Investing in shares can be a great way to grow your savings. But investing is tricky and knowing how to create a healthy portfolio is even trickier.
With more and more Kiwis now taking to the share market, it’s important your investments are set up for success and you’re not taking on too much risk. Milford Portfolio Manager Mark Riggall shared a few tips with Newshub on how you can build a healthy portfolio.
Riggall, who currently manages Milford’s KiwiSaver Plan Balanced Fund, has spent the last 20 years investing professionally in London, Hong Kong and Auckland. He says “Before you do anything, you have to work out your goals. What are you trying to achieve?”.
There are a range of goals you can have as an investor – a few common ones are saving for a first home, saving for retirement, your child’s education or for those who are retired, your goal could be to generate an income to help fund your lifestyle.
With markets in a constant state of change, moving up and down, Riggall says there’s a risk in not setting goals. “If you don’t have a clear plan, it’s easy to panic and sell after markets have gone down. The risk there, is that you’re effectively locking-in your losses and removing your ability to benefit if markets rebound.”
Once you’ve established your goals, Riggall says you want to ensure your investment is diversified by not having all your eggs in one basket. If your portfolio is concentrated in only a handful of companies, you’re taking on more risk because if one investment performs poorly it will have a bigger impact on your portfolio’s overall return. But when you diversify across a number of companies, it can help smooth out your returns and shelter you if one of your investments is a poor performer. Riggall said it can be hard for investors in New Zealand to get fully diversified. “As a New Zealand investor, your options are somewhat limited. The New Zealand share market is small and certain industries are not fully represented.”
Originally Appeared Here