Your simple guide to Investing 💸
Kia Ora Friend,
Investing is money making money to make your future better. Whoa!
Make sure this list is checked off before you continue:
Now it's time to put your money to work.
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Why should I Invest?
Two reasons:
Investing beats value-reducing inflation of money. Inflation over the long run will result in cash in the bank to lose its value. Investing will do a lot more for your wealth than sitting in the bank.
Compound interest is also a powerful tool. The returns from investing may be small in the beginning. But if you reinvest your returns, later down the tract these returns can accumulate into a giant snowball of money.
What is Investing?
Investing is making money with money.
Property is regarded as the king of investments, especially in New Zealand. But property requires a lot of knowledge and a lot of start up capital.
One of the easiest ways to get started in investing is through index funds.
What are Index Funds?
Index funds are:
Managed funds invested in a collection of a particular asset type (e.g. shares, property, bonds).
Passively managed, meaning they have lows fees compared to an actively managed fund. Active funds may not necessarily perform better than passive funds.
Diversified, where they are invested in not just one company, property, or bond, but safety are in numbers and they are invested in many.
How do I best use Index Funds to generate wealth for my future?
By dollar-cost averaging, which means to:
Do early
Do often with the same amount of cash invested
You have already assessed you level of risk. You have an emergency fund ready for anything unexpected. You also understand that investing is for long-term goals. There may be drops in your investments short term but over time you will have higher returns on average.
All you need to do now is set up an automatic payment to an investment account.
Home Buying or Investment Portfolio?
The advice is to start early. But once you have sorted out your budget and got a decent emergency fund, it's time to buy your first home.
So what to do?
My thinking is to focus primarily in building the home deposit in cash (if it's not too far away) on top of your KiwiSaver. Then, contribute a tiny amount to your investment. Something as little as 5% of your take-home pay.
This is a great debate. I want to hear your thinking. So, please email me back!
How do I get started Investing?
Below are some examples of online investment platforms:
Please note I'm not affiliated to these platforms in anyway.
Finally, investing is a great way to build wealth into the future. Make your money work for you. If you would like more in depth, please read more post in investing.
As a disclaimer, I am not a financial expert or professional. I would advise you to perform your own research or seek a financial professional for any major decisions.
If you found this useful, please spread the word by forwarding this on to family and friends. Thank you for reading.
Ngā mihi,
Shivan :)
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