Quora Answer: What is the Safest Option for a Young Person in Australia to Invest In?

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.