Financial Fitness Challenge Week 4: Make your savings and investments work harder for you

Congratulations for making it to the fourth and final week of Finder's Financial Fitness Challenge. You've already tracked your spending, learned about your credit score (and hopefully improved it!) plus learned how to get the most out of a credit card. (If you're catching up, head back to Week 1, Week 2 and Week 3).

For Week 4 we're going to look at your savings, superannuation and investments to see if you could save by switching accounts, consolidating funds or reducing investment fees. If you don't have any investments outside of super yet, don't worry; we'll go through exactly how to place a trade in the share market.

THIS WEEK'S GOAL: Make your savings and superannuation work harder for you and learn how to place a trade in the share market (plus track its progress).

Part 1: Your savings

Let's kick off by looking at your savings account to see if it's working well for you, or not. Don't have a savings account yet? You can skip to this section for tips on choosing the right savings account for you.

Do you know your current savings account interest rate?

The interest rates offered on savings accounts change all the time. So the rate you were originally getting when you opened the account is likely not what you're earning now. This means if you don't check your account regularly, you could be earning a lot less money in interest than you think you are.

Luckily, Finder tracks savings account rates so you don't have to. The Finder app will show you what interest rate you're getting on your savings at any given time, and tell you how it compares to others. If you haven't got the Finder app yet, you can get it here (it's 100% free!), then add any savings accounts you have by following these simple steps:

• How to connect your bank accounts to the Finder app

  • Head to the Products and Bills tab.
  • Tap the + and select Connect a new account.
  • Find the account you want to connect by using the search box or scrolling through the list, then tap on it.
  • Enter your customer ID and your password. These will be the same details that you use in your online banking login. (We only use these to access your information within the app; they're not shared with anyone else and we can't make transactions. Here's more on our approach to security.)
  • Your account should be connected now. It may take a few minutes to initially sync your data, then you're good to go!
  • Repeat the process for all the bank accounts and credit cards you use regularly.

Can you save more money by switching savings accounts?

Now that you've got your savings account linked with the Finder app, you can see if you're getting a good deal or if you could be earning more in interest elsewhere.

To check this, click on the Products and bills icon at the bottom of the app to see your list of connected accounts and select your savings account. From here, select Unlock savings to see how much more interest you could earn by switching accounts. Finder will compare your current savings account with others in our database and alert you to any potential savings.

Tips to choosing the right savings account for you

Here are some tips to keep in mind when comparing savings accounts:

• Look for a competitive, total variable interest rate (this is the rate you'll earn when all the account conditions are met).
• Make sure you can easily meet the account conditions; this could be a monthly deposit requirement, spend requirement or withdrawal restriction.
• If the savings account needs to be opened alongside a transaction account with the same bank, check that the transaction account doesn't charge hefty fees.
• Make sure you'll be eligible for interest on your full balance by checking the maximum balance limit for the account.

Part 2: Your superannuation

Now that you've got the money in your savings account working well for you, it's time to do the same with your super. If you're not exactly sure which fund you're with, you can check this by logging in to your online myGov account. Click on the section titled Super which links to the ATO, and you'll see your super fund listed. You might even have more than one fund in your name.

If you don't have a myGov online account, you can also speak with your employer to find out which super fund you're with.

Do you have multiple super funds?

If you've got more than one super fund in your name, it's time to consolidate them. Having more than one fund means you'll be paying multiple sets of fees unnecessarily, which will eat into your balance and leave you with less money at retirement.

Consolidating your super so you just have one fund in your name is easier to do than it sounds. In fact, your super fund will do most of the work for you.

1. Choose your primary super fund. You need to pick a fund to be your primary fund moving forward. If you're not happy with any of the funds you already have, you can compare super funds and choose a brand new fund to be your primary super fund.
2. Move your super balances into your primary super fund. If you've chosen to join a new super fund, there will be an option in the online application process to consolidate your existing funds. If you're sticking with a fund you already have, there will be an option on the fund's website to consolidate your super from another account. You'll just need to provide your primary super fund with the account details for the funds you wish to move money from, and your primary super fund will do it all for you.
3. Tell your employer. The last step is to give your employer the account details for your primary super fund, to ensure you're paid your super into the correct fund going forward.

If you need a bit more help, take a look at our guide to consolidating your super for a more detailed breakdown of each step.

Track your super investments and transactions

Once you've got one super fund that you're happy with, get into the habit of checking it regularly. You can do this by adding your super fund to the Finder app (follow the same steps as above to do this). Once it's in the Finder app, you'll be able to see your up-to-date super balance and returns, and how your balance has changed month-on-month.

You'll also be able to see a list of your super transactions, including contributions from you and your employer, fees and taxes charged to your account and investment returns you've earned. It's a good idea to scan your recent transactions to make sure you haven't been charged any incorrect fees and that your employer has been paying you the correct amount of super (if you're eligible to be paid super, you should be paid this at least four times a year).

Part 3: Your investments

With the huge market crash in March driven by the COVID-19 pandemic followed by a quick rebound, there's been lots of hype in the share market in 2020. Because of all the volatility with share prices, there has also been a record number of new investors dipping their toes in the share market this year.

If you're yet to place a trade yourself but are eager to join in, we can help you get there. Or if you already know how to invest in shares and ETFs, you can skip ahead to see how to easily track your investment performance.

Investing in shares

When you buy shares, you're buying part of a company. If the company is doing well and making a profit, the value of your shares may rise (the opposite is also true). Along with wider economic factors (hello, global pandemic) the value of your shares is also driven by supply and demand. If there are more people wanting to buy shares than there are shares available to buy, the demand is higher and the share price will go up.

The underlying goal of share trading is to buy when the price is low and sell when it's high. This could mean you buy and hold the shares for a few months or a few years at a time, depending on your investment strategy.

Here's how to buy shares in four steps:

1. Open an online share trading account. To place trades in the share market, you'll need a share trading account with an authorised broker. You can compare share trading platforms here to find one that's right for you.
2. Decide what to buy. Do some research and pick the shares you'd like to buy, and decide how much you'd like to invest. This involves researching the company and its plans for the next few years, reading its annual reports and any recent news stories about the company.
3. Place your trade. When you're ready to buy, transfer money into your share trading account (this can be done as a simple bank transfer). Create a "buy" order, select the shares you want to buy and the amount you want to invest.

If you're still a bit stuck, take a look at our detailed guide on how to buy shares online which goes into these steps in a lot more detail.

What are ETFs and how do you invest in them?

Exchange-traded funds (ETFs) are investment funds that trade on a stock exchange, like the ASX. ETFs allow you to invest in a bundle of stocks (sometimes hundreds!) in one single trade. They do this by tracking a financial market, for example the ASX200, and mimicking the price movements of the market it's tracking. That's not to say that the potential for gains is diluted, either. Some of the best-performing ETFs in 2020 have returned more than 50% over the year.

So if you bought an ETF that tracks the ASX200, you'd get exposure to the 200 stocks in that market within one trade, and you'll pay just the one brokerage fee. The idea is that ETFs allow you to own the full market, rather than trying to hand-pick individual stocks which can be tricky and expensive. They're also a great way to get an instantly diversified portfolio in a single trade.

You can buy ETFs that give you exposure to different international markets, like the S&P500, as well as ETFs that hold a bunch of stocks from one particular sector, like tech or renewable energy. You can buy an ETF in the same way that you'd buy shares using an online share trading platform.

Track your investments

You can add your share trading account to the app using the same steps as adding your savings account or super fund, and keep track of all your investments in the one place.

When you click on the Investments tab in the dashboard on your home screen you'll see your shares and ETFs sitting alongside your super balance. This will give you a more accurate picture of your total investments.

Scan your investments to see up-to-date prices and keep track of how much your investments are worth month-on-month. You'll also be able to see exactly how many shares you own in each stock or ETF, and the current value of each of your holdings.