I’m the first to admit that in the throws of my financial rut, I looked at investing as this far off magical land, only fit for the super wealthy and sophisticated. Now I’m on the other side of my nasty debt struggle, I’m pleased to report it’s not a fantasy land, there’s no secret handshake and you don’t need to have wads of cash to be part of the group! I’m off to a good start, right?
After the overwhelming feedback from “My Top 10 Budget Secrets Revealed”, I decided to put pen to paper on my investment secrets too.
Here goes, again…
SECRET 1 – I have three different types of investments – property, shares and cash. Diversifying your investments is an important lesson. If you put all your money into property and the market goes through the floor, you lose everything. This works in shares too. As of today, I have earned 17% return on my shares, 23% growth on my house in Brissy and about 2.8% return on my cash savings. If I needed cash tomorrow, I could liquidate my shares and have the cash in my account within a few days. If I just had property, I would have to pay for advertising, real estate fees and hope to the QLD property gods it sells within a month.
SECRET 2 – I invest for the long-term, not the short-term. If you’re planning on accessing the money within the next 5 years, it’s likely you don’t have the right investment attitude and you’re planning on speculating. This never ends well. In order to build growth you need to be patient.
As Warren Buffet says, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”
SECRET 3 – I pay principal AND interest on my mortgage, and in 5 years have paid off over $60,000. My opinion (and like bums, everyone has one) is that if you can’t pay principal and interest on your mortgage, you are going to be hit the hardest when interest rates rise. Don’t be fooled, this will happen! You don’t want to be a slave to your mortgage for the rest of your life and it’s important to live a good life that’s not bound by mortgage repayments and rate rises.
SECRET 4 – my shares road map started with $500 of Vanguard Australia ETF shares. That’s it. Read: “Why I choose exchange traded funds every time” to find out how I did this. As everyone on this bloody planet knows, Vanguard Australian and International ETF shares are my babies, my first borns and the gateway to my investment journey in shares.
SECRET 5 – My Savings (20%) and Sacred stashes (10%) (Read: “My top 10 budget secrets revealed”) go into my ING account which has the highest (if you can even call it that) online interest rate on savings at 2.8%. We have earned at least $500 in interest in the last financial year and we don’t touch it. This becomes part of our savings and like a magical unicorn, continues to compound. Anywhere I can, I’m compounding!
SECRET 6 – I use the Acorns App to take my 50 cents and $1 roundups and invest them into a diversified shares fund. Acorns is a brilliant concept and I’m secretly kicking myself that I didn’t have the brains to come up with it! If you’re not familiar, it’s THE investment App of investment Apps – it links (you link it #privacy) to your chosen bank account and rounds up every spend to the nearest dollar. All of these round ups are then invested into the Acorns diversified fund very similar to that of Vanguard. Heck, it’s like investing for dummies. The easiest way to invest without actually needing to do anything!
SECRET 7 – I always choose the “reinvestment” option when buying shares. This means any dividends are automatically reinvested into my portfolio and compound the value. Remember ladies and gents, compound interest is your friend and one of the most powerful (and free) services that finance, and time, has to offer.
SECRET 8 – I stay away from cheap, aka ‘penny stocks’. These are the 20 cent, 40 cent stocks that may look appealing to a beginner, but when delving into their performance records, it’s a little questionable. If it’s too good to be true, it usually is. When I invest in individual company stocks (i.e. not funds, which is my go-to), I invest in industries and companies that I am genuinely interested in. For me, that’s health. I have shares in Ansell and Cochlear.
SECRET 9 – I have one superannuation fund and review it every year. Every year! You would be amazed at the amount of money you’re wasting when you have multiple accounts – you’re paying multiple administration fees, multiple broker fees etc etc etc. When I hit 35 (and have paid off my HECS debt), I plan on contributing an additional 3-5% of my monthly income to my superannuation fund. Typically, companies contribute 9.5% to their employee’s super and if you’re lucky it could be at 11%. I’m hoping to invest up to 12-14%.
SECRET 10 – I keep it simple and I don’t let emotion dictate my investment decisions. I don’t engage in super complex share portfolio options, I don’t read every piece of financial news that hits my inbox every day and I don’t expect the unexpected. I don’t fuss, I don’t panic, I let the market do its job. In fact, my investment habits to day-traders is probably considered quite boring and vanilla. But as I’ve said, I’m in it for the long-term, not a get rich quick scheme, which undoubtedly fails. Every time. Is this where I bring up bitcoin again?!
Investing doesn’t need to be difficult and over-complicated. In fact, money doesn’t have to be confusing and scary either! We have enough on our plates without tacking on another stress-lever. I am always looking to find the easiest and most efficient path, and money is no different.
Take away the jargon, the BS and the plethora of information that’s available, and what you’re left with are some easy steps to financial freedom.
Fearless Female Traders