Investing as a young adult – 5 ways to get started
The word “investing” conjures up a lot of clichéd images about stockbrokers and trading floors, but there are ways to start investing which don’t involve reading the sharemarket reports every morning. In fact, you’re probably already investing without even knowing it.
Money in a savings account or a term deposit is effectively an investment. This means you should check that you’re earning a decent rate. If not, move your money to a more competitive account. This can be done online in a matter of minutes. Building up your savings balance now means you’ve got capital to invest when you do start off.
Yep, this is your very first investment, your money is being invested right now and while you may not be actively involved in exactly how it’s being used, you’re paying someone a fee to manage that money in readiness for your retirement. Nine per cent of your salary is a solid investment so it may be time to check-in on your account/s and see where and how it’s being spent.
Investing in shares is more accessible than you might think but may require a minimum investment to make it worthwhile. Do a bit of research to help you decide the best form of share investing. For example, an Exchange Traded Fund could be a good way to start. It allows you to diversify across multiple shares and commodities. Plus, the returns are traditionally strong and they have lower fees than most other forms of share trading.
Investing in cheaper property is a good way to get a foot on the ladder. This is because they come at a lower cost than that of your dream home aspirations. However, banks and other lenders are more cautious of handing out loans to property investors. Because of this it may not be as easy as it was previously. You may even need to build up a bigger deposit than you first thought, but it shouldn’t be ruled out altogether.
Peer to Peer lending
With low rates on term deposits right now, lending to a creditworthy borrower via a peer-to-peer network could be a much better option with better returns. Like a term deposit, you are attaching a term to your money and the longer the term, the higher the rate of interest but unlike a term deposit, you can receive monthly repayments of principal and interest for a longer-term investment.