Written by Katie Douglass
12/04/2021 | 5 minute read
Written by Kellie Amos
26/03/2021 | 8 minute read
For many people, when you start talking about investments, they conjure up images of men and woman in business suits on Wall Street looking at hundreds of stock markets, handling substantial amounts of money. It’s a common image that plays to the idea of exclusivity and elitism. We think this preconception is downright prehistoric and old-fashioned. In this day and age where almost everyone has the technology to begin investing right from their smartphones or tablets, we’re going to show you that with just a little knowledge, absolutely anyone can start investing from the comfort of their own homes.
These days, it seems that successful entrepreneurs have multiple different income streams and investments. In fact, knowing how to invest and when is arguably the key to getting your finances right.
We get it. While the idea of investing is an attractive one, it also feels out of reach for many. We’ve gotten used to hearing that to be able to make any investments, we need to have substantial cash flow and savings backing us up. But this isn’t the case. It’s now easier than ever to join the investing game. Best of all, you don’t need to have thousands of dollars saved up before you do. There are now apps and websites that are dedicated to micro-investing and they can be a great way to get your foot in the door, without a huge amount of capital behind you.
Automating your investments has never been easier. Apps such as Raiz work by linking up to your bank account and rounding up your everyday purchases to the nearest dollar or 5-dollars and investing the difference for you. So, for example with that $4.20 daily coffee, 0.80 cents would be invested automatically for you in a nicely diversified portfolio, depending on what you indicated was important to you when you signed up to the service. It’s that easy. You don’t have to do anything as the app does it all for you and it’s such small amounts that you barely notice it. Your investments portfolio builds up fairly fast and you can withdraw your money at any time from the app if you want to.
If you’ve got more money to play with and want to look at investments that utilise a bit more cash, then you have plenty of options. From the stock market and forex trading to property investing, there really is something out there for everyone.
Stock market investments are probably what most people think of when picturing traditional investing options. Put simply, trading in stock market shares means you are buying or selling a share or a portion of a specific company with a virtual auctioneer or broker facilitating the transaction. If you’re looking to get into investing for the long haul, stock market investing is great as it provides a long-term solution to building wealth with compound interest and capital gains. Obviously, picking your stocks correctly is going to be incredibly important. Yet, with a bit of research into the history of a company’s market performance, you can make an informed decision.
If you are looking to invest in stock markets, it is always a good idea to take the time to gain some knowledge and expertise. Investing a bit of time into self-education before committing your hard-earned money will be the best thing you can do for yourself and will help you make well-informed decisions. If you don’t, you risk making a poorly informed decision. That may lead to you losing some, if not all of your capital.
Forex trading or the trading of foreign currency, while not strictly considered investing, is a way to make money using investment strategies. It essentially uses the same strategies of buying and selling, but you’re buying and selling currency pairings, not company shares. For example, you might trade the USD against the AUD or the JPY against the EURO. Forex trading is typically considered a much faster way to make money. However, due to the more volatile nature of currency it’s also considered riskier than your other typical investments. If you are considering investing and trading on the forex market, it is highly recommended to do some research before-hand. Currency pairs can change in mere moments.
You need a good understanding of basic market moves before you decide to start dropping money into your broker account. One great thing about Forex trading and investments though is the fact that you can set up a demo account using fake money and live trading as a way to practice before you commit any of your own money. This is a fantastic way to get some much-needed experience and a feel for the market, without risking any of your own money while you’re relatively inexperienced.
Once you’re ready to start trading you can keep an eye on the market and enter and exit trades all from your smartphone. Technology is doing great things for Forex Trading and more and more apps are being created to make trading from anywhere at any time simple and fast.
To put into perspective just how successful property investments can be, it’s estimated that the Australian real estate market is worth at least three times more than that of all combined superannuation and more than four times that of the Australian stock exchange. That’s a pretty big market. Property investments are becoming a sure-fire way to start building an enviable investment portfolio and income stream for your future. Owning multiple profitable investment properties is arguably one of the best ways to ensure you have guaranteed income for the future. But where do you even start?
Doing your research before heading out to buy the first piece of property you can afford is really important. You need to research the best up and coming areas to buy in, what renovations you can do to the property to make it more attractive and therefore increase its worth, what the surrounding amenities are that makes the area a good place to buy. There are so many things you need to consider first to ensure that the property you buy isn’t going to end up being an expensive drain on your resources.
Property investments or investing in real estate tends to be a bit more of a long-haul game. If you’re investing in a piece of property not only do you need more available cash or equity, but it generally takes a few years before your investment becomes profitable. However, if you’re prepared to wait, investing in property can be incredibly beneficial in the long run. With house prices on the rise, for the most part, it’s no surprise that investing in real estate and renting the properties out can create a steady cash flow for your future self.
It’s no surprise that when it comes to investing, you need to think first before acting. It really does pay to be well educated and well prepared before making any financial decisions. The fact that you’ve made the decision to invest in your future is great. It really is one of the best things you can do for yourself when it comes to future finances and income streams. Now that you’ve made the decision to go ahead with some investments you’ve got a few things to think about first.
Make sure you’ve taken account of your personal finances; you’ll want to take stock of your current finances so that you won’t over-extend yourself by accident. Figure out how much money you have to invest now and in the future. Create a bit of a savings budget if you want to increase your investing down the track and then look at investing these savings. You’ll want your budget to be as realistic as possible. This will ensure that you can keep track of both your savings and your investments. It’s also a great idea to have some back-up savings put aside just in case you encounter any problems.
Evaluate your comfort zone and your knowledge and decide realistically what kind of investing will be best for you. If you’ve got the capital and the desire to invest in real estate, fantastic! Go ahead and start figuring out what you need to do and who you need to get in contact with to get your property investing journey started. However, if you don’t quite have the capital, knowledge or means to buy an investment property, you’ll want to assess your other options to see what might be a better fit.
This is super important. Unfortunately, investments don’t always go the way we want them to. This might mean that you’ll come out on some investments at a loss or that you might need to weather a bit of a loss before your investments turn around again. Having this emergency fund handy could save you a lot of stress later on down the road. It’ll be like your safety net for just in case situations. If you don’t have an emergency fund handy to back you up, think about waiting to invest. That way, you can ensure you have some spare cash behind you.
We can’t reiterate the importance of diversifying your investments enough. Many investors have been caught out when the market that they invested in crashed and they lost everything. This is typically because they put all their capital into the one market, company or stock. With investing, it’s never a great idea to put all your eggs into one basket. By diversifying your investments, you ensure that if one market does crash or drop in value, you’re not going to lose everything in one go. You’ll have other investments to help you through the crash of the one investment and you’ll be much less likely to seriously and permanently affected. You can recover from one or two bad investments if you have other diversified investments to support you and see you through.
This rule can be applied to one investment type i.e. the stock market or across multiple investment types i.e. real estate and Forex Trading. If you’re confident in more than one market and want to truly diversify your investments, then, by all means, invest in multiple markets. If you’re comfortable and confident in multiple markets, you can create a great investment portfolio for yourself.
Investing is more attainable than ever before. It’s no longer just the playground of the rich investors and Fortune 500 companies. With increasingly advanced technology available to anyone with a smartphone and internet connection, it’s time to start thinking about getting your slice of the pie.
Education and knowledge are easier than ever. If you take the time to gather some knowledge, work out a financial plan and put some money aside, you too can start your investing journey. Whether you’re looking to start small and just invest a little bit of money at a time with apps such as Raiz or you’re looking to get into the real estate property game for the long haul, you’re making a great choice. With proper diversification, knowledge and some time, investing in your future could be the best thing you do for yourself financially.
Oiyo is not a financial services provider, nor do we offer financial advice. We merely present information.
Before investing money anywhere, or making changes to your current financial situation, we recommend contacting your financial advisor.
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
The Australian Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.*This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.