My Investment Journey (Part 1)

Introduction

As a typical Virgo, I’m not much of a risk taker. However, a willingness to challenge myself & try new things over the past few months means that I’ve been able to step outside my comfort zone a little more.

One such step has been into investing. It’s not often that I’ll do risky things with my money, but I had quite a bit of money just ‘sitting there’ earning a paltry 3.5% interest in a basic bank account (with some of every dollar of interest earned snaffled up by the tax department). I wanted my money to work harder for me – as it should!

The Options

I spent some time looking into term deposits and came across some interesting offers from places like ING Direct (6% pa over 2 years on $10,000 which, I think would gain me around $1050 in interest after tax – don’t quote me on that though!) or Rabo (6.60% pa over 5 years on $1,000 which, I think would gain me around $300 in interest after tax – don’t quote me on that though!) – but I didn’t want to invest $10K and I wanted something with better returns. Of course, with that comes a higher risk.

So I began looking at the world of investing. My friends Iain & Joel had had some success in investing funds within the stock market in recent years, but I’m short of time and didn’t to want to spend every spare second of the day watching the stock market and constantly making adjustments. So what now?

Well, the idea actually came from Edz, a close friend of my partner (Dale) & I – who also happens to be a high-level accountant. Some months ago, Dale also wanted his money to work harder for him – so in chatting with aforementioned friend, suggested investing in an “Imputation Fund” (read news article here). Dale’s had one for a few months now and, since the market is growing at the moment, it’s value has already increased by around 25%.

In doing some research on this particular fund, I found some appealing benefits…

• The minimum “buy-in” is a fairly low $5K.
• If you make money, you can choose to automatically skim the excess (over the initial $5K) into your own external bank account, or reinvest it back into the same fund.
• You can pull everything out (at its current value, of course – so if you’ve lost money, you’ll be pulling out less than you put in initially) at anytime, should you need to.
• The minimum monthly “top-up” (extra money that you pump into your investment to keep it growing) is only $50.
• You can view your investment’s progress online.

So why am I telling you this?

To be honest with you, I wasn’t going to initially. But I’ve been helped so much by others out there on the Internet over the past few months, that I feel like I want to give something back to share my experiences with you so that you can make your own informed decision (refer to ‘Some things to think about…’, below) when it comes to making your money work harder for you.

I may fail completely & loose everything, I may earn a bottlecap for my thoughts (gamers will get that reference) or I may break even. Either way, I still want to document this journey & share my experiences with you. Hopefully I’ll be able to keep you posted on the progress of the investment and keep a running tally of how things are going.

Some things to think about…

As always, with anything financial, it’s very important to…

• Ask your financial adviser for their opinion.
• Evaluate your upcoming finances and spending requirements to ensure you don’t get caught out.
• Ensure that you don’t watch it like a hawk and get caught up in the day to day happenings. Investments will always fluctuate (up and down) on a month-to-month basis, but will virtually always go up over the longer term (eg: 3 – 7 years; this depends on the market of course). Check out this completely random and unrelated chart to see what I mean – notice the dips and peaks over the short-term but the overall increase in the long-term. This is what I am referring to.
• Realise that I’m not a financial adviser. I’m only telling you this because I want to share my experiences with you.
• Be prepared to loose it all. It may never happen, but you must realise that it could - you never know. That’s the thing about investing – the returns can be great, but it’s risky. I guess that’s why the “$5K buy-in” for my particular imputation fund was so appealing – it’s not a massive amount of money.

Where to now?

The next step (which I’ll cover in Part 2 – coming in a week or so) involves setting up my investment, completing the relevant documentation and depositing the initial $5K into the fund – so stay tuned for that in due course! While I usually use this one-liner to end my health & fitness posts, I figure that can apply it here too “…until next time, happy gains”