Tips to get your first share of investing

MARKET fluctuations and horror news stories can make investing in shares terrifying at first, but time in market is key, a senior financial planner says.

“For first timers, investing in share markets is daunting,” Andrew Zbik from Omniwealth said. “They see the negative press and they get the jitters.”

A perception of volatility means people need education, Mr Zbik claims.

“I always give clients peace of mind. I ask them, ‘if the share market stalls, will you stop buying milk’?” he said. “If you own Woolworths shares, you own part of 1200 supermarkets in Australia and they won’t stop trading (in a market slump).”

New investors can struggle to deal with losing money early.

“Commit the capital for a minimum of five years,” Mr Zbik said. “The market might be flat for five years and then the growth happens in the next four, it’s how the cycle works.”

Mr Zbik outlined three ways to invest your first $100,000 into the iShares S&P/ASX 200 ETF (ASX Code: IOZ), as an example only.

1. Jump in and invest $100,000. Had we done so in July 2015, it would be worth $100,623 after two years, plus we would have received $9815 in dividends; a total return of 4.91 per cent per annum.

However, the initial $100,000 would have been worth $85,587 in February 2016 – a 15 per cent decline after only eight months.

This shows investing is not a short-term project.

2. Invest $20,000 initially and then $20,000 more every six months. This would have reduced early losses and provided an end value of $104,261, but with fewer dividends of $5091 and total return of $9417 at 4.71 per cent per annum.

3. Invest $4150 every month for 24 months, irrespective of where the ETF unit price or share market is at. Our end value would have been $106,333, with total dividends of $5120, equalling a $12,108 total return for two years at 6.09 per cent per annum.