The other day my mate received a very decent redundancy payout from her workplace thanks to COVID-19. After realising that this was the largest number she had ever seen sitting in her very own bank account, she turned to me and asked me what the hell she should do with all of it. Should she treat herself to a whole new wardrobe? Should she stash it all away in a high interest savings account in case of emergency? Or should she invest it in something else? The share market perhaps?
The share market is a pretty bloody daunting place, but it’s not actually as intimidating and hard to access as most millennials believe it to be. It can be pretty exciting seeing your money increase whilst you do absolutely nothing, but it can also be pretty shit when you see the value of your money dropping. There’s a lot of factors to consider before investing your money in the share market, but if anyone ever asks me whether or not they should go for it, I always suggest considering these three things first:
1. Got emergency savings?
DO NOT INVEST ANY MONEY THAT YOU MIGHT NEED IN THE FORESEEABLE FUTURE.
DO NOT invest any money that you might need any time soon. This means money that you might need to pay your rent, to pay your bills or to help you survive if a world wide pandemic causes you to be made redundant. Everyone has a different number that they feel comfortable falling back on in an emergency, but the most common amount that I’ve heard is having at least three months of your wages stashed away in a savings account for any rainy days. Personally, I like to have roughly six months of savings stashed away before I consider investing any additional money. Make sure you have your comfortable amount stored safely away in savings before you even consider investing any other money.
2. Got debt?
I’ve said it before and I’ll say it again, debt is the absolute worst thing for your savings (excluding HECS debt because some shit is just out of our control). If you’ve got credit card debt, After Pay debt or any other type of debt that is draining your wallet, work your ass off to pay this off before you consider investing your money. You’re going to be in a much more secure financial position when you pay off all of your debt and financial security is paramount when beginning to invest.
3. Got time?
What’s the ONE thing that all twenty-somethings have in common?
Sorry boomers, but us twenty-somethings are in the best position when it comes to investing our money because we have stacks of time to watch our money grow and grow. That cash doesn’t grow when it sits under your mattress. That money doesn’t grow when you spend it all on new clothes. Sure, that money does grow when it sits in a high-interest savings account, albeit rather slowly with an interest rate of around 2%. If you’ve got heaps of time, then investing your money in the share market is a good way to see the value of your money increase (or decrease if you’re making riskier moves).
The thing about shares is that they can take a long ass time to see results. So if you want to use this money to go on a holiday whenever the airports finally re-open, or you want to use that money to buy a house next month, shares are not the investment option for you.
Unfortunately, if you’re still wondering whether or not you should invest your money, that is something that I can’t decide for you. I’m all about investing when I’m young so that I can retire as soon as bloody possible (have I mentioned I am NOT a fan of 40 hour work weeks yet), but you’ve gotta figure out if investing is best for you depending on all those things I mentioned above.
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The Stingy Bitch
Based in Sydney, Australia.
Created in 2020.
This site and all of it’s contents are provided for entertainment purposes only and do not constitute personal financial advice. All products that are mentioned are general product advice only, not personal product advice. Not all options are presented and my opinions are subject to change. All content and posts have been prepared as a general summary only and is not intended to be financial advice with respect to any particular matter. This post should not be relied on with respect to any particular matter. If you have questions about any aspect of the content or this site or otherwise require personal financial advice, you ought to seek financial advice. The author disclaims liability to any person who relies on this post.
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