With home ownership out of reach for many people, we’re seeing shifts in investing priorities that align with generational differences, particularly from Millennials and Gen Z. Following on from Boomers, who are tipped as the wealthiest generation in history, things are tough in a world where costs keep rising and outpacing income.

Data from Statistics New Zealand shows that people aged 55 to 74 have total personal net worth of $744 billion. That is compared to $197b for people aged 25 to 44 and $300.5b for people aged 45 to 54. So, people under 40 will usually have less money to spend, and less to invest. This has led to certain trends (particularly compared to pre-pandemic) like micro-investing, among other non-traditional ventures.

You might have heard the term micro-investing coming up in the past year or so. It’s the idea that through online investment apps and platforms, you can essentially create a digital piggybank with your spare change. Micro-investing advocates tout it as a way to dip your toe into investing, with the small amounts you’re putting in generally meaning you won’t be too upset if the market doesn’t move the way you want it to.

It seems DIY investing is growing in popularity, with Facebook groups dedicated to following the markets and showing progress. The Sharesies Share Club page on Facebook, set up and moderated by the company, has over 58,000 members. Typical use of this page seems to be crowdsourcing opinions or speculation on certain stocks, funds, etc. Whether or not Sharesies investors apply this collective opinion is up to the individual themselves.

From the page’s description:

Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations, and we encourage you to do your own research before you invest. Any information we provide is general only and current at the time written… For any personalised financial advice, we recommend speaking to a financial adviser.[1]

Pretty standard stuff, but definitely something to remember if you’re thinking picking stocks will be your golden goose. The risks in this kind of investing are the same whether you’re putting in a lot or a little – speculating on low-cost investments is more like buying a $2 scratch card, because it feels less of a commitment than laying down money at the racetrack. You’re still taking a gamble, and you’re not mitigating risk so much as the overall dollar value on the line.

Of course, there’s always the question of cryptocurrency. Recent estimates indicate around 220,000 New Zealanders (or 7.5% of the adult population) have traded or held some form of crypto in the past few years.

“The traditional original way to get into cryptocurrency is buy and hold – or HODL (Hold On for Dear Life) as the industry calls it – and sit on them in the hope that they go up in value,” EasyCrypto cofounder and CEO Janine Grainger explains.

It seems crypto is here to stay, despite the increasing difficulty of mining Bitcoin and the huge energy consumption this leads to. Other digital assets and NFTs are starting to increase in popularity too – in November, a tract of virtual real estate was sold for what is currently about NZ $3.5M worth of cryptocurrency.

Yes – even digital land is selling for millions in the metaverse, where other collectibles include things like digital fashion from Nike, Balenciaga and other luxury brands, and digital artwork selling for more than a Monet.

But I digress. We were talking about crypto.

Crypto in general is notoriously volatile. Just this week we’ve seen popular currencies like Bitcoin, Ethereum and DogeCoin facing sharp drops, while other cryptos soar. When thinking crypto, it’s always good to remind yourself of how dramatically (and quickly) this can fluctuate – and whether you’re willing to bet your life’s savings on it.

It can be tempting, especially in the current climate where so much is beyond our control, to try and create a sense of autonomy by picking stocks. This is called control bias, where as humans we tend to believe we can control or influence certain outcomes when, in fact, we can’t.

If you’re aware of the risk going in, and you’re fine with that, then that is your decision to make. Any potential punters may want to consider the following:

You can’t predict the market, no matter how closely you follow it. This is fundamental to success.

Followers of this column may remember our article a while back about Mr Goxx, the hamster trading crypto and outperforming so-called experts on the matter. The experiment proved the hypothesis of “A Random Walk Down Wall Street”, where Burton Malkiel speculated that a blindfolded monkey throwing darts at stock lists could do just as well as a human investment professional. When you’re picking stocks, you’re essentially doing the same.

Whether you’re investing $2 or a more considerable sum, it’s always a good idea to research the risks involved with the avenue you decide on. You should also have a firm grasp on your current situation, your goals, and your risk appetite.

If you’re looking to grow or protect your wealth, you are much better off following philosophies which subscribe to scientific, evidence-based practices. And if you question your current approach or want to get into investing for but you’re stuck on where to start, get in touch with a trusted fiduciary to discuss your options.

·         Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke’s Bay-based CEFEX certified financial planning and advisory firm.

·         The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

[1] https://www.facebook.com/groups/sharesiesshareclub/about