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Estimated reading time
5 minIn this article
- Understanding the power of investing in your super
- Becoming a landlord and owning an investment property
- Buying shares and watching your wealth grow
- Purchasing bonds and earning regular payments
- Investing in ETFs and diversifying your portfolio
Investing is one way to grow your wealth now, so you can feel confident about your finances in the immediate or far-off future.
The secret to being on the path to investing success is figuring out how much you want to invest (and where), your risk appet, and how different investment types might help you achieve your goals – something all budding and experienced investors should think about.
Remember, always do research before investing. Read the T&Cs and product information, find out more about the risks and benefits and consider any fees and charges. You might also want to consult an advisor to get independent financial and tax advice for your circumstances.
If you want to explore some of the most common investment options, you’ve come to the right place. Let’s go.
1. Superannuation
One of the first investments you’ll ever make is superannuation, which is basically the money you’re saving for your retirement.
If you work for an employer, they’re legally obliged to put some of your salary into your super fund each time you get paid. You typically won’t be able to access this money until you’ve hit the preservation age (between 55 and 60 years). But thinking about your super now can set future-you up for success.
Your nominated super fund account will typically do the investing for you, but you can check what type of investment options your fund has to offer and choose one based on your risk appetite and goals. For instance, if you’re young, you might choose an investment that focuses on growth to turbocharge your super balance. Or, if you’re older and close to retirement, you might pick a safer investment option to guarantee returns.
Another way you can invest in your super is to make voluntary contributions (where you can) to make the most of compound interest, which can help grow your wealth more effectively over time.
Video1Louis: Australians born in 1995 should currently have this much in superannuation to retire comfortably. Oh, wait. Oh my god, that's me. How do I even check how much super I have? Also, what is it all about?
Louis Voiceover: ANZ presents: Superannuation explained. It's okay. I didn't know either.
Louis: Liana! The way that I was mid spiral and you just appeared out of nowhere.
Liana: It's magic.
Louis: It's your special talent, isn't it? Okay. Actually, while you're here can you please help me upskill in superannuation? First question. What's the deal?
Liana: Well, superannuation is how you ensure a comfy lifestyle in retirement.
Louis: Comfy? I see what you did there. Your mind is powerful.
Liana: So super is where your employer pays a minimum of ten and a half per cent into an investment fund throughout your working life. And it's the law. If you're a freelancer or self-employed, you may need to pop that money in yourself. And that amount is actually going to go up to 12% by 2025.
Louis: Backtrack a bit. All I heard was the fact that I'm an investor. Am I investing?
Liana: Yeah. Yeah. So you're investing in your own retirement.
Louis: But how do I make sure that I've got enough super for, you know, the lavish lifestyle that I so desperately deserve?
Liana: Such a good question Louis. You're definitely not alone in wondering that. So there are four Cs that I hope can help you out. Connect.
Louis: Connect.
Liana: Consolidate.
Louis: Consolidate.
Liana: Contribute.
Louis: Contribute.
Liana: And consider.
Louis: Consider. Okay.
Liana: So the first: connect with your super fund by jumping online, logging into your fund, even calling them directly and finding out how your super is performing, what your balance is, how it's invested. You've got to know what you're working with if you want to grow it. Number two do you remember number two? Consolidate?
Louis: Yes. I was just going to say consolidate. I was like consuhhh- And you took the words right out of my mouth. Yeah.
Liana: So if you've changed jobs a couple of times, you might have two or three super funds floating about. Consolidating them could make them grow more over time because you could be saving in fees. It's really easy to do via the ATO and they'll send you a list of any linked accounts that you have.
Louis: So like less fees so that retired me can you know, enjoy a couple of cocktails on a cruise from time to time got it! Old me will still have it.
Liana: Yes. What's your cocktail of choice?
Louis: Margarita.
Liana: Oh, same!
Louis: I knew we were one! The synchronicity.
Liana: So number three, contribute extra. The more you put in early, the more it will grow and the more you will have at retirement to provide you with that lifestyle. So if you have extra cash you don't need, you could put more into a super fund instead of a savings account. Remember, cocktails.
Louis: Cocktails on the beach? Yeah.
Liana: So you can earn more interest. Your funds will grow more over time if you put more into the fund. Plus, those extra contributions could be tax deductible to you. Just make sure you do your research.
Louis: And the fourth C?
Liana: Consider your options. Ultimately, this is your investment, so it's important to know where it's going. There are lots of different super funds out there with different fees, different investment options, different insurance, different ethics. There are a lot of different factors to consider when picking a super fund, so make sure you do your research and pick what's right for you.
Louis: This has been so helpful and I'm not spiralling anymore but where can one go if they don't have ANZ expert Liana Cauchi sitting beside them on a reclining couch, you know.
Liana: Well I'd jump back to the first C. Do you remember what that was?
Louis: Back to the beginning. Yeah, so, Next question?
Liana: So connect
Louis: Connect. Connect!
Liana: So jump online, log into your super fund, even call them and just ask them a few questions over the phone. You could also go to ANZ.com/superlearning to access some great content to help you on this journey and make the most of your super at any age. It's really straightforward once you get started.
Louis: Some might say super straightforward. If you found this video helpful, go on. Subscribe to our channel. I need you. I'm lonely. And watch me as I upskill in a whole lot of other financial wellbeing topics. Oh, and don't forget to check the links in the description for some more handy resources. Shall we get comfy?
Liana: Sure. Okay.
Louis: Oh my god, this goes all the way back. Oh, I'm floating on a cloud. Oh, I'm floating on a cloud! Sleep in 3, 2, 1.
Liana: Glad I was that interesting.
Superannuation explained4:202. Owning an investment property
Property is an investment option most people understand. In its simplest form, when you own an investment property you can become a landlord who generates income through a tenant paying rent. Where the investment part comes in is selling the property at a later date once it’s increased in value.Superscript: 1
If you invest well, investment properties can offer stable returns. But there are some elements you’ll need to consider before you make the investment:
- Think about how you’re going to pay for the new property. Taking out an investment home loan or using the equity you have in a home you own already are some options to consider. It’ll all come down to your money situation and investment goals.
- Research your property’s location as it can affect capital growth (the value of your property over time) and rental yield (the difference between the rent you receive and how much the property costs you). You can get the latest insights on your property options with an ANZ property profile report.
- The type of property plays a role in your investment success too. Apartments and townhouses might be easier to invest in, but a freestanding home might get better (and more profitable) results over time.
- The high initial costs that are associated with acquiring an investment property, such as the initial deposit, stamp duty on the purchase price, legal fees and the ongoing costs and obligations after acquisition such as home loan repayments, maintenance and repairs. There is also potential capital gains tax payable when the property is sold in the future. Plus, if you plan to rent out your property you may need to consider additional insurance or management fees.
3. Shares
When you invest in shares, you’re basically investing in a part of a company. If the company is doing well – like a retailer seeing a bump in sales or a tech platform getting a stack of new subscribers – you might benefit from this growth in two ways:
- Share price growth: the value of your shares increase, which means you can sell them for more later.
- Income paid as dividends: the company pays you some of the profit they earn.Superscript: 2
Wondering how to invest in shares? Then you’ve got two options. You can buy directly through the Australian Securities Exchange (ASX) and manage them on your own, or you can use an online broker service or a full-service broker to buy and manage your shares on your behalf.
Before you start investing, it’s important to consider the facts by:
- Researching the companies you want to invest in. Look at their financial performance and achievements over the last twelve months and see if there are opportunities for the company to grow or be in demand in the future.
- Be financially ready to buy the shares and cover any broker costs you may need to pay. Researching all the fees and terms (such as when you want to buy or sell your shares) can help you feel assured in your investing decision.
- Understand the risk involved. Your investment can be higher-risk or lower-risk, which basically means you might make more with the risk of losing more (higher-risk) or you might make less but your initial investment will be protected (lower-risk).
- Investing in shares is often considered a higher-risk option as the companies you invest in might not make a profit that you can benefit from, and they are exposed to global market volatility. However, there’s always a chance that they will, which is what can make it a high-risk, high-reward investment.
Video2Louis: So we were waiting for our nachos to come, and then he starts talking about capital gains. I know! I just had to fake a family emergency and just get myself out of there. I've never invested anything in my life. I'm embarrassed. How am I meant to know this stuff?
Liana: It's actually okay not to know this stuff. It takes time and a few lessons from people who have gone through it already. Liana, you are just the person I needed in this very moment.
Louis: Sorry. I found an expert.
Louis Voiceover: ANZ presents: How To Start Investing For Beginners. It's okay. I didn't know either.
Louis: Okay. So I had this really awkward date last night with this regular Wolf of Wall Street†kind of guy. And it just made me realise I know nothing about investing. Can you please help me upskill in a few things?
Liana: Yeah, absolutely. So what kind of investments are we talking about here?
Louis: Uh, yeah, that's kind of the most pressing question. I don't even really know where to start. I don't think I've invested in anything except myself.
Liana: Well, technically that's not true, most Australians are investing in a superannuation fund as soon as they start working without even knowing it.
Louis: So I'm an investor. Well, when should I start investing in other things?
Liana: Blazer looks fabulous.
Louis: Thank you. I'm an investor.
Liana: Well, if you have a bit of extra income or a goal you really want to work towards, then I would say the sooner the better.
Louis: Liana. This is really good stuff. Actually, I should write this down, I'm really feeling this CEO energy. What are my options?
Liana: You can invest directly in things like property, shares, cash or bonds. All of these involve investing in assets either on your own or via a broker or investment platform. Each comes with different risk levels, fees and charges. So it's really good to do some research or maybe even talk to a banker or an independent advisor about it. On the other hand, you could look at indirectly investing through a managed fund or an ETF, and that's where your money is pooled together with other investors and investment decisions are sort of taken out of your hands and managed by somebody else. It's a great way to get exposed to different markets and invest in asset classes you might not have direct access to on your own.
Louis: How much do I need to get started though?
Liana: It really depends on the investment type. So if you'd like to invest in shares, you could start with as little as $500. If you'd like to invest in managed funds and have someone else make those decisions for you, you might need a little bit more just to factor in brokerage and fees and getting someone else to set it up for you.
Louis: Wait before you go, capital gains. What's going on?
Liana: So capital gains - put simply - if you invest a dollar today and in 12 months time it's worth $2, the capital gain is $1.
Louis: Slay.
Liana: Where it can get a little bit more complicated is when we start talking about capital gains tax. I know, I know. It's frightening. So if you sell your investment within a year of buying it, any capital gains you made are taxed in full as normal income. But if you wait and your investment has been invested longer than a year when you sell it, you only get taxed half of your capital gains. So it's an incentive to hold onto your investments for longer than a year.
Louis: Okay, I think I'm ready for my second date now.
Liana: I'll leave you with this. The most important thing is to set clear goals so then you can make decisions that will help you get there. Short term, that could be a holiday backpacking around Europe. Long term, it could be a house deposit. If you know what you want to achieve, it's easy to cut back on spending now, so you reach your goals later.
Louis: So it's all about knowing what I want?
Liana: Absolutely.
Louis: Actually, ironically, that's kind of good dating advice as well. If you found this video helpful, subscribe to our channel and watch me as I upskill in a whole lot of other financial wellbeing topics. Also click the links in the description for some more handy resources. Yeah. Gavin, I think I'm ready for our second date and I really want to talk about capital gains. I love you.
Liana: It's... second date.
Louis: I think...I think there's just bad reception on his end. He'll call back.
Liana: Yeah. Yeah! He will totally. How could he not?
Louis: Okay.How to start investing for beginners4:074. Bonds
A bond is a long-term investment where you basically lend money to a government, corporation, or insurance company. Government and corporate bonds can help you earn passive income as interest is paid to you every six months. Meanwhile, some insurance bonds accumulate earnings that are paid to you at the end of the holding period, which is the amount of time you own the bond, which is usually ten years or more.
Because bonds tend to provide regular interest payments and a return when the bond matures (reaches its end date), they’re considered a lower-risk and safer investment option – even though their value can be influenced by changes in interest rates.
To make the most of your bond investment, hold onto your bond until it reaches maturity – essentially the end date of the bond's lifecycle. This date will be locked in when you purchase the bond. Selling at maturity means you can get back the money you initially lent out. But if you sell before maturity, you’ll get back the market value, which might be lower than the initial amount you paid.
If you invest in insurance bonds these can offer a tax efficient way of investing if structured properly and if held for the minimum amount of time (typically this is about 10 years). These instruments can be complex so we would recommend that you discuss any potential investment with a registered tax agent and ensure that you are familiar with the terms and conditions of the instrument.
5. Exchange Traded Funds (ETFs)
Exchange Traded Funds (ETFs) are a lower-cost way you may be able to earn a small profit from a portfolio of investments in a specific market or commodity (everyday goods, like energy or metal). Superscript: 3
ETFs can help you diversify your investment portfolio and spread out the risk of investing. Having said that, there is some risk when it comes to investing in ETFs. For example, if the market or sector your ETF is part of drops in value, your investment will also drop.
No matter what you decide to invest in, it’s always a good idea to chat with an expert about your options.
-
Louis: Australians born in 1995 should currently have this much in superannuation to retire comfortably. Oh, wait. Oh my god, that's me. How do I even check how much super I have? Also, what is it all about?
Louis Voiceover: ANZ presents: Superannuation explained. It's okay. I didn't know either.
Louis: Liana! The way that I was mid spiral and you just appeared out of nowhere.
Liana: It's magic.
Louis: It's your special talent, isn't it? Okay. Actually, while you're here can you please help me upskill in superannuation? First question. What's the deal?
Liana: Well, superannuation is how you ensure a comfy lifestyle in retirement.
Louis: Comfy? I see what you did there. Your mind is powerful.
Liana: So super is where your employer pays a minimum of ten and a half per cent into an investment fund throughout your working life. And it's the law. If you're a freelancer or self-employed, you may need to pop that money in yourself. And that amount is actually going to go up to 12% by 2025.
Louis: Backtrack a bit. All I heard was the fact that I'm an investor. Am I investing?
Liana: Yeah. Yeah. So you're investing in your own retirement.
Louis: But how do I make sure that I've got enough super for, you know, the lavish lifestyle that I so desperately deserve?
Liana: Such a good question Louis. You're definitely not alone in wondering that. So there are four Cs that I hope can help you out. Connect.
Louis: Connect.
Liana: Consolidate.
Louis: Consolidate.
Liana: Contribute.
Louis: Contribute.
Liana: And consider.
Louis: Consider. Okay.
Liana: So the first: connect with your super fund by jumping online, logging into your fund, even calling them directly and finding out how your super is performing, what your balance is, how it's invested. You've got to know what you're working with if you want to grow it. Number two do you remember number two? Consolidate?
Louis: Yes. I was just going to say consolidate. I was like consuhhh- And you took the words right out of my mouth. Yeah.
Liana: So if you've changed jobs a couple of times, you might have two or three super funds floating about. Consolidating them could make them grow more over time because you could be saving in fees. It's really easy to do via the ATO and they'll send you a list of any linked accounts that you have.
Louis: So like less fees so that retired me can you know, enjoy a couple of cocktails on a cruise from time to time got it! Old me will still have it.
Liana: Yes. What's your cocktail of choice?
Louis: Margarita.
Liana: Oh, same!
Louis: I knew we were one! The synchronicity.
Liana: So number three, contribute extra. The more you put in early, the more it will grow and the more you will have at retirement to provide you with that lifestyle. So if you have extra cash you don't need, you could put more into a super fund instead of a savings account. Remember, cocktails.
Louis: Cocktails on the beach? Yeah.
Liana: So you can earn more interest. Your funds will grow more over time if you put more into the fund. Plus, those extra contributions could be tax deductible to you. Just make sure you do your research.
Louis: And the fourth C?
Liana: Consider your options. Ultimately, this is your investment, so it's important to know where it's going. There are lots of different super funds out there with different fees, different investment options, different insurance, different ethics. There are a lot of different factors to consider when picking a super fund, so make sure you do your research and pick what's right for you.
Louis: This has been so helpful and I'm not spiralling anymore but where can one go if they don't have ANZ expert Liana Cauchi sitting beside them on a reclining couch, you know.
Liana: Well I'd jump back to the first C. Do you remember what that was?
Louis: Back to the beginning. Yeah, so, Next question?
Liana: So connect
Louis: Connect. Connect!
Liana: So jump online, log into your super fund, even call them and just ask them a few questions over the phone. You could also go to ANZ.com/superlearning to access some great content to help you on this journey and make the most of your super at any age. It's really straightforward once you get started.
Louis: Some might say super straightforward. If you found this video helpful, go on. Subscribe to our channel. I need you. I'm lonely. And watch me as I upskill in a whole lot of other financial wellbeing topics. Oh, and don't forget to check the links in the description for some more handy resources. Shall we get comfy?
Liana: Sure. Okay.
Louis: Oh my god, this goes all the way back. Oh, I'm floating on a cloud. Oh, I'm floating on a cloud! Sleep in 3, 2, 1.
Liana: Glad I was that interesting.
-
Louis: So we were waiting for our nachos to come, and then he starts talking about capital gains. I know! I just had to fake a family emergency and just get myself out of there. I've never invested anything in my life. I'm embarrassed. How am I meant to know this stuff?
Liana: It's actually okay not to know this stuff. It takes time and a few lessons from people who have gone through it already. Liana, you are just the person I needed in this very moment.
Louis: Sorry. I found an expert.
Louis Voiceover: ANZ presents: How To Start Investing For Beginners. It's okay. I didn't know either.
Louis: Okay. So I had this really awkward date last night with this regular Wolf of Wall Street†kind of guy. And it just made me realise I know nothing about investing. Can you please help me upskill in a few things?
Liana: Yeah, absolutely. So what kind of investments are we talking about here?
Louis: Uh, yeah, that's kind of the most pressing question. I don't even really know where to start. I don't think I've invested in anything except myself.
Liana: Well, technically that's not true, most Australians are investing in a superannuation fund as soon as they start working without even knowing it.
Louis: So I'm an investor. Well, when should I start investing in other things?
Liana: Blazer looks fabulous.
Louis: Thank you. I'm an investor.
Liana: Well, if you have a bit of extra income or a goal you really want to work towards, then I would say the sooner the better.
Louis: Liana. This is really good stuff. Actually, I should write this down, I'm really feeling this CEO energy. What are my options?
Liana: You can invest directly in things like property, shares, cash or bonds. All of these involve investing in assets either on your own or via a broker or investment platform. Each comes with different risk levels, fees and charges. So it's really good to do some research or maybe even talk to a banker or an independent advisor about it. On the other hand, you could look at indirectly investing through a managed fund or an ETF, and that's where your money is pooled together with other investors and investment decisions are sort of taken out of your hands and managed by somebody else. It's a great way to get exposed to different markets and invest in asset classes you might not have direct access to on your own.
Louis: How much do I need to get started though?
Liana: It really depends on the investment type. So if you'd like to invest in shares, you could start with as little as $500. If you'd like to invest in managed funds and have someone else make those decisions for you, you might need a little bit more just to factor in brokerage and fees and getting someone else to set it up for you.
Louis: Wait before you go, capital gains. What's going on?
Liana: So capital gains - put simply - if you invest a dollar today and in 12 months time it's worth $2, the capital gain is $1.
Louis: Slay.
Liana: Where it can get a little bit more complicated is when we start talking about capital gains tax. I know, I know. It's frightening. So if you sell your investment within a year of buying it, any capital gains you made are taxed in full as normal income. But if you wait and your investment has been invested longer than a year when you sell it, you only get taxed half of your capital gains. So it's an incentive to hold onto your investments for longer than a year.
Louis: Okay, I think I'm ready for my second date now.
Liana: I'll leave you with this. The most important thing is to set clear goals so then you can make decisions that will help you get there. Short term, that could be a holiday backpacking around Europe. Long term, it could be a house deposit. If you know what you want to achieve, it's easy to cut back on spending now, so you reach your goals later.
Louis: So it's all about knowing what I want?
Liana: Absolutely.
Louis: Actually, ironically, that's kind of good dating advice as well. If you found this video helpful, subscribe to our channel and watch me as I upskill in a whole lot of other financial wellbeing topics. Also click the links in the description for some more handy resources. Yeah. Gavin, I think I'm ready for our second date and I really want to talk about capital gains. I love you.
Liana: It's... second date.
Louis: I think...I think there's just bad reception on his end. He'll call back.
Liana: Yeah. Yeah! He will totally. How could he not?
Louis: Okay.
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5 types of investments you need to know about
2024-09-04
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