Tips to get started with investing

As a financial planner, I hear many reasons why people don’t think investing is right for them; from ‘I don’t have enough money’ through to ‘I don’t know where to start’, and almost all of them come from a simple lack of knowledge.

It’s true that investing isn’t the right option for everyone – after all, there is no ‘one size fits all’ approach to money – but many people don’t realise it could be a great option for them. So, in this post, I’ll clear up some of the common myths and provide some tips to help you get started.

Money is no barrier

In a previous post, I talked about how small investment options, such as Acorns, (now Raiz), can be a great way to dip your toes into investing – and you can get started with less than a dollar. The amount of money you have isn’t a barrier to investing, there are options out there for all budgets.

What is more important, when it comes to assessing whether investing is for you, are your priorities and goals. Investing can be a long game so if you want to buy a property soon or take a long trip, you might not want to tie up your money. This is where expert advice can help you decide on the best financial strategy for you, one that gives you the best chance of reaching your financial and life goals.

You don’t need to find the next ‘Google’

The rise of cult movies and TV shows, like Billions, have many novice investors thinking that the way to make money is to speculate on cheap stocks in the hope of finding the next Google. The reality is that these companies come along rarely, and there are far more people who lose money than those who become rich. In fact, when The Wolf of Wall Street came out a few years ago, I knew a number of novices who tried their hand at finding ‘penny stocks’ that would lead to big returns and none of them made any money.

In many cases, you can make better returns with a long-term investment strategy that involves investing in blue-chip companies, those who have a good history of producing returns for their shareholders and a good outlook for the future. It’s not as exciting as searching for a fledgling ‘Apple’, but it’s likely to be far more successful. At the end of the day, you’re investing to make money – not for the thrill of it. It’s worth asking yourself why you would take unnecessary risks for little or no reward. It’s about taking calculated risks not speculative ones.

You can be ethical and make money too

Our ethics play a big role in our life decisions and there is no reason your investments can’t align with your values as well. Ethical investing is gaining in popularity and for good reason. It’s important to remember, however, that everyone has different values, so you should get advice to make sure you are making the right investment for your belief system.

A financial planner can help you find the right investments that combine a positive financial outlook with an ethos that works with your values, so you have the potential to make a return – and feel good about it.

You don’t need to check your investments every day

You don’t need to, and probably shouldn’t, check your investments on a daily basis. Much of our lives today are set up for instant gratification and immediate results – and this just isn’t the case with investing. The market will fluctuate, and some days you will lose money, just as on others you will gain. If you want to make long-term returns, patience is critical.

Three steps to get started

Step 1: Assess your risk appetite. This means thinking about both the practical – how much can you afford to risk in service of a return? And the emotional – how much are you prepared to risk? What level of risk are you comfortable with? There are many investment options, so a low risk appetite doesn’t necessarily entirely rule you out, it just means you should stick to consistently high-performing investments, which typically have lower rates of return in line with the reduced risk.

Step Two: Start small. Small investment products, like Raiz, can be a great way to introduce you to investing, help you understand how it all works, and build some confidence while risking only small change.

Step 3: Avoid going it alone. If you are new to investing, expert advice is critical, and will often pay for itself in the long run. It takes an incredible amount of time and research to develop the knowledge to adequately build and manage your own portfolio. Working with a financial planner to manage this for you just makes sense and gives you time back for the more enjoyable things in life.

It’s important to make any financial decision within the context of what you want to achieve in life, and a financial planner can help you build an investment strategy that lets you live for today while planning for tomorrow – whatever that looks like for you.

 General Advice Disclaimer

The information in this blog is provided by Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) and is of a general nature only. It may not be relevant to your personal needs, objectives or financial circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if the strategies and products are right for you.