New to investing

Could someone provide me with some help. I have never invested before and I have just received an inheritance of $86000. I don;t know where to start. I would like to get a really good return because the banks don't pay a very good interest rate.

Thank you.
Barry Thomas
[email protected]

 

ETFs are probably your best option since you're new to investing. ETFs are instruments that buy the same companies of the benchmark index they are tracking. You can purchase an ETF through a brokerage account. I'd suggest adding a small amount each month (say $5 k) so minimise the downside risk of putting it all in at a peak.

You might find some useful information on allocating capital into an ETF here: Financial Independence Retire Early | Invest for FIRE

 

barry.thomas38,

welcome to InvestChat

having been in a similar situation myself .. i have some thoughts

first TAKE A DEEP BREATH

next decide on what you call 'investing ' there is no good one size fits all plan , so tweaking a plan to suit you , should be superior ( i was 10 years away from retirement , which was both good and bad )

next all investing involves risk ( including keeping it in a term deposit )

things to consider

1. time-frame when do you need the income ( or profits ) from your investment ( my task was easier i knew i was looking hard at 10 years )

2 when the target time-frame is reached are you taking all the cash out , ( b) have a nice little source of income ( c) a mix of both ( i am hoping for [ b.] )

3 Dividend Reinvestment Plan - DRIP

Compounding

these concepts might help you ( i have a mixture some cash , some DRP )

i suggest this is NOT the time for a novice to be throwing cash at the market , i would be urging that you learn first ( unless you are 50 something and really need to get your act into gear to grow that nest quickly , like i had to ... lucky for me that was 2011 a pretty good time the grab some shares .)

dabble if you must ( say, $5k or $10k on an obvious bargain but please be careful )

also find a nice reliable calculator it will be a better friend than most analysts

PLEASE BE CAREFUL

 

If you have just received the cash, park it in the bank against your home loan for 3 months. Or in a "high interest" account for 3 months.
In the next month write down what your end goal is from this cash. Then do nothing and don't think about it. In this time learn about the different products - direct shares, ETF's, LIC's, real estate, etc. Ask questions, run different what-if scenarios.

In 3 months, revisit your original thoughts. If they are the same and with the learning that you have done, you are now ready to deploy the cash into your chosen area!

 

Everyone wants a good return, there is no magic formula. If big returns are been promoted then what is the potential downside?

Have realistic expectations, $86k is a large amount of money that can change your life long term. Retirement in a decade won't be on the cards from this alone without significant risk which could likely put you back to square one.

Diversify.

Watch fees, anything over 0.5% is getting high. The cheapest diversified indexes are under 0.1%pa

Buying cheap (low fee) index funds has proven a winner. Vanguard, Blackrock, state street all have offerings in this space.

What are you hoping to do with the money? Deposit? Retire? When? Get a nice car or holiday?