The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko is urging DIY online investors to pause before succumbing to investment FOMO as part of World Investor Week (4-10 October).
Recent research by the FMA into online investing platforms found 31% of all online DIY investors jumped into an investment in the last two years because they didn’t want to miss out. Additionally, 27% said they invested based on a recommendation from someone they know without doing their own research.
The FMA campaign is urging investors to follow the “5 D’s of DIY investing”:
- Do your due diligence
- Drip feed your investments
- Diversify your portfolio
- Don’t freak out if markets go down, and
- If in Doubt, talk to a financial adviser.
One particular DIY investor type the FMA is focused on is the ‘planter investor’ identified in the research. Planters make up (42%) of DIY investors, with the others being opportunists (19%), speculators (20%) and dabblers (19%).
Gillian Boyes, FMA Investor Capability Manager, said planters tend to be comparatively younger with a female skew, and see DIY investing as a significant part of their financial strategy.
“Our research found planters have 52% of their investment portfolio in online investing platforms. This suggests they are putting a large portion of their income into DIY platforms and may have more to lose in a market downturn, with larger portfolios and less time to recover.
“Planters have good intentions around investing but don’t always research potential investments thoroughly, such as making decisions based on whether a company is well-known. We want to use World Investor Week to remind DIY investors about good investing habits and steps they can take to protect themselves.
“As part of their due diligence, we’re encouraging planters to ask themselves some important questions before making an investment. These include, will the investment earn an income? Do I understand the company I’m thinking of investing in? Is the share price reasonable? What fees or costs are involved? How can I get my money back? Is it a legitimate offer?”
One planter, Terry, started his investment journey a few years ago when a group of his friends started a monthly investment club, each contributing $100 and choosing a new investment monthly. Terry said he enjoyed how DIY investing allowed him to learn more about financial products and how the share market works. He believes it’s important to have a diverse financial portfolio and part of that involves investing in shares. He is interested in medium to high-risk investments with a long-term horizon and isn’t in it for quick money.
About World Investor Week
The annual World Investor Week is sponsored by the International Organization of Securities Commissions.
The FMA is the lead agency for World Investor Week in New Zealand and is running with the theme, ‘Investing FOMO? Take a Mo’. In partnership with the Retirement Commission, NZX, the Financial Services Council, the NZ Shareholders Association, as well as a number of private sector organisations. The FMA will be sharing the Five D’s of DIY Investing throughout the week.
