5 Common Investing Myths New Zealanders Still Believe (And What to Do Instead)

Investing in New Zealand can be a daunting task, especially with the numerous investing myths surrounding it. One common investing myth is that you need a large sum of money to start investing, which can be misleading. In reality, you can start investing with as little as NZ$1 through micro-investing platforms like Sharesies or Hatch. These platforms allow you to invest small amounts of money into a variety of assets, making it more accessible to New Zealanders who want to start investing.

Understanding Investing Myths in New Zealand

Investing myths can be harmful to your financial goals, as they can lead to poor investment decisions. For example, some people believe that investing in the stock market is too risky, and that it's better to keep your money in a savings account. However, with the current interest rates in New Zealand, keeping your money in a savings account can actually lose you money in the long run due to inflation. As discussed in Protecting Your Savings from Inflation in New Zealand: Strategies and Tips, inflation can erode the purchasing power of your money over time. On the other hand, investing in the stock market can provide higher returns over the long term, but it's essential to understand the risks and rewards involved.

Debunking Common Investing Myths

Here are five common investing myths in New Zealand and what to do instead:

1. Myth: You need to be an expert to invest in the stock market. Reality: While it's essential to have some knowledge about investing, you don't need to be an expert to invest in the stock market. You can start by investing in index funds or ETFs, which track a specific market index, such as the NZX 50. These funds are often less expensive and less risky than actively managed funds.
2. Myth: Investing in the stock market is too risky. Reality: All investments carry some level of risk, but investing in the stock market can provide higher returns over the long term. It's essential to understand the risks and rewards involved and to diversify your portfolio to minimize risk.
3. Myth: You should only invest in what you know. Reality: While it's essential to have some knowledge about the companies or assets you're investing in, it's not necessary to only invest in what you know. You can invest in a variety of assets, such as stocks, bonds, or real estate, to diversify your portfolio.
4. Myth: You need a large sum of money to start investing. Reality: As mentioned earlier, you can start investing with as little as NZ$1 through micro-investing platforms. These platforms allow you to invest small amounts of money into a variety of assets, making it more accessible to New Zealanders who want to start investing.
5. Myth: Investing in a KiwiSaver scheme is enough for retirement. Reality: While investing in a KiwiSaver scheme is an excellent way to save for retirement, it may not be enough to provide for all your retirement needs. As discussed in Financial Independence in New Zealand: KiwiSaver, PIE Investing, and the Path to FIRE, it's essential to have a comprehensive retirement plan that includes multiple sources of income, such as a KiwiSaver scheme, other investments, and NZ Super.

The following table compares the features of different investment platforms in New Zealand:

Platform	Minimum Investment	Fees
Sharesies	NZ$1	0.40% - 0.75% per year
Hatch	NZ$1	0.30% - 0.50% per year
Kernel	NZ$1	0.30% - 0.50% per year
InvestNow	NZ$250	0.20% - 0.50% per year
Simplicity	NZ$1,000	0.10% - 0.30% per year

Investing Strategies for New Zealanders

To achieve your financial goals, it's essential to have a well-thought-out investment strategy. Here are some tips for New Zealanders:

• Start early: The earlier you start investing, the more time your money has to grow.
• Diversify your portfolio: Spread your investments across different asset classes, such as stocks, bonds, and real estate, to minimize risk.
• Invest regularly: Invest a fixed amount of money at regular intervals, regardless of the market's performance.
• Keep costs low: Choose low-cost investment options, such as index funds or ETFs, to minimize fees.
• Monitor and adjust: Regularly review your portfolio and adjust your investments as needed to ensure they remain aligned with your financial goals.

For example, let's say you're a 30-year-old New Zealander who wants to retire at 65 with a nest egg of NZ$1 million. Assuming an average annual return of 7% and inflation of 2%, you would need to invest around NZ$500 per month for 35 years to achieve your goal. As discussed in Achieving Financial Independence through Real Estate Investing in New Zealand, investing in real estate can also be a viable option for achieving financial independence.

Frequently Asked Questions

How much should I save each month in New Zealand to achieve financial independence? To achieve financial independence, you should aim to save at least 10% to 20% of your income each month. However, this amount may vary depending on your individual circumstances, such as your age, income, and expenses. It's essential to create a comprehensive financial plan that takes into account your retirement goals, income, and expenses. What is the best investment platform for beginners in New Zealand? The best investment platform for beginners in New Zealand depends on your individual needs and preferences. However, platforms like Sharesies, Hatch, and Kernel are popular among beginners due to their low fees, user-friendly interfaces, and micro-investing capabilities. As discussed in Dividend Investing for Financial Independence: A New Zealand Investor's Guide, dividend investing can also be a viable option for beginners. How do I minimize tax on my investments in New Zealand? To minimize tax on your investments in New Zealand, you can invest in a PIE fund, which has a capped PIR tax rate of 28%. You can also invest in a KiwiSaver scheme, which provides tax benefits, such as a member tax credit of NZ$521.43 per year. Additionally, you can consider investing in index funds or ETFs, which often have lower fees and tax implications than actively managed funds.

Summary

Investing in New Zealand can be a complex and daunting task, especially with the numerous investing myths surrounding it. However, by understanding the common investing myths and having a well-thought-out investment strategy, you can achieve your financial goals and secure your retirement. Remember to start early, diversify your portfolio, invest regularly, keep costs low, and monitor and adjust your investments as needed. With the right investment strategy and a comprehensive financial plan, you can achieve financial independence and secure your financial future in New Zealand. As discussed in Maximizing Your Superannuation: Tips and Tricks for New Zealanders, maximizing your superannuation and KiwiSaver scheme can also play a crucial role in achieving financial independence.