Thinking of investing…but not sure where to start?

We’ve put together the steps and questions to ask yourself when you’re thinking about investing.

1.     How much money should you invest?

At a first priority you need to figure out how much you can afford to invest. If you haven’t got a big lump sum of cash, for example from an inheritance then it is important to carefully look over all finances to know exactly how much you are comfortable with.  

Make sure to review any debts you have, as you may be better off having them paid for before proceeding to investing.

If you don’t have any money yet to invest there are options to open up a savings account with your bank to gain interest on and grow your money that way.

Ensure you also have a cash buffer available; we recommend having a minimum of three months’ salary in an accessible savings account.

If you find that you still have cash leftover at the end each month it might be a good idea to look at further investment options.

2.     What type investment should I take?

There are typically three types of investment options for consumers to choose from:

• Shares - in simple terms this means buying a piece of ownership into a company that is listed on the ASX (Australian Securities Exchange).

• Government Bonds – these are investments to the Government where you have an agreed rate of interest and a set return that is paid at regular intervals. The Government will use these investments towards new projects and infrastructures. 

• Property – As it says, this is investing your money into property wherever it is commercial and residential.

3.     Decide your appetite for risk

 All investments carry different levels of risk. Typically, the higher the rate of return = the higher the risk. For example, if you choose to invest in company shares, you may be at greater risk due to the unpredictable nature of companies.

In contrast, government bonds which pay a rate of interest over a set period are considered more stable than company shares but may not provide a higher return.

It is important to understand your investment timeframes with the type of investment you take as overtime the value may decrease/increase.

Knowing how much money you have to invest and the risk you are comfortable taking will assist in deciding the best investment avenue for you.

For more information on accessing your risk and how you should invest contact us here.