Young investors: Don’t waste it

If you’re a young investor, you’re in a tricky spot. On one hand, you’ve got time on your side, with decades ahead for compounding your investments. A comfortable retirement is well within your grasp.

On the other hand, you haven’t got the wisdom or the patience to benefit.

When you’re young your life is full of milestones. You’re never looking more than a year ahead.

  • Finishing school
  • Getting your license
  • Finding an apprenticeship/ first year of uni
  • Buying your first car
  • Finishing your TAFE units/ that next assignment
  • Finding your first rental house
  • Getting your P2/Open license
  • Getting your trade cert/ finishing uni
  • Getting your first professional job

And that’s great. Unfortunately, it’s the worst possible mindset to bring to your investing. You’re instinctively focused on the short term, what’s coming 6 or 12 months in the future. You’ve never had to plan for the long term like ‘how will I save $50,000 (or more, these days) over 5 years to get a house deposit?

When I first started investing at 17, I didn’t know much and just bought big and well-known businesses. Wesfarmers Ltd (ASX: WES) at $18. Macquarie Airports, now Sydney Airports Limited (ASX: SYD) at $2.20. National Australia Bank Ltd. (ASX: NAB) at $23. QBE Insurance Group Ltd (ASX: QBE) at $22, which I sold for a quick profit at $24 (fortunately, as it happens).

If I’d held all the businesses that I’d bought until now, I would have seen quite respectable performance. I didn’t, of course. I was too short-termist in my thinking. And while that’s the essence of being young, if you’re investing you have to be aware of this tendency to action, and act in a contrary manner.

If I could say one thing to young investors it would be this:

Always try to think at least 3 years ahead. Try to commit to the mindset of owning a part of a business that will generate earnings for you year after year. If you’re buying household-name businesses that you can understand, the risks are typically quite tame – and far lower than you think. Learn how to evaluate a company’s debt and calculate if it is reasonable. Ignore fund managers in the news. They might sound super negative on a company, but what they usually mean is ‘I don’t want to buy Woolworths Limited (ASX: WOW) at $25 because I think it’s only worth $22′. Inactivity, not activity, is one of the primary causes of good investment results for household investors.

And with that in mind, why not kickstart your investing with these 3 top stock ideas:

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited, Sydney Airport Holdings Limited, and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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