Let’s Talk About Money
It’s 2022 and most of us are carrying devices around that give us an almost instantaneous gateway to nearly all of the content that has ever been generated by humankind. We can watch videos about making resin coffee tables, join in on a Harvard lecture, we can access NASA satellite imagery and we can add our 2 cents worth to a political leader’s social feed.
In New Zealand, like most of the Western world, we live in an era where we can share ideas, contribute to discourse and access knowledge with more freedom than ever in history. Yet, there is still one subject many of us are not willing to talk about or share in public, even to our closest friends and family. Yes, for some reason money is still a taboo subject.
And the fact that people are generally so unwilling to talk about finances creates an intergenerational loop. Adding to this is the fact that New Zealand has had, and to a degree still has, an obsession with property over the years, which has made the average New Zealander reticent it to consider other investing options, even a diversified portfolio of listed equities.
Sara O’Connor, an Investment Adviser from Craigs Investment Partners, has noticed that our love affair with property may be beginning to wane.
“In New Zealand, the mentality has been, you grow up and you buy a house and then if you’re really well off, you’ll buy another house and another one and that’s how you grow your wealth. That’s been our philosophy in New Zealand on top of all the other issues around talking about money. But I think that is changing and more people are starting to realise that whilst property can be a good investment there are also other alternatives. It’s getting harder and harder for young people to get into the property market. It’s significantly easier to get into the capital markets investing smaller amounts gradually.
But even if investing in the sharemarket is becoming more common, many New Zealanders still don’t like to talk about or seek advice about their finances and investing. This is in spite of the fact that over 60% of New Zealanders worry about money and 70% of us say financial issues are negatively impacting our overall well-being, according to Financial Services Council. Sara points out that women in particular can experience financial anxiety and may avoid investing because they think they won’t be perfect at it.
“Women in particular, are realising that this taboo about money has been to our detriment. We’ve been conditioned to believe that it is not polite, it’s not good manners to talk about money, but now people are much more aware of the gender pay gap, the investing gap, the wealth gap and talking about money will help this.
And while there is some shift happening, with some schools being very proactive at teaching financial literacy and young people talking more transparently about what they’re earning, there are other parts of society where still, culturally for example it can be insensitive to talk about money.
“I still encounter people that might be in their forties or fifties or even older and that have no idea about their finances. Often in a relationship there is one person that will drive the finances and be in control. I often meet people that don’t know if they’ve got a mortgage or how much it is or how much they’ve got saved for retirement or what their retirement plan is. It’s definitely something we need to work on. At Craigs Investment Partners we have been running free seminars to educate New Zealanders for a long time. We provide a space where people can put up their hand and say, ‘I don’t understand what a dividend is’ for example and not feel embarrassed. We’re trying to keep sessions open, engaging and get rid of as much jargon as possible and to make it accessible for everyone.”
“Statistically, women can make great investors and there is evidence to suggest that because we’re slightly more risk aware, tend to seek advice, take a long term view and avoid frequent trading, we generally do better in the markets when we invest. The main barrier is usually taking the first step to get started.
And ironically, in terms of getting started, O’Connor suggests that women can be hesitant to start because of high expectations of themselves.
“We often wait until we feel that we know everything there is to know about investing or the perfect time to invest which, of course, you never know so many put off getting started.”
O’Connor highlights the power of partnering with someone, an adviser, who can walk through the process. Not only through the information, but also as psychological support during volatile markets, as well as avoiding general investor biases.
“If somebody’s watching the news and they start to panic and think the markets are falling, and want to quickly sell everything, they have someone to contact for advice and support. We can help and talk them out of a decision that potentially isn’t good for them over the long run. Most people know what they should do but it can be hard to stick to your plan in a more challenging bear market when prices are dropping. As advisers we aim to empower all our clients and improve their financial literacy because we don’t want to keep that information to ourselves. I want my clients to be as informed as possible. I want to teach them everything I know so they fully understand what they’re getting into and how it will help them achieve their goals. Educating yourself can reduce a lot of the anxiety. If you understand what’s going on, then it’s a lot easier.”
For more information contact a Craigs Investment Partners adviser on 0800 272 442 – visit craigsip.com
Making Sense Of Money – Sara O’Connor’s Quick Tips
Financial well being
- Taking action will improve your financial confidence. Don’t wait until the perfect time or for the perfect investment. Just start. Get in touch to make a first appointment with an adviser – it only costs your time.
- Remember why you are doing this. It is not about money for money’s sake. It is about how money will help you achieve your goals or the freedom it will buy you.
- You don’t have to work it out yourself and you are not alone. We can help you on your investing journey and help you achieve your goals.
- Remember wealth is often what you don’t see. If you spend money on things, you will end up with the things and not the money.
Is now a good time to invest?
- Do you have an emergency fund? Have you paid off high-interest debt? Are you able to meet your expenses? If so, bear markets can be an opportunity for long-term investors. This is because of 1) power of compounding 2) the market historically goes up over time.
- Bear markets and recessions can sound scary, but it is important to remember they are a normal part of market cycles. You will experience multiple bear markets in your investing lifetime.
- As Warren Buffet puts it ‘Investing is simple but not easy’. It will not always be a smooth path of returns. Generally, the key is to invest in quality companies and stay invested.
- No one knows where the bottom of the market is so dollar cost averaging (investing little amounts frequently) can be a powerful strategy for a long-term portfolio.
Ways to navigate this time
- Try not to panic (often easier said than done, this is where a financial adviser can be very helpful).
- Reduce your financial news intake if you are feeling anxious.
- Understand this is completely normal.
- Consider your money mindset (your money story and money personality). Knowing this can help you establish a strategy that will work for you. Work on establishing a healthy relationship with money.
- Automate as much as you can. Take the emotions and decision making out of the equation and invest a little often.
- With knowledge comes power. Educate yourself. We offer podcasts, videos and womens wealth seminars to help you.
- Remind yourself of your objectives. If they haven’t changed, your strategy probably shouldn’t change.
- Take control of what you can control – your budget, your debts, emergency fund.
- Reframe this as an opportunity.
- Lean on your adviser to help you walk through this time.
For more information contact a Craigs Investment Partners adviser on 0800 272 442 – visit craigsip.com
Disclaimer: This article is general in nature and is not financial advice. It does not take into account your financial situation, objectives, goals, or risk tolerance. All investments involve risk and can go down as well as up. The Craigs Investment Partners Limited Financial Advice Provider Disclosure Statement can be viewed at craigsip.com/tcs. Visit craigsip.com.
Published 7th September 2022.
