The new generation of sharemarket players
A new wave of investor is claiming a piece of the sharemarket action. Susan Edmunds reports.
Management consultant Stephanie Meyers likes being able to walk past the Lululemon store in Wellington knowing that she owns a small slice of the company.
She started investing in shares in the past six months, and has about $11,000 spread across United States shares via Hatch and exchangetraded funds through Sharesies.
The US shares have generated a return of about $150 so far, she estimates – although it was almost twice that before recent coronavirus-related market wobbles hit. Still, it’s more than what she would get from a bank account.
‘‘I invest a couple of thousand dollars when I can.’’
Meyers said she liked investing directly in shares because it gave her more control over where her money went than if she was putting it into a fund.
‘‘I can invest in Lululemon, a brand I am familiar with, go there and shop there, it’s nice to have a stake in that company, even a really small one. I can see when they make changes in the shop or whatever how that might be reflective of their strategy.’’
Another investor, Rachael Fitzjohn, started with $500 in stocks such as Tesla, Beyond Meat and a medicinal cannabis company. She said the idea of seeking investment advice in the traditional sense did not appeal at all but she had caught the investment bug by dabbling directly.
‘‘I’m very engaged at the moment – I check my stocks in the morning and in the evening. I’ve had small gains across all the stocks I’ve invested in, so am feeling pretty chuffed. I’m definitely in it for the long haul so am trying to stay chilled and have a long-term view.’’
She said she and her mother were invested in the same stocks and would often compare notes on how the prices were performing.
But while Meyers and Fitzjohn have jumped in, there’s a warning that other people might be missing out on returns because they’re leaving their money in bank accounts.
A survey by investment platform Hatch showed that fewer than half of respondents were ‘‘engaged investors’’ putting their money anywhere other than a savings account or KiwiSaver.
‘‘Kiwis have a bit of a bad rap when it comes to money,’’ said Hatch general manager, Kristen Lunman.
‘‘We’re internationally renowned for our hardworking attitude, but we’re not as good at making our money work hard for us. Many of us have some saved, but we leave too much of it sitting in bank accounts doing, well, not a whole lot.
‘‘I’m not surprised by the figures; people have a genuine fear of losing their hard-earned money and haven’t been given any lessons around how to put their money to work for them in the sharemarkets.
‘‘What we know is that savvy investors invest in shares because, generally speaking, they tend to provide higher returns over the long term than other types of investments.’’
Lunman said fear deterred prospective investors.
Adviser Liz Koh agreed that people were held back by fear and a lack of knowledge.
‘‘The biggest barriers to people investing in shares are fear and ignorance. This is more so amongst the older generation who lived through the ’87 share crash and the dotcom bubble of 2000.
‘‘The younger generation, by which I mean people in their late 20s and early 30s, have witnessed stellar growth in the sharemarket since 2008 and are therefore not fearful.
‘‘They just need information on how to go about investing in shares. The share-buying platforms are a big help in this respect. I suspect the subscribers to share platforms are predominantly younger people.
‘‘Of course, we need to keep in mind that it is still a good idea to pay off your mortgage before investing. The rapid rise of house prices means that mortgages are large and there isn’t a lot left over to invest beyond KiwiSaver.’’
Tim Fairbrother, a financial adviser at Rival Wealth, said KiwiSaver was making people more aware of investment. Young people were turning to platforms, he said, but many of them were saving for a first home so the money would eventually be withdrawn again.
He said it was a tougher prospect for older investors who were deciding to look elsewhere to avoid the low returns from term deposits.
‘‘They haven’t had to stray too far in the past from bank deposits with rates now at all-time lows, or property that offers lower yields in recent years. More and more people are now seeking professional advice to survey their diverse options.’’
Lunman said Hatch was offering a free online course for people who wanted to gather some basic information about investing before they began.