Investing in ETFs at age 18?

Hello OzB, long time member and occasional poster looking for some investment advice on my favourite online forum.

Following my 18th birthday, my father gifted me his yearly bonus (~$5k) on the condition that I invest it in some form within for at least the next 12 months.
It is currently sitting in a term deposit account with 2.60% interest, however I would like to explore other (read: higher growth) forms of investment with this money.

At the moment I am not willing to personally invest in individual stocks, and so I'm considering investing this money into an ETF.
As I am only 18, I am willing to take on a higher risk investment that, longer term, will yield higher growth (Will only be looking to withdraw this money in 7-8 years time, when I intend to move out)

I also have:
* $15000 sitting in the 2.60% term deposit saved from part time work.
* $2500 university scholarship I will receive at the end of each semester this year
* No credit card/credit card debt
* ~$4500 deferred HECS debt

I am willing to invest some of the money I have saved through part time work in addition to the gifted money as well, whilst retaining at least $7k in savings (emergency fund)
I already have ~$8k in superannuation so I am not looking to contribute to that at the moment.

Any advice is appreciated.


  • Congratulations on your financial position thus far.

    As for ETF investment advice:

    Step 1: Buy ASX:STW.
    Step 2: Reinvest dividends in ASX:STW.
    Step 3: Repeat Steps 1 and 2 for roughly 40 years.

    • Why in particular STW? The reinvestment is great but to me 7% AR seems average?

      • STW tracks the ASX 200. The Australian market under performed compared to the S&P500 (approx 15%, 5 years). So you have to decide what sort of exposure you are looking for, international or just Aussie. There is a SPDR S&P 500 ETF. Just note that past performance is not an indication for future performance.

  • For ETF's, all I can advise is look for US based ETF offered by Vanguard

  • Check out these guys, highly regarded and they will be launching their global fund sometime next month (hopefully) Otherwise their Aussie products are doing quite well. WAM is paying around 7%PA in divvies which you can automatically reinvest plus capital growth. WMI has good growth and is paying maiden divvies this year 1 or 2 cents per share (I forget :)) You can access your funds anytime through the ASX so you are not locked in to anything.

  • Don't discount Super so quickly…
    Drop $1000 into your Super for the Government Co-contribution this FY and another $1000 in after July 1 to qualify for it next year.

    The co-contribution gives you a guaranteed 50%* return on investment that nobody can beat assuming you qualify for the co-contribution.
    (*assuming you're under the ~$36,000pa income threshold)

    • Only works if you trust the government not to raid it/change the rules at some point in the future (like they have done many times in the past). Also, super is pretty much locked up until retirement age and the OP stated he wanted to access it in 7-8 years. :)

    • Oh cool I didn't know about this co-contribution, I will most likely put 1K in before EOFY.
      But yeah as EightImmortals said I am wanting to access this in the next 7-8 years so super isn't #1 priority.

    • Tip money into your super and year by year the government of the day will find another way to rip into your savings. Investing in super has minimal advantage over holding complete control over the funds yourself.

      • Agreed, except when the government gives you free money.
        There is no other investment vehicle that can claim to give you an instant 50% ROI.
        It's a no-brainer.

  • Keep an eye out for free brokerage
    Are ones commonly mentioned on ozbargain, also CMC markets, can’t find their ozbargain page. Doesn’t appear to be much going on at the moment except for the 5 free trades if you use the random referral for Selfwealth.

    If you use one that is on the ASX CHESS system you can move your shares around between brokers pretty easily if you want to use a different one later. can be useful for keeping track of things. Has a free plan for small portfolios.

  • On the assumption that ETFs are the way to go for you (and there are a number of assumptions in that), then I would suggest looking at possibly three ETFs (I think you're looking at putting about $15k in to start?).

    I won't recommend any specific ones as this is an investment decision you need to make, but a mix of Australian and global equities is likely to be your best option.

    I'd look for a broad-based/indexed Australian equities fund to provide exposure to the broader market.

    On the global side, you'd consider something with a level of active management that primarily invests in developed economies.

    The above two would make up 80%+ of your investment.

    For the balance, you could look to add a little spice with an exposure to emerging markets or small companies.

    The key at your stage is to build the basis for an investment portfolio that you will add to for the rest of your life. You are not going to make your fortune (unless you are very lucky) by chucking $15k on something over even the next 10 years. But, what you will be doing is looking to turn that $15k into $30k+ over that time and be adding to it regularly.

    Get rich slow.

    • Thanks for the tips.

      turn that $15k into $30k+ over that time and be adding to it regularly.

      That is along the lines of what I am intending to do - from my part time work I will be able to save about $6-7k/annually (for the next 4-5 years) after expenses and reinvest that into the portfolio.

  • Crypto

  • put 20% in crypto

    rest in vanguard

  • Don't invest all at once. What if the day after the market crashes 30%?
    Stagger your investment over a time period, maybe over a few years if you want to end up worth all $20k in shares.

    • +2 votes

      What if you put in 5% of your investment and the day after it goes up 30%?

      If investing for 10-20 years time, timing the market makes little difference. If investing for this week, maybe don't?

      At a young age, if willing to have risk in the short term, ETFs should have great returns over the longer term, provided you have one with low fees (eg Vanguard).

      If you can get the co-contribution for Super that's definitely worth it, because it's going to beat just about anything else for returns by the time you can access it, pretty much guaranteed. More than that is much less worth it if your income (and thus tax rate) is low, but definitely, don't miss out if eligible.

    • The single biggest downside to ETF investing is that this approach gets eaten alive by brokerage costs. I have investments into low cost managed funds (lowest cost one is 41bps I think) where I make weekly investments. While there is clearly a buy-sell spread that has to be paid, that spread is far lower than the two way brokerage costs on these amounts.

      In my opinion, ETFs need to be traded in lots of $5k+ to overcome these costs vs. a managed fund approach.

  • Give it all away to the poor and dedicate your life to God instead.

  • lets call it 20k for the year?

    Every quarter do a 5k buy of an ETF you like (or a different one each quarter to even out risk areas)

    The newish diversified vanguard ETFs are an easy-ish option

    could do worse than just throwing it all at VDHG or VDGR

  • Buy vas

  • Bitcoin!

  • I personally owned ASX:VTS & ASX:NDQ. VTS has very low management cost. NDQ is more like i want to invest in Tech companies.