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Lesson 2 transcript

Before you start investing, you should ask yourself a couple of important questions.

1. Do you have high interest debt such as a credit card balance?

If the answer is yes, you’re probably not yet in a position to invest. Remember that borrowing money isn’t free, so anytime you take on debt, you will pay for doing so.

For example, the average standard credit card interest rate in Australia is 19.82% p.a., while the average yearly return of the Australian sharemarket (known as the S&P/ASX 200) over 30 years is 9.28%. It really pays to place a priority on paying down high interest debt before getting started investing.

2. Do you have an emergency fund?

If you haven’t built up an emergency fund yet, you’ll want to do that before you dive into investing. Most experts suggest having three to six months’ worth of your regular expenses set aside in an emergency fund. These funds are there to help you in case life takes a turn for the worse, whether it be losing your job, sickness or another situation.

There are other important considerations once you’ve made the decision to invest. These include understanding your financial goals, knowing your risk tolerance and the time frame of your investment journey. These will be covered in other lessons in this course.

1 https://www.finder.com.au/credit-cards/credit-card-statistics
2 Bloomberg. As at 31 May 2022. Past performance is not an indicator of future performance.

 

Betashares Capital Limited (ABN 78 139 566 868 AFSL 341181) (Betashares) is the issuer. Before making an investment decision, investors should consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), available at www.betashares.com.au. This information does not take into account any person’s objective’s, financial situation or needs and is not a recommendation or offer to make any investment or to adopt any particular investment strategy. Investors should consider the appropriateness of the information taking into account such factors and seek financial advice. Investments are subject to investment risk, investment value may go down as well as up, and investors may not get back the full amount originally invested. ASIC’s MoneySmart website has useful information for people considering investing. The MoneySmart resources can be found here – https://www.moneysmart.gov.au/investing. ASIC’s MoneySmart website has no affiliation with Betashares.