100 timeless tips for young investors: Firstlinks survey
From the hundreds of survey responses, we will select them in blocks of 100 over several weeks to help manage your time. There are consistent themes in here from decades of mistakes and successes.
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.
- never invest in something you don't really understand. Get rich slowly
- invest in companies that make money or have a unique product people really want/need which will one day give them a massive advantage
- reinvest returns / dividends
- 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
- take a total portfolio approach
- 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
- look for good yields
- 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
- 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
- be patient, focus on the long term
- invest in ‘growth’ while you have time on your side to recover from the bumps along the way
- start as early as possible to benefit from the effects of compounding
- look for long-term trends
- maximise tax deductible super contributions, but no more
- invest 10% of your income into investments outside super, as a hedge against higher taxes or rule changes
- seek out, learn and listen to those with investment knowledge - not your mates over a beer or the chat forums
- read widely
- don't fret about buying a house until you have kids
- buy quality shares/property and hold for the long term but make sure to keep reviewing their strength
- invest in a diversified portfolio
- read the Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay and apply it to current times
- keep investment costs low
- invest regularly (and automatically, if possible, no matter what the outlook is or what markets are doing)
- salary sacrifice a small extra % of your salary from day one
- keep it simple
- understand the cycles and where we are in the cycle
- if you do not have the right knowledge, seek out the services of a professional
- if it sounds too good to be true, steer clear
- only invest what you can afford to lose in speculative stocks and cryptocurrencies
- wealth held on pieces of paper can blow away
- buy LICs and ETFs forget the rest and enjoy life
- accept the peaks and troughs
- read as much as you can about investing before you invest
- diversify your investments
- time in the market is way more important than timing the market
- stick to quality and worry less about growth
- know when to hold them, know when to fold them, know when to walk away and know when to run
- keep some cash in reserve and buy when everybody else is selling
- panic selling is your buying opportunity
- stay fit and healthy enough to enjoy it along the way and at the end
- invest in a diversified portfolio of quality stocks over the long-term
- don’t get sucked into the fear of missing out
- stick with a disciplined and diversified approach
- 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
- use logic and common sense
- invest in equities, but with diversification of managers, indices, and geography
- there are many possibilities, few probabilities and no certainties when looking into the future
- research the advisor to determine if they are worthy of your trust before and during your engagement with them
- buy some ETFs or maybe bank shares to keep forever if spare money becomes available at any time
- make an investment plan and be prepared to update that plan as you mature and increase your knowledge
- be patient and hold investments for long periods unless they don't pass your investment plan
- buy good quality shares and hang on to them
- invest in a diversified index fund
- wise, long-term investment into companies that are committed to ethical and sustainable investment
- be invested, be diversified, be patient but make decisions if they need to be made
- unless your investment portfolio is weighted towards dying industries you have time on your side
- OWN, not rent your home. Put up with commuting, if need be, you can move up later as your career growth moves upwards
- live within your means and use debt sparingly
- small investment steps are important because the power of growth is exponential
- utilise professionally managed active funds and diversify
- mostly buy income earning real estate and shares in boring stocks with reliable earnings
- ignore the daily market noise
- don't get sucked-in to fads and fashions
- once-in-a-lifetime investment opportunities come every 7 to 10 years
- 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
- focus on the things that matter and the things that you can control
- invest passively to reduce cost
- tax consequences pervade every decision - but don't let the tax tail wag the investment dog
- set goals and accept that you will have to make trade-offs
- no asset is guaranteed to increase let alone hold value
- just start, add a regular amount to a broadly diversified all equity fund - at 60 it will be way beyond your imagination
- buy well managed companies with franking credits
- selectively diversify across asset classes and HOLD
- 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.
- 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
- buy active value funds
- leave superannuation to a quality industry fund split 50/50 in growth and balanced.
- take advantage of superannuation tax breaks within reason e.g., salary sacrificing
- avoid SMSFs unless you really really want or need to tailor your investments to very specific requirements e.g., own your business premises
- rather than try to time the market, stay in for the long haul
- use ETFs etc, preferably simple indexed ones, unless you have a very strong desire to become an equities researcher
- use 'high growth' while young, moving to 'balanced' in later years
- buy ETFs and keep building them with available cash and hold, hold, hold
- invest 10% of every pay for the long term and don’t be tempted to dip into it for any reason/fad/hot idea
- don't borrow money to invest, other than for your own home
- don't invest money that you will need in the next three years
- learn the difference between investing and speculating, and the difference between an investment and an indulgence
- look at management expense ratios on managed funds. Put most investments in diversified index funds. Save for a house first
- expect the highs and lows despite the effort of due diligence
- 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
- you will make mistakes, but learn from them and keep losses minimal
- be cautious until you have some understanding and experience in the investment area you have chosen
- do the Buffet numbers as there is true value still to be found high yield with a low PE
- buy on any dips and hold for the long term. Don't rush in because everyone else is
- invest in companies you know will be around in 10 years
- study investment strategies as soon as you can
- 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.
- start now and continue to make regular contributions to a reputable fund
- buy stocks in companies whose products you, your friends, and your employer use frequently and diversify over several industry sectors
- buy value stocks as the base of your portfolio and diversify into growth/thematic stocks