Important financial concepts

Making smart investment decisions is a whole lot easier if you understand underlying financial concepts, like compounding, gearing and diversification. We've used a common sense approach and kept things simple so that you can grasp the key to understanding the financial landscape.

Make compounding work for you!

The magic of compounding!

Learn how starting early and letting your interest be reinvested helps you to fund a better retirement.

Save early and often

Read Noel Whittaker's article on harnessing the power of compounding and the psychology behind why we don't start saving early,

Compound interest explained

Watch an infographic video from Investopedia showing how compound interest works with a very simple example.

Compounding in reverse - understanding the impact of costs

Costs can impact your investment returns quite significantly.  The following are a few resources so that you can see the impacts:

Managed funds fee calculator - Moneysmart 
Don't let high costs eat away your returns - Vanguard

Compound interest calculator

Moneysmart's compound interest calculator helps you work out what money you'll have if you save a regular amount and the difference between saving now and saving later.


Don't put all your eggs in one basket!

Diversification

Moneysmart explains that diversification helps you ride  out the ups and downs of financial markets by spreading money across different asset classes.

Importance of diversification

Explore Investopedia's tutorial on diversification and watch a video from world renowned investor Ray Dalio on his views on the importance of diversification.


Borrowing to invest

Is borrowing to invest risky?

Moneysmart explains the pros and cons of borrowing to invest to help you decide if it is right for you.

Borrowing to buy shares

How do you work out whether borrowing to buy shares makes sense? Investsmart crunches the numbers!

Gearing vs not gearing

Is gearing (borrowing money to invest) worth the risk? Canstar's reviews the ASX report on gearing vs not gearing and says there a lot of things to consider before making the leap.