Two best friends who have developed a financial network to help young Australians invest have revealed the most important things they’ve learned over the past 10 years.
Alec Renehan, 28, and Bryce Leske, 30, have spoken to more than 150 successful investors through their podcast and agree that the most valuable lesson has been the importance of getting to the market at a young age.
“We close every interview with the same question, ‘What advice would you give your younger self?’ and the most common answer to this question is “start investing earlier,” the Sydney partners told Daily Mail Australia.
‘No matter how good you are or how smart you are, nothing beats time in the market.
“Composite interest is often referred to as the ‘eighth wonder of the world,’ and the best way to see your compound money grow higher and higher is to start young and give it time to grow.”
Alec Renehan, 28, and Bryce Leske, 30, (both pictured) have spoken to more than 150 dudes from the investment world on their podcast, and while they learned “so much,” they agreed that the most valuable lesson is the importance of has been investing since childhood
The duo describes themselves as long-term investors who focus on “time spent in the market” rather than “time the market” – a strategy that involves less risk compared to short-term investing or day trading.
Both Alec and Bryce believe that investing should be much more than looking at stock charts, buying and selling stocks, and trying to make money in the short term.
Instead, they said investing should help people understand how different industries function and how the world reacts to different global situations.
In addition to Equity Mates Media, Alec and Bryce will also be releasing a book titled “Get Started Investing,” which will be available from Booktopia August 31 (right)
“Investing has helped us understand the world around us, and so much of the change we’re seeing in the world is being driven by companies like Amazon, Apple, Netflix and Facebook,” said Alec and Bryce.
“The most important thing to know as a novice investor is that if you had invested at the absolute worst times in history, you would still be up today.
“Even if you start with a small amount, a few dollars here and a few dollars there, you have the opportunity to make your money work for you.”
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While anyone can start investing at any age, it’s easiest when you’re young because you have fewer obligations and more time to spare.
To calculate the power of compounding, the couple recommended to visit the Australian government’s Money Smart compound interest calculator.
For example, if you were to retire with $1 million at age 70, you could start with 20 and invest $125 each month and earn the average market return of 8 percent per year.
But if you wait and start investing at 30, you would have to invest $300 per month to reach $1 million by 70.
If a person invests $100 per week in an investment that returns 7 percent per year for 40 years, they will accumulate a total of $1,137,419 in that time
The hot topic of Exchange Traded Funds (ETFs)
Alec and Bryce agreed that there is no hotter topic among young investors than Exchange Traded Funds (ETFs).
According to Money Smart, ETFs allow you to “buy a basket of stocks or assets all at once.”
Alec and Bryce said the most popular type of ETF is an index fund that allows investors to buy a mix of stocks — which is perfect for those unsure of choosing an individual company to invest in.
For example, the ASX 200 index fund allows you to own a little bit of Australia’s largest 200 companies, all in one ETF.
“As an investor, you make money when the general stock market does well, rather than just when an individual company does well,” they said.
Alec and Bryce agreed that there is no hotter topic among young investors than Exchange Traded Funds (ETFs). According to Money Smart, ETFs allow you to buy a “basket of stocks or assets in one trade”
What is the difference between an ETF and a stock?
Exchange Traded Funds (ETFs) are an inexpensive way to achieve a return comparable to an index or a commodity
ETFs allow you to buy a basket of stocks or assets in a single trade. This can help diversify within an asset class
In Australia, most ETFs are passive investments that don’t try to outperform the market
AN part is co-owned by a company
Shares are also known as stocks or shares. Shareholders are entitled to a dividend – a payment by a company to its shareholders
Unlike an ETF, a stock of one specific company
Source: smart money
Should you invest while in debt?
Before investing any personal money, it is wise to first consider paying off any personal debts.
Bryce and Alec said there is no “one-size-fits-all” answer, as it is a personal decision, but a general rule of thumb is to look at the interest rate of the debt compared to your expected return in the stock market. .
‘In the long term, the stock market will rise by an average of 7 to 8 percent per year. If the interest on your debt is higher than that (such as 19 percent credit card debt), it makes financial sense to pay off the debt first,” the couple said.
“But if the interest rate is lower than the expected return of the stock market (like a 2 percent mortgage), that money is better used in the stock market — if you pay 2 percent interest and earn 7 percent, you’ll still get rid of it.” 5 percent lead.
While anyone can start investing at any age, it’s easiest when you’re young because you have fewer obligations and more time to spare
Avoiding the ‘hot tip’
When investing, it’s important to be careful when people share their ‘hot tip’ and claim they’ve found the ‘next big thing’.
“One thing we learned from doing the podcast is that it’s a quick way to lose money,” Alec and Bryce said.
“If you’re going to invest your own hard-earned money, it’s important you know what you’re investing in — don’t blindly rely on a ‘hot tip’.”
It’s essential to do your own research on the return and risk factor before investing, they said.
The platform Equity Mates Media is designed to teach people about finance, money and investing – from financial jargon to fears, fees and investment strategy.