The following is my answer to a Quora
question: “What
is the safest option for a young person in Australia to invest in?”
If you are young, with limited funds, and
a low risk tolerance, a good option would be investing in index funds, or
similar collective investment schemes. This
allows you to diversify your investments at low cost, and build a position that
will benefit you over an extended investment horizon. Index funds are not geared towards beating
the market. They are meant to appreciate
gradually, in line with the market. Your
returns, compounded, will most certainly beat inflation, ensuring you a decent
return. As your earning power improves,
you can consider putting more funds in, or diversifying into other types of
investments. However, this should remain
one of your staples.
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