Join our investing community

18 YO Ready to start his investment life, part 2

Discussion in 'General Investing Discussion' started by gcncbc, 23rd Jan, 2008.

  1. gcncbc

    gcncbc Member

    Joined:
    9th Jun, 2006
    Posts:
    12
    Location:
    seymour victoria
    Hi
    Last year I posted an item about my son wanting to create wealth, he was still at school then. This post is part two.
    He has moved on and is now ready to invest. We are hoping for advice from those far more knowledgeable than us on how he could start.

    Overview
    18 years old
    New full time employment Gross @ $1330 pf/ net @$1100 pf (shift work, overtime)
    Owns own car, 1986 commodore vl, running on lpg
    Debts:
    Fuel per Fortnight @ $200, he travels 2,000 km pf to work on lpg. If that seems high he lives in central vic and works at melbourne airport, 100 kms away
    Living at home costs $80 pf
    Debt to grandmother, see below, $60 pf
    His disposable income therefore is around $360 pw

    Grandmother has given him her car, she is over 80 and no longer drives, and has allowed him to sell it to use the funds to invest. He has agreed to repay her at $30 per week for as long as it takes, that debt will be for a number of years

    He therefore has $7000 in cash to invest.
    His stated aim is to invest somehow to get together a good deposit for an IP using the $7k as the launching pad to create wealth, both share and Ip
    He is cautiously ok with the thought of some margin lending bearing in mind his small weekly surplus over costs.

    So our question to any willing to offer advice, and able to pull themselves away from watching the share index, is how does he get started. Any advice on a good fund, margin lending and/or direct shares would be appreciated.
    Starting with a clean slate and money to invest I think the first investment step for him will be vital to how he travels on this road in the future
    In advance, many thanks to those willing to offer advice
    With the current turmoil he will probably park the money in his bank till things become a little clearer, less volatile, but in the end wealth creation is his aim
    Cheers
    GC
     
  2. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    That's great that he is ready to invest, but can I say this.

    Dollar cost averaging into shares, managed funds, ETFs and listed property is the best way in my opinion to get wealthy AND moments like these give the dollar cost averaging investor the greatest opportunity to get in.

    When ever the market tanks so hard you think it is the end of the world, like yesterday and Sept 11, that is the best time to add to your investments IMO.

    I added to my investments last Friday in Australia and last night in the first hour of trading. Could the market go lower. Absolutely. Like it did for 2 years after 11/9/01.

    Is it your fear of investing that is making him wait on the side line or yours???

    If it is your fear you are or his, I would get you to eliminate fear from your investing mindset. It has no use in investing. It's all numbers and risk elimination.

    No matter what you invest in, be it property direct or the stock market, there are ways to limit your risk. Insurance, CFD's and options.

    Persoanlly, if he was my son I would get him to split the investments into 2 and buy the ETF for the ASX 200 top companies and the ETF for the ASX 200 listed properties (sorry I don't remember the symbols yet but they are on these forums somewhere). I would teach him how to protect the investment using CFDs (and options when they become available in the future).

    When he has a sizable chunk of money I would somehow use this asset as collateral to buy an investment property IF he wanted investment properties OR use it to help him get his own property to make him move out of home.

    That is what I am going to do with my first child as soon as it is born.

    Hope my opinion helps you somehow.
     
  3. samaka

    samaka Well-Known Member

    Joined:
    30th Sep, 2007
    Posts:
    308
    Location:
    Sydney
  4. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
  5. Chris.R_WA

    Chris.R_WA Well-Known Member

    Joined:
    7th Aug, 2006
    Posts:
    113
    Location:
    Perth, WA
    Hi Stig,

    Equivalent property index fund is SLF.

    Regards, Chris
     
  6. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Really?

    I'd be putting my kids money in an investment bond, after 10 years they don't have any capital gains tax to pay...Dollars for scholars - moneymanager.com.au

    For GCNCBC,

    Watch out for Rudd's First Home Saver Account which are supposed to be discussed in more detail in the Budget 2008, apparently it will allow First Home Owners salary sacrifice into this account up to $5,000 per financial year and $5,000 after tax per financial year for up to 5 years in a concessionally taxed environment (sounds like superannuation but for buying a house).

    Also think about government co-contribution, I know, it's going to be locked up until age 60 but where else do you get a GUARANTEED 150% return? http://www.ato.gov.au/content/downloads/spr_89416_nat11589.pdf

    Cheers,

    Dan

    PS Before making an investment decision speak to an FPA registered Financial Planner.
     
  7. The Stig

    The Stig Well-Known Member

    Joined:
    3rd Dec, 2007
    Posts:
    190
    Location:
    Central Coast NSW
    Some interesting points in that article.
    Thanks, that was a good read.
    I'll be talking to my accountant before I do anything then.
    That 66% tax sucks. That's unAustralian LOL!!