Friday, March 1, 2024

So You’ve Decided to Get Serious About Investing? A How-To Invest Guide, with The Curve’s Victoria Harris

Thinking that this is your year you start working towards financial freedom? (Wooo!) The Curve’s Victoria Harris breaks down how to start, where you should put your money and what to remember as you embark on investing in this how to invest guide and click here for more investing advice!

Kia ora Victoria! So, you’ve decided that this year is the year you begin investing – how the hell do you start!? Do you have any recommendations of platforms/ methods, or different fund types?
Great question! This is one we get asked A LOT. It’s all well and good learning about investing but the best rewards come when you actually put those learnings into action. It is great that there are so many easy-to-use platforms but this can also lead to confusion on which to choose. Sharesies, in my opinion, is best for beginner investors. It has the most choice in terms of what you can invest in, without being overwhelming. You can easily search for a company you want to invest in (e.g Nike or Visa) or if you don’t know what to invest in, they also have ETFs which are baskets of sometimes hundreds of different companies – so you don’t have to choose! (And this is not endorsed by Sharesies either!)

If you had $5000 to invest right now, what would you do with it? (And is there a ‘good amount’ to begin with?)
If I had $5000, first I would jump up and down for a few minutes, then I would most likely put it in an ETF. An ETF is an Exchange Traded Fund which means it’s a fund that is made up of hundreds of different companies. Because it is invested in a basket of heaps of companies, it is diversified and your risk is spread around (aka you are less likely to lose all your money from one bad investment). The S&P 500 ETF is a great one for beginners – it’s an ETF of the top 500 companies in the US – think Amazon, Tesla, Johnson and Johnson, Mastercard, Google, Apple – I could go on forever!

There is no ‘good’ amount to begin with either. If you have only $1, you can invest. Don’t think you have to wait until you have a decent amount of money to start your investing journey – you might miss out on potential profits while you’re waiting! 

We’ve talked a lot in the past about ethical and sustainable investing – how important do you think this is?
As we become more conscious consumers worried about using our keep cups, or that our clothes are ethically sourced, it only makes sense that we are more focussed on investing consciously too. When you invest in a company, you are giving it fuel (money) to grow. You are giving it a tick of approval. Therefore, you want that investment of yours to align with your values and ethics. 
Money is power. Even if you only have $1 to invest, that can make a difference. Remember the saying “it’s only one straw, said a billion people” – the same is with investing. 

Is passive or active investing better for a beginner?
It’s completely your personal preference. If you like to choose companies to invest in (active) and feel comfortable with choosing stocks, then go ahead. Just make sure you invest in at least 10 so you spread your risk around and won’t lose all your money from one bad investment. If you just want your money to grow steadily over time, then ETFs are great (passive). They are also great if you don’t know what to invest in. 

There is no right or wrong investing style – whether active or passive is better has been one of the longest-running debates in the investing world!

How important is diversification?
So important! Diversification and taking a long-term view are two key traits of very successful investors. The best way to think of diversification is with fruit. When you invest in one company, it’s like you are investing in one fruit – let’s say an apple. If that apple is rotten, you will be very upset as you have spent all your money on that apple. When you diversify, you are buying small pieces of lots of different fruits – like a fruit salad. If there is one bad apple in there, it’s not an issue, because you have bananas, oranges, melon, pineapple…you get the picture. Your fruit salad is still delicious! 

You’re spreading your love (money) around so your eggs are not all in one basket.

What should a beginner remember when riding the investing wave for the first time?
Don’t be scared! The stock market goes up and down, it’s natural. 
Unless you have been living under a rock (even then you probably noticed it!), inflation is through the roof. The cost of literally everything is much more expensive than it was 12 months ago. This has caused interest rates to rise rapidly and increased the likelihood of a recession – I can understand that you might be a little scared to invest in the stock market right now. But don’t be. 

Over the last 20 years we’ve had three recessions – the Global Financial Crisis, and COVID and now. However, during this time, the US stock market has increased over 320%! Recessions (and economic cycles) are normal – they are cycles –  they will occur, it’s a case of when not if. However, if you keep waiting for the ‘perfect’ time to invest, you might end up waiting a long time. The ‘perfect’ time to invest in actually yesterday. 

The above is not intended to replace those of your personal financial advisor. As always with investing, do your research and make informed decisions!

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