The wide (but wonderful) world of investing can be a daunting prospect for beginners.
It’s very easy to get overwhelmed by the avalanche of information from all the personal finance podcasts, books, explainers, Instagram accounts and blogs out there.
But essentially, investing is a way to make your savings work harder for you (because you probably worked pretty hard for them).
If you're ready to start investing, but not sure how the heck to make it through that avalanche of info, we've got you covered.
Here's exactly what you need to know (plus some screenshot-worthy tips from Chartered Accountant and investor, Julia Scott).
What is the share market?
The share market (also referred to as a stock exchange) is a transparent and regulated marketplace in which shares in public companies are bought and sold.
It's basically like a Westfield shopping centre for shares – you can buy or sell shares in any public company trading in that market.
What are shares?
When you buy shares in a company, you basically become a part owner (meaning you own a percentage of that company alongside other shareholders which is actually pretty cool).
If the company is doing well (read: if its products or services are in high demand) you have the potential to earn an income from the distribution of profits by the company.
What the heck is an ETF?
If you’ve ever considered investing, you’ve probably seen this acronym floating around.
Essentially, ETFs (or Exchange Traded Funds) are bundles of individual shares slapped into an index that is designed to track the market.
We're about to get into some serious business talk, but stay with me.
If I invest $500 in an ETF that tracks the key stock market index in Australia, it will hold the 200 stocks that make up that index in exactly the same proportion as they are weighted in the index.
Say the health care company CSL makes up 8 per cent of the index I've invested in, the ETF tracking that index will invest close to 8 per cent of my $500 in CSL. It will also invest in the second largest company, the third largest company, the fourth largest company... right on down to the 200th largest company, in the appropriate proportion.
As opposed to owning a group of individual shares, ETFs spread your money proportionately across a whole lot of different companies and asset classes.
This, my friends, is called diversification.
How do I start?
Julia Scott is a Chartered Accountant and wealth manager who has been investing, using the nabtrade platform, for five years.
Her journey with investing was inspired by her work. Day to day she loves helping her clients manage their money but on a personal level, something was blocking her actively taking control of her money and investing.
And it was something maybe you’re feeling: fear.
After she worked through her money mindset — our personal belief systems that have been cultivated since a young age around money — she was able to take the first step.
She says her block was a story she had in her head that investing is something women aren’t good at — and of course she learnt that’s just not true.
So, step one, Julia tells Mamamia, "is get help with dealing with any potential money blocks and mindsets that may be holding you back."
Where do I invest?
As I've already mentioned, Julia uses nabtrade, which is NAB's online investing platform. When she was finally ready to step foot into the investing world, she was up and running in 10 minutes.
Julia recommends the platform because of how easy it is to use (both on desktop and mobile), and the massive range of investment opportunities it unlocks, including ETF investing.
It also includes the nabtrade Academy which is a training hub that helps build your investing knowledge in order to level-up your trading journey.
What do I actually invest in?
Julia says you want your portfolio to cover several different industries, countries and asset classes to reduce the risk of permanent damage to your investment and see consistent growth in returns.
You don’t have to be a finance whiz to know that there is a lot of market noise going on at the moment.
Inflation (basically everything costing more, am I right?) and global uncertainty (Ukraine and COVID) has put financial markets to the test, so ETFs are fast becoming the easiest way to diversify your portfolio against risk, covering it with a safety blanket if the market goes south.
Just think "don't put all your eggs in one basket".
She finds nabtrade’s dedicated ETF centre a great fit, especially now they've recently joined forces with BlackRock's ETF provider, iShares, to deliver a suite of innovative ETFs to the Australian market.
However, when you’re investing in ETFs, there are so many options to pick from.
For Julia, she likes having lots of geographical diversification across different asset classes (with a side of ethical investing).
You name it, there is probably an ETF that covers it. So take your time to peruse all the options and find a fit that aligns with your investing values — because at the end of the day it's your money.
When is the right time?
"Like with many things in life, there is never going to be an 100 per cent ideal time to get into the sharemarket," Julia says, but she’s found the key is consistency.
Her approach is to "systematically invest every month regardless of price, because no one can pick the market and that way, you get returns over time".
Best investing advice you’ll ever receive?
"Just start."
Even if it's just $500, Julia says you just need to rip the bandaid off and dip your toe in.
"Fear preys on the unknown," she says, but like anything in life, "whatever you are most afraid of is usually what you need to do".
It’s never too late to start, but when I asked her if she wished she started earlier, her response was, "God yes".
So here’s your final push, my reader!
nabtrade supports you throughout your investing journey. From the nabtrade Academy to their ETF centre, it's the go-to platform for trading.
Feature Image: Canva.