By Gillian Boyes, Investor Capability Manager
Times of volatility and big market swings are bringing out a lot of different emotions in New Zealand investors. Thousands of people have lost their jobs, whole sectors of the economy – aviation, tourism, hospitality and retail have taken a massive hit.
But along with this terrible news there’s also a lot of chatter about investing, particularly in shares. Many companies are seeking new capital to help their businesses grow and recover from the COVID-19 shock. Trading volumes are high on world stock exchanges and brokers are reporting a lot of interest from small investors.
So is this a good time to start thinking about investing in shares?
Share investing can help contribute to NZ’s growth
By buying shares in a company, you might be helping them expand and hire more people, enter new markets or develop new products or services.
Share investing will be an important part of our efforts to get our economy growing.
But think about your personal motivations for investing
Much of the talk we’ve seen includes speculation on which shares to buy to make a quick buck. But not even the experts can accurately and consistently pick share returns.
Instead, start by thinking about what you might more realistically achieve by investing in shares. For instance:
Think about the types of shares you might buy
Having a diversified mix of shares is key. Different industries, different risks, different markets – including New Zealand and overseas.
You may also be tempted by crowd-funding offers. While these can also be good opportunities, remember a few things before putting too much money into offers like these:
Remember you probably already own shares
If you’re in KiwiSaver you almost certainly already own shares.
The Smart Investor tool lets you download a list of every investment in your KiwiSaver fund. Search for your fund, then click on the detail to find a full list of investments the fund holds. Perhaps knowing you’re already in the market will reduce any FOMO you’re feeling about the ‘Need To Invest’!
Smart Investor also lets you research non-KiwiSaver funds. Starting with an ETF (Exchange Traded Fund) or an index fund that tracks a wide range of shares is a cheap and easy way to add to the shares you already own in KiwiSaver.
Focus on finding an investment that fit well in your overall plan and that matches a risk level and performance that you’re comfortable with.
A few other things to remember:
Take the time to understand how investing in shares works
Do your research on investing in shares before you make a decision. The disclosure and other information firms have to provide is for your protection. Our Share This! guide will help you understand what to look for.
em>And don’t panic when markets go down!
If markets drop, stay calm. If you’ve planned well, diversified your portfolio, and you’re keeping an eye on your individual investments you should still be on track to meet your long term goals.
For all you need to know about starting off investing in shares, check out our Share This! guide