If you’re living in New Zealand and have paid attention to the personal finance space, you’ve probably heard of Sharesies as they blasted onto the scene in 2017. Over half a million people have created accounts and begun to invest using their platform with as little as a few dollars a week. This democratization of investing (similar to other platforms that allow fractional share investing) has given rise to a new class of retail investors and allowed them to build their future in a way that wasn’t possible with traditional stock brokers.
Not ready to rest on their laurels, founders Brooke Roberts, Leighton Roberts, and Sonya Williams have come out with The Sharesies Guide to Investing: Your roadmap to financial freedom. As one would expect, it targets those who are brand new to investing. It provides an excellent exploration of the basic investing terms, what you can invest in, diversification, coping with downturns, impact investing, and many other aspects of the financial world.
A few of my favorite takeaways
Dollar-cost averaging and compounding interest are your friends
Like Sharesies itself, a large part of the ethos in this book is the idea that you don’t need to be wealthy to invest. Even when you’re on a tight budget, consistently investing even $5 per week can add up in the long run, and this is a point that is hammered home over and over again in this book. Sprinkled throughout are graphs that demonstrate how compound interest can make your returns skyrocket — it’s the difference between a hundred thousand dollars by the time you retire and hundreds of thousands. Investor stories from Sharesies users at all income and investment levels are scattered across each chapter and help humanize the idea of actually making investing a consistent part of your financial life. It’s all well and good reading about compound investing and dollar cost averaging, but hearing these stories about people who’ve implemented those habits and improved their financial lives gives context and encouragement to those who haven’t yet started.
Exploring initial public offerings (IPOs)
I enjoyed the section covering what you can invest in, especially the discussion surrounding initial public offerings (IPOs). An IPO is when a company first lists its shares on a public stock exchange and becomes available for purchase to the public. They have always held a certain appeal to retail investors, especially within the tech sector in the past couple of decades, where the prospect of extreme growth like that of Facebook and Google may be possible. Everyone wants to get in on the ground floor of these companies, as seen by the number of Unicorns (private companies valued at over $1 billion) funded by venture capital. The increase in SPAC (Special Purpose Acquisition Companies) allows private companies to merge with a company already listed on the stock exchange and essentially makes the process of an IPO much easier. But while this makes it easier for companies to IPO, it doesn’t necessarily mean it’s great for the investor — roughly 90% of companies that used SPACs to go public in 2020-2021 wound up trading lower than their initial offering price. Given how easy it can be for the newbie investor to get swept up in all the hype on social media, I think it’s important to discuss the finer details of an IPO and the risks associated with investing in one.
By covering the basics, the authors offer a ‘roadmap to financial freedom’, giving an accessible starting point to those who hadn’t ever considered investing as something in their future and thought of it as something reserved only for the wealthy.
Coping with downturns
One of the most important things a new investor should learn is how to cope with an investment that’s losing value and how to know when to sell. Selling too early for fear of a market crash or selling and locking in your losses are two of the main mistakes investors make and the authors do a great job laying out how to best cope with your losses and what your thinking should be when it is time to sell. They’re pointers I wish I’d had during the stock market crash when Covid-19 hit in 2020. Essentially, any losses you have in your portfolio aren’t losses until you lock them in by selling — it’s a mistake that many new investors make, myself included. As the book also mentions, it’s really important not to get caught up in the hype or echo chambers of sentiment online. When the Covid crash was at its worst, the media was hyping it up to be the end times, when in reality the stock market recovered after a month and went on to rocket past the previous high. It’s important to think about the fundamentals of the company and whether the reasons you bought the stock are still sound or if it’s just market conditions that are causing you to sell.
The rest of your financial life
While this book primarily focuses on aspects of investing, I’m glad that it touches on the broader aspects of personal finances in the final couple of chapters. Investing is an essential tool for your future financial freedom, but it’s not possible without laying out the groundwork of budgeting and getting rid of debt. It also touches on the importance of discussing finances with your family. Studies have shown that children growing up in wealthier families that teach healthy financial habits end up years ahead of their peers coming from lower-income households who may not have that opportunity. While only one of the reasons why wealth and poverty can be generational, increasing youth financial literacy is one of the more actionable barriers for us to break.
Would I recommend The Sharesies Guide to Investing?
While there are mentions of the Sharesies investing platform throughout the book, it never feels as though the book is merely an advertisement for it. It’s valuable to readers, regardless of the platform they choose to implement their investment knowledge. While you might think that a book written by Kiwi authors and founders of a Kiwi investment platform would be skewed heavily towards a Kiwi audience, you wouldn’t be entirely correct. Yes, there is a focus on New Zealand investment, and yes there are local cultural influences, however, the investing techniques and strategies are solid for people all over the world.
All in all, The Sharesies Guide to Investing presents an excellent introduction to the world of investing and how a few small habits maintained across decades can help set you up financially for life. Although decidedly foundational in the information it conveys, that’s not a strike against it — it’s a book for beginners after all. By covering the basics, the authors offer a ‘roadmap to financial freedom’, giving an accessible starting point to those who hadn’t ever considered investing as something in their future and thought of it as something reserved only for the wealthy.
It’s not the most in-depth personal finance and investing book I’ve ever read, and it won’t make you a master investor overnight, but it is one that I would happily recommend to any of my friends who perhaps haven’t yet dived into the investing world due to a lack of knowledge. If you have teenagers at home who have an interest in money, this may be an excellent way to set them on their investing journey. Like the authors, I think it’s a good thing that investing is becoming more accessible than ever — the main thing you need to do to build your financial future is to just make a start, and this book may be the right tool to help you do just that.
Book cover used in banner image from Paper Plus.
Anton is PocketSmith’s Marketing Coordinator and has just completed his BComSci degree in Marketing and Ecology alongside working at PocketSmith. Anton started his investing journey in high school and hasn’t looked back since. He’s a strong proponent of index investing, although he still likes the thrill of individual stocks on the side.
