4 things every investor wishes they knew sooner
Written and accurate as at: Apr 14, 2025 Current Stats & Facts
There’s a lot we can learn from people with more experience than us. But when it comes to investing, the sooner you can apply those lessons, the better. If you’re looking to start investing but feel like you’re frozen at the starting line, here are four things to keep in mind.
The barriers to entry aren’t as high as you think
Investing has come a long way since the 19th century, when stocks and bonds were bought directly from companies and physical certificates were issued as proof of purchase.
These days, you can buy and sell shares with just a few taps on your phone, and the education and research tools that are available are so sophisticated they would have the investors of yore reaching for their smelling salts.
But even with so many barriers to entry stripped away, a lot of people struggle to take those first steps. Often what’s to blame is a set of mistaken beliefs — ‘I’m not wealthy enough,’ ‘I don’t have the know-how,’ ‘I just don’t fit the investor profile.’
If those sound familiar, it might be worth looking for easy ways you can dip your toes in the water. Micro-investing apps, for example, have low minimum investment requirements, and some are able to round up everyday purchases and invest the spare change as you go about your day.
You don’t need to do it all yourself
While many people relish owning shares in several companies and obsessively tracking their performance, that’s not going to appeal to everyone.
For everyone else, there's the option to invest in Exchange Traded Funds, or ETFs. These are bundles of shares that are passively managed, meaning they try to replicate the performance of a particular index (like the ASX 200) rather than beat it.
The main benefit here is you get broad exposure to several different companies and industries, sparing you a lot of the hard work involved in diversifying your portfolio. And on top of that, the fees tend to be lower than your typical managed fund.
The sooner you start, the better
Find ten investors and ask them what their biggest investing regret is and you’re bound to get ten variations of ‘not starting sooner.’
That’s because those who start investing sooner have an advantage: more time to reap the benefits of compound interest. This is the snowball effect your reinvested returns have on your balance, and over a long enough period it can make a huge difference.
To illustrate, let’s compare two scenarios. In the first, Marie begins investing at age 25, buying $2,000 worth of ETFs each year with an average rate of return of 7% p.a. By age 60, she’ll have netted $295,827.
In the second scenario, Marie waits until age 40 before committing to investing $5,000 in ETFs each year, also earning 7% p.a. Despite contributing $30,000 more by age 60 in this scenario, she winds up with a balance of $219,326 — a whole $76,501 less than in the previous scenario.
Don’t get spooked by market volatility
In early 2020, when the pandemic’s demolition of the global economy was in full swing, a lot of investors took one look at where markets were heading and sprinted for the exits.
At the time you could hardly blame them, but within six months things had more than recovered. Those who stayed the course were rewarded handsomely, while those who sold their positions were punished with major losses.
The lesson here is that it’s extremely difficult to time the market. Pulling out your investments might seem like the rational thing to do in the moment, but if it turns out you made the wrong call it could be the costliest decision you make.
A potential way around this problem is to invest a fixed amount of money at regular intervals, regardless of how the market is performing. This strategy — known as dollar cost averaging — is essentially what your employer does on your behalf with your super each month.
The result, hopefully, will be a smoothing out of all the ups and downs of the market, as you’re essentially buying more when prices are lower and less when they’re high. And by committing to regular purchases, you also train yourself to filter out all the noise and focus on your long-term goals instead.
