Since I discovered Financial Independence blogs, I have begun to seriously consider and research how I can put our money to work for our future. All I wanted to do is get to the point where I could start investing. We finally have an emergency fund, along with three months of living expenses fully funded, so it’s time. However, late in 2016, I read a post by Kayla Sloan detailing ways you can start investing with a small amount of money, and that gave me pause. Am I already an investor?
Having recorded where our money goes since January 2016, then performed an end-of-year analysis, I realised we were already participating in some of Kayla’s suggestions. So why wasn’t I thinking of us as investors? Why was I approaching this from the beginning?
We have a managed investment fund. I bought into it about 15 years ago on a special from Money Magazine, which reduced the price of entry to something very affordable. We’ve contributed $100 a month ever since. Has it performed well? No idea. What are the fees? No idea. How can we access the money? No idea. (I know this seems ridiculous, but it’s true!)
Why doesn’t this make me an investor? At the time, I didn’t know whether what I was getting into suited our needs. I haven’t touched it in all these years, beyond giving the statements to our accountant for tax purposes. It is too easy – set and forget. I certainly didn’t perform any technical or fundamental analysis before investing. I read a magazine that I trusted and I followed their advice. Looking back now, there was definitely an affiliate marketing opportunity for them. I just hope that there weren’t any trailing commissions as well!
I have shares in IAG (previously NRMA). When they floated, as a member, I was given them free. Over the years there have been opportunities to purchase extra parcels of shares, and if I’ve had the minimum amount, I’ve usually invested. Have those top-ups been good value? No idea. Is the share price likely to rise? No idea. How can I access the money? No idea.
Why doesn’t this make me an investor? Because I was given them for free, and I get invitations to top up – I don’t have to do anything except fill in a form and send some money. My decisions on whether to buy more shares have been based purely on whether I had the minimum amount required – and I always only invested the minimum amount, because I didn’t know if I were getting value or wasting my money.
From a consumer’s point of view, I’ve been fond of the company. This means I am investing with emotion rather than thoughtful analysis. Real investors stay as far away from emotion as they can while playing in the share market. One note in my favour – I’ve always avoided the unsolicited offers to buy these shares, that have appeared in our letterbox over the years. The companies would legitimately have purchased my shares and paid me (and made it very easy for me to sell), but they make a killing on the price they were offering to liquidate at.
Superannuation Retirement Fund
I have Superannuation. I am in an age bracket where I have basically had an account of some kind since I started working as a casual in Fosseys (“I found it at Fosseys!“). A few years ago, I tuned into some media talking about how the pension won’t be enough to live on, so Mr. ETT and I began contributing extra. Am I getting the best returns? No idea. What are the fees? No idea. What is my asset allocation? No idea.
Why doesn’t this make me an investor? Because the Government just makes it happen, the extra comes out of my pay before I miss it, and again – set and forget. I know that I can’t begin to access it until we are at least 60 (and I expect this to increase significantly before we get there). I do spend a couple of hours each year reviewing how much extra we contribute to Superannuation using the Retirement Planner calculator at ASIC’s excellent MoneySmart website.
High Interest Savings Account
Mr. ETT and saved for our Emergency Fund in a high interest savings account. Granted, “high” interest is a misnomer, it’s about 3%. Perhaps they should be called “comparatively high interest” accounts, because it still beats the <1% from our everyday account.
Why doesn’t this make me an investor? It’s a bank account. Every single person basically has to have one.
Finally, one of Kayla’s solutions was to use Acorns, a robo-investing firm that allows you to begin investing with only $5. I started investing using Acorns in February 2016 with $200 and regular deposits of $25 a week.
Why doesn’t this make me an investor? The amounts are too small, and they come from my personal spending money, which I really view as play money. I feel as though you can’t be an investor with play money, although by the time I signed up with Acorns, I was beginning to understand more about investing. I at least thought about my timeframe and risk tolerance, as well as the fees.
So Am I An Investor?
Looking at these as a whole, I can see that we are investing. So why don’t I consider myself an investor? Partly because I have an idea in my head that investors have a lot of money. Tens of thousands at least. But of course, they all had to start somewhere. What I think really stops me from seeing myself as an investor are all the “No ideas” above. Investment isn’t something (or shouldn’t be something) that happens by accident. It should be researched and considered. I’ve tried to educate myself since the beginning of this year, and I’m getting to the point where I feel confident to begin to invest. It’s pretty clear, however, that I have a chance to put some of my learning into practice with various vehicles already in place.
So, for me to consider myself as an investor, I need to have made a deliberate choice where I place our money, with a purpose, a goal and a timeframe, taking into account risk tolerance and capacity, fees and returns and diversification, and having a solid trigger for selling out.
Over the past few months, Mr. ETT and I have sat down together to learn about investing. It’s time to start putting into action all these learned skills required to be investors. Over the coming weeks I will detail the steps we took, and the resources we used to make that start.
Are you investing? Do you consider yourself to be an investor? Why or why not?