How much should you invest?
- Adam Ampersand
- Sep 9
- 4 min read
The Small Seed That Grows:
Why Anyone Can Begin Investing Today
Imagine planting a seed that takes root, steadily grows, and one day yields a bountiful harvest. That seed is your first dollar invested—and all you need is a tiny start, a bit of consistency, and time.
Investing Isn’t Reserved for the Wealthy
For too long, investing felt out of reach—something only for those with a hefty lump sum or insider knowledge. Today, however, those barriers have virtually vanished. Micro-investing platforms allow Australians to begin contributing even with pocket change, sometimes as little as five dollars, and often without account fees or minimums. It’s not hype—small amounts add up when compounded over years.
Start as soon as you can with an amount you can automate and sustain.
Prioritise safety first (cash buffer), then consistency (regular contributions), then growth (diversified low-fee assets). As an example, setting aside ~10% of your pay cheque is a good starting point.
Action plan
Build a 3–6 month emergency fund in a high-interest account before (or alongside) investing. Clear high-interest debt first; it’s a “risk-free return.”
Pick a core low-fee ETF (eg. broad ASX or global) for 80–90% of contributions;
keep 10–20% for specific sectors or themes to learn without derailing risk.
Automate contributions each payday; enable DRP/auto-reinvest.
Rebalance yearly; keep costs and taxes low.
Match risk to horizon: equities for 7–10+ yrs; more cash/bonds if <5 yrs.
Make It Routine
Skip the timing-the-market frenzy. The real magic happens when you invest consistently. Automating small daily or weekly investments — say, the cost of your daily latte — can snowball dramatically. One notable example: $6 invested each day at an estimated return of 9.8% could grow to over $1 million in 40 years. Another common mistake people make: dismissing a $70 weekly investment as insignificant. Yet over 40 years, that could become roughly $190,000.
What to expect (evidence)
Long-run Australian shares have delivered ~9–10% p.a. (before fees/tax). Compounding + time matter more than timing. On the ASX, dividends are a big slice of total return (~4–5% p.a. historically), so reinvesting them is powerful.
Its important to keep a cash buffer: ASIC’s Moneysmart recommends an emergency fund to handle shocks. Plan for real (after-inflation) growth. The RBA expects inflation to return to the 2–3% band; use this as your hurdle when judging returns.
Diversify: long-term studies warn against relying on a single asset class.
Let Compounding Do the Heavy Lifting
Compounding isn’t a buzzword; it’s your most powerful ally in long-term investing. Historically, the ASX has delivered around a 9.55% annual return over 30 years, turning $10,000 into roughly $155,000. Even adding regular monthly contributions can dramatically ramp up future wealth. For example, starting with $10,000 and adding $500 per month could grow your portfolio to nearly $1.2 million in 30 years.
Quick sizing rule
New to investing? Start with a fixed % of net pay (eg. 10–15%).
Have a target? Use: monthly contribution ≈ goal ÷ future-value-factor (based on your assumed return, net of fees/inflation).
Example: $500/month at 8% for 10 years ≈ ~$91k (before tax/fees).
Steps to Begin—Clear, Simple, Powerful
Tidy Your Finish Line: Build a 3–6 month emergency fund and clear high-interest debt. This ensures your investment journey isn’t interrupted by life’s curveballs.
Start Small, Start Now: You don’t need thousands—just regular, manageable contributions. Platforms like CommSec Pocket allow investing in ETFs with just $50, charging minimal fees—$2 per transaction under $1,000.
Stick with Low-Cost, Broad ETFs: Diversification can be as simple as buying an ETF that tracks ASX 200 or global indices. These lower-risk, low-fee instruments help spread your exposure effectively.
Automate and Ignore the Noise: Set up automatic contributions and avoid obsessing over daily market fluctuations. Let time—not timing—be your edge.
Keep It Long-Term: Even modest contributions grow exponentially with time. The focus should be on your future self—not chasing quick wins.
Consider a modest scenario: investing $10,000 with an average ASX return of 9.55% – your money could grow to $155,000 over 30 years. Better yet, by adding $500 per month, you could hit around $1.2 million in the same timeframe. And for those after income, investments in ASX dividend stocks yielding around 7.5% could generate $20,000 in passive income annually if your portfolio reaches about $266,000—and with consistent investing, you can build that over time.
How much money should you start investing?
Starting with an initial investment of $500 can provide a solid foundation, and with the availability of fractional shares, you can diversify your portfolio even with smaller purchases of expensive stocks. Fractional shares allow you to invest in high-value stocks without needing the full share price, making it easier to achieve a diversified portfolio. The key is to begin early and consistently increase your investments as your financial situation allows for more growth potential.
A simple approach on how to allocate your budget:
