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Investing 101: How to start an investment portfolio with $5

Article by Miss FQ

If you think playing the stock market is for big-wig businesspeople only, think again.

“For most people, investing isn’t like the Wolf of Wall Street. The most important thing is deciding to invest, and getting started.”

These wise words come from Sonya Williams and Brooke Roberts, co-founders of inclusive investment app Sharesies. As advocates for getting more young women to invest, who better to ask about how to start an investment portfolio?

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Here’s what they have to say about getting started:

Why is an investment portfolio a good way to earn money?
A general rule of the thumb with investing is that to earn more, you need to risk more. Putting money in the bank is pretty low-risk, but you pay for that lower risk when you get a low-interest rate. Investing in shares generally pays a higher return than putting money in the bank, but there is also a higher likelihood that your shares will lose some of their value. It may be tempting to just stick your money in a savings account – after all, you know you can use the money whenever you need it and you’ll get paid steady but relatively low-interest rates. But if you’re saving for the long term, you can get away with taking a little bit more risk, and most likely, over the long run, you’ll get the higher returns.

How much money do you need to have to start an investment portfolio?
Put it this way – you definitely don’t need thousands to get started. We suggest you choose an amount per week, fortnight or whatever works for you, and stick to that on a regular basis. If you can commit to even as little as $5 a week, you can definitely start your own portfolio.

What’s the general rule when deciding what percentage of your savings to invest?
Choose an amount that’s high enough to make a difference, but low enough that you don’t constantly dip into it when you want to go out for coffee, wine, or anything else that would be tempting enough for you to hit the withdraw button. At the moment we have customers investing cents each day, through to thousands a week! It could be $20, or it could be $500—it’s up to you.

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How safe is it? Is there anything you need to watch out for?
It’s all about what you’re comfortable with. If you invest in things you’re comfortable with, you’re probably going to be more likely to stick with investing. It is important to know that the share market does go through highs and lows, but our advice is not to panic if you see a decline – as what goes up must come down, and vice versa! And the more you invest, the more comfortable you will get with the roller coaster ride of the markets and be more likely to invest in that more risky/returning stuff later on.

Are there certain industries or business types you believe are better to invest in than others?
Everyone’s heard the saying, ‘don’t put all your eggs in one basket’. In investing, that’s diversification – when you spread your money across a bunch of different investments to protect yourself from the risk of one of them failing. That’s what’s great about the funds available through Sharesies. Each one — for example, the NZ Top 50 Fund — gets you a piece of a bunch of companies. If you have some shares in the NZ Top 50 Fund and one of those companies has a bad year, or goes out of business, you still have a little piece of 49 other companies to pick up the slack.


Brooke and Sonya’s top tips for starting an investment portfolio:

  • Find the investment type that suits you – sorted.org have created a great investor kick starter tool that asks you questions about how you’re planning to invest and gives you an investor type.
  • Choose a platform that engages you and helps you invest the way you want.
  • Start learning how to invest by giving it a crack — the earlier you start the better. Investing is becoming more accessible than ever. You can grow your portfolio one payday at a time, investing amounts you can afford.

Read about how Sonya and Brooke created the Sharesies app and their advice for business success in Miss FQ Issue 1, 2018.

Words: Jessica-Belle Greer
Photos: Getty Images & Supplied

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