Younger New Zealanders, feeling blocked from owning a home by record house prices, are turning to shares to grow their money, according to a leading international online share trading platform, Tiger Brokers.
CEO Greg Boland says he believes young people, particularly those who feel excluded from home ownership, are looking for ways to grow their money by investing in shares – be it day trading (buying and selling the same day) or opting to invest in companies long term.
According to a survey of online investors carried out by Kantar for industry regulator the Financial Markets Authority 13 per cent of investors are buying shares in lieu of a home, 9 per cent invest their home deposit in shares, and 53 per cent say using an online platform is an affordable way to access sharemarkets. The survey also found 34 per cent of investors trade for fun.
"A lot of younger people have been stuck in the country for the last couple of years, they haven't really been able to travel overseas, and until recently the housing market has been very heated," says Boland.
"They have funds and are looking for ways to invest in companies they know, or having done their research, invest strategically for the long term. The alternative is leaving the cash in the bank and earning next to nothing."
Tiger Brokers is the latest addition to the investment landscape – offering Kiwis access to markets in China, Hong Kong, Singapore, Australia, and the US. The firm aims to increase its market share in New Zealand under CEO Boland, who joined the firm in October last year. Boland has a 30-year career in capital markets and has held senior executive roles at firms such as Craigs Investment Partners, OM Financial, and the New Zealand Futures & Options Exchange.
He says Tiger Brokers has more than nine million users worldwide and says it is early days for the firm's renewed push into New Zealand. Nevertheless, he says more than 6000 Kiwis are actively trading via the platform with around 100 new clients signing-up every day.
To help novice investors get up to speed with how the Tiger Trader app and website works, the company is offering a free test account where members can 'invest' a virtual US$100,000 to see how they would fare if using their own money.
"We also offer analytical tools so investors can better understand what companies are planning, there are customised notifications, free live market data, and unlimited day trades in the US market," says Boland.
Newbie investors should consider ETFs (Exchange-Traded Funds), he says, spreading an investment over a portfolio of firms. He points to ETFs such as EWH on the Hong Kong MSCI, SPY on the S&P 500, and QQQ on the Nasdaq 100 (which includes Apple, Microsoft and Tesla).
"You can buy an ETF and invest in a whole index in one go," says Boland. "It means all your eggs are not in one basket, as your investment is spread across dozens of companies at the same time."
As for the level of investment, he says most people drip feed funds into their account over time, although the company's fees and charges mean a minimum investment of $350 is the ideal starting point: "Investors can invest as much or as little as they feel comfortable with."
Tiger Brokers also has an online community where members share stock tips and talk about their trades.
"There will be various stories in our forums about particular shares that other investors have done well with," says Boland. "It can be interesting to see what other people are saying."
The Tiger Trade platform also offers up-to-the-minute market information that might have a bearing on future share prices and company profitability. Live graphs showing the current value of the stocks members have bought make it easy to track their investment portfolios.
"In addition we provide financial information on listed companies as well as technical analysis that provides real insight into how any listed firm is trading," says Boland. "Our members get information to help them make buy and sell decisions."
Boland says Tiger Broker is one of the first trading platforms in New Zealand to offer stock options and futures as well as margins trading. The use of these leveraged products can be a risky enterprise and is not suitable for inexperienced investors.
"However, most people buy shares for the long-term – two to five years – and ride out any downturns, like those we have seen in the year to date,which are all part of the sharemarket," says Boland.
"Shares can be down today and up tomorrow. And the heightened level of risk measured by volatility has been at the forefront of investors' minds this year but also provides buying opportunities when prices come off markedly."
Some stocks actively traded by Tiger Broker members in New Zealand are:
- AMC Entertainment
- Tesla
- Nio
- Palantir Technologies
- Apple
ETFS are:
- ProShares Ultra VIX Short Term Futures ETF
- ProShares UltraPro Short QQQ ETF