Illustrated by Bridget Daulby
In the last 10 years, technology has transformed everything from transport to accommodation and now, investing. Online investing platforms have removed the barrier to getting started so everyday Kiwis can put their money to work.
One great way to do that? The share markets. Anyone with a bit of spare money can take their first step towards a more financially empowered future.
A great way to begin in the share markets is with exchange traded funds (ETFs).
ETFs are a modern investor’s best friend and one of the most successful financial innovations over the past 10 years – people are flocking to them for long-term wealth-building as a good alternative to some of the traditional investments like property or term deposits.
Think of ETFs as like buying a slice of the local farmers’ market. You could invest in individual stalls (and have to figure out which stall’s offerings will do well), or you could invest in the whole market and spread your money across every stall.
That way, if one stall fails or doesn’t get a bumper crop, your investment still has many others that could soften the blow. ETFs provide a simple, relatively inexpensive way to invest in many companies in one go.
With ETFs, you can invest in the share markets as a whole, in a specific industry or in the trends that resonate with your personal interests or values.
If you have a salary, house or other investments in New Zealand, you might want to consider spreading your money outside New Zealand – from the convenience of your Kiwi villa!
There are thousands of global ETFs to choose from. Here are three straightforward ways you could start investing in them: S&P 500 index: You too can invest in the US share markets (the largest share markets in the world) with the S&P 500!
Widely regarded as the barometer of the overall US share markets, ETFs tracking the S&P 500 spread your money across 500 of the largest companies listed on the US share markets – companies you’re surrounded by and use every day, from Apple to Zoom.
Although nothing is guaranteed when it comes to investing, the S&P 500 has delivered a historical average growth of about 10 per year since 1926. When you log onto an investment platform, just search for S&P 500 and voilà, you’re away.
Total world ETF: Feel better about spreading your money around the world? Total stock market ETFs spread your money across thousands of global companies.
You’ll still be investing in the biggest companies in the world, like Microsoft, but you’ll also be investing in global businesses like Alibaba and smaller public companies in emerging markets.
Investment returns reflect the growth of thousands of companies. Result? Diversification that helps you sleep easy!
Thematic ETFs: Investors love companies with a strong story that captures their hearts and minds.
From female leadership to fintech, cloud computing to cannabis, green energy to gaming, thematic investing is all about backing the trends changing the world around us.
These ETFs group companies by trend, allowing everyday investors to back what they believe in. This is where Googling can help. Search for some popular thematic ETFs or trends to see what aligns with your values.
If you’re keen to kick off your investing journey but are not interested in becoming a stock market guru, ETFs could become your new best friend.
Considered a lazy investor’s tool by some, they’re also a way to invest for the long term while you get on with things you’d rather be doing!