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100 timeless tips for young investors: Firstlinks survey

Leisa Bell  |  25 Nov 2021Text size  Decrease  Increase  |  
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From the hundreds of responses to Firstlinks’ recent survey question, “What investment advice would you give to a 25-year-old starting an investing journey?”, we have compiled a comprehensive list of dos and don’ts for young (and perhaps not-so-young) investors.

As there are so many, we’ll present these tips over the next few weeks, and here are the first 100. 

  1. never invest in something you don't really understand. Get rich slowly 
  2. invest in companies that make money or have a unique product people really want/need which will one day give them a massive advantage
  3. reinvest returns / dividends
  4. get a secure full-time job. Save for a house deposit. Do night courses in carpentry and plumbing. Buy the most rundown house in a good street. Renovate the house nights and weekends for two years. Sell the house and buy another one requiring less renovation. Get a higher paying job and repeat the cycle
  5. take a total portfolio approach
  6. investment is built on small repetitive positive actions, understand risk and factor that into decisions, read the Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay and apply it to current times 
  7. look for good yields
  8. take the time to research what an investment can do to throw off cash and then imagine closing your eyes for 10 years and absolutely knowing you will have made adequate returns
  9. 100% of the experienced investors I know and admire have hunkered down as we have never seen anything so ridiculous as what's happening now. It’s the final blow-off of 42 years of falling interest rates, now zero interest rates and it will be ugly when rates rise. Rates falling from 16% to 1% move a $200,000 home to $3.2 million - what do people think happens when rates rise. Greed and slothfulness (not researching) always combine to see this cohort devastated - except for the few that get out before it ends
  10. be patient, focus on the long term
  11. invest in ‘growth’ while you have time on your side to recover from the bumps along the way
  12. start as early as possible to benefit from the effects of compounding
  13. look for long-term trends
  14. maximise tax deductible super contributions, but no more
  15. invest 10% of your income into investments outside super, as a hedge against higher taxes or rule changes
  16. seek out, learn and listen to those with investment knowledge - not your mates over a beer or the chat forums
  17. read widely
  18. don't fret about buying a house until you have kids
  19. buy quality shares/property and hold for the long term but make sure to keep reviewing their strength
  20. invest in a diversified portfolio
  21. read the Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay and apply it to current times
  22. keep investment costs low
  23. invest regularly (and automatically, if possible, no matter what the outlook is or what markets are doing)
  24. salary sacrifice a small extra % of your salary from day one
  25. keep it simple
  26. understand the cycles and where we are in the cycle
  27. if you do not have the right knowledge, seek out the services of a professional
  28. if it sounds too good to be true, steer clear
  29. only invest what you can afford to lose in speculative stocks and cryptocurrencies
  30. wealth held on pieces of paper can blow away
  31. buy LICs and ETFs forget the rest and enjoy life
  32. accept the peaks and troughs
  33. read as much as you can about investing before you invest
  34. diversify your investments
  35. time in the market is way more important than timing the market
  36. stick to quality and worry less about growth
  37. know when to hold them, know when to fold them, know when to walk away and know when to run
  38. keep some cash in reserve and buy when everybody else is selling
  39. panic selling is your buying opportunity
  40. stay fit and healthy enough to enjoy it along the way and at the end
  41. invest in a diversified portfolio of quality stocks over the long-term
  42. don’t get sucked into the fear of missing out
  43. stick with a disciplined and diversified approach
  44. don’t be afraid to take profits when returns seem excessive and don’t be afraid to invest when we are told the world will be in a bad place for a long time
  45. use logic and common sense
  46. invest in equities, but with diversification of managers, indices, and geography
  47. there are many possibilities, few probabilities and no certainties when looking into the future
  48. research the advisor to determine if they are worthy of your trust before and during your engagement with them
  49. buy some ETFs or maybe bank shares to keep forever if spare money becomes available at any time
  50. make an investment plan and be prepared to update that plan as you mature and increase your knowledge
  51. be patient and hold investments for long periods unless they don't pass your investment plan
  52. buy good quality shares and hang on to them
  53. invest in a diversified index fund
  54. wise, long-term investment into companies that are committed to ethical and sustainable investment
  55. be invested, be diversified, be patient but make decisions if they need to be made
  56. unless your investment portfolio is weighted towards dying industries you have time on your side
  57. OWN, not rent your home. Put up with commuting, if need be, you can move up later as your career growth moves upwards
  58. live within your means and use debt sparingly
  59. small investment steps are important because the power of growth is exponential
  60. utilise professionally managed active funds and diversify
  61. mostly buy income earning real estate and shares in boring stocks with reliable earnings
  62. ignore the daily market noise
  63. don't get sucked-in to fads and fashions
  64. once-in-a-lifetime investment opportunities come every 7 to 10 years
  65. the Warren Buffett value investing era just doesn't seem to work now. Despite having invested for many years, I would say a 25-year-old would know as much as me, maybe more, not being handicapped by what now seems to be an outmoded style of investing
  66. focus on the things that matter and the things that you can control
  67. invest passively to reduce cost
  68. tax consequences pervade every decision - but don't let the tax tail wag the investment dog
  69. set goals and accept that you will have to make trade-offs
  70. no asset is guaranteed to increase let alone hold value
  71. just start, add a regular amount to a broadly diversified all equity fund - at 60 it will be way beyond your imagination
  72. buy well managed companies with franking credits
  73. selectively diversify across asset classes and HOLD
  74. if you have spare funds ‘let the experts’ look after your money (fund managers) who have the expertise and time to investigate and then invest in companies.
  75. back 'self-interest' every time. Put money into businesses that provide products and services that serve and build the community, because it's human nature that no one wants to go without or provide for their loved ones
  76. buy active value funds
  77. leave superannuation to a quality industry fund split 50/50 in growth and balanced.
  78. take advantage of superannuation tax breaks within reason e.g., salary sacrificing
  79. avoid SMSFs unless you really really want or need to tailor your investments to very specific requirements e.g., own your business premises
  80. rather than try to time the market, stay in for the long haul
  81. use ETFs etc, preferably simple indexed ones, unless you have a very strong desire to become an equities researcher
  82. use 'high growth' while young, moving to 'balanced' in later years
  83. buy ETFs and keep building them with available cash and hold, hold, hold
  84. invest 10% of every pay for the long term and don’t be tempted to dip into it for any reason/fad/hot idea
  85. don't borrow money to invest, other than for your own home
  86. don't invest money that you will need in the next three years
  87. learn the difference between investing and speculating, and the difference between an investment and an indulgence
  88. look at management expense ratios on managed funds. Put most investments in diversified index funds. Save for a house first
  89. expect the highs and lows despite the effort of due diligence
  90. you do have to be an active investor to be really successful and if you don't want to manage your money actively then choose an LIC or ETF and let them do it for you… even then keep an eye on things
  91. you will make mistakes, but learn from them and keep losses minimal
  92. be cautious until you have some understanding and experience in the investment area you have chosen
  93. do the Buffet numbers as there is true value still to be found high yield with a low PE
  94. buy on any dips and hold for the long term. Don't rush in because everyone else is
  95. invest in companies you know will be around in 10 years
  96. study investment strategies as soon as you can
  97. start off with some tried and tested ETFs i.e., Index funds tracking the Australian and US share market and the Nasdaq. Then as your knowledge and experience grows, invest in companies you know a bit about, or have done some research on. Only after that, should you consider investing into anything we might consider less well known or higher risk. The purpose of investing after all, is to park the money you have earned through your endeavours, into a safe place where it can grow over time. Be patient.
  98. start now and continue to make regular contributions to a reputable fund
  99. buy stocks in companies whose products you, your friends, and your employer use frequently and diversify over several industry sectors
  100. buy value stocks as the base of your portfolio and diversify into growth/thematic stocks

 

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