In this opinion piece, Kirsty O’Hara, Engagement Lead for Flint Wealth, looks at the reasons for the rise and rise of online investing in New Zealand.
If you had to describe in two words the reason for the proliferation of investing platforms and apps in recent times, it's these: confidence and control.
The last decade has seen a rise in online investment platforms in New Zealand, providing Kiwis with access to opportunities that may once have seemed out of reach – whether home grown start-ups or those from overseas.
Kiwi customers have jumped on board – and one of the key by-products of this has been a growth in confidence. The Financial Markets Authority published a report in July 2021 showing that 80 per cent of respondents felt more confident about investing after investing online.
One of the key themes that Flint Wealth is hearing from customers is that they appreciate being in control of their investment portfolio. Online investing provides an investor fingertip access and gives them the ability to decide what is in and out of their portfolio.
Even when investing for the long term, customers still appreciate taking the wheel rather than relying on a single relationship with an investment provider. Underpinning this need for control may be the desire to easily influence where their money goes. An investor isn't tied to one fund manager – they can invest their money across different funds as they choose.
This feeling of financial control may partly be why online investing can encourage investing confidence.
What creates confidence is different for different people. Perhaps, as a country, we have become conditioned to investing through our growing knowledge of KiwiSaver. Maybe we've had more disposable cash with borders closed and OE plans scuppered. Whatever the reason, it is clear, that investing online is something we are into. Let's be honest – we all love a bit of DIY.
Psychologists would tell us that, as humans, we like certainty - we gravitate to the familiar. If you've ever found yourself ordering the same food from your favourite restaurant multiple times, then you can probably relate to this.
One of the clear challenges investors face is navigating uncertainty. Markets and funds rise and fall, and past performance is not necessarily indicative of future performance. Amidst this uncertainty, investors may find it helpful to focus on what they can control – like consciously making regular contributions to their fund. This may build confidence they are getting ahead and about investing.
This is one of the age-old principles of investing – and investing online is no different. Investment platforms have provided an easy way to diversify across investment funds and investment managers. An investor signs up to an investment platform with one account and can invest across multiple funds, removing the need to sign up with multiple fund managers.
This all-in-one access means an investor can quickly make comparisons across investment options, comparing data such as performance, fees and fund objectives. This ability to diversify may also be part of the reason why investing online can lead to investment confidence.
Investing into managed funds used to be for those with large amounts to invest but is now available to people with lower amounts. With an investment platform like Flint Wealth, investors can buy into an investment fund at often much lower dollar values than if they were to sign up directly with an investment fund manager. The accessible nature of online investing means it is much easier to give investing a go – and giving something a go can be a good way of building confidence.
For those thinking about online investing, a great place to start is understanding their financial goals, time horizon and attitudes toward risk. A goal may provide confidence, in that you are working towards something – and a natural goal for many people is investing for retirement.
Understanding your time horizon and attitudes towards risk can then inform where you might place your dollar. Many of Flint Wealth's customers find Sorted's Investor Kickstarter tools helpful for refining their investment goals and understanding their personal investment approach.
The next step is to evaluate investment options and research opportunities. Flint Wealth offers in-platform research and insights against many of the funds listed on the Flint platform, and a product tear sheet to make this process easier.
For more information: Flint Wealth
Any view expressed in this article is intended as guidance only and is not authorised financial advice.