Starting to invest in Australia is easy and in this video, we go through all the different types of investments that can be made to ensure you can retire with an healthy sum of money even if you are a complete beginner. I cover the basics of investing starting from inflation and why you should start investing as young as possible to avoid losing value just holding it in cash. All these investments use the power of compound interest to accumulate wealth slowly.
1) Saving Money in High Interest Savings Accounts - In Australia, high interest savings accounts give lousy returns when compared to the ASX but it is returns nonetheless. Investing this way will give around 1% back into your bank account automatically but be sure to shop around. The best banks for this are not the big 4 banks. Look at smaller banks like ING, UBank, and even Neobanks like 86400.
2) Investing in Gold - The most basic thing that you can invest in is the gold commodity. Gold will always be valuable and being a limited resource, its value will continue to go up over time. So ownership of gold over the long term is a good way to create wealth and is considerably better than a high interest savings account. However, because gold is a low risk investment, that means its returns is also lower than other types of investments.
3) Investing in the ASX Stock Market (Index Fund) - This is easiest and best way to get started in investing, and historically has produced the highest returns over the long-term. An Index Fund in the ASX such as the stock ticker VAS will give you a little bit of holdings in every company in the top 300 listings of the ASX. This fund also provides good dividends that can be reinvested back into the holdings for even better long-term returns!
4) Investing in the ASX (ETFs) - Another way to invest for beginners is to invest in ETFs rather than Index Funds. ETFs provide exposure to certain types of stocks rather than everything, and can be effective if you have different goals in mind. For example, you can invest in ETFs that focus on International Stocks, or a mix of Australian and US stocks. ETFs can be bought on the Stock Market just like Gold ETFs or any other company stocks, just choose a low cost broker platform and you're good to go.
5) Investing in the ASX (LICs) - The final way for beginners to invest in the ASX is through LICs, or Listed Investment Companies. These companies exist purely to actively buy stocks of undervalued companies to make money. If you invest in a LIC, you are essentially hiring professional fund managers to actively invest on your behalf. But of course, this will come with a premium fee of around 1% compared to ETFs which can as low as 0.05%. Think of LICs like how your Superannuation is managed.
6) Cryptocurrency (Bitcoin) - Investing in Bitcoin straight away as a beginner is definitely risky, because it is a pure speculation game. nlike the stock market where the fundamentals of company value and revenue and price to earnings are all well established and have a correlation to the actual price of a stock. Bitcoin on the other hand, or any other currency has none of that, and buying it at any price is just how much everyone else thinks the price should be at any time. Buying into cryptocurrency is actually pretty easy. Just log onto an Australian based exchange such as Swyftx, Coinspot or Binance Australia and deposit funds to trade for bitcoin or any of the Eth based altcoins and you’re in that ecosystem.
7) Real Estate - It’s the big one because it needs the most amount of capital just to get started. But once you do get started, the next property will become easier. As for returns, residential property will earn around 2-4% in rent when you first buy it, and gain between 8%-10% in capital gains on average.
So I hope that makes things a little bit clearer for you and helps you take your first step towards investing as a complete beginner in Australia. Please let me know what you think by leaving me a comment down below! and don't forget to subscribe to the channel for more!
⏱️TIMESTAMPS 0:00 Introduction to Investing in Australia 0:50 High Interest Savings Account 2:08 Investing in Gold 3:45 Investing in the ASX Stock Market 6:06 Investing in the ASX (ETFs) 7:16 Investing in the ASX (LICs) 8:30 Cryptocurrency 10:00 Real Estate 12:12 Conclusion
Disclaimer The information on this video is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.
