What Do I Need to Know About Investing?
Last time we looked at superannuation and that it’s an investment for your retirement. But what other investments are out there?
Other investments out there for capital growth or profit purposes include shares listed on the stock exchange or managed funds. You’re probably aware that some people use residential property as an investment. And you might also have heard of crypto-currency being used as an investment – though some people are very reluctant to call this an ‘investment’.
A few common misconceptions about investing that I hear as a financial adviser is that it’s only for the rich, it’s too complicated, or the costs of investing are high. Investing is not only for the rich since all of us that work have super. And whilst investing can sometimes be complicated, it can also be pretty straight-forward – there are different types of investments out there and investing definitely doesn’t need to be complicated. And as for costs – some investments like direct residential property do have high costs, with things like stamp duty, rates and agent fees. However some investments can be made with a relatively small amount made on a regular basis, and with very low upfront investment costs. There are different types of investing and what suits one person won’t necessarily suit another.
Some people don’t like the idea of investing because the investments are ‘risky’ and may go down in value. I’m more inclined to think that investing is important (even with some risk) because otherwise one might end up with no money. Running out of money is one of the risks of not investing.
One very important aspect of investing is to line up the type of investment with the right person, and the right financial situation. Understanding this is potentially just as important as understanding how different types of investments work – and quite possibly, this is the part of investing that people don’t pay enough attention to.
In summary, both investment types and investment risks vary:
There are risks by not investing
An investment doesn’t need to be particularly ‘risky’
An investment doesn’t need to involve borrowing money from a bank
Some investments do carry a high degree of risk, but others not so
An investment that suits one person won’t necessarily suit another person
What’s your investment strategy and how are you investing for your future? Please get in touch with us if you need some help with this, we’d be happy to try and help or answer any questions you may have.
Alison Kaigan – Your Canberra Financial Adviser