ross2340

Create A Trading Account

Step 1: Go to Commsec and click ‘Join Now’

Step 2: Click ‘Open an Account’ and go through the prompts

Step 3: Open a CDIA (or trade with your bank – not recommended). You will need your your ID – See details below.

Step 4: Confirm details via email

Step 5: You’re ready to trade – however you’ll need to put some money in your trading account (CDIA).

So I have an account, now what?

I would recommend reading my next blog – which I haven’t written yet. Also familiarise yourself with my previous post – Beginners Guide to Investing (Shares, Crypto and Trading Cards and more) and How much money should I be investing?

Other Details

Caveat 1, each bank is slightly different, but generally the same. I use Australia’s largest retail bank – Commonwealth Bank of Australia, therefore will use Commsec as their trading platform.

Full disclosure, I am not advertising or sponsored by CBA.

We know how much to invest from the previous post: Investing Fundamentals: How Much Do I Invest?

The next concept we want to think about is where we should be placing our money and this allocation will be based on the risk of the investments.

You might be familiar with the concept of risk-reward, which states that the higher the risk of a particular investment, the higher the possible return. This will help us to apply some sort of logic to our own circumstances and give some guidance around allocating our funds based on risk and return.

Each investment will have a different risk profile and some more risky than other. Example, a small exploration mining company without any certainty on finding something will have a higher risk than a large established ‘safe’ company like CBA.

From here on I’m NOT going to consider Cash sitting in the bank as an investment – that is part of your Emergency Fund established in the previous Post. Here on, investments are anything other than bank deposits.

Each person will have different risk profiles depending on their situations and life experiences. Use the Quiz below to get a feeling of your risk profile and how you can start looking at structuring your investment portfolio:

Risk Profile Quiz

Now that we have a better understanding of what OUR Risk Profile is, let’s look at what kind of assets we should start investing in based on this profile. See the next Post in the series: Investing Fundamentals: Investments Based On Risk Profile

Possibly the most difficult question to answer in getting started in some serious investing. This is not a perfect guide as each person is different, this is MY APPROACH which you can feel free to follow or take parts of to apply them to your circumstances.

Questions to ask yourself

How much cash do you need to last an ‘Emergency Period’ of X Months?
X month is different for each person. I would interpret it as how long it could take until I start earning decent money again? For me this might be 2 months, for others it could be 6 months to a year, it depends on jobs, specialisation, business type, market, etc.

To determine this we’ll have to set up a simple
Personal Income Statement:

The main parts to this are:
– Income: for most people this will be on your payslip / salary
– Expenses: from your cash / credit card / debit spends

How much money do we need to live (on current spending patterns)?
It’s a good idea to log into your bank and some have features which will tell you how much you spend. Example Macquarie Bank

It’s best to find a base for your spending, either monthly or yearly. Then you can understand for yourself more easily. Just note that sometimes the spend can be skewed by a holiday or other expenses, so you can normalise these for a more accurate number. I.e I might only go on 1 holiday per year, so $14K would be much too high.

So… what’s my minimum? $2,900 per month. Yearly…. $35,100

Final Result: $2,900 per month. For 6 months I’ll Need $17,600
This money will be kept in cash (in a bank account) and (hope to) never touch unless you really need to.

How much cash do I have available to invest?
Take some time to form a to look at your cash balances and other assets. This will help determine how much money we have left over to potentially invest (As we need a buffer of $17,600 minimum).

Cool – maximum investment amount $62K, but

What would be a reasonable amount considering my circumstances?
Considering this further, we may want to bulk up our emergency fund to consider the following:

Age / Closeness to retirement: The older you are the more you want to bulk up your fund with protected cash
Dependents / Inheritance: You may have children on the way or want to pass on a lot of your wealth to kids / grandkids.
Future Earnings Ability: you might have a successful job and be earning significant cash each year so your current balance feels particularly low
Other Expenses
- Funding your retirement – ensure your super balance is adequate to fund your desired retirement lifestyle
- Upcoming significant expenses – holidays, purchasing a house, wedding etc

Examples

The below examples are simple examples not financial advice. Apply your own circumstances and knowledge to your situation before investing.

Simply put these examples will give you an idea of the maximum amount of money you could invest. The weighting is your personal subjective opinion on each of the 4 categories. You can find the template HERE to manipulate your own google sheet and set yourself up to invest! The additional steps below will add to your starting emergency funds to provide additional safety to your equity.

Example A: Young Person in a solid Financial Position

Age / Closeness to retirement: 30 Years old, 20+ years to retirement. Long way off, would be wanting to build adequate retirement funds
Dependents / Inheritance: No children expected in the next few years and no dependants.
Future Earnings Ability: Currently earning in excess of $100K yearly with regular pay rises and promotions expected over the medium-long term.
Other Expenses
- Funding your retirement – Want to enjoy a comfortable retirement, nothing too flash
- Upcoming significant expenses – Wedding planned in the next year, expected to be $20K

Example B: Closing in on retirement

Age / Closeness to retirement: 55 Years old, <5 years to retirement. Very close to retirement, should be protecting assets built up over the years to spend during non-working times.
Dependents / Inheritance: 10 kids & grandchildren, they are self sufficient but want to ensure they are provided for comfortably before and in the Will.
Future Earnings Ability: Currently semi-retired and spending the majority of this money for life expenses and enjoyment. Earnings will only deteriorate from here.
Other Expenses
- Funding your retirement – Want to enjoy a comfortable retirement, nothing too flash
- Upcoming significant expenses – None to note.

Example C: Young and supported by family – e.g Uni Student

Age / Closeness to retirement: 20 Years old, +35 years to retirement. Very far from retirement. Longest time to build asset value.
Dependents / Inheritance: Nothing planned for now or in the future.
Future Earnings Ability: Might make some cash mowing lawns or very part-time job, but earnings can only go up from here. Parents will be supporting most expenses.
Other Expenses
- Funding your retirement – Want to enjoy a comfortable retirement, nothing too flash
- Upcoming significant expenses – Holiday for a gap year or something. Important for life experiences.

Summary

Each person is in a different circumstance. Looking at your life factors will help determine how much you can afford to invest.

You want to have a good balance between using your assets effectively to further your income and protecting the equity you’ve earned over your lifetime. Every year or so you should consider if your life circumstances have changed and adjust accordingly.

I never had planned to build a website let alone do it. Every year (for the last maybe 10 years) I’ve set my goals or as most people know them new years resolutions within the start of January. This year was like any other where i had them split into long and short.

Placeholder link – writing goals

On there for 2021 was the usual get fit, Run this, start that, etc. Only after I started chasing on of them – running events did my goal expand into this beast of starting a website and blog.

See the quote above from one of my favourite Anime: Hunter x Hunter 2011. “You should enjoy the little detours to the fullest. Because that’s where you’ll find the things more important than what you want”. I understand this as, even though you may have goals, sometimes the side tracks are where you really find meaning to the goals.

It all came about as I was training for my link: 50k ultra first lumberjack, where mid-way into a 40K run I thought this is amazing, I want to:
1. Notes for my own records
2. Share my learnings with a wider audience and hope to inspire

For me personally, when you’re out there running for up to 6 hours alone with a flat set of earphones, you have a lot of time to thing (Link to: Japan Bike Tour). So many things are going through your mind but there’s no way to write them all down.

For me personally, I want to be able to look back at my life and easily see what I’ve done. Not dissimilar to a diary or scrapbook but in a digital and interactive format. I want to see my triumphs, failures and stagnations. Learn from this and go forward.

Leading into the 2nd part, when listing all of these learning, why not share the learnings I have with a wider audience. I always thought things like the school curriculum and life lessons you learn to be almost irrelevant in shaping someone into a future success. Hopefully my way of living “live the life you want to live / live your own life / You are accountable for your own happiness” will inspire others to seek better in their own lives. My wife has taken this own board and just (as of 20/04/2021) posted her newest PB for a park run 29 minutes which she largely attributes to my enthusiasm for running and other hobbies motivating her to get out there.

Finding this website as a detour on my life path has inspired me to further mature and pass on whatever wisdom I can.

After almost 2 years and 6 months my Garmin Forerunner 935 seems to have finally clocked its last activity:

What I Need a Sports Watch For
I do a fair bit of outdoor activities (From Jan to March 158 hours) mostly Running (trails 80%, Road 20%), Cycling, Golf and Swimming. I NEED a watch with the ability to track all of these and I WANT one that will also include Music, GooglePay and Triathlon Functionality. It’s also important to consider future goals, I’m considering doing an Ironman (Full or 70.3, tbd), so for this I will need strong battery performance and triathlon sport function is preferred.

Here’s the breakdown in a (simple) table: Garmin Compare March 2021

The Selection Process
seemed difficult at first, but once put in an orderly spreadsheet, it becomes a simple process of elimination.

This simple process put me down to 4 watches (non-greyed lines) which then I had to determine if the additional features of the more expensive watches was worth it. A simple way of doing this is allocating each (useful) feature with a $ value and then using a more comparative price. The additional features (additional to the more basic and cheaper Vivoactives) were – Full Map Functionality, GP accurate, Extra battery life, Triathlon ability and ‘future proofing’. These are very subjective and up to each individual to allocate the $ values.

An honourable mention to the other major brand – Suunto. A really great watch (Suunto 7), however let down severely in Battery life.

Conclusion
In the end, I went with the Garmin Fenix 6 Pro. It houses everything I need and then some. I’m also wary of the value I gain from having such an important tool to my health, fitness & Goals, so even though I would consider it a significant price tag, it will be a worthwhile investment.