Where to start?

Question

Hi i just turned 18 and want to start investing but not sure where to start. I have heard Pearler is a good site for Australian to invest but not really sure how to. Is there an amount i have to invest everyweek and if do what is the budget. right now i dont have a job but have allowance can i still invest? Will i have to include this in my tax return? Most importantly which investment do i invest in?

Sorry it is a lot of questions but i hope i can get answers to it

Answer

Hey Han, good on you for thinking about your financial independence already. I would create a budget. Go through bank statements and work out how much you need to meet your costs. It doesn’t need to be about scrimping every last dollar, you need to live as well and that includes going out and hobbies. Think realistically about what you can put aside for investing remembering to keep some cash aside so you have a buffer should you need it. You want to invest for the long term so don’t invest money you might need in 6 months.  Depending how much is left you may want to look at microinvesting if that’s a small amount. If it’s a larger amount you still want to balance brokerage fees. So maybe you want to put a certain amount aside and then invest when you have saved a certain amount. I generally don’t invest less than 1200 at a time to keep brokerage at 0.5% or less. Do some research into different etfs and don’t spread yourself too thin. Maybe just pick one broadbased etf to start. But know what you’re investing in and make sure it aligns with your values. No need to rush, do some reading there is plenty of useful articles available and then when your ready take the plunge.

Answer

Hi Han :)Lots of questions, but that’s perfectly normal at the beginning stage!Is there a set amount to invest? No. You can invest as much or as little as you want. If you’re investing amounts less than $500, then you could look at managed funds – details on this page scroll down: https://pearler.com/pricingThe main thing is to invest with a long time horizon (longer than 5 years), and yes, any income earned from investing will need to be added to a tax return.As for which investment, nobody here can tell you what to invest in. But you can see what others invest in by checking out either the different accounts available on the invest page (which are ranked in order of popularity I think) to get some ideas. You can get go off and google those funds to learn more about any that you’re interested in.I also wrote an article for new investors with some things to think about which you might find useful: https://pearler.com/explore/learn/blog/invest...I know it probably feels overwhelming right now, but don’t worry. As you read and learn a bit more, things will start becoming more clear. Given you’re 18, that’s a great age to be starting. The most powerful action in the early stages is saving money to invest with, rather than picking the perfect investment. So if you focus on that, things will typically work out better than if you go hunting for the ‘best’ strategy.Hope that helps.Dave

Answer

G’day Han!

Mateeee, this is an amazing thing you’re doing. Investing so early is basically one of the very few superpowers anyone can attain. That, and creating a time machine, are two of my favourites. The others are secrets I can’t reveal…

Dave and Crisis have crafted some top responses for you, so I’ll keep mine brief and focus on my passion — investing education.

But, Han, please keep in mind that I can only offer generalised financial information, so please speak with a financial adviser if you’re confused about anything I say, and refer to an ETF’s Product Disclosure Statement (PDS) before you invest… (I know what you’re thinking…. the PDS sounds boring but it actually answers a lot of newer investor questions like the tax statements you’ll receive, when dividends/distributions are paid by an ETF, what you should do with your share registry… whoever that is, etc.!).

A top piece of investing advice I got in my 20s

I was a little older than you when I started investing. So, you’ve got me there (you could be retired by my age — I look 52 but I’m actually 32).

My first investment was NAB shares. Not a bad idea — it’s a big bank! — but I’m pretty sure I freaked out and sold the shares later that afternoon.

Nowadays I’d consider that a mistake but trust me, that «mistake» has never featured on my list of ‘things I got wrong’. In fact, I needed to make that mistake. And, it turns out, while I’ve lost more than 80% on some shares, by far my worst mistakes by 💲💲 value have been selling great investments too soon. Murphy’s law says they would run higher after I sold them 🤦‍♂️

One of the best pieces of advice I got in my 20s was this: time is on your side, meaning more compounding than almost any investor. So don’t waste your time trying to find ‘cheap stocks’ or ‘big dividends’… just find the strongest companies &amp; ETFs you can find, companies that will be around for 10 or 20 years, and let them go. Be slow to sell.

I WISH I took this advice sooner.

Fortunately, it’s become clear to me – after being exposed to hundreds of thousands of investors over the past 10 years — that most investors aren’t making the same mistakes I did. More investors are using things like low-cost index fund ETFs to start and build their Core portfolio, and only then are they adding extra to things like individual growth shares or those ‘exciting and great ideas’ (I’m looking at you, Crypto fans). Folks who start the other way around are, indeed, wasting their most precious thing — not money, but their time.

Take it from Warren Buffett

Warren Buffett was a millionaire by ~30 years of age. But he made 99% of his wealth after 50 years of age. 99%! It’s easy to say «he’s a great investor» but the true secret sauce was «time». He is the greatest investor of all time because he achieved really good returns (not the best, but really good) for the longest time.

Counterpoints

Now, let’s consider some ways young investors go wrong, they…
1. Try to time the market — thinking that they can ‘avoid the worst times’ or ‘make the most of this rally’
2. Don’t start with a diversified Core portfolio
3. Don’t add regularly (e.g. fortnightly, monthly or quarterly) – called dollar-cost averaging or DCA
4. Get drawn into ‘great investment ideas’ by experts on TV, fund managers or friends (this is driven by envy)
5. Expect to achieve more than 10% per year every year – forgetting how averages are calculated
6. Don’t realise the market falls, on average, 1 in 4 years – that’s not a law, just a rule of thumb
7. Don’t realise that when the market is scariest is often the best time to stay invested
8. Force themselves to ‘pick’ styles — I’m a growth investor, «value investor», «ETF investor»… when we can have all of them.
9. Don’t learn from the mistakes of others
10. Don’t read enough — thinking that forums, social media, etc. have the answers

Owen Rask

Home

Products

Learn

About

Pricing

Log In

Sign up for free

Sign up for freeSign up

Home

Products

Learn

About

Pricing

Log in to Pearler

Back

Han Le

Follow

Comments (3)

Owen Rask

Investment Adviser

A top piece of investing advice I got in my 20s

ASX ETFS & Shares

US Shares

Micro

Kids

Super

HomeSoon

Read

Listen

Community

Refer a friend

Rewards

Prizes

Home

About

Pricing

Help Center

Contact Us

Feature Requests