Where to invest $10k: Glen Hare

If you're fortunate enough in this swirling economic environment to have been able to put aside some spare cash, it may be an overwhelming proposition deciding just exactly what to do with it.

At a moment in time marked by global COVID outbreaks, war and climate change fuelling a struggling sharemarket, falling house prices and rising energy bills, we don't blame you.

Thankfully, though, there are sage and steady voices amid the noise, eight of which have lent their wisdom to this series: Where to invest $10k. 

How can micro-investing help a young saver build their wealth?

We know the cost of living is rising, wages have stagnated for decades and the entry point for Australia's property market has raced out of reach for many. Yet, in the same breath, we see an ever higher spend across Uber, fashion and dining out than 
ever before.

These realities make it very easy to frown upon, or worse, wag fingers at, the changing outfits, social lives and consumer electronics of the younger people in our lives.

But when it comes to wealth, I believe that rather than lecture we should attempt to understand young people's environment and how we can effectively work within it.

Micro-investment platforms offer a generationally appropriate wealth-building tool that can, if used properly, help young people overcome restrictive entry points for long-term, high-growth investments, conveniently integrate investment into daily life and provide in situ access to financial services that might otherwise be perceived as too difficult or restrictive.

Investment app Raiz's "round-up" feature is a perfect example of meeting young Australians where they are, while simultaneously empowering them to make better decisions and build their wealth.

By automatically investing the change from everyday purchases, the app turns every tap of a card (or phone!) into a "savings" event, effectively setting aside a percentage of every purchase for the future.

Even better, these platforms reduce what was once an overly intimidating process, choosing a brokerage account and portfolio, to a point-and-click process as simple as downloading from the app store.

Should the average 18- to 29-year-old "round up" $10 a week, it would take less than three years to surpass the median amount saved and invested for their age group.

After a decade they'd have more than 3.5 times that median, plus an extra $2000 in interest. Not a bad outcome at all!

Of course, there is no substitute for sound financial planning and careful spending, but if you are looking for easy wins, this could be a great start - and no mention of avocado or austerity required!

Where I would invest $10k

This year and into the future, I will be making a concerted effort to "catch up" with my super and maximise the benefits of carry-forward contributions.

As any small business owner, freelancer or working mother will attest, it can be extremely difficult to build retirement savings for individuals who take time out, work irregular hours or experience some other period when they make no, little, or limited contributions.

While not available to everybody, carry-forward contributions were introduced to even the playing field, making it easier for people with irregular work patterns to save for retirement and benefit from tax concessions attached to super.

Assuming I was in the highest tax bracket, if I was to make a $10,000 "catch-up" contribution taxed at 15% - rather than my marginal tax rate of 47% - I'd receive a $4700 refund in next year's return, bolster my retirement fund with a $8500 deposit ($10,000 minus 15% contribution tax) and stretch my hard-earned dollars even further by taking advantage of the current market downturn. Not bad at all!

Into which super fund will I be contributing my $10,000? An ethically aligned, environmentally friendly portfolio - free of human and animal rights abuses, of course. There are murmurs of underperforming ethical funds, due in part to their higher exposure to tech and healthcare - which have taken a battering over the past six months.

Despite recent challenges and high commodity prices driving up resource stocks, many ethical funds over a five-year period remain strides ahead of their 'non-ethical' counterparts.

Being in my 30s, I'm in it for the long haul, I'm not interested in short-term market movement, but focused on the bigger picture and end result.

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