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So you want to learn how to invest? Give yourself a pat on the back! You've already made the first step on your investing journey simply by reading this blog. Investing is actually pretty straightforward, and our guide to investing for beginners could make your first few steps a little smoother.
What is investing?
If we boil it down to its basic definition, investing is ‘the commitment of resources to achieve later benefits’. When you exercise and eat well, you’re investing in your health. When you’re spending time each week learning; you’re investing in your education.
In the finance world investing is ‘putting your money towards something that you expect to generate a positive return (make more money) over time’.
Most people invest money to achieve a goal, like retirement (think KiwiSaver), a house deposit, or for their children’s future. Investing your money is not the same thing as saving it. If you’re ready to nail down a budgeting strategy and save your money, our blog on saving vs investing will give you a couple of pointers to help get you started.
The best investing tip for beginners? Investing in your knowledge!
Making finance part of your everyday routine is a great place to start when you’re learning how to invest. No, you don’t need to devote hours of your life, and you certainly don’t need a finance degree. There are loads of great resources out there to tap into and learn more about investing. Choose your favourite medium - whether it’s listening, reading, scrolling, watching or chatting - and you’re on your way!
Investing for beginners course
We’ve designed a free Getting Started Course that teaches you the basics of investing in the share markets that takes just 10 minutes a day over 10 days. More than 20,000 people have completed our course so far; see what inspired them to take their next step and sign up to our free investing for beginners course.
Follow financial influencers on social media
There are plenty of financial influencers (#finfluencers) on social media that share tips and relatable content (yes, even financial memes) that can help you take action. Some of our Kiwi faves are Girls That Invest, MāoriMillionaire, and Aaron Hamkins. They break down how to invest in stocks into easy to understand, bite-sized content for beginners.
Make money chat great again!
Do you have friends who love to talk openly about money and investing? Ask them what tools they use, where they get their information from, and what they’ve learned along the way; what they share might surprise you! Ruth from The Happy Saver asks friends to shout her a coffee in exchange for sharing what she’s learned about general finance and investing for beginners. So grab a mug, fire up the Moccamaster and settle in while they spill the tea on finance.
No mates? No worries! If you don’t have any friends keen on finance, you can make some. We’ve compiled a list of our favourite investing communities, websites and podcasts for your learning pleasure. Already started investing with Hatch? Be sure to introduce yourself in the Hatch Investors’ Club and ask any learner questions. Everyone is happy to help.
Investing #goals - Finding your ‘why’
Having a goal in mind and knowing what you are investing for is important for a couple of reasons;
- Your future - your individual situation, the timeline for your goal, and your appetite for risk will help you to decide on what you might choose to invest in
- Staying financially smart - a goal will help to keep you on track with your finances when you’re tempted to veer off course
Having a goal may also help you decide on how to diversify your portfolio. That is,how to spread your money across a range of investments in a way that suits your investment goals. Sorted’s 6 steps to get your money sorted includes a template for goal-setting, or you could write them in a diary, or in the notes app on your phone. Put your investing goals out there to the universe - saying them loud and proud (even just to yourself!) - and work on making them a reality.
Choosing the best investment platform
When it comes to investing there’s no one-size fits all, so be prepared to make a lot of active choices along the way. There’s a limit to the amount of time and money most of us have to spend on investing, so considering fees and how much you want to DIY (or outsource) your investing can help you choose the right investments and strategies to help reach your goals.
Whether you’re looking at interest rates on term deposits, searching for the lowest lending rates, or trying to find the best investment platform, you need to know your numbers. Set-up costs, exchange fees, management fees, percentage based transaction fees, and taxes can make a big difference to your returns (the amount of money you make) over time when you’re investing.
Flat fees to buy and sell shares can make it simpler to calculate what percentage you’re spending on fees. If you’re investing in overseas share markets, exchange fees are also an important thing to factor in each time you exchange your NZD to another currency.
Then there’s the cost of your time! If you don’t have time to spend on researching individual stocks, you might consider looking into bundles of shares called exchange-traded funds (ETFs).
Read more: ETF vs Stocks: What’s the difference?
Choosing your first shares
Hatch gives access to more than 5,900 companies and ETFs, and let’s be honest, most of us struggle to even pick a movie from Netflix! With so many choices available, where could you start?
When you’ve got a goal in mind, it should give you a starting point when you start researching what you’d like to invest in. Doing your own research can help you make informed decisions, and all the information you need about a company is at your fingertips (if you know where to look).
You can also create a Hatch account and use our search function to look at companies and exchange-traded funds (ETFs), and add them to your watchlist. Whatever you do, take the time to suss out any prospective investments before you make any decision. Well-informed investors make smart investors.
Read more: Choosing your first shares: A step-by-step guide
Buying your first shares
Feeling warmed up and ready to hit the ground running? When the time comes to get off the sidelines and make your first investment, here’s how to start investing in shares through Hatch.
- If you haven’t already, create a free Hatch account and verify your identity. You can then browse and watchlist companies and ETFs and get a feel for how the platform works.
- Make your first deposit into your Hatch account. There’s no right amount to start with; you can deposit any amount you feel comfortable with.
- Choose a company or ETF you want to own a part of. You can add these to a watchlist for later, or if you’re ready to invest head to step 4…
- Choose how you’d like to place your order, the amount you’d like to invest, and you’re done!
- Keep an eye on how your investment is doing over the next few months. Your investment may go up and down, remember this is okay and don't let your emotions get in the way. Use this time to learn how the stock markets work.
- Once you’ve built up your confidence, think about making a plan to invest regularly.
There are no magic tricks or flawless investment strategies. You’ll learn a lot of lessons about investing just by doing it (including what not to do, it’s all part of the process). Getting started is the biggest hurdle you have to overcome, and with us by your side, you’ve got this!
Amanda Broughton
We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.
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Greetings, fellow enthusiasts of financial literacy and investing! I'm Amanda Broughton, a finance writer with a passion for empowering individuals on their journey to financial independence. With a proven track record in the field, I've navigated the intricate landscape of investments, and today, I'm here to share my insights and guide you through the key concepts discussed in the article.
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Investing Basics:
- Definition: Investing involves committing resources to achieve future benefits. In the finance realm, it's putting money into something expected to generate a positive return over time.
- Purpose: Most people invest for goals like retirement, buying a house, or securing their children's future.
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Investing vs. Saving:
- Clarification: Investing differs from saving. If you're considering budgeting and saving money, there's a distinction between the two.
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Investing in Knowledge:
- Tip for Beginners: The best investing tip is to invest in knowledge. Integrating finance into your routine, leveraging various resources, and choosing your preferred learning medium are crucial steps.
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Educational Resources:
- Free Course: A free Getting Started Course is available, offering the basics of investing in share markets. Over 20,000 people have benefited from this course.
- Social Media Influencers: Follow financial influencers (#finfluencers) on platforms like Girls That Invest, MāoriMillionaire, and Aaron Hamkins for beginner-friendly content.
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Building a Network:
- Friends and Finance: Engage with friends who discuss money openly. Learn about tools, information sources, and personal experiences to broaden your understanding.
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Investing Goals:
- Importance: Defining your investment goals is crucial for tailoring your approach based on your individual situation, risk tolerance, and timeline.
- Diversification: Goals aid in portfolio diversification, spreading investments across various assets to align with your objectives.
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Choosing an Investment Platform:
- Individualization: There's no one-size-fits-all approach. Consider factors like fees, DIY preferences, and time constraints when selecting an investment platform.
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Understanding Costs:
- Factors: Take into account set-up costs, exchange fees, management fees, transaction fees, and taxes. These impact your overall returns.
- Time Consideration: Acknowledge the cost of time. If research is time-intensive, explore options like ETFs for efficiency.
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Choosing First Shares:
- Research: Having a goal guides your research. Utilize resources like the Hatch platform to explore companies and ETFs.
- Informed Decisions: Well-informed investors make smart decisions. Thoroughly evaluate potential investments before making choices.
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Buying Shares:
- Process: Creating a Hatch account, depositing funds, selecting a company or ETF, and placing an order are the steps to initiate investing.
- Monitoring: Track your investment performance, understanding that fluctuations are part of the market. Use this time to learn and build confidence.
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Continuous Learning:
- No Perfect Strategy: Acknowledge that there's no flawless strategy. Learning by doing is essential. Start investing, learn from experiences, and continually refine your approach.
In conclusion, the world of investing is accessible, and with the right knowledge, strategy, and continuous learning, you can navigate it successfully. Remember, there are no guaranteed shortcuts, but by taking the first step, you're already on the path to financial empowerment. Happy investing!
