Get invested in one week: THIS week
The post Want to invest, but not sure where to start? appeared first on The Motley Fool Australia. –
As some of you likely know, my duties here at The Motley Fool include making media appearances.
Among other things, I appear nightly (Sunday to Thursday) on Nine’s Late News, and on Sunday mornings on Weekend Sunrise.
Yesterday morning, the segment was prompted by news that many Australians are looking to start investing for the first time.
“How can we help them get started?” was the general question.
Now, as much as my mother loves me, there’s only so much of me the rest of Australia wants to see on a Sunday morning, and I had three minutes to make my case.
Take out the intro, and the host’s questions, and my time was probably down to less than 100 seconds.
That’s not a whole lot of time to take a viewer from ‘not investing’ to ‘knowing enough to invest’.
So, I decided to strip right back.
To take a viewer — or, today I hope, a reader — from not investing to investing by the end of the week.
Now, I can’t ever give personal advice — I don’t know the specific circumstances, goals, objectives or risk tolerance of everyone who watches me, or reads what I write.
So, as ever, you need to consider how the suggestions that follow suit your needs.
But, here’s my 100-second answer to the question of ‘how can I get started’, that should give you a good leg-up.
And, while what follows is somewhat prescriptive, I also hope it’s helpful in dealing with what psychologists call the ‘paradox of choice’ — we have so many options available to us, our decision-making goes from ‘wow, it’s great to have some options’ to ‘there are so many options, I’m paralysed by the challenge of trying to decide’.
Here, paraphrased, is how I suggested people can go from ‘zero’ to ‘invested’ in a week:
Monday: Choose a broker
I use CommSec. I reckon they’re a very good choice for the new investor because you know the brand, the website is very good, the brokerage isn’t too expensive, and the customer service is pretty good.
So, go with CommSec. Open an account today. (alternative: if you already have a savings account with another bank, and they have a brokerage business, it might be easier to just open an account with your bank’s broker)
And when you do, make sure you also open an investment savings account so you can put your investment cash in there (and get your dividends paid into that account) to help you resist the urge to spend your investment proceeds!
Wednesday: Transfer some cash
Now your account is open, transfer your first lump sum. It assumes you have some cash saved up, of course, and it you don’t, this step might have to wait for a couple of paycheques first. But try to transfer at least something… it’ll create some momentum and get you moving toward your goal.
Bonus points: When you do, also make yourself set up an auto-transfer between your savings account and your investment account, so that every payday, you put some of that paycheque to work building your wealth.
Friday: Time to buy
The Motley Fool was founded on the basis that it’s possible to beat the market through carefully building a portfolio of well-chosen shares.
That remains true. And, in time, I think you should consider such an approach.
But this week, I don’t want to let the paradox of choice (or the avoidance of risk and uncertainty) stop you from getting started.
So if you’re following my one week plan, we’re going to kick off your portfolio building by splitting your investment cash in two, and putting one half into Australian shares and the other into international shares (but don’t worry — it’s easy, and you can do it all on the ASX).
So, I reckon you could get started by putting 50% of your cash into each of two exchange-traded funds: the Vanguard ASX 300 ETF (ASX: VAS) and the Vanguard MSCI Index International Shares ETF (ASX: VGS).
The former gives you exposure to the top 300 Australian companies. The second gives you part interest into the largest ~1,500 companies in the developed world (other than Australia).
In one fell swoop, you have both Australia and the rest of the developed world covered.
(And these ETFs are super-broad — you’re now diversified across ~1,800 companies globally — and super low-cost. The fees are 0.1% and 0.18% per annum, respectively. Plus, Vanguard is a not-for-profit business, so you know they’ll be working hard to look after fundholders.)
And there you have it.
This morning you weren’t an investor.
By Friday (all going well), you’ll have made your first strides into the world of investing.
Then, next payday, more money will go into that account (you did set up your automatic deposit, didn’t you?).
Then you can buy more shares.
Done over and over again — making saving and investing a habit — and despite market volatility and the occasional losing stock pick, I’m pretty sure you’ll be very happy with the results.
That is investing. And the power of investing.
And you can start, today.
(By the way, if you’re already investing, congratulations. Perhaps, like the mother who messaged me this morning — and sparked the idea for this article — you’re trying to help someone else get started. If you do, please forward them this email. You could just change their life.)
You can watch the segment, below:
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Motley Fool contributor Scott Phillips owns shares of Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.