Is investing for you?

Simon Doyle
Simon Doyle
Schroders CIO and Head of Multi-Asset, Australia
We take a quick look at the basics of investing and outline some things to consider when deciding if it’s for you

Investment and financial markets have a long history of being swamped by complex jargon, which often puts people off. In reality, investing need not be complicated. Once  you’ve worked out if it is the right option for you, there are lots of ways to start.

First, what is investing?

Investing can conjure images of multiple computer screens and flashing numbers, perhaps even Leonardo DiCaprio’s outrageous character in the film The Wolf of Wall Street, based on real-life swindler Jordan Belfort (he went to prison).

Here, we want to talk about investing as a sensible strategy for the long-term. In most people’s situations, this will mean putting money into a range of assets (more on this term later) such as shares, funds or bonds rather than into a savings account.

Why would I consider investing?

When savings rates are as low - as they are now - cash left in deposit accounts can lose value in “real” terms, because the rate of inflation is higher than the rate of interest it is earning. Inflation, as a reminder, is how much the cost of goods that you buy increases every year, so your money won’t buy as much in 12 months as it does now. As an example, at the end of September inflation in Australia was running at 1.9%, while the Reserve Bank of Australia’s base interest rate is still 1.5%.

The theory is that if money is invested then it will earn a better return, particularly over a longer period of time. And although some professional advice is recommended, you don’t need to be professional trader to do it.

Am I in the right financial situation to start investing?

You shouldn’t invest money that you might need to get to in the short term. You should only start investing if you have an accessible cash buffer that you can draw on for emergencies – financial advisers usually recommend at least three months’salary.

If you have a pot of money in excess of this emergency pot, the Australian Securities and Investments Commission’s advice site MoneySmart suggests – and we agree – clearing off any outstanding debts first. This includes credit cards and loans.

Once you’ve done that, investing in a fund could help you to earn more from your money and keep up with rising prices. Advice will differ from professional to professional, but we would suggest that you consider investing if your savings goal is five years away or more. This is because investments can decrease invalue as well as increase, especially over short periods of time. The length of time you can leave your money invested is an important aspect of how you best invest your money.

Some financial advisers view ten years as the minimum you should be prepared to lock away your cash. If you are unsure, you should seek professional financial advice.

How much do I need to start investing?

People are often put off investing because they assume they need huge amounts of money to get started. This is not true, but the amount you are willing to invest will depend on your goals, attitude to risk and current financial situation. You can start investing with a lump sum or by putting aside a certain amount periodically.With OpenInvest, you can begin with a lump sum of $25,000 and add what you can afford as you go.

What would I invest in?

Investors are usually advised by their financial advisers to spread their money across a variety of asset classes. The main asset classes are equities (AKA stocks),fixed income (AKA bonds) and cash or equivalents (assets that behave like cash). Less mainstream asset classes are commercial property (your money is invested in shops, offices and factories) and commodities (raw materials that range from oil to copper).

Spreading your investments across several asset types or classes is called diversification. Some assets are riskier- they can increase in value quickly but also lose value quickly - while others are more stable but offer less potential return.

At one end of the spectrum, individual company shares (also known as stocks or equities) can offer quick returns – but also quick losses. They require a lot of research and acceptance of quite a high level of risk. At the other end are government bonds, which tend to be more stable but generally offer lower returns.

Many beginner investors first take the plunge by investing in funds. These are vehicles that invest money on behalf of people and institutions. They can be invested in shares, government bonds, property or commodities – or a combination of any of these.

OpenInvest model portfolios take care of the diversification for you. The strategy you choose will spread your invested capital (money) across a variety of assets designed to achieve your goal.


Great article. As a beginner investor though I sometimes find managed funds hard to understand.

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Established in 1961, Schroders in Australia is a wholly owned subsidiary of UK-listed Schroders plc. Based in Sydney, the business manages assets for institutional and wholesale clients across Australian equities, fixed income and multi-asset and global equities.

Schroders believes in the potential to gain a competitive advantage from in-house global research; that rigorous research will translate into superior investment performance. We believe that internal analysis of investment securities and markets is paramount when identifying attractive investment opportunities. Proprietary research provides a key foundation of our investment process and our world-wide network of analysts is one of the most comprehensive research resources dedicated to funds management.

Areas of expertise:
Australia equities
Fixed income
Global equities

Why Schroders?

With a global network of researchers, we focus on serving our clients and targeting one result - superior investment performance.

Inherent in our approach to investment management is:
A structured, disciplined and repeatable investment process
A clearly defined investment style
A team approach to investment management

A global asset manager

We have responsibility for A$803.1 billion of assets* on behalf of institutional and retail investors, from around the world. Their assets are invested across equities, fixed income and alternatives.

We employ over 4700 people worldwide who operate from 41 offices in 30 different countries across Europe, the Americas, Asia and the Middle East.

We are close to the markets in which we invest and our clients.

Schroders has developed under stable ownership for over 200 years. Long-term thinking governs our approach to investing, building client relationships and growing our business.

*Source: All data as at 30 June 2018