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How to get the most out of your Kiwisaver this year

How to get the most out of your Kiwisaver this year

Are you getting the most out of your Kiwisaver? 

Here are the main ways of making the most out of your Kiwisaver. If you live in a country outside of New Zealand then some of these points may not be applicable to you.

  1. Claim your full tax credits

The government will pay you $260 every July as an incentive for contributing to Kiwisaver, but to claim this amount you must deposit at least $1,040 every year. This needs to be the goal for everyone who is in Kiwisaver.

Women have breaks in their employment to have kids and often miss out on the government tax-credits. It makes sense for husbands to make voluntary deposits into their wife’s Kiwisaver to ensure that she makes the minimum deposit of $1,040 in order to qualify for the $260 annual tax credit.

  1. Choose the right fund

Choosing the right fund can help your savings grow and grow in the long term. If you are too conservative then you are going to leave yourself short-changed by the time you retire. Retirement savings are considered a long-term investment if you have at least ten years before you retire, however, if you intend to continue working after you reach the age of 65, then you may wish to stick with growth/balanced funds. It all boils down to the risk you are willing to accept and whether a market downturn is going to affect your lifestyle.

You may have your kiwisaver invested in growth funds, but that does not mean that other investments should also be in growth funds. It all depends on your timeline and when you may need the money. If you need the money within five years then it may pay to take a more cautious approach and invest conservatively.

  1. Invest what you can

If you are not employed or are self-employed and can afford to make voluntary contributions into your Kiwisaver then do so by all means. Your future self will thank you for it. Think of what you spend your money on which does not provide you with any value. This could be diverted into your retirement fund instead. 

  1. Check what your contributing

Employers have the option of paying in 3% up to 10% of their gross wages into their Kiwisaver. If you have not nominated how much then you’re probably putting in the minimum amount of 3%. 

  1. Start young

If you have children then it is important that you teach them good financial habits. That is saving for the future. As far as Kiwisaver goes, the age of qualification for the Kiwisaver tax credits has been lowered to 16. This will give youngsters extra motivation to join. 

Saving for your future needs takes vision and is the responsible thing to do and with Kiwisaver you have a scheme which will take care of your needs in later life, providing that you keep contributing during your working life.

About this article

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Read my other articles on www.robertastewart.com

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Finding Your Calling: Why Specificity and Passion Drive Personal Goals

Setting personal goals

Setting goals do not have to involve money on it’s own. If you set goals based on money then your life is out of balance. It is important to decide what is important to you and is the vehicle to helping you to achieve those aims. In short, money should not be your number one aim. 

If you accept a job with a higher pay then you had better weight up everything that the job involves such as the hours of work, the commute to the job, and responsibilities that come with the job and then decide whether it is worth all of the hassle.

It all depends on your personal circumstances and preferences. There is no size that fits everyone when it comes to goal setting. There is no such thing as “should” even though there are people who think others should do this or do that.

Personal goals are something which are personal to you. Here are some examples of personal goals:

Learning to swim

Learning a new language (specify)

Learning to drive

Learning to use the coffee machine

Learning to salsa dance

Reading the Bible from cover to cover

Meeting your favourite sports player

joining a sports club (specify)

The most important factor in determining your personal goals is your passions. The other factor is your talents. These two are often linked. Whatever most interests you is often where your talents lie but that does not mean that you cannot learn anything new. Most skills and talents are transferable. 

We often see international sports people using the skills which enabled them to reach the elite level in their chosen sport to help them succeed in their chosen career after they have retired. Many have prepared themselves for life after sport by studying to gain a degree during their playing days.

It pays to have a number of strings to your bow as a backup. 

You have to specify what your goal is otherwise it just becomes a wish and anyone can make a wish but it is taking action which will turn a dream into reality.

If you went to your travel agent and asked for a plane ticket they are unable to help you unless you were specific and told them your proposed destination.

Examples of vague goals which are non specific are:

To lose weight

To get fit

To be happy

To save money

The problem with vague goals is that there is no way of knowing when you have achieved your goal. Goals need to be specific and timed. A goal of “To deposit at least a grand into my retirement fund by June 30th, 2023 is a specific and timed goal. You have either achieved your goal or not.

A get fit goal may be “To be able to run a 5k fun run by 31 December 2023.” This is another example of a specific goal which has been timed.

Giving your goals a timeline will give you more motivation. Just telling yourself that one day or some day I will do such and such is not a goal; it is a wish and there is a big difference between wishing for something and being serious about achieving it.

Life needs to be in balance and it is important to consider your personal talents and preferences. Many people have achieved extraordinary success in their chosen field and despite not setting out to make money have accumulated a great sum of money doing something they enjoyed. 

The key here is to not make money your number one goal in life but rather discover your calling. No one else can discover that for you so come out of your shell and broaden your horizons. Who knows, you may just discover your life’s calling in doing so.

Having money behind you will help you to achieve your goals. Sharesies is an online share market platform which can help your savings grow and at the same time develop your financial literacy.

The Wise Travel Card serves as a secure and cost-effective companion for international adventures, designed to help travelers manage funds efficiently. A standout benefit is the ability to hold multiple currencies on a single card, allowing for effortless spending on local essentials such as accommodation, fuel, and snacks.

The card automatically converts money at the mid-market exchange rate, protecting users from the excessive fees and hidden markups typically charged by traditional banks. Through the Wise mobile app, travelers can instantly top up funds, track their balance, and manage their accounts on the go. For enhanced security, the card can be frozen instantly via the app if it is misplaced or lost.

Next Step: You may want to review the specific fee structure on the Wise website or app to see how much you could save on your next trip.

Travel with Wise

www.robertastewart.com

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Mastering Your Money: How to Set and Achieve Financial Goals

In order to get to where you want to go you have to know where you are going and this involves goal setting. Even if you do not set goals you will still end up someplace. Even those who ended up in the poor house started their journey someplace. Choosing where you want to go involves goal setting otherwise your destination will be chosen for you.

Setting financial goals 

Getting all of your finances in order takes a bit of give and take as far as deciding what you have to give up in order to achieve something else. If all our dreams came true we could buy anything we want when we want it but we do not live in our ideal world so we need to decide on what our priorities are.

In today’s world where getting one’s foot on the property ladder is unachievable for a lot of young people under their current circumstances that they need to find another strategy. They same rules apply whatever the circumstances and that is getting into the savings habit and investing money is important. If you are a New Zealander then I cannot stress enough how important it is to join the NZ retirement scheme kiwisaver. With all of it’s incentives such as the free government money and employer contributions this is a no brainer. Plus you will be able to use part of your kiwisaver for a deposit on your first home providing you have been with kiwisaver for five years.

If you are from another country then your retirement scheme will have different rules and schemes.

A multitude of factors will determine your financial goals but the main ones are:

YOUR AGE

If you are young then you have the luxury of time on your side and make time work for you. As the saying goes, “It is time and not timing which is the key to making money in the markets.” 

YOUR FINANCIAL SITUATION

If you are in debt then your number one priority needs to be getting out of debt especially if it is consumer debt. That is debt on stuff that you don’t need such as a TV set, lounge, videos, and other appliances. “If you don’t have the money to buy such items you don’t buy it,” is a good philosophy to have.

The money that is spent on luxury non essential items can be better directed to building your wealth. 

YOUR MARITAL STATUS

This is an obvious one but your marital status is a major factor in determining what your life goals are going to be because life is not all about you because there is another person in the picture; this means that you both have to be on the same page.

So how can I achieve my goals with x amount of money in my pay packet?

1 Increase your income

2 Reduce spending

3 Sell stuff you no longer need

INVEST YOUR MONEY

Invest your money, don’t just fritter it away like most people. An increase in your wages and salary should be invested unless of course you are living from paycheck to paycheck. Set savings goals with long term, medium term, and short term savings goals depending on what you are saving for. 

The time frame for when you require the money is a factor in determining where you are going to invest the money. You certainly would not invest in growth high risk high return stocks if you needed the money in the short term.

www.robertastewart.com

ABOUT THIS ARTICLE

In order to get your life and finances in order it is advisable to set goals. It is easier to set bite sized goals rather than set one big goal. It is easier for a marathon runner to set a goal of one mile repeated twenty six times rather than a goal to run twenty six miles.

Robert Stewart has his own website with articles on  mainly financial/money management on www.robertastewart.com

You may use this article as content for your blog/website, or ebook.

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Why Asset Class Diversification is Your Best Defense Against Volatility

Written by R. A. Stewart

When it comes to investing, it is important to invest according to your risk profile. This means diversifying your investments in several asset classes in order that you may take advantage of the highs in each asset class, and at the same time, minimizing the effect of a downturn in one of those asset classes. 

An asset class is a group of companies which have similar characteristics. They react to economic events the same way. A financial advisor will focus on asset classes as a way to reduce the risk and help investors to diversify their portfolio.

Each asset class offers different levels of growth and risk. Some asset classes such as cash in the bank are focused on capital preservation. 

Your choice of asset class has to be aligned with your investment goals.

Equities such as stocks and shares offer potential to make a good capital gain on your money, but are riskier than cash in the bank. 

Physical assets such as Real Estate and Gold offer chances to grow your wealth, but there are downsides to both. Investing in your own home may be a worthwhile investment for you but purchasing an investment property may not if it means that all of your money is tied up in that property. 

Your goals is the one factor which determines which asset class you are going to invest your money in. The question which has to be asked is, “What is the purpose of this investment?”

Once you have answered this question, you are left with your risk profile.

It is important to stress that you can have money invested in growth and conservative funds in different investments at the same time without it affecting your risk profile.

Here is an example:

A person in their twenties has 40+ years till retirement, therefore an appropriate investment for their retirement fund, (Kiwisaver in New Zealand)  is growth or balanced funds.

That same person may be saving up for a car and may have less than 12 months before they have saved enough for their purchase. Investing in conservative funds is right for them, though as they get closer to the time they require the money, depositing it in an ordinary savings account may be the best option.

Time is the major factor to consider when setting your money goals. The person who has time on their side is able to invest more aggressively into growth funds because they have more time to recover from a market downturn.

This does not mean that you should invest haphazardly, but rather taking calculated risks. The beauty of investing in managed funds is that your funds are invested on your behalf by fund managers and it is their job to ensure that your investment returns a profit. 

Cryptocurrency such as Bitcoin, Ethereum, and Dogecoin are an asset class, albeit, a risky one with the potential for high returns. If you are going to get involved in this then only do so with discretionary spending money. The same applies to investing in anything which is outside of your risk profile. 

You could be aged 70 or 80 but still fancy investing in growth funds. Do this if a market meltdown is not going to affect your lifestyle. New Zealand financial advisor Frances Cook has a formula for calculating what portion of your portfolio should be allocated to shares. You simply deduct your age from 100. 

I do know of some folk who do not follow this rule, and I am one of them. My view is that I may avoid the effects of a market meltdown if I followed Frances Cook’s formula, but then I am taking advantage of a buoyant market.

Its a decision investors must make for themselves and if it all turns to custard then you have only yourself to blame. 

About this article

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website, or ebook.

Read my other articles on www.robertastewart.com

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Reasons why investing outside of NZ Makes Sense

Written by R. A. Stewart

“Invest in several places because you do not know when misfortune will strike”-Ecclesiastes 11:2

Is advice given by Solomon and it is advice worth heeding because you do not know when a market downturn is going to happen. It could be the result of political turmoil, a natural disaster, or another pandemic.

When I talk about investing in several places, it does not only mean investing in several different companies, but rather investing offshore as well.

It is called diversification.

There are two main reasons why investing offshore makes sense.

  1. You have access to industries not available in your own country.
  2. You are able to buy into companies that lead the way in AI

There are global brands that you have access to when investing globally, some of these have given excellent returns over a long period of time. 

With such a larger pool full of world-leading industries and companies to invest in, you will have the opportunity for better returns.

On the other hand, New Zealand is a small country with an economy vulnerable to unforeseen events such as foot and mouth disease or natural disasters.

If foot and mouth took hold in New Zealand -it would likely result in the dollar plunging and more expensive imports. Tourism would most likely be affected, and GDP would fall to unprecedented levels.

There are other things which can affect our economy such as a trade war or a serious climatic event. 

It is a good idea to invest globally to mitigate the risk of exposure to a market meltdown in your country.

Check your retirement funds to see what percentage of it is invested globally. Even if most of your retirement fund is invested locally, you can still get involved in overseas markets on a shoestring.

One online platform for doing this is Hatch.

Hatch is a New Zealand based investment platform. If you are from a country outside of New Zealand then it will pay to check out those which are available in your own country.

Before you start  investing with Hatch or any other investing platform, it is important to know what kind of investments they have available and how they align for your investment goals and risk profile.

Invest for the long-term and avoid making short-term decisions based on emotion. Focus on your investment goals and above all be patient. Don’t get fixated on your balance. If you have invested according to your risk profile then your balance should not be a concern.

Smart investors mitigate the risk to their capital by investing in a diverse range of assets and industries. Investing in Hatch offers a gateway to global markets and a diverse range of investment opportunities. By understanding the platform, conducting proper research, diversifying your portfolio, and staying informed, you can potentially build a strong investment portfolio suited to your financial goals. Remember, investing involves risk, so it’s crucial to invest responsibly and stay informed about market dynamics and your investment choices.

Join Hatch here:

Invest in Hatch here

ABOUT THIS ARTICLE

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. Read my other articles on www.robertastewart.com

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How Sharesies is turning ordinary people into Investors

How Sharesies is turning ordinary people into Investors

Written by R. A. Stewart

When I was young there were limited opportunities to get involved in the share market. You had to save up a certain amount of money and invest it in your chosen company. In order to diversify you had to repeat that same saving up then investing process several times.

Then came managed funds where your money was combined with other investors which enabled you to have a diversified portfolio. Not only that but you have the opportunity to choose a fund according to the level of risk you are willing to take, whether it be growth funds, balanced funds, or conservative funds.

80% of Sharesies investors are under 40. There are benefits to getting involved in the markets from a young age. They are:

  1. Young people have time on their side and therefore are able to be more aggressive with their money by investing in growth funds.
  2. Young people have more time to recover from market meltdowns. The Share market is a long term game worth taking on board.
  3. Investing from a young age will increase an investor’s financial literacy and this is an experience which they can take with them into the future.
  4. Young people do not have as many commitments so have more discretionary money to invest into the markets.

If there is one habit which should be developed from a young age it is the habit of saving and investing. Making provision for your future needs is the responsible and mature thing to do. Indeed, it is a red flag when a potential life partner pays no attention to monetary matters. As they say, “Most marriages which fail, do because of financial issues.”

People do not change their spots overnight. If they give that appearance, it will only last until they have you and then he or she will revert to their old habits.

Now and again there will be a financial guru who claims that they made a killing on the share market and are willing to share their secret with you. What generally happens is that the person who made the killing will try to repeat the effort and end up losing their gains and a lot more. Then there is the fact that for every person who made the killing, a lot more tried the same thing and lost all of their money.

Experience will give you the wisdom to know when to take what someone has said with a grain of salt. 

Never allow the fear of making a mistake prevent you from investing. It is better than you making your mistakes when you are young because they will not affect you as much as when you are older and have more commitments.

As for Sharesies, I treat it as another string to my financial bow. Here is my strategy. I choose one New Zealand company to invest in per year and drip-feed money into this company every year. Some of the companies I have on Sharesies are Spark, Genesis Energy, Fletcher, PGG Wrightson, Fonterra, and Contact Energy. I have not decided on which company to invest in 2026.

Invest according to your own personal goals and circumstances and not what others are doing. It is your responsibility to set out your finances according to your goals and not what others suggest you should do with your money.

There are some great books on personal finance available. Frances Cook and Mary Holm are two New Zealand authors whose books are worth reading so if you can obtain a copy of their books then it will steer you in the right direction.

All the best with your investing.

ABOUT THIS ARTICLE

The content of this article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your website/blog or ebook.

Read my other articles on www.robertastewart.com

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

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It takes Vision to make Provision

Written by R. A. Stewart

“Where there is no vision, the people perish.”-Proverbs 29:18

Financial planning takes vision. It also takes a bit of maturity and responsibility.

The choices you make today will affect the choices you have available to you tomorrow.

It is all about making provision for unforeseen circumstances and not all circumstances which you may find yourself in are unforeseen. 

If you have plans to get married and have children then that is not an unforeseen expense, therefore, if you are smart, you will make provision for such life changing events.

An unforeseen event is one where you have been injured in an automobile accident or were to have an accident at work.

For this reason it is important to set your finances up in such a way as to have some kind of cushion against financial shocks.

There is a scripture in Matthew 25:1-13 about ten girls. Half of them were wise and half of them were foolish. They were all invited to a wedding. The wise ones brought enough oil for their lamps, but the foolish ones did not. The foolish ones had to go back and get some more oil for their lamps and by the time they arrived at the wedding the door was closed on them. 

That was the consequence of not making provision for their journey. 

The wise girls made provision for their journey but the foolish ones did not.

There are consequences to living for today with no thought to the future. If you spend all of your wages within a week and are broke by the time the next pay day comes around you will always be at the mercy of lady luck. If an unexpected expense occurs it will be a great inconvenience to the broke person. A dental emergency, illness, accident, or a household appliance which we all take for granted breaking down can all occur.

Having some kind of emergency fund to take care of these is the responsible thing to do.

An emergency fund is considered short-term funds; that is, money you may require in the short term, therefore keeping this money in a low risk account is the best option for this type of fund. Investing in high risk funds, also known as growth funds, is not a sensible option. The last thing that you need is for the value of the fund to drop just when you need the money.

Your timeline is the key to finding suitable investments for your money.

Long-term money is funds which are needed after 5 years.

Medium-term money is funds which are needed from 1-5 years.

Short-term money is money which is needed within 12 months.

Discretionary spending money is what is used to feed these three categories. People who have debt do not have any discretionary spending money until that debt is paid off. As the proverb says, “The borrower is a slave to the lender.”

The bottom line is that it is essential that you control your money and not let money control you.

Certainly, the benefits of saving and investing your money cannot be underestimated. Building up your financial portfolio will give you more options in the future, but spending everything limits them. Investing will increase your financial literacy which in turn will help you to make better choices for your money.

About this article: The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your website/blog, or ebook.

Read my other articles on www.robertastewart.com

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What should you do with an unexpected windfall

Written by R. A. Stewart

If you have suddenly come into a lot of money such as from an inheritance or a lottery win then the first thing you need to do is to get financial advice. This is certainly applicable to those who have no experience at investing. A financial advisor will also advise you of the taxation issues.

There are some basic rules to making the most of your windfall which I am going to share with you.

Rule number one: Know where you are going

If you have no clue as to what your plans are for the future then you are likely to fritter away your windfall with the result that you have nothing to show for it. I have seen it happen! Financial planning requires vision. Making provision for the future is the sensible and the responsible thing to do. It will make life easier knowing that you have the funds available when some unexpected bill crops up. 

A financial advisor needs to know what your intentions are with your windfall before they can help you. It is advisable to sit down with a pen and paper and write out your plans for the future. 

Rule number two: Get financially educated

Lack of financial literacy is the most common reason for poor financial outcomes. With so much information on personal finance available there is no excuse for financial ignorance. Books written by New Zealand financial advisors such as Frances Cook, Mary Holm, and Martin Hawes are worth reading. Your local library may have one of their books available.

Improving your financial literacy will enable you to make more informed choices when it comes to investing your money.

Rule number three: Know the risks

When there is an opportunity to make a capital gain there is also the chance that you may make a capital loss, but calculated risks must be taken with your money in order to put it to work. The key is to take risks which are compatible with your time frame. The longer your time frame the more risk you can take on. Having said that, it does not mean retired people should not invest aggressively in growth funds if they understand that a market meltdown will result in their portfolio taking a hit.

Rule number four: Take responsibility

It is up to you to take responsibility for your choices. This also means not blaming others when your investments are not performing up to expectations. It is also up to you to take responsibility for your own mistakes and learn from them. 

Rule number five: Don’t Leave your money in one place.

Diversify your investments according to your risk profile. This minimizes the chance of losing your money in one hit. This advice is more applicable in the internet age when millions of dollars are lost in banking scams. Don’t leave all of your money in an account which can be easily accessible online. It pays to have an account which is not connected to internet banking. This can be used for depositing large sums of money.

Rule number six: Invest your money

Inflation is the enemy of the conservative investor. Don’t just leave your money in an ordinary savings account; put it to work so that it is making you money. This does not necessarily mean you are taking unnecessary risks with your money. If you have a lot of money to invest there may be a temptation to invest in something offering interest rates at a much higher rate than the banks are offering. Do your due diligence with such offers. The higher interest rates on offer do not always reflect the higher risk which investors are accepting. This was the advice of some financial advisors prior to the Global Financial Crisis of the early 2000s. It fell on death ears as so many got their fingers burned with the collapse of several finance companies in New Zealand.

About this article

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Check out my other articles on www.robertastewart.com

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Personal Finance: Looking at the Big Picture

Personal Finance: Looking at the Big Picture

Written by R. A. Stewart

Financial planning requires vision. It is looking beyond your current needs and circumstances and making provisions for your future. A person who sets up his finances in a way that he or she knows where there is money is going and what it is being saved for is a mature and responsible person. Someone who spends all of their discretionary savings without any thought to the future is a selfish and immature individual. I say that because if they have not left anything in their estate and expect their family to pick up the tab when they have passed on, then that is selfish of them.

Joining a superannuation scheme in order to make provision for when you stop working is the sensible thing to do. It is also the responsible and mature thing to do. New Zealand, as do other countries have incentives for contributing to a retirement scheme. New Zealand’s scheme is called “Kiwisaver.” Unfortunately, the National government (in New Zealand) has watered down the incentives in order to balance the books, but it does not affect the make provision for your future principle. 

In New Zealand, withdrawals can be made from Kiwisaver for house deposit. There are restrictions on this such as one needs to have been contributing to Kiwisaver for at least three years. 

The benefits of saving money cannot be understated. If you want to purchase a car and you have no money saved whatsoever, you have two options: start saving or borrow. If you choose the second option then you are financially dumb because you are paying more for the car than the sensible saver who pays cash for it.

There are the costs of keeping the car on the road on top of what you have already borrowed for the car so if you were not able to save money before you had a car you will struggle to keep your head above water afterwards.

You may have your retirement scheme all sorted and have no intention of buying a car, but you will need a lot of money at some point, whether that be for getting married, having kids, a medical expense, or other emergency. The sensible thing to do is to be prepared for all of these.

If you enter a relationship with someone and they do not even have a penny to their name then that should serve as a massive red flag. Be aware that if as a couple you apply for a home loan then you will be turned down if one of you has a bad credit rating.

Whether you have any material goals or not, there will always come a time when you need money for something, whether that be for a bond for a flat, house repairs, medical bills, new car, and so on. The willingness to save your discretionary money for unforeseen expenses requires vision. It is the responsible thing to do. A person with no vision will spend everything they have without any thought for the future. 

Having an emergency fund is a good idea. One which is separate from your personal bank account. This will provide some kind of cushion from financial shocks which will occur from time to time.

It is all about looking at the big picture and how being a good manager of your money will make life a little less stressful later on.

About this article

The contents of this article are of the opinion and experience of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Read my other articles on www.robertastewart.com

 

Explore Freely, Spend Wisely: The Ultimate Travel Companion

 

For the ultimate freedom to explore these incredible routes, get a Wise Travel Card. One card holds multiple currencies, letting you pay effortlessly in NZD for fuel, snacks, and accommodation. It automatically converts your money at the mid-market rate, saving you from costly bank fees. Top up and manage your funds instantly via the app, making it the smart, secure, and simple way to travel. Spend like a local and focus on the scenery, not the small print. Get yours and travel with ease.

https://wise.com/invite/dic/roberts10486

 

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Going for Growth Funds

Going for Growth

Written by R., A. Stewart

Are growth funds appropriate for you?

The only person who can answer that question is you and only you because it is your personal circumstances and your goals which are the factors which determine where to invest your money. Your age, health, and commitments are factors which need to be considered.

Time is the one factor which covers all of the others. How long are you going to be investing this money for? 

There are three categories:

Short-term money. (1 year or less)

Medium-term money. (1-5 years)

Long-term money. 5+ years

If you are saving for something and will not need the money for more than 5 years, this is considered long-term and suitable for investing in growth funds. Just understand that the volatility of the markets will mean that your savings, whether it be for a house deposit or retirement will go up and down. That is the nature of the markets.

Saving for a car, an overseas holiday, or house improvements are goals which are normally achieved within five years. These savings are suitable for balanced funds which are a mixture of growth and conservative funds. Your savings will still bounce up and down but not as much as growth funds. 

These days it is easy to save by drip-feeding money into the markets with online platforms such as sharesies in New Zealand and Australia, Angelone in India,  and Robinhood in the US. If you are not from these countries then it is a good idea to do a google search for one which you can find in your country.

It is important to diversify your portfolio and have a goal for your savings even if it is just to build a portfolio on a shoe-string. Don’t just leave your nephew’s inheritance in a bank account that is easily accessible. Invest it in a fixed term account which cannot be easily accessed. 

Don’t invest all of your life savings in an online investing platform, even if you spread your money around several companies. You do not know what misfortune will hit that particular platform.

If you are saving for a house deposit then it is a good idea to invest the money in a fixed term account until you need the money. It helps develop a good reputation as being responsible with your money.

There are added risks with online banking and investing. The main one being scammers. If your email account was hacked then how safe would your money be? Having your money spread around in different places is better. Many sites ask you to sign up using a google account. You should never use the same google account you use for your banking when doing this. Always set rules which you never break and when you read of someone who has been the victim of a banking/email scam then learn the lesson which you can apply to your own life.

In this day and age of tapping as your payment goes there are dangers involved in this with the main one being that you will lose your card. If that happens then someone may pick it up and use it. Having too much money in the account which you use for this purpose is just asking for trouble. It is better to keep larger sums of money on another card which you do not carry around everywhere. Imagine if you had over a grand on the debit card which you lost. 

If you have no plans for your money then put it to work, don’t just leave it in an account paying little or no interest. Learn to be an investor and learn to handle the volatility of the markets. There are three sure ways to lose on the share market during the lows.

  1. Change from growth funds to conservative funds
  2. Sell your shares.
  3. Stop contributing to your retirement fund.

The number 1 person will find that the share prices have risen and they have missed out on the rises which would have recouped their losses.

The number 2 person will have sold their shares at a lower price than they would have received if they had waited until the markets recovered.

The number 3 person would have missed out on purchasing shares at a lower price and when the markets recovered they would have seen the value of their shares increase by a fair bit.

About this article

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. Read my other articles on www.robertastewart.com