You’ve sat down with your partner or a close friend over a cup of coffee, and you’ve mapped out some majorly exciting financial goals. A deposit for your first home, an extended stay in New York, or (maybe slightly less exciting, but still essential) funding the kids’ education. But just how far will your savings go towards those ambitions?
When you pull out your calculator and start crunching the numbers, you might realise that with interest rates so low, leaving your money in a bank account for 3 years or more at current interest rates may not get you a high enough return to meet your goal. You might need your money to work harder.
Fortunately for you, there are other medium to longer-term investment options, including shares, that give you the potential to earn more.
“Investing in the share market may increase the chances of you reaching your important financial goals sooner,” says Anthony Potts, Head of Equity & Fund Solutions at BT Financial Group.
Even if you find shares a bit scary and wonder if you know enough or have the time to invest in the share market, Potts says share market investing doesn’t have to be complicated. (You certainly don’t need to become a trader, as such.) New products like BT Go-invest are now providing a simple way to invest in the share market by tapping into the expertise of a professional investment manager. You can retain some control and it won’t take up too much of your time.
The power of the share market in hitting your goals
Over the medium to long term, the share market has the potential to deliver a higher return than investing in assets like cash. (Of course, when investing in the share market, there will always be the risk that the value of your investment will go down.)
You’re not alone in thinking about investing in the share market and harnessing those potentially superior returns. Share market investing is becoming more common.
According to the recent BT Australian Financial Health Index survey, which gives an annual snapshot of how Australians are feeling about money matters, the percentage of people surveyed who claim they own shares has grown to 29%, up from 25% in the previous year
So what’s stopping you?
Maybe you feel a bit intimidated by the share market. What should you buy – and sell - and when should you do it? How do you actually do the buying and selling? Isn’t it just for the wealthy? Will you lose control of your money? Will you have time?
“A lot of people just don’t know where to start,” Potts says.
The BT Australian Financial Health Index survey found that, in addition to lack of spare cash, a key reason for survey participants not owning shares was a belief that they did not know enough about share trading.
Potts says that when BT recently spoke to over 700 potential and current investors to really understand their thoughts about share market investing, control was found to be important – they wanted to be able to access their money and not have it tied up. They were also worried about whether they had enough time to manage a share portfolio, with work, kids and hobbies keeping them so busy. And trust was also crucial if they were relying on experts to help.
You’ve been heard
Fortunately, Potts says, your desires - and concerns - are being heard. And that’s resulting in new products that help simplify share market investing.
BT Go-invest is one such product. Potts says BT Go-invest allows you to beneficially own portfolios of share market investments and have them optimised by a team of investment experts from BT Investment Management, who will actively manage and rebalance your portfolio to suit current market conditions.
There are four BT Go-invest portfolios that you can choose from.
A young person in their 20s, for example, might be saving for a deposit to buy a house in five years. They might choose the BT Go-invest Local Growth portfolio, which invests in a portfolio selected from the biggest 20 companies listed on the Australian Securities Exchange like BHP, Woolworths and Telstra. If they’re more sensitive to risk, there are other Diversified portfolios, each with different target returns and risk that invest in a broader range of asset classes than just shares, that may be more appropriate.
Potts says that with BT Go-invest, you beneficially own the underlying investments. “BT Go-invest gives you transparency, with 24/7 online access to information on the individual holdings in your portfolio,” Potts says.
If you are one of the many who worry whether you have enough money to invest in the share market, take heart. Potts says BT Go-invest has a low minimum investment of $10,000. “A lot of managed funds will typically have a higher entry hurdle,” he says.
The takeaway? Don’t put share market investment in the too-hard basket. You may want the potential to generate higher returns over the medium to longer-term to get that deposit, go on that trip, or to fund the kids’ education. Today, share market investing can be relatively simple. And that may increase the chances of achieving your financial goals sooner.
Find out more about the four BT Go-invest portfolio options and if you’ve got your goals in mind already, use the goal calculator to estimate whether you’re on track to achieve them.
Just remember, when you invest in the share market there will always be the risk that the value of your investment will go down, particularly over a shorter timeframe. Future performance is not guaranteed and past performance is not indicative of future performance. More information about investment risk as well as other types of risks can be found on our website.
The latest batch of 2015 BT graduates is ready to get moving in life. How does this smart, ambitious group of millennial men and women view their future?
At 25, Nate Johnstone already owns an investment property in Sydney, and is open to advice on his next steps - career-wise and also financially.
This information is current as at 22/08/2015.
BT Go-invest is an offer of interests in BT Investment Portfolios (ARSN 605 271 645), a registered managed investment scheme (Scheme). Westpac RE Limited (ABN 80 000 742 478, AFSL 233717) is the responsible entity of the Scheme. This information has been prepared without taking into account your objectives, financial situation or needs. Before acting on any of this information, you should consider its appropriateness having regard to your individual objectives, financial situation and needs. You should be aware that there are risks associated with investing in BT Go-invest and ensure that, before investing, you read the Product Disclosure Statement (PDS) and in particular the section titled 'Risks’. You can find the PDS and other information about BT Go-invest at