How would you approach investing at 19 Years Old?

[Regi]

Hi all,

I've noticed many threads of people asking for advice regarding planning for retirement and the like but at 19 years old that's the last thing on my mind. I have learnt a lot by lurking on these forums but it's also made me aware of how little I know especially with a number of you who've been investing longer than I've been living.

At the moment, I've got about $40k in the market. This is spread across only 4 stocks (2 NZX, 2 ASX) with a large majority in AIR.

Obviously, it's no one's intention to lose money in the markets and if a steal comes along you'd jump on it regardless of age but I feel as I am only 19 I have a little more room for error/room for taking risks seeing as I'm not exactly planning for retirement... although I am thinking about the student loan looming overhead.

I have financial and materialistic goals and as I am full time studying I believe shares is my best way of achieving them at least for the next 2-3 years. So my question is... if you were to start over with my resources and stage in life, how would you approach investing?

I'll be very grateful for any advice and tips you guys have to share for me/younger investors in general.

Cheers :)

[stoploss]

Regi congratulations on having 40 K saved for investing in the market at 19 . If there is one thing I would do is get into Kiwisaver in a good growth fund . Personally I would not miss the payment each month , and the Employer will be putting in at least 3 % . Plus a Govt tax break of $ 500 a year .This will grow to a very nice nest egg by the time you are ready for retirement .
As for your other questions , read as much as possible , the market is dynamic , respect it , be disciplined . Have fun out there.

[Regi]

Regi congratulations on having 40 K saved for investing in the market at 19 . If there is one thing I would do is get into Kiwisaver in a good growth fund . Personally I would not miss the payment each month , and the Employer will be putting in at least 3 % . Plus a Govt tax break of $ 500 a year .This will grow to a very nice nest egg by the time you are ready for retirement .
As for your other questions , read as much as possible , the market is dynamic , respect it , be disciplined . Have fun out there.

Thanks for your reply stoploss! I am with KiwiSaver as it's a requirement at my workplace. Looking forward to that growing in the background. Most of my 40k has come from personal business/ventures where I have not been able to do KiwiSaver :)

Cheers

[muss1]

I would learn about investing in small caps. They are a lot riskier but you have a lot more growth potential. This strategy isn't for everyone. Your age suggests you can invest in riskier shares, but you need to be comfortable with volitility. If you watched a share price drop by 50% for no reason would you be able to remain rational and not let it effect you mentally? And most importantly not sell but potentially buy more? If the answer is no then that strategy isn't suited to you.

Anyway that's where I would be looking to invest it I were you. There is a lot to learn before jumping in though

[percy]

You are getting good advice.
Invest in yourself.Your education is most important.
Then I would travel.You will learn about yourself,other people,and the world,which will make you a better investor.

[RGR367]

You already knew and done a lot as compared to us when we were your age. So just keep on reading/learning and weigh all advice that you read or received. Don't get emo about shares when they don't perform as per your expectations. You'll learn more from your misses than from your winners.

[Regi]

I would learn about investing in small caps. They are a lot riskier but you have a lot more growth potential. This strategy isn't for everyone. Your age suggests you can invest in riskier shares, but you need to be comfortable with volitility. If you watched a share price drop by 50% for no reason would you be able to remain rational and not let it effect you mentally? And most importantly not sell but potentially buy more? If the answer is no then that strategy isn't suited to you.

Anyway that's where I would be looking to invest it I were you. There is a lot to learn before jumping in though

Thanks a lot muss! Food for thought :D


You are getting good advice.
Invest in yourself.Your education is most important.
Then I would travel.You will learn about yourself,other people,and the world,which will make you a better investor.

Cheers Percy! Am doing just that.

Have also been rather fortunate (or unfortunate depending on how you look at it) to have the majority of my family living in Europe. Have had some great European trips and "half-way-meet-ups" over the years and definitely have caught the travel bug from it so more travel will definitely be on the cards, great advice thanks mate :)


You already knew and done a lot as compared to us when we were your age. So just keep on reading/learning and weigh all advice that you read or received. Don't get emo about shares when they don't perform as per your expectations. You'll learn more from your misses than from your winners.

Cheers RGR. Definitely went through that with a loss I experienced with BRL but realised that doesn't solve anything. Lesson learnt and moved on!

Thanks for all the help and advice so far guys, really appreciate it. :t_up:

[malus]

Hi Regi... good on you as RGR367 says you are well ahead of us at your age, and we didn't have the internet and this sort of forum to test out our ideas.

Just a thought, if you haven't already, I suggest you find a copy and read "Rich Dad Poor Dad" by Robert Kiyosaki. It's an easy read and gives you a pretty clear idea of where your wealth comes from in life and how to either grow it or, let it flow through your hands as a consumer. :p

[fungus pudding]

Hi all,

I've noticed many threads of people asking for advice regarding planning for retirement and the like but at 19 years old that's the last thing on my mind. I have learnt a lot by lurking on these forums but it's also made me aware of how little I know especially with a number of you who've been investing longer than I've been living.

At the moment, I've got about $40k in the market. This is spread across only 4 stocks (2 NZX, 2 ASX) with a large majority in AIR.

Obviously, it's no one's intention to lose money in the markets and if a steal comes along you'd jump on it regardless of age but I feel as I am only 19 I have a little more room for error/room for taking risks seeing as I'm not exactly planning for retirement... although I am thinking about the student loan looming overhead.

I have financial and materialistic goals and as I am full time studying I believe shares is my best way of achieving them at least for the next 2-3 years. So my question is... if you were to start over with my resources and stage in life, how would you approach investing?

I'll be very grateful for any advice and tips you guys have to share for me/younger investors in general.

Cheers :)

I would think long and hard about whether you want to be a trader or an investor. I'm like a broken record on sharetrader but this what I would do. Forget about trading and buy and accumulate shares in listed property trusts. Well managed and located commercial and industrial real estate will give you a meal ticket for life. Keep stacking up the income and letting it compound. 40k would give you an income of say 2k + with no tax to pay. Plus of course capital gain which flows from rent reviews - which increases dividends as you hold. Not a big deal, but if you can build up and keep buying by the time you've got say 10k per annum coming in from your properties you can really start compounding your investment input. Soon you'll be making 20k per anum and every doubling will occur in shorter and shorter time frames.
The magic of compounding' Not recommending anything - merely saying what I would do. Generally real estate is very low risk and backed by land, bricks and mortar. That's why banks lend on property and are very iffy about other asset classes. They trip over each other to give you a mortgage. The security is real as opposed to shares in a widget manufacturer whose shares are valued largely on projected and historical profit: aka goodwill.
That's my 2 cents worth. Best of luck.
Disclaimer. I own a reasonable pile of LPT shares - but no. They're not for sale. :t_up:

[h2so4]

Don't fall for that old cliche your young you can afford to take risks.Risks equal losses.Money lost that you'll spend time making back up. Change it to 'Do the right thing.'

[Lewylewylewy]

If you can buy a house as early as possible, then start paying it off (you don't even have to live in it - just rent it out), then in about 20 years you'll have it paid off and be in a great position. No matter how much prices change, you'll always be on the property ladder.

In terms of money (I'm guessing your cash came from an inheritance / gift), the best thing you can do is focus on your career. Try to apply for a new job every year to get a $10k pay rise each year - guaranteed way to increase your savings. Especially worthwhile while you're young - imagine you work for the next 41 years until you're 60. Getting an extra $20k now, rather than when you're older works out to be $820k (41k*20) by the time you retire.

Alternatively, you're 20-30's is more socially valuable than your 30-40s; your 30-40s are more valuable than your 40-50s, etc. So dedicate your youth to enjoying life. Some people may dispute this. I put the argument forward because the best friendships are usually formed when young (stronger bonds), girls are prettier because you have more hormones pumping around and they have better skin, etc. Relationships will be more passionate (in a good and bad way lol). Experiences (travel, etc.) will be more interesting because everything is new and you don't have a jaded view on things and passion for life is stronger when young (typically). Your health will be better than it ever will be - you can run marathons without training, injure yourself doing silly things and not worry about never fully recovering, climb mt kilamanjaro without worrying about your old knees playing up, etc.

My point is, that you need to decide what's important in your life and aim for that. You might want some sort of blend of investment, career and fun.

Good luck

[Regi]

Hi Regi... good on you as RGR367 says you are well ahead of us at your age, and we didn't have the internet and this sort of forum to test out our ideas.

Just a thought, if you haven't already, I suggest you find a copy and read "Rich Dad Poor Dad" by Robert Kiyosaki. It's an easy read and gives you a pretty clear idea of where your wealth comes from in life and how to either grow it or, let it flow through your hands as a consumer. :p

Hey malus thanks for the reply mate. Will checkout those books! :)


I would think long and hard about whether you want to be a trader or an investor. I'm like a broken record on sharetrader but this what I would do. Forget about trading and buy and accumulate shares in listed property trusts. Well managed and located commercial and industrial real estate will give you a meal ticket for life. Keep stacking up the income and letting it compound. 40k would give you an income of say 2k + with no tax to pay. Plus of course capital gain which flows from rent reviews - which increases dividends as you hold. Not a big deal, but if you can build up and keep buying by the time you've got say 10k per annum coming in from your properties you can really start compounding your investment input. Soon you'll be making 20k per anum and every doubling will occur in shorter and shorter time frames.
The magic of compounding' Not recommending anything - merely saying what I would do. Generally real estate is very low risk and backed by land, bricks and mortar. That's why banks lend on property and are very iffy about other asset classes. They trip over each other to give you a mortgage. The security is real as opposed to shares in a widget manufacturer whose shares are valued largely on projected and historical profit: aka goodwill.
That's my 2 cents worth. Best of luck.
Disclaimer. I own a reasonable pile of LPT shares - but no. They're not for sale. :t_up:

I don't study property as a major at university but I have taken a couple of extra papers in it and it has genuinely caught my attention. Will definitely take what you've said on board Fungus and look into it some more. Thanks very much for the reply! Lots to learn though...


Don't fall for that old cliche your young you can afford to take risks.Risks equal losses.Money lost that you'll spend time making back up. Change it to 'Do the right thing.'

I don't think you can say Risk = Loss. Comes down to the degree of risk, your own tolerance for risk and position of coping with it. I do however agree that the young age thing is a bit of a cliche and essentially... a loss is a loss no matter what age you are. Thanks.


If you can buy a house as early as possible, then start paying it off (you don't even have to live in it - just rent it out), then in about 20 years you'll have it paid off and be in a great position. No matter how much prices change, you'll always be on the property ladder.

In terms of money (I'm guessing your cash came from an inheritance / gift), the best thing you can do is focus on your career. Try to apply for a new job every year to get a $10k pay rise each year - guaranteed way to increase your savings. Especially worthwhile while you're young - imagine you work for the next 41 years until you're 60. Getting an extra $20k now, rather than when you're older works out to be $820k (41k*20) by the time you retire.

Alternatively, you're 20-30's is more socially valuable than your 30-40s; your 30-40s are more valuable than your 40-50s, etc. So dedicate your youth to enjoying life. Some people may dispute this. I put the argument forward because the best friendships are usually formed when young (stronger bonds), girls are prettier because you have more hormones pumping around and they have better skin, etc. Relationships will be more passionate (in a good and bad way lol). Experiences (travel, etc.) will be more interesting because everything is new and you don't have a jaded view on things and passion for life is stronger when young (typically). Your health will be better than it ever will be - you can run marathons without training, injure yourself doing silly things and not worry about never fully recovering, climb mt kilamanjaro without worrying about your old knees playing up, etc.

My point is, that you need to decide what's important in your life and aim for that. You might want some sort of blend of investment, career and fun.

Good luck

Haha, loved reading that Lewy, thanks for the reply! I am not far off being in a position to purchase a property like you suggest (of course this is with my parents lending me the balance to get a deposit and with their property as collateral) but there is so much to learn and in uncertain times I am less sure about jumping into it as I was a few months ago. Yet despite whatever doubt the media casts over the property market it seems to keep climbing... might just have to make the jump ASAP as you suggest.

Also, a small part of that was a gift but the remainder is actually from me working and running my own business since I was 16 :)

Balance is key and definitely agree with everything you said, thanks man :)

[Lewylewylewy]

They say property is time in market, not timing the market. The fact is, considering demand and supply, an increasing population, the biggest finite resource is land.

You've done really well. Wish I was as clued up as you when I was your age... Or even in my 20s lol

The fact is, any investment that lasts (IE not shares in a company that goes bust) will serve you well because of the amount of time you have on your hands. Granted, some will do better than others. Learn to not regret. For example, if I started property investment in Auckland 5 years ago, I'd be retired now. Instead, I managed a will above average return on my investments and a well paid job. It's OK.... God I wish I'd bought some Auckland property lol.

Well done on what you've achieved already. Do a spreadsheet that works out compound interest on your investments to work out how much of an income your investment can get y you, then compare that to the effect of leverage + CG on property ;)

[Markymarknz]

I do feel sometimes that the view on property is a bit rosy due to recent - ridiculous - gains. The old mantra "you cant lose money on property" seems to be back front of mind. I have been thinking property was overpriced since before Auckland went gang busters so my view is probably not worth much, lol.

[Lewylewylewy]

I earn twice the average wage (so the same as the average couple) and find property cheap. Therefore property is cheap. I'm talking outside Auckland.

There are a lot of comparisons to international prices, but it's apples and oranges. Which other English speaking country can you buy a house on the coast in a warm climate for less than a million? Actually, which other English speaking country can you buy a house in a city centre for less than half a mil? House here are cheap because people can afford them, expensive or not. Buy something nice before foreigners like me realise how sweet it is here ;)

[WingingIt]

I would think long and hard about whether you want to be a trader or an investor. I'm like a broken record on sharetrader but this what I would do. Forget about trading and buy and accumulate shares in listed property trusts. Well managed and located commercial and industrial real estate will give you a meal ticket for life. Keep stacking up the income and letting it compound. 40k would give you an income of say 2k + with no tax to pay. Plus of course capital gain which flows from rent reviews - which increases dividends as you hold. Not a big deal, but if you can build up and keep buying by the time you've got say 10k per annum coming in from your properties you can really start compounding your investment input. Soon you'll be making 20k per anum and every doubling will occur in shorter and shorter time frames.
The magic of compounding' Not recommending anything - merely saying what I would do. Generally real estate is very low risk and backed by land, bricks and mortar. That's why banks lend on property and are very iffy about other asset classes. They trip over each other to give you a mortgage. The security is real as opposed to shares in a widget manufacturer whose shares are valued largely on projected and historical profit: aka goodwill.
That's my 2 cents worth. Best of luck.
Disclaimer. I own a reasonable pile of LPT shares - but no. They're not for sale. :t_up:

Your thoughts on the Smartshares property funds for both NZ and Aus? Im 22 and have just sold out of AirNZ so looking for something else to put my money into.

[Lewylewylewy]

Smartshares seem dumb to me. Take a look at some of the chat on the NZX forum, there are a few good bets still.

[Harvey Specter]

Smartshares seem dumb to me. Take a look at some of the chat on the NZX forum, there are a few good bets still.Warren Buffet likes index funds (for those who dont invest full time, like his family), so not completely dump.

[MichelleMM]

Congratulations on saving for your initial investment! 40k at any age is commendable let alone at 19, so you're definitely well ahead of the pack there. As many have mentioned before, I would recommend entering in to the property market at the earliest age you can. I reside in Australia and therefore have little knowledge of the New Zealand property market however I would suggest looking at property as early as you can. Research areas that are likely to experience good capital growth and choose a location that will likely be highly sought after in the coming years. Buy it or build it and then rent it out so your mortgage repayments are covered. At any earlier age I'd be looking for more secure investments and then once your disposable income increases that's when I would look at investing in the share market.
Wishing you all the best with your financial goals!