Hi looking best tips / advice/guides/ experiences for a beginner in shares/investing,
Probably have between $1k -10k$ extreme max too work with at start.
Only really had money in savings accounts before and looking to make any extra I earn to go further in this current climate and longer term
Currently have a fairly large mortgage,small family, early 40's .
Cheers many thanks.
First Steps for Investing
Francis82 on 21/06/2024 - 12:14
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Sorry but that is a complete waste of time
You missed a very imporant point that OP made….
"Currently have a fairly large mortgage"
So there is OPs best investment
PAY DOWN THE MORTGAGE!
Personally I have my emergency fund in the mortgage offset account (enough for around 9 months of spending).
Every time I get $5k over that I put it into shares (vanguard index etfs) the shares have gone up 16% over the last few years with a bit of dividends as well. I wouldn't put everything into shares as there is volatility but over the long term it should work out.How much in the emergency fund?
PAY DOWN THE MORTGAGE!
While this can be helpful, it is also very important to expand your investment options in a safer way. The side hustles don't need to return anything substantial at first, but will be very useful in the longer run with experience in hand. I'm not talking about dumping half of your offset account funds into crypto or stock market. But it's about diversifying options.
agree re: diversification although it's hard to beat a guaranteed 8-12% pa post tax (equivalent if you put it in offset depending on your marginal rate) in this climate
@zorodluffy: You don't pay tax on interest you didn't pay on your mortgage, so the comparison is 'post tax'
@greatlamp: I know that, but his saying 8-12% post tax.
Most interest rates are 6-7% atm, so youre only getting 6-7% post tax return.
The only way for 8-12% to make sense, is if it was pre tax.
@zorodluffy: yes you are right i meant 6-7% net of tax which is 8-12% equivalent pretax which is what any other investment income would be unless through a trust/corporate trustee structure or smsf
I don't agree with this.
The longer you keep the mortgage the cheaper it becomes due to inflation.
There's a category called micro investing that is specifically targeted towards simplifying things to make it easier to get people's feet wet.
One example: The Diversify and Chill option from Pearler Micro.
It costs $1.70 per month if you choose just one option and don't have multiple portfolios ($2.30 for 2 or more).
You can invest in fractional shares. You don't have to have the exact amount for whole shares.
Diversify and Chill invests in VDHG and is one of their most popular choices.
Downsides:
You do not own the VDHG shares directly. If Pearler collapses, you may be in for a longer wait for them to determine what belongs to you and what doesn't. Worst case scenario, you lose everything, but that's usually CHESS advocates overstating the risks.
You have less control over what price you buy the VDHG (or other) shares at, since you're just handing Pearler Micro your spare money and telling them to do it for you.
Micro investing platforms have a history of slowly tightening the screws as they mature, so don't be surprised if the fees slowly increase over time. Just ask anyone who has put money into Spaceship Voyager.
As with all financial advice, please take everything with a pinch of salt. This is real money and your money.
I don't want to hear about an angry man wanting to send hitmen after me, but not being able to afford to because they've made a bad investing decision.
Why not just buy VDHG themselves? Once off transaction fee and at $65 a share it's not like fractional shares are really that important.
It's pretty important when you have less than $65 dollars to invest.
Betashares Direct offers brokerage free ETF and fractional shares trading. Shares are not hold under your name (but you are still the beneficial owner). Betashare is rather a large player so the risk of their collapse is relatively low.
https://www.betashares.com.au/direct/faq
Also DHHF seems a better choice over VDHG…https://www.reddit.com/r/fiaustralia/comments/12e5kvs/vdhg_vs_dhhf/
but depending on your risk appetite.
You save 50 cents here, then you go somewhere else and save another 50 cents, then you have 1 dollar.
To be fair, if you have less than $65 to invest you probably shouldn't be investing in this manner.
What about Betashares? No fees to buy ETFs. Also a risk that they could go under but you are right diversifying is the key.
*edit: oops comment above already mentioned.They could go under, but if the alternative is buying ETFs directly the risk is exactly the same, you still don't own the underlying asset.
Step one: get a Pablo
Step 2 buy a Tesla
Step 3 buy stretch pants from Costco and tell the whole world.
Step 4 Hide behind a family trust
Step 5 advertise pearler zillion times on youtube
Step 6 receive a free 1,8 million according to Queenie
https://www.youtube.com/watch?v=adZgDUUBQy8
Invest in the next Nvidia. Just imagine what is almost worthless today but will be worth a fortune 20 years from now and buy 10k worth of shares of it.
nvidia was not worthless 20 years ago
It was 18 cents a share 20 years ago. $130 today. May have been splits since then, but was still 18 cents a share.
yes there had been splits. but it was still a established profitable company back then making gpus.
@Jaduqimon: Sure, but without the recent coin mining rush and now generative AI, what would they be worth today?
@AustriaBargain: or the borderline fraudulent vendor financing deals they're basing their sales off that they got busted for doing before and are doing now again?
With a market cap of around 3 billion - not worthless.
As soon as they announced tnt2 I knew they were on a winner. Pity I didn't have any spare cash back then. I think they floated at around $2 per share. :)
Yes, invest in the next best thing. Just choose , out of the 100s of possibilties , the one that is going to succeed.
And not any of the failures.
That's the secret to investing. Don't choose companies that will fail, and do choose the ones that are going to go up in value 1000x. You're wasting your time and money if you choose the companies that won't go up in value.
If you pick the company that will develop the next best thing, you should be ok. It’s a no brainer.
@joka: Exactly. Just invest in the next Tesla or the next Apple or the next Standard Oil while their shares are still cheap. It's not rocket science.
@AustriaBargain: Exactly. Just pick the winning lotto numbers. I dont understand how people arent getting this one simple life hack!!
Reading this pointless advice being rephrased by multiple random people coming together to be in on it had me burst into tears from laughter for some reason
@AustriaBargain: Don't forget, other than picking only winners, make sure you skip the losers. 0% loss rate that way. Simple stuff!
Yeah buy asts and chill
Pay down all debts
Save 3 months emergency fund
Invest in ETFsInvest in ETFs
If you can be patient, I prefer to throw as much money into super as possible, The tax benefits alone are unbeatable. (ie even in the 33% tax bracket you are making 18%pa immediately)
Can do EFT via SMSF…
Even better, do it within Super with something like ChoicePlus
Most Industry Super funds allow you to choose how to invest.
Sort of like an ETF and apply different % of you current balance@0806449: AustralianSuper (an industry super fund) has a "Member Direct" feature which allows you to directly invest in ETF's. There are limits on the % of your super you can put into some of them, but the way to go if you want to take a more hands-on approach to investing your super.
Wealth warning - Buy some financial advice to make sure this option is the best for your circumstances, or risk stuffing up your retirement
Once you get to $3m in super you are stuffed now thanks to the changes.
I think most people would happily choose to be your definition of "stuffed"
Not really. The extra 15% tax only applies to balances over $3m, so you still have an enormous sum of money in a low tax rate environment. The tax is still much lower than what it would have been if the $3m was outside of super.
5k chunks in vdhg/vas maybe if you're worried on risk.
Otherwise Nvidia options lmao
Nah Aussie shares have no future it's very flat but good dividends
Better to go into FANG or s&p 500
Nvidia has maybe 20% upside and 70% downside, risk to reward not good
See if you can get a cheaper rate on the mortgage and weigh up how much money is better in an offset or shares (I'd recommend ETFs).
As a beginner, you should avoid individual stock picking unless you want to invest the time researching IMO. Exchange traded funds are like managed funds in that they invest in a basket of securities, such as stocks, bonds, or other asset classes (I stole the definition from Blackrock). There's a bit of diversification which lessens risks and losing money.
I'm just starting to buy some vanguard ETFs directly through them. The advantage of this is no brokerage when you buy, only when you sell.
Is the ROI on ETFs potentially higher than the ~5% interest in savings account? Always thought they were slow but steady increases over longer periods.
VDHG, as suggested by someone else on this post, has 8-9% average annual return since inception so it's potentially higher than 5% interest in savings account.
I would put it in his offset acct. He's probably paying over 6% on his mortgage and there's no tax to be paid on the money he saves which makes the 8-9% not worth the risk.
edit - people below beat me to it.
VDHG:
24 Nov 2017 $50.19 now $64.70 about 29% growth over 6.5 years.=29%/6.5
=~4.46% per annum.Whereas if you compare it against VGS, VGS has grown about 90% comparing same period about 13.92% per annum. I would recommend VGS over VDHG anyday.
@No ONE: You're ignoring dividend payments in your calculation
I would recommend VGS over VDHG anyday.
I would recommend not taking financial advice from someone that just compared share prices in google.
What's next, NVDA dropped 90% after a share split?
I've gotten a lot out of podcasts. Popular one is the Australian Finance Podcast which covers a lot of the basics. This website also has good info to start with: https://passiveinvestingaustralia.com/
Max out your super concessional contributions if you haven't already. If you have, put the rest into VGS.
Max out your super concessional contributions if you haven't already.
This is all any casual investor needs to know. Industry fund Super is the easiest, most reliable, most profitable return for most regular people
I agree that Super should be the first consideration due to the tax advantageous nature of it - but you must remember that Super isn't particularly liquid and that should be considered as part of your 'requirements' or plans for the money.
You shouldn't be investing into your Super if that would affect things like your Safety Net etc, or would affect your planned spendings.
I.e. if you're wanting to buy a house in ~10 years, contributing to your Super will be great further down the road but won't assist with your immediate needs/requirements.An offset account would keep the funds liquid and also provide a number of benefits, so in this case that would be my starting point.
Time-frame is also important, as Index Funds/equivalent ETFs are generally expected to be held for around 7 years minimum, and if held for less than a year (iirc) it would have a big impact on CGT.
That's all to say: it depends. Maxing out Super is definitely not "all any casual investor needs to know" - though, like I say, it is still very important.
Do you recommend just buying when you have extra cash or do a limit buy and be patient?
Buying when you have extra cash. The gain from a limit buy is negligible in the long run.
Do you recommend just buying when you have extra cash or do a limit buy and be patient?
I personally remove the temptation to try and time the market and just do regular one a week buys with my pre-determined weekly 'invest' amount (currently DHHF, last year was VDHG)
Vanguard has AutoInvest options; trying to time the market with your purchases probably isn't worth your time.
At age 40 you should consider super, tax-effective with solid returns. Diversify only if you'll need the cash before you retire (but then retire with somewhat less income).
Sounds like you need to see a financial advisor as you should be thinking about paying your mortgage off first IMHO.
In the current environment, assuming you have an offset (or can redraw) and a ~6% interest rate on your 'fairly large mortgage', I would just be smashing it into that.
There is nothing that will give you the same return after taking tax into consideration with the same level of risk (very near zero on your own mortgage).
Obviously you can re-assess as interest rates, returns, etc, change over time.
This, or if op happens to have higher interest loan such as credit card or car loan, then pay the loan first.
Read Barefoot book.
Super funds optioned into growth have been returning better than mortgage rates even before factoring in the lower tax on contributions vs full marginal rate on mortgage repayments.
There is nothing that will give you the same return after taking tax
Member Super contributions ???
with the same level of risk ???
Super is more diversified so risk exposure is arguably less than a single property investment, unless OP is within 10km of a capital city CBD?
Super is just a restricted access tax effective "holding account" (not an investment as such). Owning the same asset inside super and outside super will give very different returns. Notably higher for those on higher incomes.
Then there are the income tax savings you may be able to access by putting money into super, depending on your income level and concessional contribution levels, so the pure investment return is usually better inside super.
Having said that, paying down a mortgage to create the capacity to invest is a sensible plan. Just don't talk yourself into believing it's the best financial return.
Currently have a fairly large mortgage,small family, early 40's
If your mortgage is on say 6% interest rate and you're paying after tax even on 30% marginal tax rate you need a return of 9% to justify investing. You might want to pay off your mortgage to within $1 then withdraw the money and invest. The interest on redraw then becomes tax deductible.
The beauty for the tax office with high house prices and mega loans is nobody would be able to do the above. Spend your life paying off your mortgage then sitting on $2m with no cash.
If you have a mortgage you should focus on paying that down first before throwing money into the markets.
Markets are frothy at the moment and economies are on shaky paths with interest rates being “high” right now. You can’t time the market but it’s worth thinking about before investing any money.
Pay down the mortgage. Interest rate is about 6% & inflation is about 3.5% so your investment needs to yield 10% at a minimum to make it worthwhile
Currently have a fairly large mortgage,small family, early 40's .
Pay off your mortgage first…
i'm paying off my mortgage from super balance at retirement… because we enjoyed a period of low interest rates where super was doing somewhat better, and the carry forward rule (concessional contributions) yielded additional returns. My super now grows enough in a single year to pay off my mortgage.
Cheers manys thanks all! Yea mortgage around 6% currently,
A few abbreviations and terms too swat on from above posts!So sounds from the jist of above comments you need to be making over 9/10% too break even with the taxes on the profits??
That's sounds quite a bit, without more riskier investing or just more than just my greenie knowledge.
Would investing in start up companies be the best way to get the higher percentage return companies or any other alternatives to that strategy?Sure, but it’s about risk vs reward. For every Uber there are about 1000 others that fail to take off.
You said yourself you have a massive mortgage. In my opinion you can’t really afford to invest and aim to reduce this as much as you can.
For every Uber there are about 1000 others that fail to take off.
if 999 out of 1000 stocks that are on ASX/NASDAQ fail, i think we have a big problem.
Would investing in start up companies be the best way to get the higher percentage return companies or any other alternatives to that strategy?
so you want gambling tips, not investment tips?
Currently have a fairly large mortgage
Probably have between $1k -10k$
Very hard to beat the risk/reward ROI of paying down your mortgage, considering the risk of essentially 0
I know your not retiring yet but noel Whittaker's retirement made easy isva must read… covers al sorts of interesting topics including investing.
Is reddit down? There's already a heap of threads about this.
I think this is perfect for beginners like you:
https://www.amazon.com.au/gp/product/B0C3ZTL5HK/ref=ppx_yo_d…
I started with a copy of Rich Dad, Poor Dad which deals more with the philosophy and psychology of investing but is still very important. You need to make a choice as to what type of assets you will be investing in and I believe the content of this book still holds up. You can then do more research into how each asset type is currently going, which one suits your personality type, etc.
I went with property… as I knew I wasn't into other investment vehicles such as shares or businesses in the long run. Shares move too quickly for me, and businesses is too hands on.
As an analyst that deals with property these days, there's a lot more to property than what the property investment books tell you about. And I suspect that'll be the same for the other asset types.
Considering I wasn't born with a golden spoon, I think I've done OK to not only get myself into the property market but also to be the main income earner that made my wife's and my house build in the current environment mostly succeed.
As an analyst that deals with property these days, there's a lot more to property than what the property investment books tell you about
Care to elaborate?
Legal stuff, how a property is maintained properly especially if there are defects, body corporates, duty of care as a landlord, volatile economic conditions, etc, etc, etc
You know… regional specific things that can't be addressed for everywhere in a book, and all the not so appealing stuff that would deter someone from wanting to buy a property. Most property investment books will simplify the financials, and not go into as much detail on a lot of the other stuff; usually painting a picture of how easy it is. It could be if you don't run into any issues but even a thorough due diligence can miss problems if it's well hidden (intentionally or unintentionally).
I have over $2k (spent about 20yrs ago) of investment and wealth creation books on my shelf and none of them would have directly helped me solve the $3mil defects issue (incl interest since not all owners had the fund to pay upfront) my old body corp had. It's no Opal Towers but when a strata loan (at the time at least) is a max of 10yrs, that would have been just over $100k per lot or ~$1k/mth extra each lot owner would have had to cough up. I dunno about you but I'd find it hard to earn another $1k/mth to cover such costs.
In order to solve the issue, I initially spent 2 months of my own time dissecting the almost 10yrs worth of mostly bad decision making that came before it. Total duration of having to deal with the core problem ended up being ~3yrs. Total cost I est about $150k in legal, engineering and project management fees. They most certainly don't tell you about this in investment books.
My previous property had a serious issue with commission housing. And my wife's current townhouse that we live in has a similar systemic defect to what my old townhouse complex had (though not $3mil worth)… I managed to solve the issue for my wife's lot with just time but the other owners aren't so lucky. Other things that people in my professional property network or myself have had to deal with include deceased estates holding back rectification works, owners in body corps having crazy solutions to problems, ill informed body corp managers, etc, etc, etc.
In short (and this is the opinion of my colleagues too), every property has an issue… big or small. And you'll be very lucky to be stuck with small issues.
Would I still buy property?
Yes… but I'm confident in my ability to mitigate such issues. But if someone is treating property as a surefire, get rich vehicle that requires little effort, they're likely going to be in for a rude awakening.
Many thanks guys for the advice ! Much very appreciated!
Paying off the mortgage faster is the best investment.
Second would be to put it into your super. Probably the safest and highest yield for that thing of amount.
Assuming you're with a decent super with low fees like the ISF ones, everyone should be better off doing this rather than wasting money on quick rich guides
Cheers thanks
It depends on your age, level of income security and capital gain outlook of your mortgaged asset. I believe in the past 10 years high growth super has returned twice as much as average house prices. Your income gets taxed less going into super and average returns have exceeded variable mortgage rates.
Currently have a fairly large mortgage
There's your problem,
Took a chunk too big to chew on.
How else would they buy a house
Rent or buy something more manageable to your budget, in terms of home size and location.
See the whole property market is a domino-effect market.
one person buys at extremely high price makes the rest of the homes nearby shoot for the same goal and it just raises the bar.
There is not enough data to suggest it's not manageable
Just buy IVV or QUAL or someother wide reaching low fee Index ETF and have a day
contribute to it regularly and dont worry about short term volatility
[this is not financial advice just my opinion]
It 'wont' get you rich quick but it will build steady compounding wealth
All in FANG
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Go subscribe to Money magazine's free newsletter. It has plenty of articles to see if investing is interesting to you, and something you want to spend time on, and will get you up to speed on mainstream investing ideas.
The newspapers and other general media also have plenty of intro financial stuff.
Read a book like the barefoot investor (I actually find that one annoying, but plenty swear by it).
If you get really into it, consider more "out there" investing ideas like an SMSF, holding assets like gold, international shares or crypto directly, but all that complexity and risk isn't for a novice, or really a normal person unless it becomes their hobby.
So start off with tried and true information sources to begin with, and you will see pretty quickly if you want to wade in neck deep, or just do what 80%+ of people do and put money in super, maybe some share market funds, possibly an investment property.