5 Ways To Start Your Investing Journey

Investing can be a great way to make a bit of money on the side, especially if your living expenses are covered, and you’ve got a bit of an emergency fund built up. The only thing is that there are just so many investment options out there. It can feel a little overwhelming. That’s why we wanted to break down a few straightforward ways to help your wealth grow.

Micro-investment apps

If you don’t have the money to make an initial deposit into a trading platform, micro-investment apps may be a great first step into the world of investing. The way that it works is that it bundles up lots of users’ smaller investments so they can buy units of ETFs or index funds.

These are financial products that invest money in multiple companies instead of just one. For instance, one popular index fund is the Vanguard Australian Shares Index, which follows the performance of the top 300 publicly traded companies in Australia.

Some micro-investment apps ask for as little as a $5 initial investment, and you can set these apps to ‘round up’ your transactions to the nearest dollar so that your ‘spare change’ is automatically transferred to the fund.

There are some fees involved that you should make sure you read up on before you get started, as depending on how much money you have,the term of your investment and the risks you are happy to accept, you could be better off using a traditional platform.

High-interest accounts

Interest is a powerful thing when used in the right way. If you’re not up to speed on how interest works, let me break it down for you. Basically, when you put your money in a dedicated savings account, the bank uses that money for their own investments, and gives you a percentage of your savings as a reward or incentive for choosing them.

The best thing about savings accounts is that they use compound interest, meaning that the amount that you’re earning in interest goes up the longer you save your money (as long as your balance keeps increasing), assuming you continue to make deposits and do not withdraw the interest earned either.

That’s why it’s so important to look into opening a savings account, as transaction accounts normally have very low or no interest rates at all.
If you’re in the market, Westpac actually has a special savings rate for people aged 18-29 if you have use their Choice and Life accounts at the same time.

You can take a look at it, plus all the extra deets over here.

Buying tangible things

You don’t have to do a finance degree, or understand what a leveraged position is to get into investing. An investment is basically anything you own (known as an asset) that you’re aiming to sell at a profit later on. That could be anything from a home or a car, all the way to a sealed copy of Super Smash Bros. Melee for the Nintendo GameCube (they go for a lot these days, trust me).

However, you still need to do your research before you decide to buy a real object for investment purposes. You should think about how likely the thing is to become valuable, how you’ll store it and keep it in good condition, or any ongoing costs of owning the investment. I mean, you can do research but not every painting is going to become as valuable as a Van Gogh.

If you want to go down this route, you might consider making investments in areas that you’re really knowledgeable about, or interested in learning more about. Some areas that might be in your price range could include rare vinyls, streetwear or sneakers.

Your super

You might not think about it, but superannuation is absolutely a form of investment! If you earn. No matter how much you’re being paid, your employer also pays you an amount on top that gets sent to your nominated super fund. The fund then takes that money and invests it in a variety of different products and industries to help you build your nest egg for retirement.

Most people know about that, but there are a couple of tips that can help you grow your super even faster. For starters, make sure you don’t have any previous funds lying around that you don’t contribute to any more, because every super account you own will typically have fees attached.

Second, take a look at your fund’s investment strategy options. Some funds give you the option to change your investment balance to something more aggressive, and possibly riskier,
which could pay off while you’re young enough to weather any economic downturns.

If you’re really set, you can also make your own contributions to your super account. You can arrange contributions through your workplace before you pay tax on it up to $27,500 - and the government will match the contributions up to $500.

This is called a concessional contribution. You can also make contributions up to $110,000 every financial year using payments from your after-tax pay. They’re also tax deductible, but that’s a topic for another time. For more info about super contributions, take a look at MoneySmart’s guide over here.

You might be thinking to yourself that mentioning super as an investment is not really the Wolf of Wall Street fantasy you had in your mind - but while you can’t buy a yacht with your super before you retire, you might be able to put your super contributions towards a home deposit. Just saying!

Personal investment platforms

This is the most straight-forward way to get involved in investing. Banks and investment companies often have online platforms where you can access and buy a variety of investment products. These range from stocks of individual companies (such as Apple or Alphabet), index funds, or ETFs that they manage themselves.

These can be strong options because you have a wide array of investment choices, access to tech support and added security. On the other hand, all that extra choice and control means that you have to make sure you do lots of research about any potential investment you make.

These companies also typically charge fees per transaction, and have minimum deposit requirements, so it’s generally only worth your while to buy or sell large amounts at a time. If you don’t have the cash on-hand, you might be better off investing in something smaller for the time being.

Also, it’s worth mentioning that some products need to be put aside for a fair amount of time (up to several years) to see significant returns, or a return at all. There’s also no guarantee that you’ll sell your stocks or financial products at the right time to see any profit at all!

The following content has been created by Year13 in conjunction with Westpac as part of a paid partnership. The information is general advice only, does not take into account your personal circumstances and you should do your own research and seek advice before acting on this content.