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A Guide To Investing: how not to feel lost

It also pays to be clear about your values and ask yourself: how do I want to make my money and at what cost? 

HAMESH FINAL sq Hamesh Sharma 3 minute read

It’s not uncommon to feel lost when you start investing.
Hamesh, our portfolio manager, has created a quick guide to help you out.

The first step is to consider your personal financial position and objectives.

Ask yourself: What do I want to get out of investing? 

For example, are you investing for the long-term, trading for short term profits or saving for a house? How you answer these questions will influence what kind of risk tolerance you would like to take in your portfolio and therefore what kind of funds you might choose to invest in.
Remember, if you’re a KiwiSaver member, you’re already an investor - the questions to consider then are:

  1. Is the risk profile of my fund right for me?
  2. Am I getting the full benefit of the free money (employer and government contributions) every year?  
  3. Does my KiwiSaver invest in line with my values (am I investing in animal testing, envionmental violations or fossil fuels and am I OK with that?).

**Hot Tip: Check out Mindful Money to check and compare what your KiwiSaver Fund is really invested in.

Then consider: How high is my risk tolerance? 

Risk tolerance really means your ability to handle downside moves in the value of your investments (particularly over the shorter term - like the turmoil in early 2020 when COVID rattled financial markets).

How much risk you’re willing to take and how long you want to invest for will shape the kind of things you invest in. If you’re a risk taker you might be more keen on growth assets such as stocks, and income assets such as bonds. 

Is there a “good” time to start investing?

Generally speaking, if you are investing for the long term, it is nearly always a "good time" to start investing. While markets will fluctuate over time, the long term trend of markets is higher, as economies grow and companies become larger and more valuable. There are always going to be booms and busts, so it pays to "average in" to investments and build your portfolio over time.

How do I get started?

Now you know what you want to achieve, over what period and at what level of risk, you can check out some fund managers or platforms like Sharesies and InvestNow which have helped democratise access to investing for all.
Do you want a passive or managed fund? Investing into a managed fund means there’s a person dedicated to investing on your behalf, which takes a lot of the stress out of investing.
It also pays to be clear about your values and ask yourself: how do I want to make my money and at what cost?
Ethical investing is fairly specific to each fund manager - make sure you investigate them thoroughly to ensure they walk the talk. Ask them not just what they avoid, but what investments are they proud of in terms of their returns for our communities and the planet.

Good luck!

Hamesh Sharma is a portfolio manager at ethical fund manager and KiwiSaver provider Pathfinder Asset Management , which is part of Alvarium Wealth .

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