Why becoming an investor is critical

Why becoming an investor is critical

Vanessa Stoykov

No matter where you are on your money journey, and how much you know, the one thought that you should hold firm is the fact that being an investor diversifies your risk, and gives you more security. 

What do I mean by this? Well, most Australians understand that owning property is an investment. Its very much imbedded in the Aussie psyche. But what about other investments outside of property? The biggest investment for most people outside of their home, is usually their super. And by contributing to your super, you are investing for your future. 

While those close to retirement really do value and understand the lump sum that is sitting there helping them have a more comfortable reality, the fact is most people under the age of 45 are not engaged with their super – they don’t read what comes to them from them their fund, and in fact more than 6 million Australians have more than one fund from previous employers – meaning their investments are paying multiple fees, and not benefitting from a single larger sum being invested in a way that is suited to their particular life stage and life goals. 

While you may want to try with other types of investments, such as managed funds or direct shares, the number one thing everyone needs to do first is make sure their super is working hard for them. The power of compounding interest over a time period of 20 and 30 years is absolutely phenomenal. 

Did you know that $395 a month for sixty months invested in an indexed or balanced fund that returned on average 8% a year, would be $588,691 in 30 years?

So if are in your 20s and 30s, and decide for 5 years to invest that money rather than spend it, or pay off something like a holiday, think about what it would mean to know that in your 60s you could be sitting on that kind of money. 

We often make decisions around money and spending without knowing the long term consequences. Having that new car, clothes or phone seems the most important thing to afford at the time. But if you really want to invest in your future you as well as who you are at the moment, I urge you to think about the opportunity cost – the real cost of spending that money now, rather than investing, or putting it into your super. 

Nobody knows what is going to happen in the future. If the pandemic taught us anything it is that we can expect the unexpected. So by putting some of the risk of what could happen to you financially off the table, you are preparing for anything. By focussing on your super, adding a little more when you can, and thinking about investing rather than spending, you can take a load of worry, risk and hard work when you are older out of your future.  

In these times, everyone needs to look after themselves and their own family. The only way you can truly do that is by becoming an investor, and reaping the benefits of a long term strategy that pays off. 

After all, you and your family, deserve that security. 


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