investing in the share market

some people wonder how they should invest in the share market. Is now a good time since the price has dropped? Which companies should I invest in? How much should I invest?

Compared to other investments (like a bank deposit), share prices are more volatile. The price which they are worth can move up and down many times during a week, depending on the markets and internal company issues (compared to a bank account which goes up slowly every month).

The good news is that the average return is higher than a bank account since you are taking more risk. So in the long term, investing in shares is a good idea.

If you want to try and take on the share market yourself, I recommend you having at least $25,000. Yes, that's a shit load of money, but you need to diversify to cut down on unnecessary risk (unsystematic risk).

Most people reading this will not have that much, so it is better to buy into a managed fund. This is where many investors pool their money together and buy a basket of shares (decided by the fund manager).

My suggestion if you have $1500 is to get smartshares (you can find out about it at nzx.com). The funds there track an index so the fees are relatively low. They also offer a regular savings scheme which allows you to put in a certain amount (by direct debit) into the fund per month. This can be as low as $50 and is a way of doing dollar cost averaging.

Remember if you don't know what you're doing, you should invest in share for the long term. 10 years should be your minimum but the longer the better.

You can always email me if you have questions...

Disclaimer: You should always consult a professional finance advisor before investing your money (just like you should always consult a doctor before starting a new exercise routine/diet). I'm not a professional, I wrote this article purely for fun.