One revelation that recently came to me, is that when you have some savings and you are almost 30, you should probably look at other options than the bank. I always thought share trading was for people with Money (the capital ‘M’ refers to the seriousness of their bank account balances), and people with serious financial intellect.
I have neither.
But I do have the desire to learn something new, so armed with the lesson that you never invest anything you can’t afford to lose, I signed up for a share trading account (Mine is with ANZ, but I hear Direct Brokers may be better). The sign up proces is simple and you simple get charged a transaction fee for each trade.
Im writing this, because since then, a few of us have got into it and are madly trying to convince others to look into it. I think generally, girls in my age group are very conservative about investing, and spend far, far too much of their salaries on clothes etc, while never building any wealth for themselves. Im trying to dispel the ‘I cant afford it’ myth by investment small amounts (my understanding is $3,000 is about where you want to start to ensure the trading fees dont suck up too much profit, but that can be split into 3 $1,000 investments)
Then comes the ‘Portfolio’. Based on advice, Ive sort of come to the conclusion you want to keep the vast bulk of your money in something safer. Im not convinced Im taking my own advice, but I think I may be more of a risk taker than I thought, and startup life changes your perception of risk :) So the rough plan is to keep 80% in the bank/house, 10% in high risk shares and 10% in low risk, long term holdings.
I have assumed, since Xero IPO’d and I convinced my entire family to invest, that Im a share market natural. I suppose it’s not ‘normal’ that your first dabble increases over 1,300% (is that right?) in a few years, but it sure gave me confidence. My theory is to go off my gut. I know it seems a bit cowboy, but I started with the research way of doing things, and the general consensus seemed to be its all a big gamble anyway. Like I say, I feel like a natural (terrible advice, but whatever).
So I started the year with a piddly portfolio. Unfortunately for me, Xero IPO’d when I was buying an apartment, so I made a very small, $1,000 investment initially.
I then bought $10,000 of Xero shares at $7.50 in January and kicked myself for a month when they steadily tanked. But now they’ve pretty much doubled. Im very happy as the point of that was ‘oh well, Im sure they’ll raise more than the 4% I’d get in the bank’.
I then started spamming everyone I know who has financial literacy for hot tips. On the basis that it was totally judgement free (people are quite hesitant to recommend shares in case it all goes terribly wrong), I got a few ideas.
I then had a grand plan to become a share trader. I bought $1,000 of Diligent shares at $5.20 or something. When they hit $6 a few weeks later I was like ‘kapow!’ and sold up. Then sat glumly watching them rise further and further. I was stoked at the couple of hundred extra in my pocket. It was fun, but I think I realised Im not a trader.
So I bought back in the other day at $6.85 when they went down a bit That was the same $1,000.
In the meantime, I also invested in Snakk Media. Probably my worst current investment as the price is still hovering around what I paid. Ill probably take advantage of the $0.12 offer though. I think that took $3,000 of my money. I will definitely hold onto these, but consider it the biggest gamble Ive taken. Im totally ok with it because, like I say, this is probably the best chance I have to take risks without it seriously causing harm if it turns to custard.
So thats my high risk out of the way! I think I may have got a bit over excited on that front.
Next up is the long term. I am thinking a NZX 50 fund, a bank and/or a resthome (once again based on advice from people far more competent than me).
So anyway, so far, Ive been pretty fortunate. The worst Ive done is to not make anything.
I also know, for a lot of people, the sums Im throwing around still seem like heaps. But so does the salaries that most people spend, to savers like me.
So that’s my sharemarket 2 cents :)