I appreciate it.
  
  Cheers
H E B on 24/04/2019 - 15:14

+1

Not a financial advisor here but one traditional approach would be:

1) 3% or close to savings account based on rates these days it's really not much (set up a few if you want for different needs like a don't touch account for example)

2) Find a low brokerage platform to invest stocks in and start putting away say 25-50% of your savings into individual stocks of $3-5k for diversification. With the dividends pre tax say (aim for 4-5% min) you can put those funds back into your savings account. The stocks I'd aim for would be high yielding blue chip shares (this way the swings won't be as extreme and should be relatively easy to sell when you need to access it). As you would know the key here is to get the dvidiends but hope for some ultimate capital gain by the time you want to access those funds to sell the stocks (that way it exceeds basic bank interest).

Given Australian banks are considered some of the safest in the world you could look for one of those. NAB may be an interesting one to watch the next few months given their recent hammering at the royal commission and a direction of the new board. They seem to have lost some ground the last few months which could be a good time to get in.

3) Rinse and recycle till you've got enough for a house deposit or just roll another 25-50% into a decent managed fund or safe ETFs for further diversification.

I'd stay away from crypto, forex, futures, and derivatives for the time being. I'd want to save enough money first before I go to the casino. With great gains often come great risk and some would consider the ultimate lesson of saving to be the worthwhile cause. You probably won't get rich quick but you shouldn't get poor quickly either.
Diji1 on 24/04/2019 - 15:37
Index fund tracking major stock index where you own the fund so there is minimal fees. eg Vanguard 500. This is because no one has outguessed the market in the long term, barring two people that we know of, so accepting that the best position is to own what the entire market believes is best.

Real estate.

The key is to always avoid fees which have devastating effects on compounding wealth

eg. the average superannuant loses over half of their lifetime investment earnings though the 0.8% fee that is paid to banks

and trust nobody.

Almost everybody working in wealth generation is out to remove your money from you while lying about it eg. the superannuations industries explanation for morons that "fees cannot be avoided but we are always trying to reduce them".

Most people give their money to banks to invest. Don't be that stupid.
Steptoe on 24/04/2019 - 15:58

Read Mr Money Mustache?
- knoxy1001 on 26/04/2019 - 12:38
  
  I Havent, Ill have look for it, see if it's available in a .pdf, thanks
  - Steptoe on 02/05/2019 - 02:37
    
    It's a BLOG come website
JIMB0 on 24/04/2019 - 18:11

Invest in yourself. Spend the time and money to gain qualifications that will make you more employable and at a higher rate.
- knoxy1001 on 26/04/2019 - 12:37
  
  +2
  
  Always reading and learning, finished my trade, now doing uni, reading books as I go!
deelaroo on 24/04/2019 - 22:04

There's no big secret or real short cut with the amount of money you are talking about or the timeframe. Find the best bank savings account deal/rate and just keep putting your extra into that.
- knoxy1001 on 26/04/2019 - 12:37
  
  $12,000/year over 10 years isn't worth investing? Don't make me feel too bad, I'm hopeful there's something good out there.

Where to Start Investing When Relatively Young

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