Take the fear out of investing

When I was broke and broken up with I didn’t have a backup plan. I didn’t have anything that made me feel safe and in control of things. On my happy money journey I learned that having investments gave me options. We are often reluctant to get into investing. We see it as a high risk, that we need to have special skills or it’s going to take a lot of time, energy and effort. What it takes is a thorough understanding what you want and why.
What sorts of investments are out there? We’re all investors. In Australia if we’re working and employed and have a super fund but what is you’re super doing? When you get your annual super report there’ll be a pie chart that shows you where your money is invested. Generally, this investment is in line with what you’ve selected as your specific risk strategy. How much do you want to risk? Typically, a higher risk means higher return, and the older we get the less risk we take. But we don’t all have to follow suit. I see a lot of people that don’t have a lot of money in super taking some bigger risks as they get older, particularly sort of late 40s, early 50s. It’s not too late. Please of course seek the advice of a professional, often your actual owned Super Fund have a financial advisor or helpline. Also as there’s a whole lot of variables, seek advise on non-concessional contributions. If you haven’t been paying extra into your super, that is very much worth checking out. It a tax free or 15% tax of up to $27,500 a year. It’s not just what you’re putting in, it’s also what your employer puts in. So if your employer puts in 10, you’ve got an extra 17500 that you can put in. Jump on to the ATO website and have a look at the non-concessional contribution rules. Often, if you haven’t put in the $27,500 over the last three years, you can make it up, that’s a rolling carry forward contribution that’s tax free. Investigate to be prepared for retirement but don’t sacrifice your own life, live the way you want to live.
When I was broke I fell back on to micro investing. It’s where I put my emergency money. My get out of jail free when the hot water heater has blown up. Micro investing rounds up to the nearest dollar of what you’re spending in your bank accounts and invests it. You can choose how high risk you want to go. There’s lots of micro investing apps out there and you can compare all. I’m with one where the fees are not bad until it gets to $5000 and when it gets to $5000 I then look at other investment opportunities or paying off debt. It’s also good to look at where you’re actually spending your money. You’ll find yourself paying for the holiday or the new furniture rather than paying it back, like with AfterPay. I then move from my micro investment to my exchange traded fund after paying the little debts.
An exchange traded fund (ETF) is like a bundle of shares where we can invest directly rather than indirectly (like investing in super, you’re not actively managing that fund, someone is doing that for you). ETF is when you’re not making the direct choices of what you’re investing in. It’s indexed against the top 200 or say the top 10. I use an ETF for my larger investments when I don’t have the time, energy and effort to be able to put into direct share investing. There’s more complex investments, things like options and derivatives where you make money by buying and selling shares. There’s also commodities that you can invest in directly, so people buy gold or silver or livestock. And again, you can buy that directly or you can buy that indirectly through a fund that. Which is precious metals or livestock?
Keeping your money in the bank where it’s paying, you know, maybe .1 or .05 of a percent is not really worth it. Check out different savings accounts, there’s good deals to be gained where you’re putting in minimum amounts or have bonus interest. But again, you’re managing this. I find it easier to have something that I’m not actively managing, but is actually growing for me.
Understanding your risk appetite is really important for what you’re going to invest in. Then go get investing. When I was busted and broke and I didn’t have anything, so having that little bit stacked away means that I’m never going to be in that position again. It’s that’s important to me. It gives you options, bails you out, savings for a house, start a business, go back to study or even put it aside for your children.


Contact Phoebe

Phoebe is available for interviews, guest appearances, article commentary, and talks on a range of topics relating to property, mortgage broking, and personal finance (particularly for women!).