The article below is the opinion of the writer and does not constitute financial advice. If you require financial advice see your bank, financial advisor, or budget advisor).
Which companies to invest in?
Written by R. A. Stewart
A look at the sharemarket pages look depressing reading for those who have a sharemarket portfolio. Most people have a retirement fund of some sort. In New Zealand that is kiwisaver which most people in paid employment are enrolled in. The self-employed and those classed as not working are eligible to join kiwisaver by making their own voluntary contributions. Even minors are eligible to join and have done so.
KIwisaver as with mutual funds in other countries are structered to minimize the risk of loss by spreading your investment around several different companies and in different types of industries. When one industry is in a downturn then others that are doing well help compensate for the poor performers.
The current situation is that it is not just one industry in a slump due to COVID-19, it is most of them.
Your fund manager should really be smart enough to know what he or she is doing with your savings for that it is what they are paid for so it is best to leave them to deal with your investment but there are other options for investing in the markets where you are able to buy shares in individual companies and you do not need to have much money. In fact you only need $20 (NZ) to kickstart the investment.
SHARESIES
Has anyone heard of Sharesies?
This is a New Zealand managed fund where individuals are able to dripfeed money into the sharemarkets.
As with kiwisaver, Sharesies has several types of funds with various level of risk you can invest in. It also gives investors the opportunity to buy into various companies even with as little as $10 or $20.
This is a great way for Mum and Dad investors and their kids to learn about the markets and grow their wealth at the same time.
So which company or companies should you invest in during the current state of the market (2020) where there are falls across the board?
Answer this next question and it will give you the answer to the previous one.
Which sector is going to be unaffected by coronavirus (Covid-19) shutdowns by various countries?
Here is a sample of various industries;
Banking (ANZ, BNZ, ASB, Westpac, etc)
Airlines (Air NZ)
Tourism (Tourist Holdings, Auckland Airport etc)
Retail (Briscoes, Hallenstein Glassons, Warehouse, Micheal Hill etc)
Insurance (Amp, Tower)
Telecommunications (Spark)
Power (Genesis Energy, Meridian Energy, Contact Energy, Trust Power etc)
Dairy Products (Fonterra, A2 Milk Company)
The banking sector is affected by the market downturn because they lose a customer each time a business goes bellyup which is the case in this business climate not to mention the job losses which will leave some unable to pay for their mortgage.
Airlines are an obvious no go for the investor since some countries have closed their borders to foreigners. In Air NZ’s case, they will have to be bailed out by the NZ government.
The collapse of the tourism industry has also left this sector a no go area.
Some retail outlets which are considered essential services will remain open during the New Zealand’s shutdown but those I have listed are not among them and will suffer financially during New ZEaland’s lockdown.
Insurance companies are subject to Mother Nature but may be worth a nibble.
Spark have experienced a huge increase in internet usage during the lockdown and so are worth including in your portfolio.
Everyone uses power to light and heat their home. It is one of life’s basic essentials. Even during a recession, people will still use power in one form or another. Even when the sharemarket is falling, the price of power companies will remain steady.
Dairy companies are subject to demand from China and the price Fonterra receive from abroad so can be volitile, however, they are a reliable company with a lot of safeguards against an economic downturn and just like power companies, provide one of life’s neccessities.
I have a FREE ebook titled “Financial steps,” and you can get it here: https://forms.aweber.com/form/72/892285272.htm
www.robertastewart.com
#retirement income