6 tips for the young investor in today’s markets

How much money you’re able to invest each year is one of the biggest factors in achieving your financial goals. And the longer you’re invested, the more time your money has to compound and grow.

Inflation is up and markets are down. What does this mean for you?

6 tips for the young investor in todays markets

Entering the world of investing can be intimidating, even during the best of times. After all, it’s normal to have some hesitation when you’re doing something new. But what about when the markets are choppy?

The truth is, ups and downs in the markets are normal parts of the investment landscape. But starting out during a rocky market is not a bad place to be.

When you’re still in the accumulation phase of your financial life, you’re trying to grow your portfolio—by holding more growth-oriented investments, for example. At this stage, you’re more likely to have time to take on more risk because you won’t be accessing your money for many years. In short, time is on your side.

A volatile market can be seen as a formidable hurdle. But down markets can be favourable for investors. As the mantra goes, “buy low, sell high.”

If you can start saving for your future when the share market is down, you give yourself a better chance of meeting your goals. That’s because you’ll be able to buy more shares at a lower price, which can give you more value over the long term.

The longer you wait to start investing, the more money you’ll likely need to invest over time to accumulate the same amount. You could also end up purchasing shares when they’re more expensive and miss out on market appreciation.

This also could be a great time to dollar-cost average. “Dollar-cost averaging” is the practice of purchasing a fixed dollar amount of a particular investment on a regular basis, regardless of the share price. You’ll automatically buy more shares when prices are low and fewer shares when prices are high. This helps you avoid the risk of investing a lump-sum amount when prices are at their peak. With each contribution, your portfolio has the potential to grow—increasing your nest egg.

Tips for getting started on your investment journey

The Dos

1. Start now, start small

Create a budget for yourself and commit to investing a comfortable amount on a regular basis. For example, you could:

  • Start contributing a little each month into an account dedicated to investing suitable for your situation.

  • Set up a monthly investment into a high-yield account where you may be able to earn more interest than a standard savings account.

2. Maintain voluntary contributions to super

If your company provides a matching contribution, contribute up to the full match. The company’s match is essentially “free money” toward your future that can help you reach your goals sooner—so why miss out?

3. Start an emergency fund

An emergency fund should cover about 3 to 6 months of your living expenses. Keep in mind:

Your emergency fund should be kept in a liquid and stable place like a high-yield savings account.

The Don’ts

1. Don’t spend your money on trendy investments.

While it may be alluring (who wouldn’t want to get rich quick?), jumping on the bandwagon for an individual stock that’s momentarily in the spotlight is high-risk.

2. Don’t stop contributing to your investment when markets are volatile.

The sooner money is invested, the more time it has to grow. Stopping contributions altogether will slow your progress. You work hard for your money; let it work hard for you.

3. Don’t focus on the value of your portfolio on a single day.

On any given day, the market can go up or down. Instead of stressing over your balance, ask yourself, “When will I need this money?” If the money is for a longer-term goal—say 10, 20, or even 30 years—the value of your portfolio today doesn’t matter.

These are general tips and every investor should consider their own personal situation when making financial decisions.

If you’d like to start your investment journey, call us on 03 9553 0271.

Source: Vanguard

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

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Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.