I know that not everyone wants to invest directly in shares and would rather use a more passive approach to the stock market such as buying managed funds instead (and that’s cool if you want to do it that way) but for me I like the thrill and excitement of getting my hands dirty in research and choosing to buy stocks directly (yes I’m weird like that).

This isn’t a get rich quick method of making money however (even though sometimes that happens when we are in a bull market), no, investing in stocks is a long term way of building wealth.

So having said that, should you invest in shares?  Do you still want to?  Coolio, here’s what to do.  Buy my other book Shopping for Shares.  Ok done, article finished.  Bye Bye.

Just kidding, I’m going to give you the basics here for free.  Aren’t I nice.

Anyway .. where was I?

Oh yes, the stock market.

I’m going to assume that you already have an account which you can trade through.  If not that’s your first step.

Next is doing your research to find the best companies.

To get a diversified portfolio I recommend using three different types of strategies:

1. Long term shares
2. Short term shares
3. Shares with high dividend payments

There are different strategies to all of them but here is a basic run down of what I do to choose stocks within each of methods:

Long term stock investment

While I go into more detail in my book Shopping for Shares, generally for the Australian stock market I look for the following things:

• In the All Ords Index
• Return on Equity over 15%
• Debt to Equity under 75%
• Earnings Stability over 80% (this one can be difficult to find)
• Decent share price return over 5% or 10% p.a.

Fairly soon I’ll be making a list of all of those companies that fit my rules over at my shopping for shares website.

Short term stock investment

I use quite a different strategy for short term investing (obviously).  In bear markets (like now) it can be difficult to find good quick growth stocks but you can still do it if you know what to look for.

• In All Ords Index
• Look for Outperforming sectors
• Look at which companies within that sector are doing the best
• See what the increase over the past two months has been.
• Buy with that increase as your target over the next few months.
• Sell if it falls below about 10% or if it hasn’t reached your target within 6 months.

Buying for the Dividend Income

This strategy is a newer strategy for me, but one I’ve become increasing more interested in as I invest since it allows you to take advantage of both capital growth when the market is good and also receive regular dividend payments no matter what the market is doing.

• Stocks within the All Ords (although generally I tend to stick with the top 100 or even top 50)
• Decent financials (as close to my long term rules as possible)
• A dividend yield of over 5% (the higher the better).

Having a good mix of all of the three methods should give you good basic diversification for your portfolio.

So how much money should you invest in stocks?

Hmm, let’s see.  As a ball park consider the following amounts (for the average Australian).

- You should have $2,000 in your emergency account.
- No debt.
- $10,000 in a high interest savings account.
- $50,000 in shares / managed funds (either, or, or combination)

So yes.  Around $50K.

Sounds a lot but you’ll be building it up gradually over time and it depends on how the market is doing as to how quick you’ll be able to get there.

The rest of your money is going to go to pay off your mortgage.  And that’ll be what I’ll concentrate on next …

Thanks for reading Should You Invest in Shares And If So Which Ones?. I hope you liked it.

P.S. Just released my newest book "30 Day Spending Detox: The Simple Plan To Save Money & Get Out Of Debt In Just One Month". $4.99 on Kindle (print version and other readers coming soon). Tracey xx

And the next place most Aussie’s turn is investing in managed funds.

Now I’m not totally opposed to the idea of investing in managed funds (in fact it can be a good thing if you don’t have control issues like I do and prefer to invest directly in the share market) but you still need to be aware that not all funds are the same and there are no guarantee’s that they would do any better than you could.

Ok, but this isn’t about me, this is about you and your money.

So is investing in managed funds a good idea?

Actually it is!  (Didn’t think I’d say that did you).

I actually think that managed funds can be a good set and forget type of investment and it will allow you to get easy access to certain types of investing such as international stock market’s, global and local property funds, as well as the usual local share market funds of various levels of risk and income.

And of course, our Superannuation is just one big managed fund anyway.

Now having admitted that it’s a good investment decision, you probably know want to know which ones you should be looking at, whether you should get a balanced fund or high growth, and of course the advantages and disadvantages of investing in one.

Phew, that’s a lot of info, ok here goes.

Advantages of Managed Funds

• You get access to hundreds of different options of investment funds from stocks, bonds, property, or combinations of them all both here in Australia and around the world.
• Your money is pooled with other investors so that the fund manager can larger groups of stocks giving you more diversity.
• Some funds outperform the market.
• You don’t have to do any work yourself, it’s very set and forget.
• Experts (mostly) run the funds to ensure good market and investment decisions.

Disadvantages of Managed Funds

• Fees.  Most funds have entry, exit and sometimes even monthly fee’s.
• No control (apart from choosing the style of investment).
• You need a certain amount of money to start investing (could be as low as $500 but generally around $1,000 or $2,000 to get started).
• Not all funds outperform the market.
• The top rated funds change from year to year leaving investors to ‘chase’ the best performers thus reducing their income (please don’t do this).
• Not easy to access your money in a hurry.
• Not a good short term investment (if you think you’ll need the money within ten years stick to savings accounts instead).

Should You Have Both a Super Account AND Other Managed Funds?

Now since Super accounts are managed funds wouldn’t it make sense that you just invest into your super account rather than open another managed fund?

No.  Keep your Super as a separate account to this fund.  Only because you can’t get access to your super if you need to in an emergency. (But if you’ve got some spare cash, but all means top your super up if you want).

How Much Money Should You Invest In A Managed Fund?

For the average family, around $20,000 is a good minimum.  You can start with much less than this and build up over time though as many funds will allow you to make regular deposits.  The longer you can keep your money in the account the better as it will take advantage of compound interest and make you more lovely money.

What Type Of Managed Fund Should You Invest In?

Obviously this is going to depend on the amount of time you have to invest (you can be more risky the longer you have) but generally I think that you should stick to Australian Balanced Funds by the higher profile fund managers like Colonial First State, B&T, and AMP.

Ring each of them and get some information packs sent to you.  You’ll be surprised at how many there is to choose from!

The reason I like to keep my managed funds more balanced is that frankly these are the ones that do the best year in year out (and especially so in volatile times like we are experiencing now).

Besides if you want to go more risky, you can do that yourself by investing directly in shares (which I’ll cover soon).  That way you can get out at a moment’s notice, something you can’t do with managed funds.

Thanks for reading Investing In Managed Funds – The Advantages & Disadvantages. I hope you liked it.

P.S. Just released my newest book "30 Day Spending Detox: The Simple Plan To Save Money & Get Out Of Debt In Just One Month". $4.99 on Kindle (print version and other readers coming soon). Tracey xx

Now in Australia all of the best accounts are those that are online only, but they can be linked to your regular savings account for ease of use.

Where To Put Your Money

Just choosing the highest interest rate isn’t always the best option, and there are a few things that you should consider including:

• Minimum Balance.  Most of the more well known savings accounts don’t require a minimal balance (or if they do it’s just a low $1 to open the account) but some accounts do so make sure you check.
• Which Banks Are They Linked To. Many accounts can be linked to any bank you are with, but there are some, such as the ANZ Online Saver which can only be used if you bank with them.
• Fees.  They shouldn’t have any fee’s.  Move on if they do.
• Interest Rate.  Ok interest rate IS important.
• Special Deals.  Very often some accounts will offer cash and higher interest rates just for opening an account with them.  That can be a nice bonus.
• Convenience.  You want to be able to access your money fairly quickly, so same day or next day deposit into your account is standard.  Any longer than this and it’s not so convenient.

So which are the best savings accounts in Australia right now?

Here are my picks.  Please note I have not been commissioned by any financial institute to mention these, they are merely my opinions only, but before taking out any account do your due diligence to make sure it’s right for you.  

• Virgin Money: Virgin Saver Account. Links to any bank account, currently has a bonus $50 plus 4 month intro rate of 6.51% (then drops to 5.35%), no fees.

• RaboDirect: RaboDirect Savings Account. Links to any bank account, currently has a 4 month intro rate of 6.26% (then drops to 5.75%), no fees.

• Citibank: Citibank Online Saver. Link to any bank. 6.05% for 6 months then 5% onwards.

• ING Direct: Savings Maximizer. Link to any bank. 6.35% for 4 months then 5%.

• UBank: USaver. Base interest rate of 5.61% with bonus 0.5% interest for setting up automated savings plan of $200 a month deposit.

• Bankwest: TeleNet Saver: 12 month intro rate of 6.30% and then 5.00%

All interest rates mentioned are variable and are likely to change, but are correct at time of writing.

So there you go.  My picks for the best online savings accounts.

Go forth and multiply your money (or at least get a bit more interest any way .. )

t xx

Thanks for reading Where To Put Your Money? The Top High Interest Savings Accounts. I hope you liked it.

P.S. Just released my newest book "30 Day Spending Detox: The Simple Plan To Save Money & Get Out Of Debt In Just One Month". $4.99 on Kindle (print version and other readers coming soon). Tracey xx

But the problem with this method is that you can get overwhelmed.

I know because I’ve been there myself recently (but let’s not go there, it’s kind of embarrassing).

During this time I actually found that it’s a much BETTER strategy to pay off your lowest balance cards and loans first and then work up from there.

And here is why.

MOTIVATION.

Every time you pay off a credit card balance and it reaches that magic zero, then you get a tremendous feeling of accomplishment.  A high five to your ego.

It then spurs you on to tackle the next lowest balance and pretty soon you’ve got the motivation and energy to pay off all of your debt much faster.

Now sure, you might end up paying a few extra dollars in interest, but that’s nothing to the feeling you get when you wipe out one of your debt’s completely.

If you feel like you are drowning in debt and are not sure where to start then just start with the lowest balance first.

So here is how to use this method:

1. Write down a list of all your credit cards, store cards and student/personal/car loans that you have with their interest rates and the remaining balance on them.
2. Also make a note if they have a minimum payment that you have to make since sometimes car loans and the like have a set monthly payment that you need to pay.
3. Now put a big star next to the lowest balance.  That’s the one you are going to wipe out first.
4. On your next pay day, pay the minimum or lowest amount you can to the debts that don’t have the star.
5. Now pay the maximum amount that you can possibly afford on that card or loan that has the lowest balance.
6. Knowing how much you can afford to pay off it, you can now work out how many more pay check’s it will take to reduce it to zero.
7. But a big star on the calendar every time you make another payment and get one step closer to paying it off (gold stars have extra magical motivation – I’m sure of it).

That’s it.  Rinse and repeat until you get to zero balance.  Do a happy dance.  Start again with the next lowest balance.

And that my friend, is how to pay off your credit card debts (and other debts) without going crazy.

Or be crazy if you want.  Who am I to judge?

Thanks for reading What Is The Best Way To Pay Off Your Debt? Highest Interest Or Lowest Balance First?. I hope you liked it.

P.S. Just released my newest book "30 Day Spending Detox: The Simple Plan To Save Money & Get Out Of Debt In Just One Month". $4.99 on Kindle (print version and other readers coming soon). Tracey xx

But how much money do you actually need in your emergency account?

While it will vary depending on your lifestyle (for example a university student will need less money than a family), generally I recommend that you set up a high interest account and keep $2,000 in it.

$2,000 is enough to cover any emergency expenses that should crop up in the year, such as the dishwasher kicking it or having to get your tooth fixed after it get’s knocked out during a soccer match (don’t laugh – this happened to a friend of mine).

If you are like any normal family, you’ll find that you probably need to dip into it around twice a year (hopefully not more often than this).

So how do you set one up?

If you haven’t already I recommend getting a high interest account that is easy enough to access in an emergency, but not so easy that you are tempted to buy a new Kardashian handbag when you see one.

Most of the big banks now have online only accounts that you can link to your regular savings account that have a decent interest rate, otherwise use the usual suspects like ING Direct’s online saver account.

At the time of writing, ING Direct’s Savings Maximiser is 6.35%, and ANZ’s Progress Saver is 6.0%.

Saving for the $2,000 to put into it.

Now I like saving’s goals, I think it makes the game of saving far more achievable (or it could just be that it brings out my competitive spirit) but getting to that $2K for your emergency fund should be a priority so you can start to get ahead financially (yes even BEFORE you start to pay off your debts – I’ll get to that soon).

So scrimp and save (or do a 30 day spending detox where you stop spending on anything unnecessary for a month) and you should be able to get to that amount within a few months.

(as long as you don’t have any emergency’s during that time of course )

Then just let it sit there quietly earning interest until you need it.

Topping it up

Then when you do need to use it, make it a priority again to top it up to the full amount.

Do you really need $2,000?

Generally most families will, yes.  But if you are a single or uni student then you probably need less and could get away with $1,000 for a single, or even just $500 for a uni student.  Be aware though that uni student’s aren’t immune from emergency’s such as car breakdown’s which can cost a lot so if you CAN afford it, try and get the full amount in your emergency account.

So that’s it.  Setting up your emergency account with two grand.  Your first step to financial freedom.

Next post: Paying off debt – in which order do you do it?

Thanks for reading Your Emergency Fund: How Much Do You Really Need?. I hope you liked it.

P.S. Just released my newest book "30 Day Spending Detox: The Simple Plan To Save Money & Get Out Of Debt In Just One Month". $4.99 on Kindle (print version and other readers coming soon). Tracey xx