The article below is of the opinion of the writer, if you require advice from a qualified professional then see your financial advisor, bank manager, or budget advisor
Do your homework lesson for do-it-yourself investors
Written by R. A. Stewart
On the news recently was an article about sharemarket investors in New Zealand who got their fingers burned by investing in a company whose price dropped dramatically after the company was revalued. The previous valuation was an error and a lot more than its real worth. Its share price tumbled quite dramatically.
Some young investors who used the share trading platform Sharesies got their fingers burned with one losing $10,000 as the reporter stated.
The share price increased by 1000% in a short time so looking at the maths of all of this, for a share price to increase by 1000%, it would have to be worth ten times its listing value so if the investors who was said to have lost $10,000 would have invested $1,000 to begin with.
So that would have been his actual loss.
The company was one I had never even heard of and the lesson here is to do your homework first. Don’t invest in anything unless you know something about it.
A presenter said, “Shouldn’t Shareies have done more to warn investors?”
My view is this; Sharesies are not there to spoon feed their investors, it is up to everyone to do their due diligence. With Sharesies, investors have the choice between investing in individual companies or managed funds.
With managed funds, your investments are chosen by the fund manager. They are experts in their field and know what they are doing.
Investing in individual companies requires investors to use their own judgement but is a great way to learn about the markets and those who lose money in this way should learn the lesson and grin and bear it.
If you are from New Zealand and would like to have a go at online investing then I recommend Sharesies, I am with them myself, you can join here: