How do you invest?
In my final year of University I decided to educate myself about personal finance. What better time to start than before entering the workforce?
Make your money work for you
I often heard this phrase without a sense of its meaning. After some research, I came across The Simple Path of Wealth. It was my introduction to the world of Financial Independence Retire Early.
In short, it's achieving early retirement through investing the majority of your savings into an index fund which averages about 7-10% annual returns. You invest until you have amassed a portfolio equivalent to 25x your annual expenses. At this point, you can withdraw 4% of your portfolio each year without the risk of diminishing your net worth.
With a generous savings rate and the magic of compound interest, one can retire in ~10-20 years of investing. See for yourself using this early retirement calculator.
The argument for index investing is that majority of financial advisors rarely beat the market. The easiest way to get started in index fund is through investing in ETFs which is an exchange traded fund. This is a type of security that tracks the market, meaning they are highly diversified. It is traded just like a stock. They also have low expense ratios. Examples of ETFs are the VTSAX which is an index which tracks ~3700 stocks. Another example is VAS which tracks the top 300 companies in Australia.
I personally have a 3 way portfolio split between VTS, VAS and VEU in hopes of diversifying across different global markets.
Below are some of the articles and resources I used to educate myself on investing. I would high recommending you to become as financially literate as possible because at the end of the day it's your money and not your financial advisor's.