We all know that investing is a fantastic way to grow your wealth and financial independence – hell, we harp on about it enough on Capsule! But, like the gym, the dentist and all of the other stuff that’s good for us, the hardest part is starting. A new app, Tempo, is a homegrown, Kiwi-run guided investment app that aims to help get you going and actually start to get some financial wins on the board – four out of five Kiwis worry about their long-term financial security (not shocking in the slightest). To chat through the app, as well as the general state of affairs in the investing world, we hit up Chelsea Leadbetter, a member of the Tempo/ Forsyth Barr advisory team, to answer some questions:
Kia ora Chelsea – tell us about Tempo. How is it different to usual platforms and other investment apps?
Tempo is New Zealand’s first guided investment app, meaning you get advice on what to invest in right from the very beginning and throughout your investment journey. Tempo will recommend a mix of our funds to suit your preferences, goal and investor type. The teams’ mission has been to make investing easy, and provide you with confidence in your decisions.
Tempo is backed by, and leverages the expertise of, Forsyth Barr who has been helping Kiwis invest for more than 87 years, and its launch represents a significant milestone in our journey to provide more New Zealanders with access to investment advice.
Tempo is different to other products in that it reduces the complexity involved in deciding what to invest in, and how to manage investments over time.
What are the biggest barriers that women especially come up against when it comes to investing?
Studies have shown that women are actually great at investing – once they start. Typically women tend to buy and hold investments which means they benefit from the long-term investment nature of markets. The issue is not enough women are taking the first step of getting involved in financial markets, and often that can come down to confidence.
Another factor often cited as a reason for women not investing (I actually don’t think this is unique to just women!) is the idea that it’s perceived as too complicated or time consuming. This is where I think Tempo can play an important role – providing a shortcut through guidance along your investing journey. There are also a number of great online communities emerging in New Zealand that support investors at all stages, and these are worth checking out if you are interested in learning more.
How do you guide beginners through the beginning of the investment journey?
Here’s a few tips I would usually share when I’m asked by someone how to get started with investing:
Make a plan
Always begin with a plan – consider when you need the money or what you’re investing for. Some things to think about are how much you can afford to put aside for your future each pay day (it could be as little as $10). Do you have disposable income after your bills, any high interest debt and emergency fund are covered? A high-level budget will give you a good starting point.
Always consider risk
When investing, it is important to understand the level of risk you are taking and what you are comfortable with. At the core investing is all about maximising your return and minimising your risk. Generally, higher risk investments have the potential for higher returns, which means you’re also likely to see more ups and downs with your investment along the way.
Diversify your investments
Diversification is spreading your risk, by not putting all your eggs in one basket. Think about splitting your investments across multiple different companies, sectors and countries. This means you are not solely reliant on the fortunes of any one company.
How does a beginner build up confidence in the investing space?
Don’t be afraid to start small. One of the most important things is just getting started and having time in the market.
Make investing easy by automating it and setting up regular payments to buy your investments. Over time you’ll start to see the benefits of regular investing (compounding interest – the 8th wonder of the world according to Einstein). It’ll also become a habit, and hopefully a non-negotiable to pay your future self.
You should expect some unpredictability through your investing journey. Your investments will move up and down. It can be tempting to make decisions based on how you are feeling through these periods. Often, a helpful approach is to take a long term view and stick to your plan – this will keep you ‘zoomed out’, and feel more comfortable even when the value is down.
If you’re ever in doubt, seeking financial advice is always a great idea.
Do you have any insight/ predictions of investment trends in 2024?
Heading into 2024 we are expecting to see interest rates start to ease from recent highs, which should help to provide some support for share markets globally. However, the decade of extremely low interest rates we had following the global financial crisis (GFC) is probably a thing of the past – don’t expect to see headline mortgage rates of 2.5% again any time soon.
Another key area to watch is geo-political risk which is expected to persist into 2024, with the upcoming US election in early November likely to steal the limelight. It’s too early to assess the implications from various party policies as yet, but political uncertainty can create some volatility for financial markets.
Finally, an overarching theme that is set to continue over the next decade (and beyond) is the focus on decarbonisation. The summer of 2023 in Europe and the US was the hottest on record and El Niño is expected to add to the number of volatile weather events in the coming six months. The two largest contributors to global carbon emissions are the utilities and industrial sectors (electricity, heat, and transport). These sectors are the ones most likely to be impacted by government policy and technological disruption which could create a range of investment opportunities.