I’ve come to believe the hardest thing about share investing is the decision on whether you should be investing in the first place. It is important to consider the myriad alternative uses for your money, writes Jess Irvine | OPINION money
A year ago, I made my first foray into sharemarket investing, along with a million or so other younger Aussies who also dipped a toe in the water for the first time during the pandemic.
After a year of investing, I’ve come to believe the hardest thing about share investing is not so much the act itself – picking a broker, signing up and placing an order for shares; once you get the hang of it, fairly straightforward. The real decision is whether you should be investing in the first place.
Do you need your money to be at your disposal in the short to mid-term to fund any other goals, such as a deposit on a first home, buying a new car, funding a wedding or doing major home renovations?Are you making the most of the tax concessions available on contributions to your superannuation, provided you don’t mind not seeing that money again until you’re in your sixties?
I am also regularly maxing out my allowable tax-concessional contributions to super, and I already have saved and put down a deposit to buy my home. My international investments are sitting more firmly in the red, amid rising inflation and the rotation out of ‘growth’ stocks such as technology, which the Aussie market is less concentrated in.
Amid all the heightened volatility, the past couple of months have felt like something of a ‘blooding’. I’ve watched the paper value of my investments fall, and I’ve held the line, continuing to follow my strategy and invest my surpluses.I know that, over the long term, shares have historically delivered an ‘equity premium’ to compensate investors for the riskier deployment of their savings. It’s common to quote the long-term annual return on shares, including dividends, at about 8 per cent.
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