Investing and getting advice

Making your money work harder

You don't need a lot of money to start investing. Some investments let you begin with a small amount and add to your investment regularly, allowing you to build it up over time. 

There is plenty of information available to help you make an investing plan, or you could talk to a qualified financial adviser if you want help with your investment decisions. Here we have some tips to get you started.

Get ready to invest

You'll know you're ready to invest when you:

  • are comfortably meeting your living expenses
  • have your bills under control
  • pay your credit card in full each month
  • have set up an emergency fund to cover any unexpected expenses.

When you're comfortable with where you are financially, you're more likely to possess the clear, level head you'll need to make good investment decisions.

Invest smarter

All investments carry some risk, but without risk, there's no reward. The secret to investing smarter is to plan, research and understand your investments, and how they fit with your financial goals.

Set your investment goals

Setting investment goals is important because it gives your investment plan a purpose and will help you decide what types of investments are appropriate.

For example, if you're saving for something in the short-term (say, up to 3 years) you'll be looking for a conservative asset where there's little chance of losing your money. However, if you're saving for the longer term, you can afford to ride out the inevitable ups and downs in investment markets to chase a better return.

For more information about setting investment goals that match the level of risk you're prepared to accept, see goals and risk tolerance.

Choose a suitable investment

When it comes to choosing your investments, you'll need to consider your financial goals, and your tolerance for risk. You'll also need to take into account how much money you want to start your investment portfolio with, and whether you want to be able to add to it over time.

It's also important to diversify your investments in order to spread your risk. This means if one company doesn't do as well as you hoped, you won't have all your money riding on it.

For example, if you want to start investing in shares with, say $10,000, you could invest in a number of companies across different industries. If, on the other hand, you have a much smaller amount to invest, say $1,000, you can still get exposure to a diversified share portfolio through an exchange traded fund (ETF). An ETF may also be suitable if you would prefer not to choose individual shares yourself.

Look out for scams

Protect yourself from investment scams. They often look professional and believable and it can be hard to tell them apart from the real deal, so take some time to learn about the types of scams doing the rounds and approach every opportunity with a healthy dose of caution.

Use your favourite search engine to investigate companies and funds. Look for investments with a company that's been around for a long time and has a good track record of returns. You will also find plenty of expert opinion on what to invest in; just be aware that we all have biases, so don't rely on just one person's opinion.

Consider seeing a financial adviser

A financial adviser can help you with a range of money matters, from personal budgeting and investing, to planning for retirement and protecting your assets with appropriate insurance cover. They can also help work through your finances if you've received a windfall, are recently divorced, or have just lost your partner.

By law, a licensed financial adviser must consider your goals, needs and personal circumstances when they make any recommendations to you.

Choosing a financial adviser

Look for a financial adviser that has experience with the type of issues you want advice on. Read our tips on how to choose a financial adviser.

When you have a short list of advisers, use ASIC's financial advisers register to check what areas they can provide advice on.

The register will tell you:

  • the adviser's qualifications, experience and employment history
  • what product areas the adviser can provide advice about 
  • whether the adviser belongs to a professional body or industry association
  • whether the adviser has been the subject of disciplinary action by ASIC
  • the name and number of the Australian financial services (AFS) licence holder who employs or authorises the financial adviser to provide advice
  • who owns or controls the AFS licence holder.

Check a financial adviser's details.

Financial advisers register

Types of financial advice

There are several different types of advice, from general information that doesn't take your personal circumstances into account, to personal advice that does consider your personal circumstances.

You can get personal advice for a specific issue, such as choosing investments or sorting out your super, or you may prefer to have someone look at your finances as a whole and put together a comprehensive plan to achieve your financial goals.

Financial advice costs

How much you pay for advice will depend on how you choose to receive advice and the type of advice you receive. Face-to face advice is usually more expensive than phone-based or video chat advice. If you're only looking for help on a single issue, you may consider choosing a more cost-effective option, like robo-advice.

Financial advisers can be paid in different ways. They may charge:

  • on a time-based, fee for service arrangement, or
  • an asset-based fee, calculated as a percentage of the amount you invest through them.

Many financial advisers use a combination of these payment methods. For example, they may charge a flat fee up-front and an ongoing fee based on a percentage of your investments.

See financial advice costs for more information on the cost of advice and what to expect for your money.

Case study: Claire meets a money mentor

Young woman who has sought financial adviceAfter she completed university, Claire, 25, was enjoying a decent income for the first time in her life. But she was also spending a lot and starting to rack up an unhealthy level of debt. She says, "It wasn't until my dad asked me if I was putting some money away that I realised all I had to show for a few years' work was an impressive shoe collection."

Claire decided to get her money on track and put a plan in place to build a financially secure future.

A family friend recommended a financial adviser, who worked with Claire to help her set and stick to a budget and pay off her debts. The adviser also helped Claire put a savings plan in place and start building a small investment portfolio.

Develop a good savings habit 

Saving and investing often go hand in hand. You probably had to save regularly to build up an emergency fund and a starting balance for investing. Developing a regular savings habit will help you plan much better for the future.

If you get paid regularly, set up an automatic transfer to move some of your salary into a separate savings account each pay day. If your employer allows you to split your pay, you could ask them to deposit your savings directly into this account.

Choose a savings account with a good interest rate, but don't link it to your bank card. You don't want to accidently pay for everyday expenses with your savings.

If you have a mortgage, see if your lender offers an offset account. This is a type of account that is linked to your home loan and reduces the amount of interest you pay on your loan. You will effectively be earning a mortgage interest rate on your savings.

Monitor your investments

Whether you choose your own investments or get help from an adviser, it's important to keep on top of where your money is and how it's performing. Some investments will need more attention than others.

Here are a few examples of different investments and what to look for, but visit our webpage on keeping track of your investments for more detailed tips.

Savings accounts

Compare the interest rates on offer every few months to make sure you're still getting a good interest rate for your savings.

Shares

If your broker offers daily alerts, set up this feature to receive any news about the companies you have invested in. Check the share price at least weekly and, if it has gone down more than what may be expected with normal market fluctuations, you'll need to investigate why. You may also consider putting a stop-loss order in place. This tells your broker to sell if the price of the share drops by more than a certain amount, for example 20%.

ETFs

Because professional fund managers watch the markets for you and make investment decisions accordingly, this type of managed fund should need less of your attention.

However, you should receive investment statements periodically. Read these carefully to ensure you understand how the fund is performing, what fees you're paying, and to check that any additional contributions you've made to the fund (if you've topped up your investment) are included.

Financial advice

If you're working with an adviser and paying an ongoing advice fee, you should receive a review of your plan at least once each year. You may also receive more frequent investment reports. Even if your adviser has recommended investments for you, it is still in your best interests to read these reports carefully to keep an eye on those investments. No one is likely to care more about looking after your money than you .

Women's money challenges

Women's money challenges infographic thumbnail

Our women's money challenges infographic looks at the everyday challenges women face and the small steps they can take now that can make a big difference later.

Investing your money can help secure your financial future. If you're thinking of seeing a financial adviser, look for a qualified and licensed professional that has the appropriate experience to help you, and only deal with someone you feel comfortable with.


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Last updated: 16 Oct 2018