The wonderful world of investing is an exciting one, but with so many new things to learn about and think about, taking that first step and starting your investing journey can feel a bit overwhelming. How to fit investing into your personal finances, how much to invest or sell, and when, are all frequently asked topics – and granted, because there’s a lot to consider.
So, if you are keen to take charge of your personal finances and see what investing can do for you, here are the top four things that Director and Co-Founder of Sharesies AU, Brooke Roberts, recommends thinking about:
- Know your money personality
- Save up an emergency fund
- Keep it consistent and make it a habit
- Learn as you go!
If your plan of attack covers off these four things, sticking to and growing your investments may become an easier habit to adopt over time.
Know your money personality
We’ve all got our different quirks when it comes to money. Some of us are incredible savers, while others of us are more likely to spend and let our impulses lead the way, and others still can land somewhere on that spectrum. It’s helpful to uncover and acknowledge who you are with money. If you feel like you have good control over your expenses and savings and are keen to get investing, then that’s great! If you want to work on reigning in your spending more but without being too restrictive, then that’s great too.
Investing can help no matter what money personality type you have. If you’re a saver, you’ll likely enjoy investing because it gives you the opportunity to make your money work for you, and potentially access compound returns. If you’re a spender, you’ll likely enjoy investing because you can buy companies or funds that you care about and potentially watch your portfolio grow over time. You own the shares.
There’s a common misconception that you need hundreds of dollars to start investing, but this is not the case – sometimes all you need is $5, $10 or $50. Our vision at Sharesies is to give someone with $5 the same investment opportunities as someone with $5 million, which is why there is no minimum investment required on the Sharesies platform.
Save up an emergency fund
Considering unexpected expenses is a great way to prevent setbacks in your investing goals. If you spill that delicious soy latte on your laptop, would you have enough spare cash to get it fixed or replace it?
If not, it may be worth setting up an emergency fund that provides some cash relief for those unpredictable times, instead of needing to dip into your investment portfolio.
Setting up an emergency fund doesn’t necessarily need to be done before you start your investing journey – you can do both! Everyone is different in how they choose to build up their emergency fund, but it can be as simple as saving a percentage of any surplus income and investing the rest.
Keep it consistent and make it habitual
One thing about a habit is that it typically stays the same every time you do it. You don’t brush your teeth a different way every day, and you probably start work at around the same time every day. So why not follow this lead when you’re starting an investing habit and keep as many things as consistent as possible? The amount you invest, the day you invest, even the time you log in to invest.
This also ties really well to an investment strategy called dollar-cost averaging. Dollar-cost averaging is when you invest the same amount on a regular basis, regardless of what the price is – it’s a way to invest consistently and average out the short-term ups and downs of the share market!
While this is a way to get your head into the investing world, be sure to sense check your investments from time to time and use your initiative. It’s worth making sure your investments still align with your goals and values. Depending on the development of your investments, it may be worth re-evaluating your habits and switching them up from time to time.
Learn as you go
You may have heard before that the biggest investing mistake is not getting started. Once you have a clear oversight of your personal finances and the amount you’re ready to invest, you can embrace learning by doing!
There are so many different investment options available to you, so it’s helpful to consider your financial goals, how long this money will remain invested for, and whether investing in line with your values and beliefs is something that’s important for you. Explore the resources available to help you understand investing, speak to family and friends, and think about investing regularly and often to keep building out your knowledge. One great resource for those beginning their investment journey is the She’s on the Money podcast – two episodes I love are “Is ethical investing as ethical as we think it is?” and “Investing 101: The Stock market? Please share”.
Your journey, your time
The important thing about investing is that it isn’t an ‘all-or-nothing’ proposition. In this case, ‘slow and steady wins the race’ is a reality, as even the smallest contribution can still make a difference over time. Invest the time to adapt the way you think about money, get your emergency fund organised, make it a habit, learn as you go, and most importantly, go at your own pace throughout your journey.