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How to invest if you’re not rich

June 28, 2020



5 reasons why managed funds are an easy, low-cost way to start investing.

 

You have to be rich to invest. True or false?

False. It’s a myth – and it’s one of the reasons why so many people miss out on the chance to build wealth.

The truth is that you don’t need a fortune to start investing. And whether your financial goal is to support your whanau, buy your first home or retire early, regular investing is a great way to get your money working for you.

Most of us weren’t taught about investing at school, so it’s not surprising it’s unfamiliar, even scary. But there are easy ways to get started.

Managed funds are often seen as an accessible launch pad for beginners. Here are 5 reasons why.

1. You can get started for $100

You don’t have to be rich to invest in a managed fund, you can open an account for much less than you might expect.

While some managed funds thousands to join, you can invest in a Kiwi Wealth Managed Fund for as little as $100.

The low entry point also makes it possible to open multiple managed funds accounts, for specific goals– for example, one for your retirement, one as an emergency fund for your extended family, and one for your children’s education.

2. You don't have to be an expert

Investing in a managed fund takes less knowledge and effort than investing directly in things like shares or an investment property.

Your money is pooled together with other people’s money and invested in different types of things, such as shares, bonds, property and cash.

You choose the type of fund that suits your timeframe, goals and attitude to risk, and an expert fund manager chooses what to invest in.

3. You can spread the risk

If one of your investments isn’t going well as expected, other assets may be doing better. The higher-performing assets in your fund may be able to offset the losses of an asset that’s performing poorly.

Another plus is that the risk of losing all your investment’s value is less than if you’d just invested in a single asset.

Diversification is one of the most important parts of investing.

4. You can get your money whenever you need it

While term deposits and savings accounts are usually locked in, you can make withdrawals from your managed fund whenever you want to.

You’re also able to set up regular withdrawals.

5. You can choose contributions to suit your budget

With Kiwi Wealth Managed Funds, you can make contributions of as little as $1. You’ll have the flexibility to contribute whenever you want to.

The longer your timeframe, the more the value of your investments can grow. By starting early and making regular contributions, the better your chances of success.

Tom Hartmann, personal finance expert for the Commission for Financial Capability, encourages Kiwis who managed to save money during the lockdown to start investing regularly to achieve their long-term goals.

“That consistency is what we would recommend...doing little and long and consistently over time, irrespective of the market turbulence,” Hartmann said in a Stuff article.

Tags: Investing, Managed Funds

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