By Priya

April 5, 2021


Show notes

🎙 Ready to build real wealth? Learn how to start investing and determine your investing strategy, even if you're a beginner. Your investing strategy is like a GPS for your investing. It knows where you want to go and how to get there. There’s no getting rich quick here, but it’s easy to lose a lot of money if you don’t know what you’re doing. Having a solid investing strategy will take your risk tolerance and time horizon into account while making sure you’re only investing in something you understand. But how to do determine your investing strategy? 🤔

This episode discusses topics like:

  • How to determine when you’re ready to start investing even if you still have debt;
  • How to start building and managing your investment portfolio; and
  • What kinds of risks are involved when investing in the stock market and what they mean.


Hey there, friends! And welcome back to Girl on FIRE, the financial independence podcast for women. 

My name is Priya, I’m a Chartered Accountant, an analyst and the creator of Paper Money Co. 

I’m also a fierce financial feminist and the host of this podcast. I believe that a woman who is in control of her money, is in control of her life.

This weeks’ episode is all about how to start investing. Investing is a huge topic that we’ll be covering in a lot of depth over the coming weeks.

But I don’t want to overwhelm you, so this episode is a crash course on how to determine your investing strategy so that you can reach your investing goals. 

So, there are more episodes on this topic coming up in the future. I just didn’t want this episode to take 10,000 hours.

I also didn’t want you driving home in tears or on the train with snot coming out your nose because investing is too overwhelming.

As always, I encourage you to take notes as you learn from this episode, but if taking notes isn’t your thing, the full transcript of this episode is up on my website — — as well.

In future episodes, we’re going to be talking about different things you can invest in, how to choose them, how to build and manage your portfolio.

But for this episode, we’re focusing on how to determine your investing strategy. Let’s start off by covering some basic questions.

Why do you need an investing strategy?

First, why do you need an investing strategy? Your investing strategy is like your GPS.

It knows where you are now, where you want to go, and provides you with a roadmap to guide you to your destination. 

Just like a budget is a plan for how you spend your money and reach your savings goals, your investing strategy is your plan for investing and how to reach your investing goals. 

And it’s super important because investing is risky. It’s easy to lose a lot of money by making the wrong choices or following the wrong advice. So, it’s one of the first steps to take when you’re learning how to start investing.

It’s also something that takes time. So, when you combine those two things together, risk and time, investing also becomes something that’s very emotional. 

If the idea of losing money is scary right now, if it gives you a churning stomach, imagine having to feel that way for the next 10 or 20 years!

So, having a clear strategy helps you see the big picture and stay focused regardless of what your emotions are doing.

Now, just a side note here — we’re going to be discussing emotional investing in future episodes because it’s an important topic. 

But I want to make it clear that emotional investing isn’t something that’s only for women. And it’s not because of stereotypes that say we’re too emotional. 

It happens to all investors and it’s just because humans are wired to avoid risk, that’s how we protect ourselves.

Why do you need to start investing?

Moving on from that, the next basic question I wanted to address is this: why do you need to start investing? If it’s so risky, isn’t it safer just to put your money in savings?

And the short answer is no. When your money sits in savings it’s not growing. And if it doesn’t grow, it’s not going to outpace inflation. 

This means that over time, your money is going to lose it’s value and it’s purchasing power. We talked about this in episode 2. 

That’s why it’s not enough just to save money for retirement. And I’m not just talking about FIRE here, I’m talking about traditional retirement at 65, too. 

Now, the way to beat inflation and make sure your money grows enough to sustain you in your golden years is to invest it. 

Not only that, but investing is more important for women than it is for men because of things like the gender pay gap and the need to take time out of the workforce to raise a family.

It creates a gender wealth gap as well, which means that many women actually end up in poverty when they retire

And that’s also something we talked about in episode 2, so I recommend you check that out for some extra credit as well. 

How to determine your investing strategy & start investing

Okay, so now that we’ve got that out of the way, let’s get into the fun stuff and talk about how you’re going to determine your investing strategy. 

So, the first step is to make sure you’re ready to start investing. Now, if you can answer “yes” to the following questions, then you’re ready to start investing. 

Have a fully funded emergency fund before you start investing

  1. Do you have a fully funded emergency fund? 
  • This is something we covered in depth in episode 6. Your emergency fund is not — I repeat — not going to be invested. 
  • But you do need that safety net there for emergencies. You’re not going to get anywhere if you have to withdraw your investments every time you run into an emergency. 
  • So, you need a fully funded emergency fund before you’re ready to start investing. 

Pay off high interest debt before you start investing

  1. Have you paid off all your high interest debt? 
  • Contrary to popular belief and what some financial experts will say — you don’t need to be completely debt free before you start investing. 
  • Time in the market is the most important thing when it comes to growing your wealth and retiring, so the earlier you start the better. That means you can absolutely start investing if you still have debt, particularly if the interest rate on your debt is lower than your expected average return.
  • But you want to eliminate all your high interest debt, like credit cards, first. For debt like that, you’re usually paying 20% or more in interest. We talked about using credit cards without going into debt in episode 13.
  • And if you’re only earning 10% on your investments, then you’re still not increasing your wealth.
  • So, given that the average long term return on the stock market is about 8-10%, if you have debt with an interest rate higher than 8-10%, then you need to eliminate that before you start investing.

Have stable income to support your short term lifestyle before investing

  1. Do you have stable income to fund your lifestyle in the short term?
  • Investing is a long game. It takes decades of investing to grow your wealth and become financially independent. It’s not going to happen overnight, or next week. 
  • That means that you can’t rely on your investments to cover your expenses in the short term. You need another income source to do that. 
  • The purpose of the money you invest is to provide you with an income when you retire in 30 or 40 years.
  • So, you need to make sure you have enough money to cover all your expenses now as well as your short term savings goals like sinking funds.

Find money available to invest

  1. Do you have money available to invest?
  • Now, depending on the type of investments you choose, you’ll need different amounts of money, so there’s no one right answer here. 
  • But the point is that you need to have some money that you can invest — money that won’t be needed anytime soon. 
  • You might need to look over your budget to find that extra money to invest if you don’t already have it saved up somewhere. 
  • Your budget will be a really powerful tool here. That’s why in episode 7 we talked about your budget being the foundation that’s going to turn your dreams of financial independence to reality.

So, if you can answer “yes” to those questions, then you’re ready to start investing.

How your time horizon impacts your investing strategy

Okay, so once you’ve determined whether or not you’re ready to invest, it’s time to get into the really good stuff. 

The first thing you need to consider in your investing strategy are your investing goals, which we covered in episode 5.

Why do you want to start investing?

Why are you investing? How much wealth are you trying to build? If you’re investing for retirement, then a common rule of thumb is to use the 4% rule. 

Based on some studies that were done, the 4% rule states that you should be able to live off 4% of your portfolio for 30 years and not run out of money.

So, if you take your annual expenses in retirement and multiply it by 25, you’ll find out what the value of your portfolio needs to be at retirement. 

Essentially, it tells you how much money you need to retire. 

So, for example, if your expenses in retirement will be $60,000 a year then you’d need $1.5M to retire.

And $60,000 might be a pretty luxurious retirement but it’s just an example. If your annual expenses in retirement are $30,000, then you’d need $750,000 to retire.

This is just one of the ways to figure out how much you need to retire, which is a whole other episode on it’s own.

But the 4% rule is a pretty common one you’ll see out there in the internet wilderness.

Consider your time horizon before you start investing

Now, the next step is to determine when you’re going to need the money you’re investing. When are your goals “due” — so to speak?

This is your time horizon. It tells you how long you have to invest. And how long you have to invest will determine how much risk you can take on.

So, this is a really important part of your investing strategy, because it will impact what you can invest in and what kind of returns you can get from your investments.

Because if the market crashes tomorrow and you lose everything, you have time to recover. Think of it like being back at university or college.

You’ve had a bad year, your grades suck and you’re almost failing. But the semester is almost over, you only have one exam left. 

You don’t have time to turn things around. You don’t have time to make up your grades. But if it was the beginning of the semester, you’d still have time to make changes and turn things around.

So, think about your goal and think about how much time you have. If you’re investing in the stock market to earn enough income for a down payment on a house, your time horizon might be too short. 

If your time horizon is less than 5 years, then the stock market will have too much volatility and you’ll be making a much riskier investment.

But if you’re investing for retirement, early or otherwise, you likely have a time horizon of at least 10-15 years, and all the way up to 20 or 35 years depending on your age.

So, for example, if you’re 30 years old right now, and you want to retire at 65, then when it comes to investing for retirement, you have a time horizon of 35 years. 

If you’re like me, and you’re pushing 30 and hoping to reach financial independence by 45, then your time horizon is 15 years. 

How to start investing based on your risk appetite

The next thing to consider for your investing strategy is your risk appetite. Your risk appetite is how much risk you’re willing to accept. 

There’s inherent risk involved in investing because you can lose money. And as we just talked about with your time horizon, you might not have enough time to recover before you retire. 

So, your risk appetite is generally impacted by two main factors — your age (which helps determine your time horizon) and your personal preference.

How your time horizon impacts risk

Now, when it comes to investing, especially in the stock market, the longer your time horizon is, the better. And that’s because risk is a lot higher in the short term.

All you need to do is check the news on any given day and you’ll see that day to day, there’s a lot of volatility in the stock market. 

Prices go up and down, up and down, all day, every day. Today, you could be earning money, tomorrow you could be losing money. 

But over the long term, history has shown us that the stock market always moves up. That’s a trend you can easily see. 

I want you to Google the ASX 200 or the S&P 200 right now. Google will show you a nice little graph at the top of the search results.

That graph shows you the performance of those indices over time. On the short term graphs, it’s all over the place.

But when you zoom out, you can see an upward trend forming.

This is something I remind myself of constantly when I get antsy that my investments are losing money. When in doubt, zoom it out!

Economies are always growing, we’re becoming more and more prosperous as a society over time. 

And “over time” isn’t a few months or a few years. It’s decades. It’s 10, 20, 40 years. So, the longer your time horizon is, the more risk you can take on.

Now, your time horizon changes as you get older, especially for retirement. It gets shorter as you get older. And that means that your risk appetite decreases as you get older and get closer to retirement.

So, if retirement is 10 years away for you, your risk appetite is going to be a lot lower than it is for someone who’s retiring in 35 years.

Risk appetite and your personal preferences

Now, when it comes to your emotions, remember this — humans are wired to avoid risk and choose the safest options. So, you might be super risk averse like I was for years and be afraid of investing. 

Or you, might be willing to sacrifice everything in a risky investment for the chance to make bank. There’s no right answer here. It’ll depend on what helps you sleep at night. 

I used to be super risk averse. I was scared of investing because I was scared of losing money. I made my first investment when I was 18 but I was always scared of it.

Until I grew up a little bit and realised the biggest risk I was taking was setting myself up to be tied to a desk for the best years of my life.

That was a bigger risk to me - I can make more money, but I can’t make more time. And I became obsessed with the idea that I was running out of time to live my life.

And I didn’t want to spend my limited time on Earth making money for a rich white man. So, my attitude to risk changed. 

Not only that, but I invested time in learning more and more about investing. And the more I learned, the less afraid I was. 

I still consider myself a conservative investor, but I’m no longer so risk averse that I won’t invest.

The difference is that I choose investments that align with my risk tolerance. I only invest in things that I understand and that carry lower risk. I try to strike a balance between growth and being defensive.

I’m not planning on investing in cryptocurrency or NFTs anytime soon because it’s too much risk for my liking.

So, understanding how much risk you want to take on will help you decide what to invest in and how to structure and manage your portfolio.

How time and effort impacts your investing strategy

Moving on, the next thing to consider for your investing strategy is the time and effort you’re willing to put in to managing and building your portfolio. 

The more time you have and the more effort you can put in, the more actively you can manage your portfolio. 

So, you need to ask yourself whether you’re able to put in the time and effort to learn, do the research, analyse the reports and make the decisions.

Or, do you want to pay someone to handle all of that for you? Or maybe you’ll still take the DIY approach but you’ll choose investments that don’t require a lot of work.

Essentially, do you want to be a passive investor or an active investor? I try to strike a balance between the two. 

I don’t have hours to spend researching every week but at the same time, I want to do it myself because I’ll put my own best interests first, more than a paid advisor will. 

So, I put in some time and effort to understand what I’m doing, formulate my investing strategy, execute that strategy and check in on my portfolio.

But I don’t spend hours a day researching stocks and reading up on the market news. And I choose investments that align with that strategy.

How often should you invest when you start investing

Next, I want you to consider how often you’re going to be investing. Now, this is more geared toward investing in the stock market as opposed to investing in property. 

If you’re buying real estate every month, you probably don’t need to be listening to this podcast!

But if you’re investing in the stock market, how often or how frequently are you going to invest?

Some of this will depend on how you get paid, but it’s also based on what works for you. Do you want to invest monthly? Quarterly?

Knowing that time in the market is super important, do you want to do it weekly? Or maybe you’re happy with making one lump sum investment at the beginning of every year. 

It’ll also depend on your budget and your cashflow. Do you have a steady income coming in every month that you can invest? 

Or maybe you want to do it quarterly because you earn commissions every quarter? There’s this great calculator you can use online that helps you figure it out. 

You just enter in a few details and it tells you how frequently you should be investing to maximise your returns. I’ll leave it linked in the show notes.

How to start investing: portfolio management

How are you going to diversify your investments

Okay, so now that we’ve gone through all of that, it’s time for the really big part. This is the ganache on the chocolate cake — portfolio management. 

Portfolio management is all about what you’re going to invest in and how you’re going to manage your overall portfolio. And your portfolio is just a collection of all your investments.

The first thing you want consider with portfolio management is how you’re going to diversify your investments. 

Diversification is the complex investing term for saying: “don’t put all your eggs in one basket”. 

It’s a way of managing risk because your investments are spread out among different asset classes and even within those asset classes. 

Because if you have all your eggs in the straw basket and the basket collapses then all your eggs are gone, right?

But let’s say you have 30% of your eggs in the straw basket, 50% in the plastic basket and 20% in a carton in the fridge.

If the straw basket collapses, you’ll lose 30% of your eggs instead of the whole 100%. The other 70% of your eggs are safe, and they might even be thriving. 

You’ve minimised your losses by spreading your risk around. That’s what diversification is. And that’s what you’ll need to do with your investments to manage risk.

And since your risk changes as you get closer to retirement, the way you allocate your assets will change too. You might choose riskier investments when you’re younger and still working.

But as you get older, you might want to have more of your money invested in safer investments.

So, for me, my portfolio consists of my superannuation and my stock market investments. I’m not investing in real estate because I want to retire in Spain, and also — hello, Sydney property market.

I’m a lot more aggressive with my superannuation because I can’t touch that money for at least 30 years. It’s got 30 years to sit there and grow for me. I’m adding to it when I get paid every month, but I can’t touch it.

But my stock market investments are different. I want to be able to get my hands on that in 15 years at the earliest. Which means I’m still trying to grow it —  but I’m not as aggressive with it because the time horizon is shorter.

How to start investing with your superannuation or 401(k)

Now, first, let’s go for the low hanging fruit — your super or your 401(k) for my listeners in the US. Your retirement fund counts as an investment and it’s part of your portfolio. 

And for those of us in Australia, yes, contributions to your superfund are mandatory but it’s still 100% your money. You worked for it, you earned it. It’s not free money.

You may not see it now, but I promise you, it’ll be a big deal when you hit 60 and retirement is around the corner.

Now, it’s up to you whether you want to make voluntary contributions either from your pre-tax income or after taxes. 

It’ll depend on your own personal circumstances and your planning. And it’s something we’ll get into in a future episode because it’s a pretty big topic.

So, your best bet it to discuss this with a financial advisor who can really go over your needs not only now, but in retirement. 

It’s always a tricky area because it’s money that you can’t touch until you’re in your 60s. And that could be 30 years away. 

For my listeners in the US, if your employer offers a match for any contributions you make to your 401(k) — take it!

That’s your money that you’re leaving on the table. I wish we had that here in Australia but I’ve never heard of it. It would be such a sweet perk!

Another decision to make with your super is what investment option you choose. 

Most superfunds will let you choose whether you want to be aggressive, conservative or balanced with your super.

And that will depend on your personal time horizon and your risk appetite like we talked about before.

At the very least, I recommend that you look into your superfund and make sure you’re not paying excessive fees and you’re not paying for insurance you don’t need.

Most superfunds sign you up for insurance by default and you have to opt out.   The amount you pay for that insurance could have a significant impact on your retirement nest egg. 

The same applies with fees. Do your research on industry superfunds. You know, one of “those” in the ads, with the little hand thing? You can’t see the symbol I’m making with my hands but I know you’ve seen it before.

Industry superfunds don’t pay commissions to advisors and have more favourable fee structures so more of your money gets invested for your retirement.

Asset allocation

Now, most of the time, you don’t have a lot of control over where your super is invested. You generally only get to choose how aggressive or conservative you want to be. 

The real fun happens when you put together your own investments. You generally have 3 choices here: you can invest in stocks, bonds or real estate.

Your asset allocation is how you divvy up your money between those three asset classes. So, you might choose to go 70% in stocks and 30% in bonds, or 100% in stocks or 10% in stocks and 90% in real estate.

It’s going to depend on your goals and all the things we’ve talked about so far — your time horizon, your risk appetite, how often you’re going to be investing and how active or passive you want to be. 

The important thing to note here is that stocks are generally considered to be more risky than bonds. Bonds have less risk which also means they offer lower returns. 

Now, I’ll be taking a deep dive into both stocks and bonds in future episodes, but for now, you need to understand that they differ in terms of risk and return. 

Real estate will also differ very widely depending on geographic location and what the local property market looks like, so you’ll have to do a lot of research there. 

Your asset allocation is one of the ways you can diversify your portfolio. And then you can further diversify within each asset class.

So, a nice and neat example of this is a 3-fund portfolio. In a 3-fund portfolio, you allocate your money between domestic stocks, international stocks and domestic bonds. 

So, you can see there are two different asset classes — stocks and bonds. And then within stocks, it’s further diversified into domestic and international stocks.

Investing in yourself

Now, investing strategy is a huge topic and I could honestly talk about it for hours and hours, but since this is a crash course, I want to leave you with one more chicken nugget of wisdom.

Investing isn’t always about trading stocks and buying real estate. It also includes investing in yourself. And that means continuing to learn and grow in whatever makes sense for you.

Maybe you want to take a few classes to upskill yourself and apply for a higher paying job. Or maybe you want to make a complete career change.

It also includes starting your own business. That’s why, if you remember from episodes 8-10 when I did my deep dive budget series, my business expenses are classified as an investment for me.

And one of the ways you can keep investing in yourself is to keep learning more about investing. You work damn hard for your money. It’s about time you made your money work for you, don’t you think?

Next weeks’ episode

And that’s all I have for you Girls on FIRE today!

My challenge for you this week is to answer those 4 questions and see whether you’re ready to start investing. If you’re not quite ready yet, then create a plan to help yourself get there. 

Investing is really the only way you’re ever going to retire and live a comfortable retirement. You can’t rely on winning the lottery or moving in with your kids.

And if you’re pursuing an early retirement or financial independence, this is how you make it happen. So, I’ve got a lot more to say about investing, it’s a huge topic and there’s a lot to cover. 

I know we’ve gone through a lot in this weeks’ crash course episode, so be sure to visit for the transcript. 

On next weeks’ episode we’re going to taking a deep dive into stocks - what they are, how they work and how they can help you reach your financial goals.

It’s going to be a super interesting episode so you’re definitely not going to want to miss it.


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The advice shared on Girl on FIRE is general in nature and does not constitute financial advice. The information shared does not consider your individual circumstances. Girl on FIRE exists purely for educational purposes and should not be relied upon to make an investment or financial decision.

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