Share Market – Page 5 – Personal Finance

February 23, 2022

Your friends could be costing you money

Your friends could be costing you money

Written by R.A.Stewart

The people you associate with could well be having a detrimental effect on your financial future and though you may not notice it at the beginning, eventually their influence could pull you down to mediocrity. Let’s look at an example from the animal kingdom.

If you lock a sheep on its own in a paddock, it will try to find a way of escaping to find greener pastures but if it has company it is quite content to remain in the same paddock with its friend.

People are like that; some will conform to the standards of others and as far as financial matters are concerned will take on board what the others are saying, and eventually will adopt the same kind of mentality towards finances.

There are different kinds of lifestyle habits which are incompatible to a financially successful lifestyle; drinking, smoking, and eating takeaways regularly are habits which will shorten your life and drain you of your finances.

Your choice of friends will influence your attitude towards money; if you associate with gold digger’s who believe people with lots of money are selfish, then you will be encouraged to spend your money rather than save and invest it.

This is what I am saying in a nutshell:

“The people you choose as your friends will set the standards for your life.” It is important that you keep good company because if you spend too much time with people with bad attitudes, some of their money attitudes will rub off on you. It has been said that you are the average of the five people you spend most of your time with. So who are you spending most of your time with?

I have known a lot of people with terrible money attitudes. One is “You cannot take it all with you” as if you are going to pass away within the next week or so. What they are doing is to cling on to every excuse they can hold onto for their lack of financial literacy. They will try to make others who are in a better financial shape feel guilty by making them feel stingy or selfish. This makes them feel less guilty about their own financial situation.

It is better to spend time with Financially literate individuals and in this way you will pickup some of their financial knowhow. You sure will not learn anything from those who friends are the type of people who go out on Saturdays or have no problem with breaking the law then they will encourage you to follow suit and a lot of people do in order to fit in and abandon the values taught by their parents.

The bottom line is, “If you keep company with financially ignorant people then you will become like them.

“He who walks with wise men shall become wise but a companion of fools will be ruined.” Proverbs 13:20

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February 10, 2022

RETIREMENT SAVINGS SCHEMES

Kiwisaver Retirement Savings Scheme

“A good man leaves an inheritance to his children’s children.” Proverbs 13:22

Saving for one’s retirement is the responsible thing to do and it is up to each individual to get their own finances sorted for their latter years. New Zealand has their own retirement scheme as most other countries do to help make life easier for their citizens when they retire.

The New Zealand retirement scheme is called “kiwisaver.” It is open to New Zealand residents. Kiwisaver is voluntary and anyone aged up to 65 can join. You do not have to be in work to join kiwisaver, you are able to make voluntary contributions at any time.

You are about to make contributions through your wages and salaries of between 2%, 4%, or 8% (you choose). Your employer will also make contributions to your kiwisaver account. If you are not employed then you can choose to make voluntary contributions.

The key component of kiwisaver is the government’s contribution which is a maximum of $10 per week or $520 per year but you have to contribute at least $1040 per annum to get the full $520 otherwise you the government will put in 50% of whatever is your contribution.

You will receive the government money sometime in July. The kiwisaver year starts 1st July and ends 30th June and any money deposited into your kiwisaver account during this period will be eligible for the government contribution the following July. You could say leave it until June before you put any money in kiwisaver and still be eligible for the tax credits as the government money is sometimes called.

When joining KiwiSaver you will be given the choice of fund managers. If you do not choose one, the I.R.D (Inland Revenue Department) will choose one for you and when this happens, it tends to lean on the more conservative side.

You have the option of different funds, Growth, Balanced, or Conservative with growth funds being aggressive. They have the potential to grow your savings but the downside is that they are the most risky. Conservative funds are low risk but can inhibit the growth of your savings while balanced funds are a combination of growth and conservative funds.

Your savings in kiwisaver are locked in until you reach the retirement age of 65 (applicable in NZ) but you may be able to access your funds under exceptional circumstances. These are if you are suffering from financial hardship, have a terminal illness, or die (money goes to your estate). It is important that you have a will because if you don’t, any money still in your kiwisaver will likely be swallowed by lawyer’s fees.

You may use some of your kiwisaver funds for a deposit on your first home but only after you have been in kiwisaver for at least five years. If you are at that stage where you will be looking at purchasing your first home in the not too distant future then it would be a good idea to go for a combination of balanced and conservative funds when choosing which type of kiwisaver fund to invest in because if you went for growth funds, the markets may have gone down when it comes time to withdraw some of your kiwisaver funds for a home deposit. That would be a double whammy because when the market recovers and is on the up, you have missed out on the gains because you withdraw your money when the market was down.

It is a good idea though to have other investments which can take advantage of the swings and roundabouts of the markets even if you only have a small amount to invest.

Always try to keep up to date with what is going on in the financial world as this will increase your financial literacy and help you make better decisions on your finances.

Check out my site www.robertastewart.com for useful information on how to increase your wealth.

The information in this article is the writer’s opinion and experience. It is advisable to seek independent financial advice to ascertain the best financial plan for your situation.

December 10, 2021

Share market tips for the Mum and Dad investor

Share market tips for the Mum and Dad investor

Written by R. A. Stewart

I think it is fair to say that a lot of people dream of hitting it big on the share market and some do but for everyone who has found a pot of gold in the markets there are countless others who entered the markets blindly without doing their homework or having a strategy in place; this article is to give you some pointers if you have some money to spare and are looking for somewhere to invest your hard earned cash.

In the share market, as in real life, if you are able to reduce your number of bad decisions then you will be better off; not that there’s anything wrong with making mistakes.

You are sometimes better off by learning a lesson the hard way if that is what it takes for you to get the lesson.

Here then are my sharemarket pointers.

1 Investing directly into the share market is beyond most small investors because their abilty to diversify their portfolio is limited therefore the only option is to invest all of their funds in one company which leaves them open to disaster. If that particular industry which the company is involved in suffers a downturn, value of the share heads south. It is similar to a horse racing fan attending the track and betting all of their money on the one horse instead of dividing their bankroll between several horses.

Small investors are able to invest in the markets, however, and enjoy the same benefits of larger investors by investing in managed funds; this is where your savings are combined with other investors. You do not have the choice of which companies to invest your money in as that decision is left to the trust manager, however, you can choose which type of fund to invest in whether growth, balanced, or conservative.

2 Investing in the markets is a long-term game, therefore, if you require the money in the short term then you may be better off leaving your money in fixed term interest bearing accounts however, having said that, investing in the markets can increase your savings if you give it enough time. Young people have the advantage of time on their side; they are able to take more risks with their money because they have more time to recover from financial setbacks than their parents.

3 Don’t try to time the markets! It is time and not timing which is the key to making money in the share market. If you are waiting until the markets dip before investing you are missing out on plenty of opportunities to increase your capital and this is particularly true in a rising market.

4 Decide whether the money is required in the short term, medium term, or long term before deciding on where to invest your money.

Money needed in the short term or on standby is money which may be needed for car repairs, a holiday, household expenses etc

Medium term funds is money needed for a new car

Long term funds are savings for your retirement such as your superannuation funds.

Short term is not money which should be invested in bank deposits where you are able to have easy access to it.

Medium term money can be invested in managed funds where you are able to have easy access to it but still have the potential for it to grow.

Long term money is money invested in a retirement fund such as kiwisaver in New Zealand.

Conclusion

Think of money as “seed,” it will reap a nice harvest if you give it enough time, therefore you need to sow enough seed in order to increase your wealth; the sharemarket is an excellent investment and managed funds makes it easier for the ordinary person to get involved in the markets. My site www.robertastewart.com has articles to help you increase your wealth. CHECK IT OUT!

Sharesies

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

Note: This article is of the opinion of the writer and does not represent financial advice.

December 7, 2021December 7, 2021

Which shares should I buy in 2022?

Which are the best stocks to take a punt on in 2022?

Here are my tips:

Written by R. A. Stewart

2022 is nearly here and those of you who like to have a dabble on the sharemarket through using those micro investment apps such as Robinhood in the US or Sharesies in New Zealand giving some thought to which shares are most likely to outperform the market.

It is hard for the ordinary man in the street to pick a stock that is likely to do well for the simple fact is that the same information you are using to base your predictions on is available to everyone else. Still there is no harm in trying. There is a certain amount of satisfaction in making your own selections as there is from selecting your own horses to back in the Melbourne Cup without relying on the newspaper tipsters.

Without further ado, here are my tips:

Fonterra

Despite being blamed for climate change, this is my number one company for 2022 because there is always a demand for dairy products, and with Christopher Luxon being appointed as National Party leader, it has become more likely that National could steal the next general election due in 2023. This current government, led by Jacinda Ardern, has anti-farming policies which is really just biting the hand which feeds us since farming brings in so much export earnings.

Spark

Spark is my second tip. This is more than just a phone company. They also have contracts to televise certain sporting events.

Genesis

Genesis is an energy company. We all use power so I see no reason why this will not remain a steady stock. Trustpower and Meridian Energy are other power companies worth investing in.

Fletcher Building

A great New Zealand company. New Zealand is in a building boom due to the need for more houses. Problem for Fletcher though is that the demand for timber is outstripping supply.

Ryman Healthcare

The retirement industry is big business and so those companies which provide services to the elderly should flourish in the next decade and Ryan is one of these.

Companies to avoid:

With so much uncertainty in the tourism industry, any company involved in tourism and hospitality is best avoided as are most retail companies as the internet is affecting sales, though one exception could be Wrightsons which is a farming retailer.

Media and TV stations also have challenging times ahead as viewers get their information online.

Sharesies

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

Note: This article is of the opinion of the writer and does not represent financial advice.

October 3, 2021

SHARE MARKET FALLS

INTRODUCTION

The sharemarket has enjoyed a great run since the Global Financial Crisis. Will it continue or will a major fall in the markets put an end to it all? No one knows therefore, it is important to set proper financial goals and use strategies to factor in scenarios which may or may not occur.

What to do if the sharemarket crashes

The 1987 sharemarket crash known as “Black Monday” wiped out fortunes as many investors lost their life savings. Those of a generation who were around back then will be well aware of what can happen when you place all your eggs in one basket as many investors did. I mean there were stories of investors borrowing money to purchase shares using the value of their shares as collateral. When the markets went down, the value of their shares were a fraction of the money owed on the borrowed money.

The 1987 crash was the worst crash since the 1929 Wall Street crash. There were almost 60 years between 1929 and 1987 so investors need to reassure themselves that another crash may not fall within their lifetime.

So what should investors do when the markets are falling?

Here are my 5 tips:

1 KEEP CALM

Do not fret, markets go up and down like a rollercoaster. Treat the markets as a long term investment. If you are young then you have time on your side. There is time for you to recover from financial setbacks. Even if you are say 50 you still have another 15 or so years before you reach the age of retirement so you do not really need to be too conservative, however, someone who cannot stomach the thought of rapidly falling markets would disagree. It all depends on your temperament.

A financial advisor is likely to steer you to more conservative investments if you are approaching what is termed “The retirement age.”

2 STICK TO YOUR FINANCIAL PLAN

It is important to stick with your original plan despite all if the negativity in the newspapers which will no doubt arise after a crash. When planning your financial strategy your plan needs to factor in the possibility of a sharemarket tumble. Shares can take investors on a rollercoaster ride which rewards persistence.

3 DON’T TRY TO TIME THE MARKET

It is time not timing which rewards sharemarket investors. Few investors have the knowledge to predict the movement of a share price and those who do and take advantage of it are breaking the law because it is known as insider trading. Investors should do their homework first and trust their own judgement when deciding on which shares to buy.

4 KEEP SAVING AND INVESTING

The market rewards consistency. Investing into the markets when there is so much negativity which will follow a crash will pay off. As they say “Fortune favours the brave.” The advantage of investing when there is not much negativity and uncertainty in the markets is that you will be able to snap shares up at bargain prices and as the market recovers, investors will gradually jump on the bandwagon and in doing so will give it a shot in the arm.

5 LISTEN TO THE RIGHT PEOPLE

A sharemarket crash will dominate the news for weeks and all of a sudden there will be financial experts coming out of the woodwork with advice on what you should do with your money. A smart investor will be able to discern between good, bad, or downright stupid advice.

www.robertastewart.com

ABOUT THIS ARTICLE

Feel free to print this article for easy reading. You may use this article for content for your website or ebook. Visit my site www.robertastewart.com for other articles.

April 27, 2021

THE ART OF AVERAGING

INTRODUCTION

Investors must realise that investing in the markets has its ups and downs (literally) that it is important to keep it all into the right perspective if investments do not go your way. There is a method of playing the markets in a way that you can take advantage of the market drops.

The Art of Averaging

Averaging is a term one may come across in the markets now and and again; what this refers to is the average price paid for a particular share if you had bought shares in that particular company.

To calculate the average price paid for a particular share you add up the total amount you have paid for the shares and divide that by the number of shares you have bought in that company.

The answer is the average amount that you have paid per share.

Try this mathematical question:

There are five numbers 10, 20, 30, 40, 50

What is the average number?

The calculation:

Add up the five numbers: 10 + 20 + 30 + 40 + 50 = 150

Divide the total of the five numbers (150) by 5

150 divided by 5 = 30 (answer)

You can do this easily with a calculator.

There are so many share trading platforms available these days that investing directly into the sharemarket has never been easier for the ordinary man and women.

So how does averaging work?

If you purchase stock at regular intervals you will pay different prices for each stock because share prices go up and down. Imagine if you bought something at the supermarket last week at the full price then bought the same item this week on special. The average price you paid for the item will be somewhere between the higher price and the lower price.

The sharemarket works like that. By purchasing a particular stock at regular intervals you will manage to pick up some shares in it when the price is lower. This is the advantage of saving regularly.

In fact I think there is a case for purchasing more shares when the price is low. The average price paid per share is determined by calculations as explained earlier.

The averaging strategy can also be used in cryptocurrency investing.

Bitcoin is more volatile than the sharemarket so an astute investor who has an eye for a bargain can invest when the price has dropped.

There are so many share trading platforms available that playing the markets are accessible to everyone. I have joined two of them in New Zealand. Most countries have share trading platforms available. Signing up for them is easy; you require some form of identification. Just follow the directions and you are all set up.

TO SUMMARISE

Playing the markets requires a positive mindset and a cool head. If you have these you can profit from falling markets. Averaging is a method that takes advantage of falling markets.

www.robertastewart.com

July 31, 2020

LESSON FOR SHAREMARKET INVESTORS

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:

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

www.robertastewart.com

June 19, 2020

LEARNING FROM PAST FINANCIAL MISTAKES

This article is of the writer’s experience and opinion. If you require financial advice then see your bank manager or financial advisor.

Learning from past investing mistakes

By Robert A. Stewart

“He who never made a mistake never made anything,” but there is no need to make a mistake if you can help it. How? By learning from other people’s mistakes.

The most tragic thing of all is to not learn from your own mistakes; here are some tragic examples which have left people with badly burned fingers.

In October 1987 the sharemarket crashed bigtime; there were horrific stories of mum and dad investors losing fortunes. Leading up to the crash investors would borrow money to purchase shares by using the value of their shares as collateral. As the share values increased, they were able to borrow more and more money. One story I was told was of a man who borrowed money using the value of his home as collateral.

Many companies were basically called paper shufflers; in order words they were not producing anything tangible but trading in shares.

It took several years before the market recovered.

One should never borrow money to purchase shares which is the first basic lesson of investing.

During the Global Financial Crisis several finance companies went belly up in NZ; these included Provincial Finance, Hanover Finance, Dominion Finance, Lombard Finance, and South Canterbury Finance. There were sad stories with one common one being of investors who had their whole life savings invested in the company. The media’s spin on this is to tell the viewer about the investors who lost everything they invested but that is not the case. The truth is investors were drip-fed money from what the receiver’s could recover.

The investors concerned had a lot to say about all of this but one thing was never mentioned was the fact that they placed all of their financial eggs in one basket. This is a fundamental mistake. In one case, an investor had NZ$400,000 invested in Hanover Finance. One would have thought an investor with commonsense would have spread their money around.

It does make one wonder whether someone provided this investor with misleading advice.

The second basic lesson is to not place all of your financial eggs in the one basket.

Crypto currency such as Bitcoin and the like have been very popular during the last ten years. Stories of great wealth have been floating around from time to time of investors who have invested x number of $ and turned it into a fortune worth x. My view of Crypto Currency is that it should be treated as a bit of a gamble where you only invest discretionary income in. Only money you can afford to lose should be invested in crypto currency.

A company called “Cryptopia” which was basically a blockchain which held funds invested in Bitcoin was hacked into and all those with bitcoin invested with cryptopia lost their money. There were some sad stories of an x amount of $ lost.

The third lesson here is to NEVER invest money in cryptocurrency which you can not afford to lose. In other words only use your discretionary money for Bitcoin.

It is certainly well worth remembering that if there is a chance of capital gain then there is also a chance of capital loss. That is the nature of investing.

The bottom line is this; “It is up to YOU, the investor to take responsibility for your mistakes.

www.robertastewart.com

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