Stocks going into the Christmas stockings
On the first day of Christmas my true love gave to me ... a parcel of shares.
There’s a long history of financial Christmas presents, from ANZ’s Bonus Bonds to cash and gift cards to KiwiSaver contributions.
But the rise of the DIY investor has resulted in more sophisticated shares-based investments being touted as presents. Kiwi investment platform Sharesies has facilitated just over 700 gifts, at an average value of around $100.
In the run-up to the 1987 sharemarket bust, vast numbers of Kiwis got into owning shares. History indicates they were caught up in a mass mania, often directing their own investing.
But a new bow-wave of DIY investors is being created through the advent of KiwiSaver, and the increasing ease of transacting online, which, until sharemarkets turned south at the end of September, had been on an incredible march up for the better part of a decade.
Sonya Williams, co-founder of Sharesies, said technology was breaking down the traditional barriers that kept DIY investing the province of well-off, ageing men.
‘‘It’s definitely changing,’’ she said. ‘‘Eighty per cent of our customers are under 40, and 1000 of them are children.’’
Sharesies claims around 30,000 DIY investors who use their smartphones to drip-feed money into shares, buying when markets are going up, down and sideways – ‘‘dollar cost averaging’’ as the process is known – building a portfolio slowly.
But they are not buying shares directly. They are buying stakes in funds such as Pathfinder’s Global Responsibility fund, AMP Capital’s Global Shares fund, or exchange traded funds (known as ETS) which track sharemarkets.
Committed self-directed investors are also opening accounts for their children.
While Sharesies has been building a customer base since April, Kiwi Wealth’s Hatch service has been going for only a month but has already pulled in more than $1 million.
It’s given DIYers access to a much wider range of investments, including direct holdings in over 2700 companies, including the likes of Apple, Amazon and Facebook, and 450 ETFs.
Joe Bishop, Kiwi Wealth’s general manager for customer, product and innovation, understands the self-directed investor because he’s one himself.
‘‘What people want is to have a proportion of their wealth with an investment manager, but many also want a bit of money on the side they can look after for their own reasons,’’ he said.
Values and beliefs are also factors in self-directed investment: ‘‘People are engaged, looking for investments that actually reflect their point of view.’’
The top 10 from the first month of Hatch included shares in two companies specialising in medical marijuana.
There seems now to be a lifecycle of share investing among DIYers. It starts in the late 20s with wealth-building, then share ownership dips in the 30s, possibly a time of cashing up to buy a home, and taking on a mortgage. The likelihood of share ownership then rises as Kiwis enter their 40s, a time of peak earning power for many.
Just one in five people actually own shares in their own name, but it is a growing market.
‘‘It’s still a small part of the marketplace,’’ Bishop said. But, he added: ‘‘The promise is enormous.’’
‘‘It’s still a small part of the marketplace. [But] the promise is enormous.’’ Joe Bishop of Kiwi Wealth