To Save or Invest? What are some good Options for someone that is not financially literate?

Question

I have just moved into my parents house that they are going to eventually retire in (I have about 5-10 years to stay there), they are nice enough to not be charging me rent as I earn a mediocore income and they are trying to give me an oppurtunity to get ahead financially.. At the moment I can save $200 a week sometimes even $300 on a good week (which is only every now and again at the moment).. I am 24 and single, from australia and trying to figure out what would be my best options on what to do with this $200 a week.. I am not financially Literate at all and have no-idea about stock's or shares..and don't belive that I could afford an accountant with only $200 a week investment.. Should I just save this money in an 5% interest account or is there other ways to invest and gain the most out of what I have? any input or suggestions would be muchly appreciated,.. I know it's a small amount to be talking investments with but I'd rather start small than not at all..
Thanks again :)

Answer 1

I suggest speaking with a financial adiviser. These services are not quite as expensive as you would think and are often available at discounted rates through unions, clubs, your employer, or your superannuation provider.

A financial adviser will have a chat with you and establish your financial goals, the sorts of risks you are willing to take, and take down some personal details regarding your current financial situation.

$200 a week for the next 5-10 years is actually a substantial amount of money (about $52,000 over 5 years excluding earnings) for a 24 year old which many financial advisers would see as a solid foundation for securing your financial future and helping achieve your financial goals.

Depending on your "exact" financial situation, there are different investments which would be considered by a financial planner.

While a 5% p.a. earning rate on your savings acount may be substantial over the next 5-10 years, the options avalable are endless and can only be established by a full analysis of your financial situation. A financial planner would not only look at the best investment vehicles for you in terms of earnings, they would also consider the tax implications of each investment vehicle. For example, it may beneficial for you to put a portion of your investment into your superannaution fund to take advantage of the generous tax concessions available through that vehicle.

Your financial goals also would need to be considered. Do you intend to purchase a house at the end of the 5-10 years?Or are you looking for an investment which would provide income to supplement your current income? Are you looking for an investment that would maximise the value of your money, or are you looking for an investment which would have positive tax implications (Thus giving you a pleasant tax refund at the end of each year)?

Your attitude toward risk would also impact the investment vehicle that would suit you. Are you willing to put all your eggs in one basket and risk them all breaking? (and being left with nothing). A direct investment in shares can be risky; a financial planner may recommend that you invest in shares through a managed fund, allowing you to invest in shares, but letting the decisions regarding exactly which shares to be made by a professional, thus reducing the degree of risk slightly. On the other end of the scale, a term deposit (which would give aconstant rate of interest over a specified period of time) may be your preferred option.

I think that sound financial advice is the key for you and I really hope that you go and see a financial planner. It would be dangerous for you to take any advice from anyone other than a financial planner, particularly from the internet.

There are plenty of valuable investment oportunities available to someone of your age and they should all be considered by a professional

Cheers

Answer 2

You have the right idea. It would be best for you to divide your funds in two parts. Part 1: major investment - Part 2: minor investment (emergency fund). Suggest $150 part one, $50 part two.

Part 2: Use for anything that keeps you moving forward, if you have additional funds add it to part 2. Part 1: Should be real estate, I do not know if you live in the USA. If you don't I am sure that what I am suggesting is much the same in your country.

Find a piece of property that serves a purpose, and can be acquired inexpensively. as an example; a friend of mine bought a large empty lot next to a restaurant. For two summers he sold fruits on the stand he erected on the property. In the Christmas season he leased the ground to a guy to sell Christmas trees. After two years of ownership the restaurant owner signed an agreement to lease half the lot for parking, he leased the back half.

During the time that my friend owned the land, he was paid the full cost of the land from rent. Taxes were minor expenses. Finding a small house and renting it out, even if it takes a lot of
fixing up is the first, best investment a person can make. Always make the improvements as if you are going to live at the property for the rest of your life.

The reason this plans usually work well is because we don't expect to have to depend on this investment. We often have too, and it is just the thing to save our lives.

Answer 3

Your 1st responder has some excellent suggestions. I am not too familiar with your investment options in Australia, but I sure would like to come there to look for birds.

I am going to assume that you have mutual funds (investment trusts) available to you. I am almost certain that you must. They offer the best investment vehicle for a person that is not too knowlegable about investments. BUT!!! There are good mutual funds and not so good mutual funds. That is the difficult part. Finding the good ones. I am not certain what resources are available to you. You might have to go to the local book store and inquire as to books on the subject.

As for living in you parents home, I think you should offer them $200 a month for your keep. It is only fair, and they will then know that they have an offspring to be exceptionally proud of.

Answer 4

the main's country is a superpower and India is a colony human beings. in spite of if Indians are the neatest and human beings the dumbest would not exchange something. So i don't be attentive to what issues are taken under consideration whilst such surveys are carried out. If Indians are greater financially literate than human beings then why is India a financial disaster?

Answer 5

Generally most of the Big4 banks actually have financial adviser services for their customers, all it takes is to walk into a branch and ask at the service counter as to whether or not you can book an appointment with one. I believe these services are provided free of charge to customers.

Ultimately, if you decide to go with investments, Colonial First State have a managed fund investment product that can be entered into for a minimum initial investment of $1,000.00 and regular investments of $100.00 a month, well within your budget.

Check out www.colonialfirststate.com.au for the details and product disclosure statement.

Answer 6

i think there are alot of apportunities but i suggest that you ask twice if you're aiming for one idea...
i think you have tow ways even to invest the whole amount at one time .. the realestate market is growing around the world .. i don't know about australia but here if you buy aland now you'll sell it double the price next year .. the other solution if you don't want to resk every thing i suggest to deposit hal in 5% interest account and use the other accomulated for like 6 months to start a small trading business.. something inevtive and rapidly profitable.

Answer 7

I suggest you to open a brokerage account at TD Ameritrade.

I also suggest you to save more or you won't have enough to buy a house in 5 years.