Investing in the share market is going through something of a renaissance lately. With interest rates at record lows and share markets having rebounded strongly since the onset of Covid – there have been hundreds of thousands of Kiwis taking to the sharemarket - investing with fund managers or doing DIY investing with new online share trading platforms.
One person who’s particularly encouraged by this resurgence is Milford Portfolio Manager Mark Riggall. As someone who lives and breathes investing, he’s thrilled to see others getting involved.
Riggall, who currently manages Milford’s KiwiSaver Balanced Fund, has spent the last 20 years investing professionally in London, Hong Kong and Auckland. He spoke with Newshub about his top tips for those investing in the share market.
Mark’s top tips for investing:
- Set long-term goals
- Look for conviction in your investments
- Appreciate your tolerance for risk
- Stay flexible
- Have a repeatable process
Riggall says the recent market volatility is a timely reminder of the importance in setting long-term goals.
"Before you do anything, you’ve got to work out your goals. What are you trying to achieve with your investments?"
This sounds simple enough, but it’s something Riggall says is easy to overlook especially in a time where buying and selling shares is often just a click or tap of the screen away.
"An iron rule of investing is almost nothing is certain and the best you can do is put the odds of success in your favour. Once you accept this, you can see the benefit in setting up a repeatable process that you can follow to ensure you’re making informed investment decisions."
"Firstly, look for conviction in what you’re investing in. It’s tempting to just borrow someone else’s ideas but are they going to tell you when they’ve changed their mind? It’s best to do your own research and get really comfortable before you invest."
Next, Riggall says you need to be honest with yourself and know your limits "You want a healthy appreciation of your own tolerance for risk."
Famous behavioural psychologist Daniel Kahneman says the key to investing is having a well-calibrated sense of your future regret. In other words, when you make risky investments that are beyond your own tolerance for risk, you’re setting yourself up to face financial and psychological pain.
Riggall says you need to take risk in order to generate returns, but it’s easy to underestimate your tolerance for risk. "It’s hard to know what you can withstand until you’ve gone through it. You may say you can handle a ten per cent drop in the value of your portfolio, but when it actually happens you could feel quite differently."
Thirdly, he suggests staying flexible. "Don’t fall in love with your investments. You might have to change your mind as incoming news comes to light. It’s a real skill being able to cut your losses and move on."
Following these steps is a great starting point to help you build a repeatable process which Riggall says is fundamental to having long-term success in investing.
"Having a repeatable process which you can apply to multiple investments over time is the best way to drive long-term success."
Disclaimer: This is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as financial advice. Before making any financial decisions, you may wish to seek independent financial advice. Read the relevant Milford Product Disclosure Statement as issued by Milford Funds Ltd at milfordasset.com. Please note, past performance is not a reliable indicator of future performance.
This article was created for Milford