Following Ray Ong’s previous interview on 98five he went back to the studio talk about Risk and Return and to answer some listener questions. In the interview, Ray’s philosophy of investing is based upon diversification. He encourages you not to put all of your eggs in one basket because it’s unlikely that all of your investments will do well all of the time.
Listen to the podcast on 98.5 here:
Read the Q&A below:
My husband and I would like to start investing but have no idea where to start or who to talk to. Do you recommend property or shares?
Property is not a good place to start investing. You need a lot of outlay which will tie up a lot of your funds in one area which restricts how diverse you can be. Shares are a good place to start because you can start with a small amount of money and achieve diversification at the same time.
What would be the minimum investment?
You can start investing with $1,000 or $2,000. It comes down to the power of compound interest and the power of things that you buy that generate a return. Think of the saying ‘from little things, big things grow’ and go from there. Don’t set out to make yourself rich by turning $10,000 into $100,000. It can happen but generally doesn’t so we need to look at what we can do and that is starting with small, regular investments.
How do you know where to start and which shares to invest in?
You want to start out by looking at putting your money in the overall share market rather than specific businesses. What the overall share market means is that by putting your money across the top 200 businesses in Australia you’re diversifying your investment and buying shares in the Australian Market as opposed to specific businesses.
We are looking at buying shares, do you advise buying into Blue Chip or going with managed packages and portfolios through a broker?
This answer comes down to how much money you plan on investing now and in the future. If the amount is quote small it limits your options, if you have more month to invest that’s when a managed package works better.
If you’re investing in Blue Chips you’re buying a slice of specific businesses and you’re exposed to the risk of that business. You need a lot of time to research then you need to keep researching to stay on top of those businesses and if you have 10 businesses it’s a lot of time.
I’m 55 and have $25,000 in super. I have no income but am married, should I start building my super or look at buying shares?
The advantage of super is that you have options to invest with the super company, you can also choose where the money goes. If you’re looking at investing outside of your super company you need to spend a lot of time researching and shopping around to be able to decide where you should put your money.
For more information on investing head to the government run Money Smart website for more information on how shares work.