If Only I Was In My 20s Again: Investing in Shares

In the personal finance realm, I was a clueless 20 year old and already with a baby in my arms. It wasn’t that I was bad with money, I just didn’t know what to do with the money I saved. Unfortunately, this lack of knowledge continued throughout my 30s and into the beginning of my 40s.

The simple fact is: you don’t know, what you don’t know.

My mum was never good with money. If she had it, she spent it. She still can’t manage her money and as a hoarder she has no desire to change. My dad died of alcoholism – you can figure out where all his money went. My parents were definitely not personal finance role models, nor did I have anyone else in my life to be a guiding light.

And without a mentor, it took a long time for me to figure out what the hell I was supposed to be doing (as well as breaking the cycle of domestic violence and poverty).

Although, I can’t be too harsh on myself. We don’t start life on a level playing field and some of us have a lot of catching up to do just to reach status quo.

That’s why I’m writing this article about investing in shares in your 20s, because it can truly be a life changing financially sustainable decision.

Not a Fantasy (Something I Wished I Had Done)

Imagine saving and investing money for part of your 20s, never investing another dollar, but still ending up with $2,100,000 at retirement age. That’s 2.1 million dollars.

Knowing your retirement fund is covered gives you a lot of flexibility in life. Once you know you’re set it opens up options: take a few years off to raise kids, study, change careers, have a go at self-employment, work part-time – all without worrying that you’ll end up a broke pensioner.

This is not some far fetched fantasy where you can knuckle down for a few years and then coast along until retirement age. It’s real. And it can be done. And it’s simple.

The Scenario (If Only I Did This!)

Save and invest $25,000 per year, every year, for four years until you reach $100,000.

That’s it.

You don’t even need to add another dollar to have $2.1M at retirement age. Sit on the beach and drink pina coladas if you want, just don’t touch the investment.

The Numbers Don’t Lie (It’s Just Maths)

$100,000 saved and invested for 40 years with an 8% return will equal $2.1M.

You can check the figures yourself on a government website by using the MoneySmart Compound Interest Calculator.

Here it is: $100,000 invested with no further deposits.
The dark blue is the original investment, the light blue is the compounding interest.
The strategy parameters.

But, What About …

Q. Are you kidding, you can’t get 8% interest.

A. Not from a bank. But, you can get that type of return from the share market. In fact, 8% is a very conservative figure. Over the past 100 years the share market has returned an average rate of 10%. If we get all excited and calculate the same $100,000 with zero further deposits for 40 years compounding at 10% we get an astounding $4.5M. But, hey, best to stay conservative, right?

Q. Are you crazy, the share market is too risky!

A. I’m not talking Wall Street type of day trading, rather buy and hold. Did you know your superannuation money is held in shares? And this money invested in shares is there to fund your government mandated retirement money.

Q. But where do I put this $100,000?

A. You can invest it inside your superannuation fund, or through a broker outside of your super fund.

Q. How do I know which super fund?

A. The Barefoot Investor has a great superannuation fund recommendation. Whatever you do, please don’t make these four mistakes that I made by being unaware of your super fund, having multiple super funds, paying for default insurance you’re not entitled to claim, and paying high management fees.

Q. So, if I invest outside of superannuation using a broker, which shares do I invest in?

A. According to financial independence experts, the answer is – all of them. This can be done by investing in index funds. For more info about index funds, please head on over to Aussie Shares For Beginners.

Inside or Outside of Superannuation (Decisions, Decisions.)

These will be tough questions for someone in their early 20s.

Do you enjoy working and can you see yourself happily employed until retirement age?

Or, are you interested in the potential of retiring early and would like to have access to your money at any age?

If you’re okay with working until retirement, you should consider investing that $100,000 inside of superannuation for the taxation advantage. For example, depending on how much money you earn, you may have to pay 32 cents in every dollar as taxation HOWEVER if you invest your money in super ‘before tax’ then you only pay 15 cents in the dollar as tax. That’s a savings of 17 cents in every dollar earned. Please be aware that the 15 cents in the dollar tax caps at $25,000 per year. This means any money invested in super over the $25,000 cap for that financial year is taxed at your normal rate.

And because you’ll continue to work and pay a compulsory 9.5% into your super each year, your super fund will grow to an eye-watering amount.

Think you may want to retire early, or just make sure you have access to your money? Then perhaps investing outside of super using a broker is for you HOWEVER remember that if you sell your shares whenever you need some extra cash that it’s unlikely you will have a tidy nest egg for your retirement.

Ensure you don’t touch that invested money until you have accumulated enough money for retirement and are ready to draw down the money as living expenses!


In the world of financial nerds this retirement strategy is called Coast FI. It means you go in hard and you go in early with your retirement investing and then you can spend the rest of your life coasting along.

Knowing you’ve got a comfortable retirement plan already in motion gives you a lot of flexibility in your lifestyle and money choices.

All you need is four lots of $25,000 saved and invested and you’re coasting! (Trust me, it’s so much easier to do before you have kids.)

The biggest decision you need is whether to invest inside or outside of super.

Ready to commit and coast your way to retirement?

I sure do wish I knew about this in my 20s!

Please scroll on down to the comments box and share your retirement planning.

Have you heard of the online broker SelfWealth – it’s who we use and I can highly recommend them. Each buy or sell trade only costs $9.50 – no matter how much you are investing. Here’s a link if you’d like to try them out. The link entitles you to 5 free trades (and we get 5 free trades as well). https://secure.selfwealth.com.au/Registration/Plan/5/K2qDn

Disclaimer: I am not a personal finance advisor. Do your own research and contact a professional as needed.

3 thoughts on “If Only I Was In My 20s Again: Investing in Shares

  • 13 April 2021 at 4:52 pm

    Woah! What a powerful strategy. Not many 20 you would have 25k per year but if u had that power (staying at home for 4 years?) How incredible. It would be a waste not to harness the tax effectiveness of super. You only need to fund the gap between desired retirement age and preservation age. I would b tempted to boost annual contributions to $25k (along with employer contributions) an invest the excess outside super.

    • 13 April 2021 at 9:24 pm

      I wrote this with my daughter in mind who became a nurse with a very good wage at 19 years old. I tried to include everything my four young adult children would say in response to the strategy.
      Thanks for sharing your thoughts about retirement funding.

  • 19 April 2021 at 12:22 am

    Great article!!!
    As someone who is 29 and turning 30 in September, this is reminding me of the good steps I’m taking for my retirement.
    Personally I don’t contribute to my Super much as I no longer live in WA and now live elsewhere in the world so I’m focusing on building up the equivalent version of the Aussie Super and my emergency fund. Investing has gone on the back burner for now as the two steps I’m taking for the time being are important, take time to build and with the Pandemic being intense where I’m located, I don’t want to put money where I can’t access it. I have two separate savings accounts outside my emergency fund and my everyday account.


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