Hello Fellow (or Future) Investors,
Starting your investment journey can feel overwhelming – as you need to understand things like how to invest, what to invest in, and steel yourself for the inevitable ups and downs of the market!
To help make things easier, here are some suggestions of wht to consider if you are keen to start building wealth through investment. (You may also like to read our article “Before You Invest: 4 Questions You Must Answer“).
Ideally, you need to make sure the timing is right for your personal situation. Investing is an effective way to build wealth over the long term, but it isn’t suitable for every stage of life.
Consider your Personal Circumstances
In general, you’ll want to ensure that you:
1. Have a Savings Buffer
This acts as your safety net – and preferably have your personal insurances organised too. If an unexpected expense or issue pops up, you won’t be forced to sell your investments at a potentially bad time.
2. Understand Volatility and can Stay Patient
Markets move up and down — sometimes sharply. It’s normal for your investment value to be lower in one year than it was the year before. Successful investing usually requires the ability to stay the course during periods of uncertainty.
3. Don’t need the Invested Funds in the Short Term
If you plan to buy a home or make a major purchase soon, investing may not be ideal. Because markets fluctuate, short‑term goals are generally better suited to savings rather than investments.
Types of Investments
In Australia, the four most common types of investments you’ll hear about are Property, Direct Shares, Managed Funds, and ETFs.
1. Property
Property can be residential or commercial — your home, an investment property, or a business premises. Australians have long favoured property.
2. Direct Shares
When you buy shares, you’re purchasing a small ownership stake in a company. This can be any listed business, from Apple to BHP.
3. Managed Funds
A managed fund pools your money with that of other investors, and a professional fund manager invests the total into different assets. There are many types of managed funds, including property funds, equity funds, and index funds.
4. ETFs (Exchange‑Traded Funds)
ETFs are essentially managed funds that trade on the stock market like shares. They’ve become extremely popular due to their convenience. Most people referring to ETFs are often talking about index funds — funds that follow a market index. For example, if the overall share market rises 10%, an index ETF designed to track that market will generally rise by a similar amount.
Common Mistakes We See
Two of the most frequent mistakes our Brisbane financial planners see people make when they are keen to start building wealth through investment is:
- Investing before they’re ready.
Some people invest without a savings buffer or without understanding what volatility feels like — and then they panic when markets fall.
- Selling during downturns.
Many investors sell as soon as the market drops, locking in losses. Often, this isn’t because the investment was unsuitable, but because the investor wasn’t prepared mentally for the market’s natural ups and downs.
Professional Advice for Building Wealth
Investing can be a powerful way to grow your wealth and improve your financial future — but only when done thoughtfully. If you’d like personalised guidance, book a meeting with one of our Brisbane‑based financial planners to see whether investing is right for you.
Joshua Napier
(Provisional Financial Planner)