Why 2025 should be the year you start investing
The start of a new year is the most popular time to invest. Here's why.
If there's anything that screams "it's the new year" more than (ultimately underwhelming) fireworks, it's a new year's resolution that barely outlasts your NYE hangover.
Like the gym membership that gets 2 weeks of use before being forgotten about for 12 months.
Or the new diet that falls apart as soon as your favourite ice cream goes on sale at Woolies.
But if there's one resolution that's worth sticking to this year, it should be to invest.
According to Finder research, 17% of Australians have made "investing more" in 2025 one of their financial goals. 14% also want to find ways to increase their earnings.
And data from investing platform Sharesies backs this up.
The start of the year is the busiest period for investors, both in terms of new sign ups and increased investing activity.
In fact, January sees the most new Sharesies users, and the buy-to-sell ratio of shares traded on the platform reaches 1.8:1.
This means that $1.8 of shares are bought for every $1 that are sold on Sharesies, suggesting investors are adding to their portfolios at the start of the year.
This is compared to a ratio of 1.5:1 in the last quarter of the year.
But why is it so important to be investing these days, and what do you need to do to actually get started?
Why invest in 2025?
Everyone is feeling the pinch of the ongoing cost-of-living crisis, but high inflation has another hidden impact on our finances beyond everyday expenses going up.
According to the most recent data from the Reserve Bank of Australia, yearly inflation is at 2.3%.
This means that your money is effectively worth 2.3% less than it was 12 months ago in real terms.
While this doesn't sound like too much of an issue, it adds up over the long term.
Leaving your money in a regular bank account or even a savings account earning a bit of interest may seem like a sensible financial decision, but it can really hamper your ability to grow your net wealth over time.
This is where investing comes in.
Say you had made "start investing" your 2024 new year's resolution.
You invested $1,000 on 1 January in an S&P 500 index fund that tracks the performance of 500 of the largest companies on the US stock market.
The S&P 500 then rose 23.31% in 2024. That means your $1,000 investment would have been worth $1,233.10 by the end of the year.
That's a profit of $233.10 (ignoring inflation).
Of course, investing is not without risks and and the stock market can fall as well as rise.
But over the long term, both the Australian and US stock markets have averaged an annualised return of around 9-10%.
Now say you had instead left that $1,000 in a savings account earning 2.7% p.a. interest (the average savings account rate in Australia).
After 12 months, you'd have only made $27 (again ignoring inflation).
Once you factor in inflation and tax, that paltry $27 profit becomes even smaller. Your net worth is effectively treading water.
So how do you start investing?
Hopefully you've now decided to make investing more one of your 2025 resolutions.
But where do you actually start?
"The first step is to identify your goals and values as an investor," says Demetria Chelepy, operating director at Sharesies Australia. "Are you looking to invest in specific companies, exchange-traded funds (ETFs), or a mix of both?"
"Are you only interested in the ASX [Australian Securities Exchange], or do you have an eye on international opportunities too? You should also consider your appetite for risk and the industries you're interested in putting your money behind."
Once you've identified your investing strategy and interests, the new step is choosing a low-cost investing platform.
These days, it's possible to start investing with as little as a few dollars, and even pay nothing in trading fees.
This means you can slowly dip your toes into investing without having to put too much money at risk, or paying too much in fees.
But ultimately, the most important thing is just to start.