Last year, you probably saw your distant-friend from high school post about their ‘gains’ from investing.
“You haven’t made squillions from Dogecoin, Gamestop and Afterpay?”
While this may cause a mild stabbing-sensation in your heart, it also provides us with an opportunity to educate ourselves on different investment classes before throwing cash at a speculative cryptocurrency (and expecting to ride it to the moon 🌙).
We’re going to run through a few different types of investments to get started and show you the platforms you can use so you can shove it up your high school friend.
What actually is a share and where do I get them?
When you invest in a share on the sharemarket, you are actually purchasing a tiny sliver of ownership in a public company. Yep, a cool $150 and you could become a part-owner of Apple! That’s going straight on the resume.
But remember, the stock market is fickle - and there is no guarantee that the company you invest in will rise. So only invest an amount of money which you could afford to lose. And do your own research (preferably away from TikTok).
Okay, so now that you know the company you want to invest in - you’ll need to find a platform to purchase the shares from.
Although not quite as sexy as investing in shares, depositing money in a savings account is still considered an investment. And that’s because you earn interest on the cash you’ve deposited.
Yes yes, I hear you. The interest rate on a savings account is ultra-low right now (darn you RBA!). But at least it’s actually guaranteed by the government (up to $250k).
That means you can sleep well knowing that your hard-earned cash is in a safe spot. And while you might not make a lot of money, you certainly won’t lose your money (inflation excluded).
ETFs (exchange-traded funds) are another popular way to invest in the sharemarket.
They’re traded on the stock market in the same way as individual shares, but rather than investing in one share, an ETF invests in a collection of shares.
Let’s look at this like pokemon cards.
Individual shares are like having lots of fire pokemon type cards. Whereas with ETFs, you’ve got a range of flying, poison, rock, fire and electric pokemons to diversify your skills.
Why do people invest in ETFs you may ask?
Because ETFs are generally less volatile than individual shares - you get a bit of this and a bit of that to spread the risk. So if you come up against another pokemon player, you’ve got a mixed bag of pokemons to help you win.
Last, but certainly not least, we have cryptocurrency - which represents a range of digital currencies in the market.
You’ve most likely heard of the big dawgs of crypto - like Bitcoin and Etherum. But did you know there are more than 6,700 different cryptocurrencies trading publicly on crypto platforms?!
Over the last 12 months, we’ve seen cryptocurrencies become more mainstream - with Tesla, Paypal and Square recognising cryptocurrencies in some form.
So hopefully you’ll be armed with a little bit more knowledge now to take on the investment markets with confidence.
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