By Caity Somers, Marketing, ASA
23 June 2022
Investing has become omnipresent – it’s nearly impossible to avoid finance news and advertising whether you’re walking through the CBD or scrolling social media.
Almost 300,000 Australian investors made their first trade in the 12 months between 2020 and late 2021, analysis by research firm Investment Trends and I was one of them.
At 25 years old, I had already invested in the start up of my own business, was unable to travel due to the pandemic and had no immediate desire to purchase a property. Having saved religiously since I first started earning money, there was money in an account earning little to no interest.
A huge anxiety of mine at the time was knowing that I should be doing something with the money in my savings account. I understood that, due to inflation, having the money just sitting there meant I was losing purchasing power in the long run. My main obstacle – I had NO idea where to start! I knew absolutely nothing about the stock market and felt extremely overwhelmed any time I tried to learn more. The language felt extremely foreign to me – what was an ETF? What was an investment broker? What is a dividend reinvestment plan?
For the longest time, rather than taking action, I procrastinated. It was terrifying and such a confidence kill to feel like such a novice or make the “wrong” decision. However, the recurring message from those around me who were invested was clear – JUST START.
Eventually, I plucked up the courage and determination to do exactly that. After enough conversations with friends who were invested, listening to some podcasts and watching YouTube tutorials I took my laptop to my favourite cafe. By the end of a large coffee I had opened my first trading account and deposited two thirds of my savings.
Within another week I had divided my money available to invest into three ETFs and opted into dividend reinvestment plans for each. This was absolutely nerve racking as the world of investing is still so new to me and, unlike my business, putting my savings into things I can’t control was a hard emotional obstacle to overcome.
While I remained quite anxious by the idea that my holdings would appear in the red on my dashboard, my confidence grew simply from knowing I’d taken action. What I didn’t know until I began reading and listening to investing education was that a lot of very wealthy people – wealth that I didn’t even think was possible for me – got there by investing a little bit every month over the course of a long time. When it dawned on me that I could use discipline and simplicity to build wealth in the future, my fears about investing subsided.
Before opening my business (a gym and online fitness coaching), I competed as an athlete in fitness sports. After finishing high school I was actually very out of shape and knew something needed changing. Over the course of six years I went through big changes that moved me from being unhealthy to competing in a stadium in front of a couple of thousand fans in the amature sport of CrossFit.
My fitness journey is strikingly similar to getting started investing, although I don’t have aspirations to become a top investor! What I do think transcends arenas is that simple habits, behaviours and consistency makes an enormous difference to achieving your desired outcome.
My plan is to take a passive approach with investing and allow the effects of compounding to grow my portfolio over the next 20, 30, 40, 50 years. Being in my mid-20s I know I had time on my side.
Since starting my portfolio, I’ve very slowly and consistently added to my investments. I’ve systemised and automated the entire process so that it doesn’t feel restrictive or overwhelming – each week I transfer savings into a designated account, then purchase ETFs each quarter (rather than monthly in order to spend less on transaction costs). While I’ve never been much of a reader, I’m obsessed with listening to podcasts and watching YouTube videos on investing daily. This has made a tremendous impact on my motivation to continue investing and learning – I find by consuming such small amounts of content consistently, I’m able to really digest, retain and apply the material.
As I look at what’s ahead for me, I’m no longer terrified by the prospect that I have so much more to learn. That same prospect brings me excitement now – while my goal originally was to “just get started”, I’m ready to really broaden my knowledge and surround myself with investors I can learn from. If there is one lesson from my experience that I endeavor to take with me into my future, it is this; action precedes motivation. Living in fear of “failing” and telling myself a story that I didn’t know enough to get started only had negative repercussions to my money, not the other way around!