The myths of investing

After years of talking to people around New Zealand about investing, we’ve learned that there are more than a few popular misconceptions around the subject.  Misconceptions that could be preventing Kiwis from investing in their future.  So, we thought we’d break down a few of them and set things straight

 

Myth number one: You need to be wealthy

Contrary to popular belief, investing isn’t just reserved for the rich.  Anyone can be an investor.  Realising this can be the first step.

Investing incrementally on a regular basis is a sure-fire way to secure your future.  This strategy offers benefits such as riding out the short-term volatility of investment markets and avoiding the pitfalls of trying to time the market.[1]

From as little as $100 you can begin investing today.  If you don’t have $100 to spare, make it a goal and start by putting aside a little bit each week.

Once you’ve invested your first $100, you’ve taken the first step as an investor.  If you begin by investing in PropertyShares, you’ll gain monthly dividends into your account.  By doing this regularly, you will soon build yourself a portfolio to be proud of.

If you’re wondering if PropertyShares are for you, check out the ten reasons why PropertyShares are perfect for first-time investors.

Experienced investors know the importance of investing for the long-term.  Time is on your side and the more time you give your investments, the more likely they’ll perform well.

Investing is not a get-rich-quick scheme.  Rather, look at it as a gift to your future.

 

Myth number two: My money is “stuck” once I invest

“Money makes the world go around” and saying goodbye to your hard earned cash can be a difficult thing to do. Many people avoid investing because they believe that once their money is invested, it’s gone and inaccessible.

Granted, this is the case with some investment methods, such as fixed term deposits and fixed term bonds.  With these options, your funds are tied up for a period of time.

However, this isn’t always the case.  Other investment options such as company shares or buying PropertyShares with The Property Crowd gives you the potential to sell your shares if you need to.

 

Myth number three: Popular companies are always good investments

An old-school Kiwi perspective on investing might be; “invest in a good solid company like Z Energy, they’re reliable”.  The longer standing companies can make for good investments, but not always.[2]

No matter how well established a company is, if it’s in what’s termed a ‘declining industry’, it may not necessarily be the best investment for the future.  For example, if the oil industry was being impacted by a move towards renewable energy, the stock price of a company like Z Energy might fall with the industry.

Profitability doesn’t guarantee stock price growth.  A company can be doing really well, while their stocks are providing little to no earnings.  One example is Tesla, which has a current EPS (earnings per share) of minus $13.98.[3]

Investors will often invest because of a business’ concepts and vision, rather than their profitability.

 

Myth number four: It’s too complicated

Many people find the concept of investing to be quite daunting and can be put off by terms such as “asset allocation” and “index funds”.

Investing doesn’t have to be complicated.  The Property Crowd makes things simple and straightforward.  To make it easier to get started, we offer plenty of resources to help you become a knowledgeable and confident investor.

While it’s not super complicated, here are three tips to keep you on the right track:

  1. Don’t put all your eggs in the same basket. Clever and experienced investors tend to diversify their portfolio by spreading their money across different investments.  This helps to reduce risks.  This way, if an investment underperforms, only 10% or 5% of all your investments underperform, rather than 100%.
  2. Don’t get stressed about ups and downs. Markets fluctuate and it’s something you should be comfortable with.  While they do fluctuate, they tend to follow an upward curve over time and pulling out after a small downfall could be a mistake.
  3. Invest regularly. Even it’s just small amounts, making a habit of investing regularly is one of the best things you can do for your investing career.  You’ll be surprised to see your investments go from a snowball to an avalanche over the years.

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[1] https://www.anz.com/aus/Invest-And-Insure/Product-And-Services/Financial-Planning/pdf/Dollar_Cost_Avg.pdf

[2] https://moneyqanda.com/do-good-companies-make-good-investments/

[3] https://investorjunkie.com/investing/why-great-company-isnt-always-great-investment/

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