Know Exactly What It Is You Are Investing For.
Having a clear understanding of what your investments are intended to help you achieve is a vital, if often overlooked, part of investing. If you don’t know your destination, its impossible to know when you have arrived.
How Long Are You Investing For?
You know what you want to achieve with investing, but when do you want to achieve this goal? Knowing how long you plan to invest is closely related to knowing what you are investing for.
This helps create the next layer in your investing strategy.
For example, if you want to achieve your goal in 1-5 years’ time, you have a shorter investment time frame and may need to tend towards more conservative investments, such as term deposits or bonds.
In contrast, if you are aiming to invest for 10-20 years or more, you have a longer investment time frame. You are more likely to take on higher risk for greater returns and may be comfortable investing in equities or property.
Risk Tolerance
Investing also depends on how you personally feel about risk.
Investing is supposed to help you achieve your financial goals, not give you more financial stress. If you are comfortable with riding the ups and downs of a riskier investment mix – great! If you’d rather a steadier ride, then a more conservative investment mix might be right for you.
Benefits of Contributing Regularly
Contributing to your investments regularly, also called dollar cost averaging, is a great way to become a more disciplined investor. It takes out emotional factors like trying to time the market, instead giving you time in the market. It also generally smooths out some of the market ups and downs. The longer your money is in the market, the more chance you have of reaching your goals.
Fund Ethics
Are you comfortable with where your money is being invested? You may wish your investments to reflect your personal values. If you feel passionate about sustainability, investing in companies that also value sustainability might be important to you.
Finding a fund that has similar values to you, will make sure your money is going toward supporting your values.
Most fund managers will disclose what sustainability characteristics their funds have in their PDS or on their website. For more on how we at SBS Wealth consider responsibility in our investments find our PDS here and our environmental, social, and governance (“ESG”) investing principles here.
Don't Forget To Utilise Financial Advice
You also don’t have to go through this investment journey alone. Financial advice can help you with all the above points: helping clarify your goals; finding the right investment mix for you; and making sure you’re aware of risks associated with your investment choice.
Here at SBS Wealth, our advisers are available to provide advice on KiwiSaver at no additional charge to you if you would like to get in touch.
- The Team at SBS Wealth
