Lockdown lessons in playing stockmarket come with caveats
With more time on their hands and growing fears about finances, Kiwis used the Covid-19 lockdown to learn to invest.
One online investment platform saw such an uptake in its services it hired more staff. But experts have warned firsttime investors: don’t take on too much risk and be wary of scams.
Teacher Ben Brogden saw an opportunity to join the share market after the coronavirus market crash.
‘‘With the interest rates going so low, you’re almost paying to have money in your bank,’’ he said. ‘‘You’re definitely not making anything so you might as well have your money somewhere else.’’
Likewise Otago University student Charlie Sladden had made small investments, but he and his flatmates – some of whom were first time investors – took it more seriously during lockdown. ‘‘We’d always have discussions or point out new stocks we’ve heard about… it was always interesting keeping up to date with the markets.’’
Hatch, which allows New Zealanders to invest in the US stock market, experienced massive growth during lockdown, almost doubling its user base.
General manager Kristen Lunman noticed a big increase in interest for the company’s ‘‘getting started’’ course. To keep up with the company’s growth , partly from the lockdown, the company hired eight new staff.
Lunman thinks new investors saw the crash as an opportunity to upskill and hoped for similar gains to the long-running bull market that followed the Global
Financial Crisis.
‘‘It was like, this is the opportunity to get back to that level and to take advantage of the next 10 years. Money was on everyone’s mind.’’
As KiwiSavers dropped, attention turned to investments. ‘‘And if you kept your job, you’re likely spending less, so here’s an opportunity to really take control of your financial lives.’’
Sorted finance expert Tom Hartmann was encouraging people to take advantage of the disruption. Regular investing was a good way to achieve long term goals, he said.
‘‘That consistency is what we would recommend. That you’re doing little, and long, and consistently over time, irrespective of the market turbulence.’’
Hartmann said people’s financial behaviour changed during lockdown depending on their earnings. ‘‘If you didn’t see a change in income then you’re probably going to see people saving more and paying down debt.’’
Lunman was pleased people had picked up good financial habits during lockdown, whether it was investing, spending less or gaining financial literacy skills, with complacency ‘‘equally as bad as taking a couple of punts’’. But she warned against speculative investing.
‘‘I think those piling in to invest in an Air New Zealand stock that’s going to spike at some point; that’s probably not wise behaviour.’’
Hartmann said investments needed to be goal-based at a level of risk that made sense to the individual. He warned about fraud and scams, as people who suffered from financial hardship are more likely to take bigger risks.