Let’s talk about investing
One of my most favourite things to do in the whole world is to talk about investing. Seriously. When a friend or a workmate wants to pick my brain about how to buy shares, whether they should buy shares or how much money they need to start, I couldn’t be more excited.
For me, the investing process has been a very long game, and it’s something I had to teach myself. I got started buying shares in 2007 and I really had no idea what I was doing. I also didn’t have many people to talk to about it. I opened an online brokerage account and basically just had to throw myself in the deep end and learn by doing. Ultimately, the very first shares I bought didn’t turn out to be a great investment, which you can read about here.
Not actually me, but a somewhat accurate depiction of my first entry into the share market and subsequent financial flop.
The way we invest has changed a lot since 2007. Just as the stock market has evolved over the years from when you’d see a lot of (mostly) men in suits shouting incomprehensible things across the trading room floor. Today investing has gotten sooooooo much easier.
First, there’s lots of online brokers these days. When I started, they were mostly attached to the big banks. I’m not going to run through a list of the best or the cheapest, but the one I hear spoken about most often while trawling stock forums (because once again, I am a big nerd for investing) is Self Wealth. I haven’t used it myself – I already have a couple of brokerage accounts and I don’t want to make my life any messier – but it’s basically a no-frills brokerage service that charges $9.90 per trade no matter how much you spend in one transaction. Other brokers charge upwards of $20 and trades get more expensive the more you spend.
Nerd alert! I’ve visited a bunch of different stock markets around the world. From the ASX in Sydney (2018), to the New York Stock Exchange (2016), and then there was that time I made my friend Jen come with me on a tour of the Tokyo Exchange while we were on holiday in Japan (2010).
When I buy shares, I save up a big(-ish) chunk of money and buy them through my Commsec account. I do it this way because at this point in my investing journey, I have a pretty good idea of what I’m doing, am comfortable with investment risk, and am happy to make the big purchase myself. These days I’m into buying Exchange Traded Funds (ETFs) because they are a great way to diversify by buying an entire index, and I already have shares in a bunch of individual companies – most of which I bought because I didn’t know ETFs existed (see, I’ve learned so much!)
Second, you can invest through a robo-advisor. There are a few around, the most notable being Stockspot and Six Park. There’s also Clover and Quiet Growth. These guys invest in a range of different ETFs on your behalf, based on your risk profile and rebalance as necessary. They manage the investments for you at a pretty low cost and you can incrementally add to your investments over time. You usually need a few thousand dollars at least to get started with one of these guys.
Third, there are a whole bunch of apps that allow you to trade in stocks in both Australia and overseas. With these, you don’t need a $500 minimum like you do with a brokerage account, or a few thousand like you do with a robo-advisor. Micro-investing apps like Raiz, Spaceship Voyager, Goodments and Stake let you get started in investing pretty easily. I haven’t really used any of these much, because these days I’m a pro *cough* but I have dabbled with Raiz and Stake for curiosity’s sake. These are a good place to start when it comes to investing because you can learn without losing huge chunks of money.
The above is by no means a comprehensive list of what’s out there, I don’t have time to put all that together. It’s just a brain dump of what I know about the different ways you can invest.
Something I prepared earlier: Read my blog post about the importance of investing.
The point about investing is to actually do it. By incrementally saving and investing over the long term, you will likely be in a much better financial situation down the track. Putting your money into a savings account – while fine if you’re saving for something you’ll need it for in the short term – most likely won’t get you as far in the long term.