#SheSociety had the chance to ask financial expert, Shahirah Gardner a few questions on how to get started on investing.
What do you suggest to those first starting when it comes to investing?
Before investing, you want to make sure you do two things. Firstly, pay off bad debt – yes, that means those high interest credit cards! You don’t want to be paying more in interest on the money you’ve borrowed than you’re earning on your investments.
Secondly, putting money away in an emergency fund is critical for financial stability. Set yourself up with three to six months worth of living expenses so you have access to cash for a rainy day. You don’t want to end up in debt under unexepected and stressful circumstances.
To get started on your first investment, your best way to start off is by diversifying your investments. Look into exchange traded funds (ETFs) and mutual funds. This is an easy way to disperse your money among the top 500 brands on the ASX. You’ll have a little money invested in companies with a record of stock exchange success. That means, if one stock drops, another will pick up which will balance out your investment performance. There are several “robo advisors” on the market who can help with diversification and asset allocation based on your risk profile and financial goals.
What type of investments can be made?
You can pretty much invest in anything from traditional investments like shares, bonds, funds… to cars, wine, tech and social enterprises. For most people though, investing means investing in the stock market: buying shares in a company with the goal to generate decent returns, generally over the longer term.
What percentage of income would you recommend putting towards investments?
As a rule of thumb, you should never invest more than you can afford to lose. The stock market is described as a gamble for this exact reason: you can win small and lose big! Which is why you need to take a long term approach to investing. Can you afford to have your wealth tied up long enough to weather the surges and crashes (because it will be tempting to sell when your shares are not performing!) If the stock market crashes, you could potentially lose a large portion of your wealth if you have too much invested.
It all depends on how much risk you’re willing to take and how aggressive your financial goals are. If you are in your 30s and investing for retirement, you have 30 years to accumulate your wealth vs someone in their 50s investing for retirement. These investment portfolios will look very different.
And for those looking to get their feet wet in investing: you actually don’t need as much money as you think. There are plenty of fund managers and investment platforms that provide fractional investment opportunities to introduce you to investing.
About The New Investors
Recently Yahoo Finance launched The New Investors; the new generation of finance experts helping Aussies navigate their financial future in different and unexpected ways.
Meet Al Bentley, the self-taught investor and finance whizz, Shahirah Gardner, fintech start up specialist and Will Richardson, a warrior impact investor. This team of finance, fintech and investing experts are dedicated to ‘make money work’ in simple and surprising ways.
In and eight-week content series, The New Investors will bring the latest trends in alternative investing, ethical investment and personal finance to young Australians interested in approaching their financial decisions in a new way.
See more here: https://au.finance.yahoo.com/the-new-investors