21 and dumb, 40k investment suggestions

As the title states I am 21 and am really struggling with making the decision on where and how to invest my savings.

I am a subcontractor earning on average $800 a week, I also buy and sell woman's clothes after hours online which averages an additional $400 cash per week. I have saved $20,000 through Contracting and another 20k through cash for clothes,

I have no debt and not a great deal of living expenses, still living with my mother I pay $250 a week in rent plus on average 200 spending per week.

After saving all my pennies since I started working I feel like it is time to invest my savings but have no idea how or where, or even if investing is a good idea in my situation' any advice, help or ideas would be greatly appreciated!

 

Hi Paezah,

Now is not a good time to invest your savings, now is the time to educate yourself. Research 'Dimensional Fund Advisors', Exchange Traded Funds on this site (ETFs) and Dan's blog Canadiancouchpotato.com Go back to his first post and read from there. Should take you 3 months. Then you will be in a better position. It won't hurt if your savings are in a 3 month term deposit.

Johny.

 

Thanks heaps johny!
I will start today, and keep this thread posted on my movements

 

I wish you all the best in your journey. Ask me any question, that's what I am here for.

Johny.

 

Great work so far - a lot of the process of success in investing is persistence and patience, being able to save like you have is a good indicator of this.

The two main asset classes in Australia are property and shares - perhaps have a read of material on both and see where you think it may be best to first direct your first investment.

Factor in leverage into your equation - 40k can be used to easily purchase a ~300k investment property, whereas that same amount would be able to be leveraged at a lower amount of shares, at a higher cost and margin call risk.

 

As an investor in the markets avoid leverage at all costs unless you are wealthy and can afford to loose all your money over night and be left with a giant bill or you are an idiot. sorry but if you don't know what you are doing your dumb money will line the pockets of smart money quickly.

 

Investing with sharks

i am going to cut and paste advice I gave to another young person on another thread hope it helps.

Mate the rule to investing is you are surrounded by sharks a who call you dumb money and they call us that openly on on CNN, NBC etc. so most people who give you investing advice from this online company or that one are simply fleecing you. I have spent around 2 years being a sponge listening to all investing info from any where I could get it and most of them don't invest any better than I do.

Firstly I'm on here for two reasons one is to pass on what I have learned and the other is I am a gold brokers affiliate. That being said here are some things I have learned in the pass 2 years don't read any of the books people quote unless you have Investopedia.com website open at the same time as all these books assume you have more knowledge of investing than you do and is not going to help but confuse you. do not buy into the advisers that will send email after email to sell you services just use the sight to learn.

Do not invest without knowing what is happening in the world financially on a week to week basis and what your govt is doing to fleece you of any profits you might make. When you find advisers who are smart cookies at their trade don't follow their investment instructions to the letter. My advisers make more money than me because they see when to get into an investment but I lose less than them because I am better at seeing the drop in investments and get out before they do. Do not listen much to the talking heads on TV as they are often idiots who have no idea whats happening in the world. They are the people who loose their shirts in each market crash.
Do not subscribe to a service for their propriatory wiz bang algorithm or software because even someone like Jim Richards (CIA/Pentagon adviser on financial warfare issues) sells a service called the "Kissinger Cross" and it looks suspiciously like the Aroon indicator on a stock chart. So your paying for their research into the company, their experience in the world of finance but not their program.

First piece of advice stay out of the markets at this time unless its for short term stock you intend to hold no longer than 1-3 months. Rickard's, Ford and now Soros are telling people to buy gold and close and resize positions down. super wealthy like Soros and Buffett have listened to the IMF warnings of a new bigger crash for the past 18 months and have pulled large chunks of their cash out of the markets and have been buying hard assets such as entire railroad companies, tracks etc. When the big boys pull out you follow them. Keep around 10% of your investing capital in gold and or collectables that will rise in value when things turn to S@!t. Dont go crazy buying gold it is a hedge against bad times but not a very good investment for anything else. I would avoid the Aussie housing market for a while as we have not had the bubble burst yet and housing prices will plummet when it does. prices are through the roof because the Chinese are getting money out of china as fast as they can before it drops off a financial cliff over 300 billion each month so far. Soros suggests the next financial crises will come from China and I agree. Do not put your money into a new fixed term savings account because if the global financial slide continues like it is and there is every reason to think it will then money will dry up as people panic and you will lose most if not all if it. like in Greece last year banks lock up over night and the gov comes for your saving to fix what they stuffed up and in those time banks go belly up quickly.

Lastly watch every free seminar sites offer from investopedia, Agora financial, etc, because they are not just an advertising ploy for their service but a wealth of info and training. Best free stock market chart site tradingview.com heaps of the indicators you buy on other sites are free on this one and again have investopedia open to learn about what indicators are used for and what they track.

Find advisers that know what they are talking about Jim is the best for interpreting what the IMF says and what it actually means to the Elites.
Jim Richard's - Agorafinacial.com (Stock and financial markets)
Mark Ford - Portphillippublishing.com.au (wealthy business man the service mentors people wanting to start and or grow a business)
Biz opp detective -fitzroypress.com.au (they find start ups and online business opportunities and tell you how to go about it with clear instructions for each opportunity they find.)
The Motley fool - fool.com (open honest service on everything financial/market based).

 

Firstly, good advice there from Jason Griffin. Take note.

There are a lot of sharks out there looking to feed on less informed investors. So best get your investment knowledge up before jumping in.

I've been in the investment markets for about 18 years now, so have seen a lot of the good and bad of the industry.

Now run my own financial life management business here on the Gold Coast (don't hold that against me though - it was a lifestyle choice )

Property is always a good longer term investment and we are definitely advocates of direct property over a managed fund where possible. We utlise a little know strategey here in Australia called fractional property investing. Great for investors with little capital and who don't necessarily want to take on large levels of debt, but still believe in property as a good investment.

We can help you get started in you own investment property for as little as $2,000, so with your $40,000 you could in fact spread it across 20 properties if you wanted. Not saying you should, just that it's possible. Maybe start with just one property and put up $10K, then look to other asset classes to further diversify your portfolio. e.g. shares, and fixed interest.

You are young, so time is on your side. As long as you take on your investments with a long term view and with the notion of not selling out early when you think you need cash, you'll do well.

That's what I can help with as financial life manager. We look at your overall life goals and then recommend investment vehicles that will help you reach those goals in the most efficient manner.

Would love to help if you're open to it.

Message me or hit me up on Skype and we can have a chat and I can get some more info out to you. Looking to take on long term clients so if I feel we can work together on this stuff, I'll be there for you for the long haul as your financial coach, if you'll let me be that for you.

Cheers

Jeremy

 

as an alternative to a term deposit , have you thought of a holding account ( or similar ) that pays monthly interest but you cash is 'at call ' ( maybe even use some of each , term deposit. and holding account )

i don't like all my investment cash in one place ( say one share or ETF/LIC ) check your brokerage fees it might be better in ( say $10k or less lots )

i would suggest keeping some cash in reserve .... a genuine bargain can be just one announcement away .

but most importantly have a plan that suits you ( and possible future needs )

good luck ... if you take it seriously .. it is hard work for novice and veteran .

 

Firstly, what are you goals? How secure is your work as a contractor? Do you need access to your investment?

I'll offer some of my views on things. As mentioned property and shares are the two major classes of investment in Australia.

Property is great for a lot of investors, some features are
- High leverage at reasonable rates is common so you can control say a $300,000 property with your $40k deposit. Leverage is a double edge sword and having a loan means you need to make repayments even if your circumstances or tenants change (and don't pay)
- Many people find it easier to be disciplined with property and making regular payments.
- High entry and exit costs (fees, taxes and time)
- Cumbersome, need to buy a large asset and put all your eggs in that basket. Yes there are listed property trusts and fractional property ownership. However it is likely you loose the main advantage of high/cheap leverage along with a number of other things that put me off.

Shares,
- Can purchase in smaller amounts and get cash back in days relatively cheaply
- No ongoing fees (no maintenance) or loans
- May receive a regular dividend (often twice a year)
- Leverage (loans) terms are not as favourable, rates are higher and there is the risk of margin calls.
- Can diversify by either buying a small amount of many companies or by the use of diversified products (such as ETFs and LICs).
- Watch out for managed funds or some of the news LICs with high fees; it usually isn't worth it.
- Need the right mindset to ignore short term volatility. If you are thinking of trading you are likely to loose.
- Brokers make cash from trading volume so the news and advice is about trading. Which greatly increases costs and risk.

It is important to have realistic expectations of your investments. $40,000 is not going to have you retired in 10 or even 20 years, even if invested well, it could get you a good way there however. Taking on huge risks to try and accelerate your returns are likely to have to loose cash and waste your biggest asset - time and compounding growth.

A word on gold; previously it has been a currency/de facto currency and safe haven and performed well in times of market turbulence. Gold doesn't actually DO anything, it doesn't provide shelter or services to people and it doesn't provide income in terms of rent or dividends.

No one can time the market or make reliable predictions about where it is headed, be wary of those that say they can. There are only a handful of investors/managers that have shown meaningful out-performance over decades that would put you ahead after fees. Purchasing and holding quality assets is likely to provide solid returns in the long run and can be done so cheaply.