Sharesies – Page 2 – Personal Finance

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

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