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I am 17yo & ask for financial planning

Discussion in 'Financial Planning' started by kai, 14th Jun, 2010.

  1. kai

    kai New Member

    Joined:
    14th Jun, 2010
    Posts:
    3
    Location:
    SE QLD
    Hi there,

    Due to a cancellation to an overseas school trip, I now have some money to play with. Initially, I wanted a new audio system for my car, then a new netbook. I have now thought about it more wisely to explore possible investment opportunities. I have chosen investED as my primary community for this- thank you!

    Here is my situation that I am currently in:
    • Savings: $1000 invested in a "CBA AwardsSaver Acc." which has 6%p.a interest (compounded daily, paid quarterly) (cannot make withdrawals) (Investment account)
    • Income: At the moment, I earn $140 a wk. (working 7.5 hours)
    • Expenses: $20p/month for phone + $80 a week for personal expenses
    • In grade 12

    I am asking for members of the community if they can write me up a financial plan for the next 6 months until January 1 2011.

    I have three bank accounts at the moment:
    1. Youthsaver account (I have a CBA EFTPOS CARD)(Money from work is paid to this account)(However, I don't purchase anything from this account.
    2. Smart Access Account (my weekend spendings accounts if i need to use EFTPOS at shops)
    3. Award Saver Account (thats my 6%p.a savings/investment account)

    • Initially, what I was thinking was to set up long term (year) and short term goals (6 months). These goals are things that I want to purchase. If I transfer $100 into my investment account every week, that leaves me with ~$40 in the savings account. From that $40, $25 will be transferred into the Smart Access. ($5 for the phone [$5 X 4 = $20p.month] + $20 for expenditure). That leaves me with $15 dollars in the YouthSaver account; which can just accumulate for emergencies if I need emergency money.


    1. [*]Is the AwardSaver account the most suitable for making a QUICK RETURN (dollar-wise) ? Are there any other investment accounts that offer better rates!?
      [*]With question two in mind, are there any other investments that I could put my money in? I know that $1000 won't get me anywhere, heck I could goto the casio when I turn 18 in a couple of months and probably get more money, but obviously this would mean HIGH risk. I have been doing some reading into the Sharemarket and into Currency.
      [*]Does anyone suggest any other job that earns >$18 per hour for a 17y.o I currently work at a pharmacy and work Sundays (1.5 pay). Note that I am doing engineering at uni next year and I live in the S.E QLD Region.

    In conclusion, I have done some research. To be earning $20 a week on interest with my investment account, I need $16000....just thought that I'd point that out, perhaps if I am disciplined to save that much it may be quite beneficial!

    I know that these are all rough things and obviously, real life can affect and alter these things, but what I am asking for is REAL, PRACTICAL help! I am not really asking for motivation (I am self motivated) such as this "If you can dream it, you can do it" CRAP. I am simply asking for specific guidance and to be pointed in the right direction

    Thank you very much in advance for your time reading this and hopefully answering this as well. Note that I am a realistic young man, I am a practical young man. I have seen members of this forum my age asking for "how to earn 1Million by I am 20" nonsense. I love life. I live life for my friends and family. Saving money for goods simply make my life more enjoyable. I do not need to earn 1million dollars by I am the age of 20 to see myself "successful and happy". That does not mean I do not believe it cannot happen. I believe for that to happen takes a lot of time and patience and hard work.... I work hard at school and at work. However I value my time with my family and friends more importantly. However, that is not to say that I have high aspirations.

    Note that next year I am studying Engineering at Uni.....and sorry if my questions are everywhere! I will underline all the questions that I have! Please remember, I have after practical, concise and realistic help! Thank you very much investED Community!
     
  2. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    Hows it going kai

    I have a feeling that you will do well in uni. That was a clear and nicely presented post.

    The whole point of investing is postponing things now, for a better future. That means putting money away to earn dividends/distributions. With the dividends you buy the netbook and the car sound system

    When I was your age, all I did was spend money. Neither my parents nor school taught me anything(and I studied financial maths). You have age on your side, my friend. Read everything you can get your hands on.

    Try Ubank for high interest.

    Nobody can give you a financial plan unless they are financial planners.

    Work out what you really want. Don't start planning for 69 when you are 17(unless you really want to). Start with a holiday to Europe or Canada. Work out how much the trip will cost. When your dividends/distributions equal this value, go on the trip. You will have acheived 4 things: A reward for investing, Travel, Some capital, Regular income.

    I enjoy asset allocation and index funds. I am alway happy to share info on these topics. :)





    Cheers,
    Johny.
     
    Last edited by a moderator: 14th Jun, 2010
  3. kai

    kai New Member

    Joined:
    14th Jun, 2010
    Posts:
    3
    Location:
    SE QLD
    Thanks Johny for the encouragement and support mate!

    I am going to look into Ubank actually; as I have also heard that they aren't quite bad.

    My girlfriends dad has me hooked into the Currency Market actually. He uses FXCM MT4. It seems quite lucrative (with very high risks and high gains)...I'm actually going to research into currency; which I guess, will be a long term goal for myself.

    Thank you also for offering your help!
    I think for the time being, does this asset allocation sound feasible:

    NOTE: This is per week allocation.

    Total Income: $140

    Allocation:
    • $100 into Investment Account
    • $25 into Smart Access Account
    • $15 into Savings account (accumulative backup)

    Is this plan too restrictive, being that a whopping $100 goes straight into my investment account? Thoughts please!
    :)
     
  4. Tropo

    Tropo Well-Known Member

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    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    "My girlfriends dad has me hooked into the Currency Market actually.
    He uses FXCM MT4. It seems quite lucrative (with very high risks and high gains)...I'm actually going to research into currency; which I guess, will be a long term goal for myself".


    Does it mean that you are thinking of trading Forex?
     
  5. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
    1st Jul, 2009
    Posts:
    703
    Location:
    SE Queensland
    kai,

    Asset Allocation is where you allocate different asset classes ei. Cash, Term
    Deposits, Bonds, Shares, Emerging Markets, Commodities, Precious Metals. One year gold might be up, the next year cash might be up.

    Your
    $100 into investment Account
    $25 into smart access account
    $15 into saving account
    are All cash. And what you are doing is called saving.

    May I make a suggestion. Start with $2000 as a goal. $2000 is usually the balance needed for a managed fund. You have to start somewhere, right! Don't look for rich quick scemes. If it makes lots of money, it can lose lots of money.

    While you have a MF, research as much as possible to find market areas in which you find interesting. Then use your capital on that. Remember with each goal, you needed a completion date. And Action.

    So, What goals do you have? :D




    Johny.
     
  6. kai

    kai New Member

    Joined:
    14th Jun, 2010
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    Location:
    SE QLD
    Yes, under my parents name of course.
     
  7. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
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    Location:
    SE Queensland
    kai,

    I have no experience with foreign exchange trading. There is lots of crap info to sort through while the Valuable data is held by a few. Perhaps you could give your strategy, goal plan, stop loss positions ect. that you intend to use. Do you have a mentor?





    Johny.
     
  8. Johny_come_lately

    Johny_come_lately Well-Known Member

    Joined:
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    Location:
    SE Queensland
    Do you have $80 a week for personal expenses, or $80 a month?
    If you can put $100/week into your investment acc - that is $5200 for the year. Not bad! :)




    J.
     
  9. SF

    SF New Member

    Joined:
    17th Jun, 2010
    Posts:
    3
    Location:
    Sydney, NSW
    Hi,

    Perhaps I'm being a tad critical but:

    a) Firstly, can I ask why you are only working 7.5 hrs per week? I understand the importance of education, I went very well in my HSC in 2007, but I was still working a minimum of 15-20 hrs a week. If you're disciplined enough and have your head screwed on, it's really not that hard to manage your time effectively. Instead of saving $100 a week, you can save $200-$250. The opportunities from here are limitless.

    b) Watch out for spending ridiculous amounts of money on cars, alcohol, women :p, partying and holidays. Sure, they are wonderful, and I've been lucky to experience the intricate luxuries of each, but make sure you put your savings first. I advise you set a savings goal each week, and the first thing you do when your expenses are paid is put the money in. Too many people save what's left after spending, it should be the opposite: spend what's left AFTER saving!

    c) Think more long term then 6 months. Have you thought about when you may want to move out?? I know you're only young, but cover your bases. Have you ever thought of owning a property portfolio? If so, then why not put money away into a First Home Savers Account for 4-5 yrs and by the time you graduate your deposit will be 90% paid. A year out of uni and you'll be ready to purchase your first property! Live in it for 6 months, then move back in with your parents and have other people pay your mortgage! Use the equity on the property plus additional savings to buy your first owner occupied property. Two properties before 25/26.

    All just little bits of advice that will seemingly make a big difference in the long run.
     
  10. jabba_jones

    jabba_jones Well-Known Member

    Joined:
    2nd Dec, 2007
    Posts:
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    Location:
    Sydney
    On this point your money can be locked away for as little as 25 months.

    Is there a minimum time period that money is tied up?
    First Home Saver accounts are designed to encourage people to develop good savings habits, and a requirement is that contributions of at least $1,000 in each of four or more financial years must be made before an individual can withdraw their funds.

    Frequently Asked Questions | First Home Saver

    So you have 13 days to open an account and deposit $1000, or add an extra year on the end. Now could be a good time to think about your goals and possibly move that $1k you have in your CBA AwardsSaver Acc.

    Members Equity Bank is currently paying 6.25% on their first saver accounts. Add the gov 17.% contribution and you're looking at ~22% post tax return on your contributions upto $5k a year.
     
  11. SF

    SF New Member

    Joined:
    17th Jun, 2010
    Posts:
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    Location:
    Sydney, NSW
    For Kai,

    My girlfriend and I have capitalised on this exact thing. We both put $1000 into our accounts yesterday and will be both putting 5k before June 30 in 2011 and 2012 respectively. Additionally, we'll also be then putting another 5k into each of the accounts on July 1, 2012 to allow us access to the money. So effectively, as the poster mentioned above, it's a 25 month process.
    Had I of known of this when I was 17/18 I would've made it my obligation to jump at this opportunity. As a result, my purchase has been delayed, the FHOG has significantly decreased, and I may not be able to get into the property locations that I would want to invest in today in 2 yrs time.

    I believe it's definitely something to consider..
     
  12. SF

    SF New Member

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    Location:
    Sydney, NSW
    The 4-5 year period that I suggested for Kai was based on him not being able to acquire a loan for a home until he's got full time employment. It may take him 4-5 yrs from now to graduate.
     
  13. jabba_jones

    jabba_jones Well-Known Member

    Joined:
    2nd Dec, 2007
    Posts:
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    Location:
    Sydney
    I agree contributing $100 a week is likely to fall short of a useable desposit in 25 months, circumstances can change though, I personally was working full time in 3rd year uni (My course required 1 years work experience before graduating).

    End of the day as Johnny mentioned, depends on Kais' goals.

    Note: Getting the money out for a house purchased prior to meeting the 4 financial year contributions is still not legislated.