Invest 3.0: The age factor

Can I assume that by reading this far into ‘About Investing’, you’d like to learn more about the sharemarket?

If so, I hope you’ve now started to save. You need a minimum of AUD500 to buy an ASX-listed company. Add up to about $30 for brokerage costs and GST charged by the online trading platform. (Charges might vary according to the broker.)   

There are 3 important things you need to take into consideration:   

  1. AGE 
  2. LIFESTYLE 
  3. PERSONALITY

I will deal with the age factor in this post. 

Age

This is crucial as to what shares you buy, whether you want income (through dividends) or growth (stocks that have potential to increase and grow your money-tree). 

1. 19 to 25 years  

You’re probably spending too much of your parents’ money and too much time on your devices!

When I was 20, I was already well-acquainted with the stockmarket. It was 1969. Newspapers were full of the astonishing rise of a West Australian nickel company called ‘Poseidon’. Nickel was in great demand from the 1960s due to the Vietnam War. From 80 cents a share in September 1969, Poseidon went up to $280 by February 1970. Some brokers even said it could go up even further. (Advice:  Brokers and ‘experts’ often get it wrong!


The buying frenzy and the metals ‘boom’ produced what we now know as a ‘bubble’. Well, the bubble burst in the 70s: Poseidon went into receivership in 1974. Those who didn’t sell earlier suffered depression for months, even years. (Advice:  Don’t be greedy or unrealistic – my weakness is not selling shares at the right time, and I can give you a list of what I should have sold.) 

Poseidon has in fact been resurrected. But will it take off again?

TIP:  Nickel (Ni) is in demand again, 52 years later.  This ‘power metal’ is used in all things electronic – batteries, electric vehicles, smartphones and medical equipment to name a few.  

TIP: The world’s largest producers in order are: the Philippines, Russia, Canada and Australia.  Pay attention to the nickel producers that have binding supply contracts (i.e. they’ll be there a lot longer).

Finally, 19 to 25s – please read my last 2 Invest posts. You have the precious gift of time. You’re smart. Use your intelligence wisely. Social media influencers won’t make you rich. The sharemarket will

2. 25 to 39 years

I know you really want to buy property – but that could well be beyond your reach, especially in Sydney and Melbourne. 

There are many more people like you discovering the advantages of entering the stockmarket. You’re listening to podcasts from experienced investors. You’re online, continually searching for ‘tips’.

But too much information results in confusion.

Balance your information and your index funds with your own research. Spend a little of your investment money and buy 1 or 2 of your own stocks! Get excited about them! I guarantee it will help you better understand the mechanisms of share movements.

‘LICs’, ‘LITs’ and ‘ETFs’ … I hear that you talk about them a lot. They’ve become ‘trendy’. But do you fully understand the difference between them and ordinary ASX-listed shares? Read this Q&A article by Andrew Heaven (The Weekend Australian, November 7– 8, 2020).  

Google should not be your only resource. OBSERVE what’s around you. So many clues! Get together with like-minded friends. Pool money together to buy investment magazines or subscribe to excellent resources like The Motley Fool and Padley Today. TALK to people.

If you’re still keen on property in Australia, it’s still an option in South Australia and Western Australia, and even in country NSW and Victoria. The same principle applies to shares. Finding the next best thing or the next best location is worth the time you spend researching and asking questions

Lastly, SAVE. By all means go out for your coffee, but stay in for your smashed avo on beautifully toasted sourdough!  

3. 40 to 55 years

This is a critical time. Think of how you’d like to spend your retirement.

If you’re working, put as much as you can into your mortgage (if you have one) – and depending on your income, opt to salary sacrifice up to the maximum allowed.  

Don’t be blasé about your superannuation or finance. Get the facts now, not when you’re 60!  

Most super funds have financial advisers, and some may not charge for their initial consultation. If you want to keep it simple, pick a good-performing fund and keep an eye on it. Websites have links to compare fees and performance with similar industry or public super funds. The Australian Taxation Office website is also helpful. Read the PDS (public disclosure statement) that all super funds must provide; if there is anything you don’t understand, ask.

There’s a marvellous article by James Kirby in The Australian about financial advice and the fallout from the recent Australian Hayne Royal Commission. He notes financial advisers are now harder to find, and says: 

“ … This is a sector in crisis. Industry reports suggest that the total number of licenced advisers will drop from 22,000 to 15,000 over the next few years. … 

“Due to the burden of post-Hayne financial advice regulation the best advisers want to concentrate on ‘sophisticated investors’ who operate with much less ‘red tape’ than everyday investors. That is, they satisfy the legal definition of ‘sophisticated’ having $2.5m in investable assets or an annual salary of $250,000 a year.1

In a nutshell, Kirby writes that you need to invest $500K to be considered a worthwhile client. To make an adviser’s practice viable, they must be able to charge you $3000 a year (at least).  What’s more, paying for one-off (or “niche”) advice you need at the time (which to me seems perfectly reasonable and fair) is not possible under current rules in the industry.

So unless you’re resigned to paying $2000 to $3000 a year for a financial adviser, “that’s your lot!!” (a phrase of our senior gardening guru, Peter Cundall).   

BUTif you’re willing to use $1000 or more of your savings, I encourage you to buy shares. Read my previous Invest posts. If you have any questions, please leave a comment at the end of this post, or in Let’s Talk.  

4. 55 years & over

You should have already set a retirement date!

Barring any unexpected events, have an idea of how much super you’ll have and the tax-free income you’ll receive

Personally, I don’t think ‘retiring’ is a good idea.  

TIP:  Your last day at work must be the first day of your new life! 

What can you do now that you couldn’t do before? NEVER stop doing what you love: keep meeting with friends, make new ones, learn a language, musical instrument, join a choir and .. a gym!
Invest 4.0 will explore how your lifestyle and personality impact on your ability to invest successfully.

 1 Kirby, J. (June 5, 2021). ‘This year’s advice: Rip it up and start again’. The Australian.