If you’re considering investing money for the first time, then it’s best to start off with smaller amounts. In this article, we’re going to look at the best ways to invest 10k in Australia.
What Are The Best Way To Invest 10k in Australia
So you have AUD 10.000 and you want a good and safe investment?
One of the most effective ways to gain financial security is by having multiple streams of income. Not only will you earn more but you’ll ensure that you don’t rely on just one avenue for your livelihood. Hence, in addition to your full-time job, consider investing in a few different passive income streams.
Think About Your Current Financial Situation
From the wealthy to the low-income earners, risk is something that everyone worries about. It’s something you can never factor out of an investment.
Even if you do the most thorough research, some unforeseen factor can suddenly cause you to suffer massive losses. This includes things like economic slumps and major geopolitical events. For instance, large tax increases in certain industries can shake investor confidence. Before you know it, you’re suddenly in the midst of a bear market.
As an investor, you must be prepared to face some risk. However, your current financial status will determine just how much you can handle. For instance, if you can’t afford to lose the entire $10,000, then high-risk investments are a bad idea. Instead, you’ll have to find something stable, like government bonds. According to a report by ASX, average returns of 6.2% per year can be expected with these.
At the same time, you may need to access the $10,000 again in the near future. In that case, it definitely can’t be tied up in something long-term like a bond. What you need is an investment that can be liquidated easily like gold or cash. The trade-off is that these type of investments don’t give you many returns.
If you can afford to lose the $10,000, then high-risk, high return investments might be good enough. If you’ve already attained some financial security, you could also afford to invest in long-term ventures.
Think About Your Future Goals
Your future goals should factor into how much risk you can take. For instance, if you’re planning on having children, then you need to have a decent amount of savings. Hence, you should look for relatively safe investments that give you steady returns.
If kids aren’t going to be in the picture, then perhaps you can take on more risk.
What Should You Invest In?
Below are some of the best investments options available to you, if you live in Australia:
A lot of people view the stock market as a high-stakes game of chance. In reality, it’s a game of precise calculations and accurate predictions. Hence, if you want to be able to make money from it, you have to do your research on both the stock and the company.
For instance, here are a few details you need to look into before you invest:
- Company performance over the last decade
- Debt/Equity ratio – If this is high, then it means the company is using more debt than equity to finance its assets
- Profit margins – Increasing yearly profit margins signify continuous growth
- Whether the company relies solely on commodities – Companies like this turn volatile when something negatively impacts the availability of the commodity
Once you chose the right stocks, you’ll easily be able to get more than a 10% return on investment.
Blockchain-backed currencies are now increasing in popularity. Things like Bitcoin are now being accepted by many vendors all over the world, including Newegg and Microsoft. In addition, countries like the UAE are planning to integrate blockchain into all of their government operations.
What does all this tell you? That cryptocurrencies are going to be huge in the future. That’s why even Facebook is coming up with its own currency!
It’s true that the values of coins like Bitcoin or Ethereum seem volatile now. However, all signs point to the crypto market stabilizing in the future. Hence, if you buy stakes in a reliable cryptocurrency now, it may pay off in the long-term.
If you want to check cryptocurrency prices go to https://coinmarketcap.com/.
Gold is seen as a very stable investment instrument as it always retains its value. Why is that? First of all, gold is seen as ‘everlasting’ because it doesn’t corrode. Secondly, it has always been considered an indicator of wealth and luxury. This has been the case throughout the ages and across many cultures.
Gold is so stable that its value doesn’t plummet in response to negative economic and geopolitical shifts. As a matter of fact, its value rises when the stock market goes into a downturn.
There are two reasons for this:
- When the stock market crashes, inflation rises. This makes everything more expensive, including gold.
- During times when standard currency is seen as volatile, people view gold as a more stable way to maintain the value of their assets.
Living in Australia, there are three ways to invest in gold:
- Physically owning gold – You buy gold in the form of coins, bullions or jewelry and store it in a secure location. The downside of non-stock investments in gold is that you have to pay storage fees.
- Gold-backed Exchanged Traded Funds (ETFs) – In this scenario, the ETF actually owns the physical gold and you own a percentage of the fund. As a result, you’re not responsible for storing the gold.
- Buying shares in mining companies – the value of shares in mining companies are directly proportional to the price movements of gold. Hence, you can theoretically expect the same stability in value. However, the future of the company itself depends on the ability to keep finding gold. Hence, this method carries the most risk.
Before you invest $10,000, there are a lot of factors to consider. Most importantly, you have to think about how much risk you can handle. This, in turn, will determine what you should invest in. With $10,000 you can’t really invest in real estate. However, the stock market, cryptocurrencies, and gold are viable options.