What I Wish I Knew About Investing

The money in your superannuation is likely invested in shares, so you are never too young to learn about investing. I recommend reading the Barefoot Investor by Scott Pape and reviewing your super.

Pay off consumer debt. The interest rates on debt are higher than any returns from shares.

Save an emergency fund because you don’t want to sell shares in a crisis.

Know your risk profile, strategy and time frame. Shares are high-risk assets and should be held for the long term.

If shares go down, you haven’t lost money, it’s only an indication of how much people are paying for your shares. You only lose money if you sell when the market is down and crystallise the loss.

There are two ways to make money from shares; dividends when a company pays profits to shareholders and capital growth when the shares price increases.

Always remember the saying, “it’s not timing the market, it’s time in the market”. I may buy shares when it seems high, but I plan on investing for 20+ years. Also, don’t wait for the price of shares to go down; otherwise, I’ll miss out on any dividends being paid.

Dollar-cost averaging is investing small amounts over time regardless of if the share price is up or down. I don’t have a crystal ball to predict share prices. So with dollar-cost averaging, I may buy at peak, but I will also buy more during a market downturn, and I’ll get the average of all prices.

There is no need to watch the price of shares every day when investing for the long term.

Do plenty of research and understand the risks.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Albert Einstein

RESOURCES

Websites: MoneySmart & ASX

Books: Getting started in shares for Dummies & Money Magazine

Podcasts: She’s on the Money, My Millennial Money & Equity Mates