The combination of a sharemarket boom, ultra-low interest rates, and Covid-19 has created periods of working and staying at home, combined with that I have not witnessed for decades.
Take it from a late-stage boomer – millennials are the lucky ones when it comes to investing in shares. You will benefit from digital and technological innovation that makes share investing more accessible, and the advent of multiple online platforms allows for easy and affordable investing, regardless of budget.
Add to that the excitement of living in a once-in-a-generation period of change: think about what we call the “mega secular” growth trends such as green energy, electric vehicles, decarbonization, data, eCommerce, digitalisation, gaming, and cybersecurity, to name just a few opportunities.
And you have far greater choice. You can invest your money in a way that aligns with your ethical values, meaning your investment decisions may even effect change, if you follow an ESG (environmental, social and governance investing) approach. You can also invest outside Australia, in the booming US stock markets or pretty much anywhere else in the world.
Take your pick
Traditionally, share investing was transacted through a private client stockbroker, who was not only an adviser but someone with who you would meet for a friendly annual catch-up to discuss your blue-chip portfolio. More often than not the amount of cash needed was higher than most of us could afford and the fees reflected the company research and advice we received.
Technology advances in the past decade mean you can now invest small amounts of savings as regularly or intermittently as you want via online platforms and apps that can be easily downloaded.
For most of us, there are three ways to invest. You can invest directly in shares both in Australia
and overseas and you take responsibility for picking those shares. Investing directly is for those of us who love sharemarkets and are happy to read, listen and research. Direct investing is not necessarily for the newer investor or those who have yet to build their confidence.
The second way to invest is through exchange-traded funds (ETFs), which are financial products that are listed on the share market and represent an underlying basket of shares.
The third way is through managed funds, which are also listed, but the costs tend to be higher than for ETFs and there is an expert who selects the basket of stocks you invest in.
All three options allow you to choose whether you buy shares according to various criteria, including:
• Sectors, such as technology, energy, health, financials, energy, property.
• Performance factors, usually growth or value and/ or income.
• Indices, for example, the S&P/ASX200 in Australia), or the S&P 500 (US) or NASDAQ (US/global technology).
• Regions and themes, for example, electric vehicles, cybersecurity, space, life sciences or genomics, China, emerging markets.
Apps make it easy
Micro-investing apps such as Raiz allow you to invest your change from daily purchases into a variety of ETFs for a $2.50 monthly fee. Stockspot starts at a minimum $2000 investment across 10 possible ETF portfolios that can be selected based on your risk appetite and growth potential.
The CommSec Pocket App starts with a purchase as small as $50 and a $2 fee, compared with the usual $500 minimum trade and a fee of $10 to $29.95 if you were to invest via the CommSec online platform. The app offers seven ETF investment options, including a good range of international funds.
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