Dear Sharesies investors
Leighton Roberts, the Co-founder, Director, and Acting Co-CEO of Sharesies writes a letter to you, our Sharesies investors, to help us work through the challenges (and opportunities!) over the next few months.
Dear Sharesies investors,
We’ve been writing blogs for three years now, with the aim of building confidence and knowledge of what to do in an inevitable market dip, crash, correction, recession...and here we are.
In times like this, markets may not be top of mind. Despite media coverage, I think most would agree that our first thoughts are to maintain good health, support friends and family, and be concerned for either ourselves or people close to us who may be out of work and/or have significant parts of their income impacted.
In general, life can become reactionary very fast. But your behaviours during this time could have a long-lasting impact on your overall wealth over time! So I’d like to share some things that are top of mind for me as we work our way through the challenges over the next few months.
It’s about how we behave now
Financial future and success is defined by how we behave now, when times are tough, rather than when times are easy and returns are flowing. If you can afford to continue investing through this period, then you should, as this will enable greater returns over time. Accept that the roller coaster is the most volatile it’s been in decades, if not ever. Investing only when share markets are high is a poor way of achieving good returns in the long term.
KiwiSaver
Keep KiwiSaver! Unless you absolutely have to (for example, if you need ALL of the money in your KiwiSaver in the shorter term), do not lower the risk profile (e.g. change from ‘growth’ to ‘conservative’). This goes against the massive advantage of dollar-cost averaging, which KiwiSaver employs by its very nature. Repeating the point from above, it doesn’t work nearly as well if you only buy markets at their highs—and changing now will both lock in losses from current low markets, and restrict your ability to enjoy the recovery when it arrives.
Number of shares vs. returns
Enjoy the number of shares you hold in companies or funds, over the returns they’re currently showing, accepting that they have some things to work through at the moment. Over time, history shows that they will almost certainly reward you. For many people, this is a really tough and intimidating time to be checking your Sharesies account, so if you have to stop that and get your auto-invest going instead, do it! Don’t let reactionary behaviours let you down. 🙂
Support New Zealand companies
Support New Zealand companies now (or as soon as it’s safe to do so). Over the next few months, it’s likely that many of your favourite companies will be looking to raise further funds to ensure the future success of their company and to give their staff some certainty. By supporting and investing in New Zealand companies, you have an opportunity to both have the potential of a longer-term upside financially, and be part of a great New Zealand story.
Support the economy
Support other parts of the economy where you can—this will be a difficult period for many companies and their employees. The Government and the Reserve Bank is well-positioned to support New Zealand, and so far, they’ve shown that they’re really prepared to put their money where their mouth is.
While it can be tricky to support local businesses at the moment, why not dedicate the first few nights out of isolation to getting some money back into the economy at your favourite places? For those who are lucky enough to be on full incomes during this time, with nothing to do and spend it on in isolation, please think about heading along to your favourite local cafe as soon as this is over!
To wrap up
These are unusual times, but at some point, from a financial point of view at least, we’ll look back on it as a bump in the road. We’ll also have a generation worth of stories to tell! With regards to your investments, it might be a story of either an opportunity taken or an opportunity missed.
We want your future self to be proud of how you both supported the people around you, and managed to stick to your investment strategy. If it was your strategy in good times, and you still believe the companies or investments are good, then you should stick to it in the tough times too!
If there’s anything we can help with, get in touch at help@sharesies.co.nz.
In the meantime, stay home, stay safe, and take care of one another,
Leighton
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.
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