{"id":3065,"date":"2017-01-23T22:54:17","date_gmt":"2017-01-23T22:54:17","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/investing-isnt-just-for-financy-pants\/"},"modified":"2021-02-08T04:47:43","modified_gmt":"2021-02-08T04:47:43","slug":"investing-isnt-just-for-financy-pants","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/investing-isnt-just-for-financy-pants\/","title":{"rendered":"Investing isn\u2019t just for financy pants"},"content":{"rendered":"
\"image\"<\/figure>\n

By Clayton Daniel of Fund Your Ideal Lifestyle<\/a><\/p>\n

 <\/p>\n

I
\nremember over a decade ago when I didn\u2019t know anything about investing. It\u2019s a
\nreally good frame of reference to have, and one that I hope I never lose.<\/p>\n

Because
\ninvesting can seem ten million times more complex than it really is. Why? Well,
\nmoney is an emotional topic, and the first time you do anything it seems hard.<\/p>\n

So
\nwith that in mind, I wanted to explain all the financy pants terms that get
\nthrown around, and give some explanation as to where all the pieces of the
\npuzzle fit in. I think the more you understand about where you are investing,
\nand what you are investing in, the more control you will feel, and ultimately
\nthe more comfort.<\/p>\n

So
\nhere we go.<\/p>\n

Starting
\nright at the top we have the ever-ethereal word \u2018market\u2019<\/b>. This word gets
\nthrown around a fair bit. It basically means the same as it always has. A place
\nwhere people gather to buy and sell. But instead of buying and selling fish or
\nbread, they are buying and selling assets like property or equities.<\/p>\n

So
\nwhen something is traded on the market, it really means it is traded in a place
\nwhere there are buyers and sellers. If an asset has a market price, it simply
\nmeans the price is at a point between where buyers want to buy and sellers want
\nto sell.<\/p>\n

Now
\nlet\u2019s talk about the most common type of asset traded on the market \u2013 an\u00a0equity<\/b>.
\nAn equity is called as such as when you own it, you own equity in a company.
\nYou own a part of the company. Equities have the remarkable distinction of
\nbeing able to interchange their name at any given moment. Have you ever heard
\nthe terms \u2018shares\u2019 or \u2018stocks\u2019. Yeah, same thing.<\/p>\n

At
\nthis stage, now you know that equities are traded on the equity market (or
\nshares\/stocks are traded on the share\/stock market). This is where you can buy
\nand sell blue chip shares like the big four banks, or speculative mining
\nshares. There are thousands of different stocks to trade on the stock market.
\nThe only limits are your limits to research and what equities you are
\ncomfortable in buying.<\/p>\n

Okay,
\nso that\u2019s great right? You can go out right now and start investing. Fantastic.
\nWhat are you going to buy? If you are an investment professional, you will have
\nan investment philosophy that works for you. If you are not an investment
\nprofessional, you probably don\u2019t have an investment philosophy.<\/p>\n

Therefore
\nyou can either spend a lot of time researching to become an investment
\nprofessional, you can hire an investment professional for you, or you can buy
\nwhat\u2019s called an\u00a0Exchange-Traded Fund (ETF).<\/b>\u00a0An ETF is simply
\na computer algorithm that invests your money into equities. The benefit is, for
\nevery change to the portfolio you aren\u2019t charged a fee. Instead, you pay an
\nongoing percentage fee to cover the management of your portfolio. This reduces
\nthe conflict of \u2018churning\u2019 investments which is the natural result of a
\nbusiness model where revenue is made through the amount of buy\/sells that are
\nmade.<\/p>\n

\"image\"<\/figure>\n

As
\nyou can see above, the amount of global money invested in ETF\u2019s has grown
\nsignificantly since the start of the Global Financial Crisis (GFC) in 2007. So
\nwhy has the ETF market grown by 400% in less than a decade? Well for a few
\nreasons.<\/p>\n

Firstly,
\ninvestors were burned so bad during the GFC that they got sick of paying for
\nstockbrokers, financial advisers, and fund managers to invest their money. The
\nargument that people were better at picking equities than computers were
\nlargely proven wrong.<\/p>\n

This
\nin turn created the rise in Modern Portfolio Theory. Put basically, you get 80%
\nof your gains and losses simply by being in the market. There are easily
\nrefutable points to this theory, but put simply, it provided a framework to
\nbuild a portfolio without human involvement.<\/p>\n

Which
\nbrings me to technology. The technology to build these trading algorithms have
\nimproved like all other tech has improved over the decades. These days there
\nare many different types of ETF\u2019s, though most the money is still in the easy
\nto understand simple ones.<\/p>\n

As
\nalways, price is very important. Some ETF\u2019s are so unbelievably cheap that it\u2019s
\nhard to see where the revenue is being made by the product issuer. Some ETF\u2019s
\nare so cost effective that on a million-dollar portfolio you can pay as little
\nas $300 a year.<\/p>\n

And
\nwith all these benefits it drew in many investors, which in turn created more
\nawareness, and more education. To the point where now ETF\u2019s are essentially the
\nmost popular way to invest. And considering the points above, it\u2019s not hard to
\nsee why.<\/p>\n

Now
\nyou know how to invest in the market, by purchasing equities through an ETF.
\nBrilliant. You\u2019re nearly there. So how do you do all this? How do you pick
\nwhich broker to use, and which ETF\u2019s to invest in. Well again, you can either
\nlearn to do it yourself, hire someone to do it for you, or use technology.<\/p>\n

This
\nbrings me to the last piece of financy pants education today. The technology to
\nmake all this happen \u2013 Raiz. Raiz is simply an app which takes the small amount
\nof round ups on purchases you make in everyday life, and invests them for you
\ninto ETFs.<\/p>\n

Raiz
\nthemselves don\u2019t have anything to do with the ups and downs of the market. They
\nsimply make easy what has typically been hard to do \u2013 open an account and start
\ninvesting. They take the manual work out of starting a brokerage account, and
\nchoosing which ETF\u2019s to invest into.<\/p>\n

They
\ntake all the complexities out of investing, and make it as easy as buying your
\ndaily coffee. And that to me is brilliant. As a personal finance expert, the
\nease in which they make investing is unbelievable. Raiz are the packaging to
\nmake investing easy for the every day person.<\/p>\n

So
\nto recap: You invest in the market, by purchasing shares, with an ETF, through
\nthe Raiz app. For more information on Raiz fees, click here<\/span>.<\/a><\/p>\n

Look
\nat you \u2013 all financy pants\u2026..<\/p>\n

By
\nClayton Daniel of\u00a0Fund Your Ideal Lifestyle<\/a><\/p>\n

 <\/p>\n

\n

 <\/p>\n

Don\u2019t have the Raiz App?<\/h3>\n

Download it for free in the App store or the Webapp below:<\/p>\n

\n
\"download-raiz-app\"<\/a>
Click to download the Raiz app<\/a><\/figcaption><\/figure>\n

 <\/figure>\n

Important Information<\/strong><\/span><\/em><\/p>\n

The information on this website is general advice only. This means it does not take into account any person\u2019s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.<\/em><\/p>\n

A Product Disclosure Statement for Raiz Invest and\/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.<\/em><\/p>\n

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.<\/em><\/p>\n

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.<\/em><\/p>\n

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Clayton Daniel of Fund Your Ideal Lifestyle   I remember over a decade ago when I didn\u2019t know anything about investing. It\u2019s a really good frame of reference to have, and one that I hope I never lose. Because investing can seem ten million times more complex than it really is. Why? Well, money […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[1503,1497,1501,1488,98,1505,1502,1498,224,1500,233,289,1504,97,82,117,166,125,239,1499]}