Right, time to start investing

Since starting Sharesies, we’ve spent a lot of time thinking about what people should consider when getting started as investors.

Much of what’s in the news and business commentary highlights what to beware of — fee’s, debt, booming property markets, market crashes etc. While all of these are important, they rarely have people finish reading thinking “right, time to get started”.

But really, the best thing you can do to develop your wealth, is get started — so here are a few of the things I think are good to consider when starting out.

Timing and diversification

For me, investing has always been about playing the long game. If you’re using the sorted.org.nz investor profiler, this would put me firmly in the ‘aggressive investor’ category.

Whichever type of investor you are, understanding how long you want to invest for is one of the biggest factors in choosing the investment that’s right for you. Check out our friend Zoe’s blog for more info on investment horizons.

Another major consideration, is diversification. For me, having fingers in lots of pies means I don’t need to be an expert in financial risk analysis to limit my downside. It also gives me a chance to learn about a bunch of things that I might not otherwise come across.

Discipline and affordability

Investing is just like anything else in life — a bit of discipline goes a long way. In my case I made it hard to get my money by putting it into an account I couldn’t touch and co-investing with friends — where the peer pressure of missing a payment was not worth the grief.

Affordable means different things to different people. Many say don’t invest anything you’re not prepared to lose, but that would imply you haven’t got the diversification part right or you’re hanging out at the blackjack table rather than the investment table.

The great thing about investing is it becomes more affordable the more you understand it. Whether you start with $10 a week or $1,000 — just get started with an amount you’re not relying on to feed yourself week-on-week.

Engaged and interested

Invest in things that might keep you interested or that you want to learn more about. Many New Zealanders invest in property (or want to) because we feel like we understand it.

We know that if we buy a house today and sell it tomorrow we’ll probably lose money. Hold it for 10 years and we’ll probably make some profit.

With houses, we’re not confronted every day by a red or green number on the letterbox saying whether the house price has gone up or down, in the last minute. I think when we have a similar mindset to other investments they’re far more likely to be successful. That’s why Sharesies has decided to make the primary portfolio measure a risk based one instead of return based.

What next?

Choose a platform that engages you and makes it easy for you to engage with your investments and learn. This engagement is obviously one of the key focuses of Sharesies (excuse the sales pitch).

My first entry to the stock market was using a more traditional broker buying and selling individual shares with a $30 minimum brokerage each time. I made some terrible stock picks and broke all the investment rules I now use to manage my money. Looking at the return on investment for that starting out period wasn’t pretty, but the learning from doing was invaluable.

We’ve built Sharesies the way we would have liked to get started.

The key takeaway as Nike would say — just do it.

Ok, now for the legal bit.

Investing involves risk, including the potential loss of principal. The information provided above is my personal opinion only based on my personal experience and is not a recommendation to buy, sell or hold any financial products available through the Sharesies platform. Before investing consider your investment objectives and read the fund’s product disclosure statement carefully. It contains the fund’s investment objectives, risks, charges and other information which should be considered carefully before investing.