Would appreciate some advice for a newbie

[justakiwi]

At the age of 55 (female, divorced, no children at home, working four days a week but renting) I've been seriously looking at my financial situation. I don't have a huge potential to save but I do have a regular savings plan set up and around $7000 of savings, currently sitting in the bank earning pathetic interest. I looked at the option of putting some into term deposit but the rates for those are also pathetic unless you have a significant amount of money. I have Kiwisaver but was a late starter with that so right now the balance is only around $16,000.

I have come to realize that I need to be more proactive and find a way to make what little money I do have, work better for me. I've made a decision (and have run this past an authorized financial advisor) to leave my Kiwisaver as it currently is - contributing 3% until I retire. I will just let it take care of itself but will probably change my plan (currently 50% balanced 50% growth) as I get closer to age 65. In the past I've tried to make extra manual payments to it as funds have permitted, but I no longer believe this is the best option. I think I am now better to look at alternative investment options to run alongside my Kiwisaver (that won't tie me in until I'm 65).

So ... I took the plunge yesterday and purchased my first 1000 shares (Kingfish Ltd). I am definitely a newbie to this (owned some shares many years ago but it was more for fun than as a serious investment) but I have spent the last few weeks researching companies, seeking advice from some trusted friends who have been investing in shares for many years, and generally trying to build a better understanding of how all this might work for me. I am looking at this holding as a long term investment focusing on growing my holding via dividend reinvestment, and will look to buying additional shares as funds permit, with the aim of building up to maybe 5000 shares. Alongside that the plan is to continue with regular savings and every time I accumulate another $1000 - invest that in additional shares with different companies (thinking maybe next time something outside of NZ).

As I said, the aim of this is to make what money I am able to save, produce (long term) better results for me than leaving it in bank deposits would. On top of that, I'm looking to diversify (both in terms of geographically and types of stocks). I would hope that as I build up a portfolio I will see some growth over the next 10 years until I reach 65.

I could really do with some advice or feedback on this as I'm flying solo with it. I am on my own making decisions for myself so it is really good to get some input from others with more experience than I have, as a way of seeing whether or not I'm on the right track. I would also be interested to hear opinions on ETF as an option for the next step in my plan, to stand alongside my Kingfish shares.

Thanks in advance for any comments!

[stoploss]

Congratulations on your savings ethic justakiwi and welcome .
There is a world of good advice on here and informative threads .
so you can do a lot of research , I would also recommend searching out some investment books at the public library .
One thing did alarm me " seeking advice from trusted friends" - and the best they came up with was Kingfish ?
IMO if you spend some time on here reading the history of various stocks and posters, you will be able to do a better job yourself . Good luck out there .

[justakiwi]

Re your alarm bells - I wouldn't say my friend told me to go with Kingfish. What she said was that she has invested with them for a number of years now (contributing to her overall portfolio) and she has been very happy with their performance over that time, particularly in terms of their dividend policy. She is aware that I only have a very small amount to invest right now, and she believed Kingfish would be a good way for me to build my holding via dividend reinvestment. I read through their policies and looked over their past performance and I made a calculated decision to "give it a go." As I said, I'm looking for long term growth that will (at the very least) beat what bank deposits could provide me. So I get what you're saying - no doubt you would have recommended something else, but the unfortunate reality for newbies is we have to throw ourselves in the deep end with that first trade and figure it out as we go along. I'm pretty sure most people have learned by trial and error and I'm prepared to do that - at least initially. Right now I can't afford to buy into companies with high share prices - which is why I'm considering going the ETF way next time. Maybe that is a better way to get a slice of the better companies for someone like me?

What are your thoughts on that idea?

P.S - my previous dabbling in shares was over 25 years ago. I had a couple of thousand shares in Brierley - at the time considered one of the companies to buy into. Needless to say that theory backfired on me

[stoploss]

Share prices that are high often go higher ...AAPl @ 10 dollars circa 2000, then $ 50 , then $ 100, then $ 200,300,400,500,600,700 , ........
I'm don't know a lot about ETF's , but search on here I am sure there is a thread . Re KFL have a read of the thread , take note post 266 ....

http://www.sharetrader.co.nz/showthr...&highlight=KFL

[777]

Bear in mind that some posters have certain vendettas against some people. That post 266 on the above thread is by such a person. He pops up in a number of threads with a similar stance.

[justakiwi]

Thanks. I had actually already stumbled across that discussion while researching KFL. Who knows, maybe I made my first bad decision but I'm not going to stress about 1000 shares. I'll take whatever dividends come my way, in extra shares and will see what happens with them over the next year or so. The money I spent on them was making me nothing in the bank so I took the gamble.

Having said that, I've been browsing these forums for a while (before I joined up) and it is clear that there are some people here whose passion in life seems to be based around dissing other people's choices in shares. Often without offering any actual constructive advice on alternatives. I'm not referring to anybody who has posted in this thread - just making an observation based on what I've seen while browsing these forums. I guess over time hopefully I will be able to sort the wheat from the chaff and figure out which posters here are genuinely here to help newbies, and which ones are just here to stir ****/rant about particular companies. I'm a self confessed newbie who is here to learn. I am sure I will make mistakes along the way but sitting back watching my savings languish in the bank is no longer a viable option.

Thanks for the input everyone

[King1212]

Reading from your background, I think you be better off with managed fund. ANZ offers growth fund, u can set up a direct debit forthnigthly or monthly to your your unit trust. I done the same with my son saving...the unit price is fluctuated depend on the share market condition. Overtime, it return around 5-7% capital growth. Remember, share market is harsh. Your share value that u invested could double or burst....

[cyclist]

The other thing to consider, in addition to how you wish to invest, is to see if you can find ways to get your savings rate up a little. A higher saving rate, particularly while you have relatively little capital, will make a huge difference to your outcomes.

I'm not sure if you have discovered the financial independence blogging community yet, but it is worth reading some of the blogs out there. Making changes particularly around your living arrangements (housing) and cars, can make a big difference to how much you can save.

My favourites:

livingafi.com This explores the psychology behind wanting to save and become financially independent. I find his writing very entertaining and thoughtful.

http://www.mrmoneymustache.com/ This is a mix of life philosophy, plus nuts and bolts ideas for saving while still enjoying life. The writing style is probably a bit polarising, but the messages are well worth considering.

http://bravenewlife.com Dormant now, but the historical stuff is well worth looking at. Another one that is less nuts and bolts and more philosophy, with a very accessible writing style.

If you have some spare time, I'd start with bravenewlife from the beginning (earliest posts first). For each of these sites, some of the very early posts are a bit light, but they all hit their stride quite quickly.

[artemis]

I think Kingfish is fine for dipping a toe in the water. Investing is like learning French - add a little knowledge every day and fluency will increase over time. Once you have shares, suddenly they and their sector get a lot more interesting.

One thing you could do is look at sectors, eg retirement, retail, infrastructure. Set up a mock portfolio on ASB or ANZ Securities and watch the companies and their announcements for a while.

A question - are you looking to buy a property? That might change what you do. However, renting even forever might be a good option - you sound like an excellent tenant who will usually be top of a landlord's list. Plus rent is probably cheaper than home ownership, with no maintenance hassles.

[justakiwi]

Reading from your background, I think you be better off with managed fund. ANZ offers growth fund, u can set up a direct debit forthnigthly or monthly to your your unit trust. I done the same with my son saving...the unit price is fluctuated depend on the share market condition. Overtime, it return around 5-7% capital growth. Remember, share market is harsh. Your share value that u invested could double or burst....

I am also considering managed funds. I bank with ASB and RaboDirect both of which have managed funds. I haven't ruled these out but so far none of them have grabbed my interest. I am still researching all options, particularly ETF (the financial advisor I saw suggested these would be a good "next step")

It would be really easy to convince myself I don't have what it takes for this. It would be easy to just put it in the "too hard" basket and give up, but I feel like I need to get my head around this stuff and give myself a chance. I had hoped to find a NZ based online/distance course that I could do to build a better level of knowledge and understanding, but there is nothing. NZSA runs courses in the NI but nothing down my way. They are working on setting up an online option but this is still some way off. Other than that, I haven't been able to find anything in NZ. None of the tertiary institutions seem to run anything either, which is a real shame as I'm sure there are many people out there who would be keen to learn.