Hello. I have been giving some serious consideration lately as to my first investment. After some thought, it appears as though a managed fund would make a good starting block. I just turned 21 and have roughly $10,000 in savings. Any advice for a first timer would be appreciated. How can I find a fund which is right for me? When I do find the right fund, how do I invest? What steps do I need to take in order to get started? This forum has proved to be an invaluable source of information, and I thank you all.
Thanks Bundy. I have registered at InvestSmart already. I just wanted their free newsletters and information initially, but are they considered a 'discount broker'? What is the advantage of applying through a discount broker? I avoid opening and closing fees? I also had a look at the 'find a fund' link yesterday. Honestly though, I have no idea what I am looking at or searching for. I guess I need to consider how aggressively or conservatively I want to invest, though I'm not sure how to do this. Thanks for the assistance.
Yes and IMHO one of the best. You save the usual 4% entry fee and once you get enough funds you also get a refund on trailing commissions. Performance is what it is all about. The common term is sleep at night factor.
Step One: Put $9,700 of your $10k into a high interest bank account Step Two: Spend $300 of your $10k on investment books Step Three: Use the knowledge and ideas you generate while in Step Two to develop an overall strategy - establish a direction and basic strategy on how you want to get there. It is too hard just to say "I have $10k, what managed fund should I invest in?". If you have a read through this forum you will see everyone has their own opinion on what the best idea is - forget managed funds altogether and jump into property, invest in the highest yielding managed fund, invest in the highest growth fund, margin lend (if at all and to what degree), buy and never sell, buy and sell regularly, invest globally, invest in Australia, etc etc etc. Once you work out your direction, it is much easier to get opinions on what to do. Personally my opinion is that step one for almost everyone would be to buy a good property, either to live in or rent out. Property allows the highest leverage and allows you to grow equity faster than you would with $10k in a managed fund. That equity can then give you a lot of options in terms of strategy specifics.
I agree with coopranos with this. By looking online, it seems as though there are quite a few good investment properties over there in Melbourne. I'd love to do what coopranos suggests, in my own backyard, but as coopranos would tell you, things are overpriced at the moment and I'm predicting a price correction will occur over the coming years, so I am going to use my geared managed funds portfolio to wait for a opportune time to invest in property.
Thanks for the advice everyone. I would really like to buy an IP at some stage (hopefully sooner than later). However, I can't imagine at this stage any bank would give me a loan. My parents have recently payed off their mortgage, so I could probably secure a loan through/from them. I'm not sure if that would be a good idea though. Opinions?
Have you tried looking for properties? Even just at places like domain.com.au, realestate.com.au? Then you need to speak to someone, like a loans manager at a bank, or a mortgage broker. You may be surprised at what they have to say. I am assuming you are thinking about getting your parents to be guarantors, rather than lend you their money? To me, borrowing from your parents is a more personal decision/dilemma than a financial one. While I don't look down on anyone who has used their parents as/parents who have, become guarantors, I personally would never want to put my parents in that situation, even if it means that I will never ever own a house. I am sure I will cop a bit of flack for that comment, but its just me. No disrespect to anyone else. Even if they wanted to give me money to help buy a house, I would not take it.
I'm inclined to agree with you. I don't think I could borrow money from them either, as they would have to take out a loan against their property I assume. I wouldn't feel comfortable putting them in that position, as they could never pay it back if anything went wrong. I think for the time being I will probably look further into a managed fund. I'm still establishing myself as a personal trainer, so my cash flow isn't exactly reliable. Once I get myself setup properly I might look at what sort of loan I could get. Thanks for the input.
For a toe in the water I would go managed funds over direct property given your need to cover costs with a property loan. Gearing into a savings plan is still going to leverage your investments maybe not as high as property will but it will still take you places.
