Getting started as an investor: Here’s what the experts say

The keys to becoming an investor for the first time are simpler than you might think, and you don’t require a lot of money to start.

Sinking share markets and falling home values make now as good a time as any to become an investor.

The worst time to invest is when prices are peaking, so recent drops suggest it could be a good time to snap up a bargain. But how do you get started?

Investment specialists say “now” is always a good time to start as long as you are careful, have a plan, and take a long-term view.

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Sometimes you just have to take the plunge into investing. But be sure to start small. Picture: Supplied

MBA Financial Strategists director Mark Borg said first-time investors should start with the question “why”.

Know why you want to invest, know what your time frame is, and understand what you are putting your money into.

“If you don’t, you are really just handing money to a stranger,” Mr Borg said.

“Investments are not your friends. Just because you know a brand doesn’t mean you should consider getting it.”

Mr Borg said first-timers could be DIY investors if they did enough research, but should be realistic with their expectations.

“All in is not a good strategy. Putting everything on black is not really investing — that’s gambling.”

In its simplest form, all investments come from just three areas — business, property or cash.

Online US trading platform Stake.com.au’s founder, Matt Leibowitz, said investing was a continual learning process.

“Getting down on yourself or going too hard too early can hurt you,” he said.

“Even if your first investment is a loss it doesn’t mean the next one is going to be. If you never invest at all you will never get anything out of it.”

Stake.com.au founder Matt Leibowitz says investing is getting easier through online options. Picture: Supplied

Mr Leibowitz said investors should know their exit plan before they started, read books, and speak with other investors.

He said now was always a good time so begin investing as long as you started small.

“If not now, when? It’s always now, but that doesn’t mean you need to throw all your money in straight away.”

Investing was getting easier thanks to the growth of online options, Mr Leibowitz said, and “sometimes you need to jump”.

“By pulling the trigger you get into the system.”

Stake.com.au gives people access to the US sharemarket through investing as little as $50.

Canstar general manager of wealth Josh Callaghan said many people saw investing as complex and difficult, but the key was to “just start investing and start small”.

Mr Callaghan said doing homework was easy online with great resources offered by investment groups, online trading platforms and even YouTube videos.

“Consider exchange-traded funds. They’re a great way for first-time investors to get access. They are automatically diversified and invested on their behalf.“

Listed investment companies and property trusts are among other ways to diversify your dollars.

Mr Callaghan said investors should try to examine demand for an asset, whether a company’s products or a property’s rental potential.

STEPS TO INVESTMENT SUCCESS

• Understand why you want to invest, and when you eventually plan to sell.

• Research as much as you can through newspapers, books, online resources, speaking with other investors, and professional advice where needed

• Examine the costs of buying and holding the investment. Know the fees you’ll pay, and if buying shares directly online aim for a minimum investment of $1000 to spread the fees over more assets.

• Think about tax before you start. Whose name will the investment be under, and what structure?

• Don’t be afraid to take the plunge, but only use a small amount of money if you can to minimise early losses.

• Diversify across different investment classes — such as shares and real estate — and within classes. Holding just one share or rental property increases your risk.

• Review your investments regularly, perhaps every three months, but avoid knee-jerk reactions to market volatility.

@keanenmoney