Where you at?
Before you jump in, take some time to evaluate where you’re at in life. Is your career just getting started or have you already got both feet in the door? Whether you’re earning a little or a lot, the first step is knowing if your financial position allows you to set something aside for investing.
Another thing to consider is your age. While you can start investing at any point (provided you’re over the age of 18), the longer your money is invested the more likely you’ll be able to withstand the ups and downs of the sharemarkets.
Know thyself
Next, think about what it is you truly want from your investment. Setting your eyes on the prize not only gives you something to strive for, but it also helps keep yourself accountable – so long as you stay realistic.
Setting tight deadlines and drastically changing your lifestyle to achieve your goals sooner may not always be the best approach. Sure, there will be sacrifices along the way but, chances are, if doing a complete 180 won’t work for your New Year’s resolutions, it won’t work for your investment strategy.
Instead, work out how much you’ll be able to set aside each month, then decide how much risk you’re willing to take on. High-risk investments have the potential to yield a high return, but the risk of making a loss is also greater. Low-risk investments may yield a smaller return but tend to offer more stability.
Set your goals
Your investing strategy will also depend on your goals. Short-term goals, like an overseas vacay, a fancy new ride, or a MasterChef-worthy kitchen upgrade, can take anywhere from a few months to a couple of years to achieve. This means you may be required to sell when the conditions are unfavourable. Lower-risk investment options, like cash, bonds and some ETFs, could be solutions to minimise risk.
What is an ETF?
ETF is short for Exchange-Traded Fund. ETFs are asset bundles that are traded on a stock exchange just like shares. When you buy an ETF, you own a share in the fund that owns the assets, not the assets themselves. You can buy units in themed ETFs, like tech or sustainability, with CommSec Pocket or CommSec.
Long-term goals are a longer waiting game. An example of a long-term goal could be saving for a house deposit, building financial independence or stocking up your retirement fund.
Depending on what you’re after, long-term goals can take anywhere from a few years to a couple of decades to achieve. When you’re in it for the long haul, you might consider higher-risk investments with the potential for higher returns as it buys you time to ride out any potential dips in the market.
Whichever way you roll, how much to commit and what level of risk to take is still entirely up to you – and even small sums can make bank.
Still need some inspiration? Find out how Ellis invests.
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Important information
Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited (formerly Chi-X Australia Pty Limited), a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.
This information is not advice and is general in nature. The information has been prepared without taking account of the objectives , financial situation or needs of any particular individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to the individual's objectives , financial situation or needs, and, if necessary, seek appropriate professional advice. You can view the CommSec Terms and Conditions, Product Disclosure Statements, Best Execution Statement and Financial Services Guide, and should consider them before making any decision about these products and services.
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