Lockdown has given us something we never seemed to have enough of before – time. And there’s no better way to spend that time than thinking about how to create a more secure future for you and your family.
For those of us fortunate enough to have held onto our jobs and maybe even saved some money during lockdown, these 5 tips can help make your investments fit for the future.
Lesson One: Review your money goals
Maybe you were planning a long overseas holiday, or a trip to an international sporting event. That isn't going to happen - at least, not in the short term. So now’s the time to review your goals to see which ones make sense in our new reality.
Lesson Two: Check your timeframe
Knowing when you want to achieve your goals will help you decide what level of risk to take on. If you plan to buy your first home within the next three or so years, shares probably aren’t the best choice for you. If you can invest for longer, higher-risk investments typically produce higher returns.
Lesson Three: Spread the risk
Choosing a mix of investments rather than putting all your eggs in one basket can smooth out the inevitable ups and down of investing. You might choose to diversify by having other investments as well as KiwiSaver.
Opening a managed fund would give you access to an investment managed by a team of experts as well as providing the flexibility to add and withdraw money when it best suits you. A DIY platform like a Hatch account would let you make your investments in quality companies and ‘recession-resistant’ industries.
Lesson Four: Play the long game
Chopping and changing funds can lock in losses. While it’s impossible to know when the market has hit the bottom, history suggests investors who sell when share prices are falling miss out on gains when prices are on the rebound.
Lesson Five: Sit tight
Don’t let market volatility hijack your thinking – scary headlines aren’t necessarily your friend. If you’ve reviewed your investments to make sure they suit your goals, timeframes and risk profile, focus on the long game rather than short-term changes in value.
This information is provided in a general nature only and should not be construed as or relied on as financial advice. This is not a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any investment decisions.
Past performance is not a reliable indicator of future performance. The value of your investment may go up and down.