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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.

 

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INVESTING ON A SHOESTRING

INTRODUCTION

You do not need to be rich to invest but you need to invest in order to be rich and investing in the share market has never been more accessible thanks to the internet. It gives everyone the opportunity to invest irrespective of income levels, therefore there is no excuse for not getting involved.

Investing in the stock market on a shoestring

Investing in the share market has never been as easy as it is today thanks to share market platforms where mum and dad investors can invest as little as $10 at a time. Compare that to investing through a share broker where fees make this uneconomic unless you are able to invest a few thousand dollars at a time. Problem with this is that unless one had tens of thousands of dollars to invest then diversification where money is invested in a variety of companies is out of the question.

The solution to this is mutual funds, often called managed funds where your money is pooled with those of other investors. The fund manager invests on your behalf. The advantage of this for the ordinary man and woman is that the fund manager who has experience in the financial markets is working on your behalf for a minimal fee.

Your money is invested in a variety of companies and industries in order to minimize risk. Wealth, and Invest Now

Sharesies is a popular trading platform in New Zealand but is certainly not the only one; Hatch, Kernel, and Invest Now are others. In the US, Robin Hood is a popular trading platform.

There are so many benefits of getting involved in the share market in this way with the main one being that it improves the financial literacy of participants. It is all very well just reading books of a financial nature but knowledge comes from action otherwise what you may have learned on paper is just information.

There are several strategies you can use to drip feed money into the markets using online platforms. 

I will tell you what I do. I focus on one particular company per year and invest money in this same company regularly, usually every two weeks. That way I will purchase shares at the lower price when the shares are down. If an investor just simply bought shares in one company with just one lump sum then there is the possibility that the share price was high which means it will have to rise further to maintain the value of the investment when inflation and fees are taken into account.

The share I have been buying this year is Spark, a New Zealand phone company. Last year it was Genesis Energy. I have not yet decided which company I will go to next year.

If you are prepared to invest more money you can choose more than one company. So long as you invest regularly you will take advantage of the low points in the market. 

If you so wish you can just invest in managed funds. Sharesies has a range of options for this with varying degrees of risk. The golden rule is the higher the return the higher the risk. An astute investor will take this into account when deciding what to invest in.

The basic rules of investing still need to be adhered to such as not placing all of your eggs in the one basket and investing according to your goals. If you require the money in the short-term then investing in growth stocks which are high return but with higher risk is not a suitable investment because chances are that the stock price will be down at the time when you need the money.

Micro investing is an excellent way to get involved in the sharemarket. It helps to build your financial know-how, not to mention your wealth. It can be part of your wealth building strategy so what are you waiting for?

ABOUT THIS ARTICLE

You may use this article as content for your website or ebook. Feel free to share it with anyone. You can find other articles on my site www.robertastewart.com

Watch this video

This is not for everyone; we prepared a presentation for you outlining the income opportunity, please watch through it in its entirety. Here is the training link, http://bit.ly/3uQXf7I

 

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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

 

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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