Tips for Investment Beginners | Trilogy Funds Australia

Where, what and how
for investment beginners

Everyone has to start their investing journey somewhere… And like most of us when we’re just starting out, if you have no prior knowledge of investing or the various investment options available, it can be difficult working out where your starting point should even be.

Investing can be an intimidating concept, after all you’re risking your hard-earned cash. A solid investment strategy can be crucial for anyone looking to build their wealth or ensure their savings can go the distance in retirement.

So, if you’re an investment beginner, it’s a good idea to begin with a few simple questions, such as the below, and consult a licensed financial adviser who can help you put these questions into practise to develop a financial plan and investment strategy fit for your circumstances, risk appetite and financial goals.

  • Why do you want to start investing?
  • What do you want to achieve?
  • What are your short-term, medium-term and long-term goals?
  • How much risk are you willing to tolerate?

With the answers to these questions, prospective investors and their financial adviser can start to understand more about their underlying desire for investing, to then work out what they want to achieve and when. By taking into account timeframes and tolerance for risk, it’s possible to choose the right investment options, which should allow them to reach their financial goals.

The importance of having financial goals

When it comes to making an investment decision – whether that’s investment in property, investment in the stock market, or any other type of investment – having goals helps to set the framework for your investment and can make the process of investing run smoothly. For example:

  • Having investing goals can provide direction. They can make it easier to make sacrifices when needed, as there is a clear, outlined goal in sight.
  • Investing goals can also provide motivation, delivering the purpose and energy needed to remain disciplined throughout the investment process.
  • Having written investing goals also creates accountability. This not only makes it easier to track progress, it can also help investors to stay on track towards each goal.
  • Lastly, having investing goals set out can provide a sense of accomplishment when those goals are reached. Reaching each goal can be celebrated, to then provide motivation to reach the next one.

Which investment option is right for you?

Outlining financial goals provides the starting point for a financial plan. Next on the list of things to consider is which investment options will make those financial goals a reality. There are four main types of investments: shares, property, cash and fixed interest investments, each of which can be classified as either a growth investment or defensive investment.

Growth investments

Growth investments are generally more suited to long-term investors who are content to withstand market ups and downs.

  • Shares are considered a growth investment, as investing in stocks and shares can help investors to grow their original investment over the medium to long term. While the value of shares may fall below the price paid for them originally, historically, the value of shares rise over time. As they provide dividends, shares can also offer ongoing income as well as long-term growth.
  • Property is also considered a growth investment, as the price of property typically rises over the medium to long term. When considering property investment for beginners, it should be noted that property prices can also fall, and there are numerous costs that come with owning a property, which may affect the overall opportunity for growth.

If you’re passionate about property investment but not sure if direct property ownership is the right option for you? Depending on your investment strategy, a viable alternative could be a mortgage trust, such as the Trilogy Monthly Income Trust.

Defensive investments

Defensive investments are generally considered lower risk than growth investments, as these investment types focus more on generating income rather than growth. These options tend to be more liquid, meaning they can be sold relatively quickly, when needed.

  • Cash investments are a defensive investment, and can include everyday bank accounts, high interest savings accounts, and investment options similar to Trilogy Enhanced Cash. While these options typically offer a lower potential return, they can deliver regular income and stability, playing an important role in an investment portfolio as a whole.
  • Fixed interest investments are another defensive investment, with options including government bonds and corporate bonds. When offering bonds, governments or companies borrow money from investors and pay them a rate of interest in return. These fixed interest options generally offer lower risk and a lower potential for return.

When it comes to investing, it goes without saying that starting out can be unnerving. Just the amount of information available on the topic can be overwhelming.

If you’re taking your first step as an investor or just thinking about changing up your investment strategy, we encourage you to consult your financial adviser. Still need convincing? Check out why financial planning is essential for your life plan.

This article has been prepared by Trilogy Funds Management Limited (Trilogy) ABN 59 080 383 679 AFSL 261425 as responsible entity for the managed investment schemes mentioned in this article. This advice is general advice only and does not consider your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances and we recommend that you seek personal financial product advice on your objectives, financial situation or needs and obtain and read the relevant product disclosure statement before making any investment decision.