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6 steps to get your money Sorted
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Shares are among the riskiest of investments, yet they are also one of the best ways to grow money, especially over the long term.

A share (sometimes called a stock, equity or security) is a slice of a company. These days on apps like Sharesies or Hatch you can even buy ‘fractionalised’ shares, which are ‘slices of a slice’ of a company. Owning these units, no matter how small, means that you own part of that company and can enjoy a portion of the profits it makes.

When the company does well, you do too, depending on how many shares you own. If it distributes its profits by paying a dividend, you get some of that. Even if it doesn’t pay a dividend, you can still look forward to a quality company becoming more valuable and your shares being worth more in time if the share price climbs.

Taking on more risk with shares generally means the potential for higher returns. Think of those returns as you getting paid for taking on that higher risk.


In this guide

How does investing in shares work?

Companies offer shares in order to raise money and grow. Many companies start out as an entrepreneur’s idea, often with humble beginnings in a garage, apartment or dorm room (think Facebook, now Meta). To make the jump from an idea to a fully operating company, they need massive amounts of money (capital), so they sell shares – essentially sharing the ownership of their business with investors.

Share prices – how much investors are willing to pay for them – rise and fall throughout a trading day. When they go up above the price you paid for them, you make money when you sell. Prices depend on how investors think about the company and its outlook, and they typically look at:

Shares can rise and fall in value and be a bit like a rollercoaster, so generally they’re better as a long-term investment (at least a decade). That way you can ride out the typical ups and downs in the sharemarket.

Are shares right for you?

The sharemarket can be risky, so you need to be prepared. If you are going to get on a rollercoaster, you make the choice ahead of time – it’s dangerous to try to get off halfway. The ups and downs of the sharemarket can be steep, since it tends to grow steadily and then could fall suddenly. So you’ll need to be comfortable riding the ups and the downs (and not lose sleep when the market is falling and your shares are worth less).

Before you invest in shares, ask yourself, what am I investing for? If your goals are long term – at least a decade away – shares can be a good option. You don’t want to be forced to sell your shares (or any investment for that matter) in a hurry.

If you are picking and trading shares in individual companies, you’ll need to be ready to spend time researching them, including following the news, reading their reports or even attending their annual meetings. If not, you may want to leave it to professional fund managers.

A great way to find out if shares are right for you is to understand your investor profile and see how they fit into your overall mix of investments. Here’s our investor profiler to help.

How to invest in shares

You have many options when it comes to buying shares, and you’re not limited to investing in just one way, either. But it’s important to know that scammers use sophisticated websites designed to look legitimate, so you want to make sure you’re using one that is authorised by NZX, the New Zealand Exchange.

Many share investors get started buying shares on NZX-approved online trading websites. You can either buy shares in individual companies or invest in funds that hold shares.

These DIY platforms have made it extremely easy to get started in trading shares, although you’ll need to be comfortable making your own trading decisions without professional financial advice. But as long as you’re starting with small amounts (even as low as a cent!), you can give it a go and learn by doing.

Another way to invest in shares – and if you are in KiwiSaver, your fund likely includes some – is in a managed fund or exchange-traded fund (ETF). In this case a professional fund manager selects shares on your behalf, either more actively (doing research on the companies and trading them for you) or more passively (buying shares by automatically following a market index of shares). There’s more in our guide to managed funds and ETFs. This could be a good option if you don’t have the time to research individual companies yourself.

What are the risks vs rewards?


  • Like house prices, share prices are generally expected to go up over time and give us a capital gain on our money when we sell. However, shares can also lose value if the price falls below what we paid for them. You only make a loss or a gain when you sell the shares. Overall, the long-term trend is for the value of shares to increase at a rate higher than inflation.
  • Any investment opportunity could be a scam – everything can be faked, including online investing platforms. Anyone who cold calls offering an exclusive investment opportunity is most likely a scam and you should hang up straight away. It’s illegal in New Zealand to sell financial products through cold calling or other unsolicited communication.


  • When the company makes money, you’re sometimes paid a portion of the profit, called a dividend. You can choose to receive this dividend in cash or reinvest it to buy more shares in the company.
  • When the company’s outlook for future profits improves, the demand for its shares goes up, making them more valuable and driving the share prices up. Your shares become worth more, and your balance goes up. When you sell your shares at a higher price, you enjoy those gains and growth.
  • To get an idea, the outlook for shares generally ranges between a low of -7.2% and a high of 26.4% over any given year. See the aggressive investor profile for more on what you can expect.

How much does it cost to invest in shares?

There are always fees that come with investing, as various services ‘clip the ticket’ while you’re buying and selling shares. These can typically be either a flat fee or a charge based on the percentage of your funds being invested.

For financial advisers and brokers, there will be a minimum brokerage fee and possibly a percentage fee over a certain minimum.

Active managers tend to be more expensive, which reflects the additional time and research they put in when selecting shares. Passive managers that follow an index of shares are more on autopilot and tend to charge less. As always, you can expect to pay more if the broker or fund manager is offering additional services such as financial advice or company research.

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Keep an eye on fees

Fees make a huge difference when investing, since they eat into your returns. You do not necessarily get more by paying more to invest – as you might with other things you buy – and can end up getting less back.

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Discover your investor profile

Work out your investor profile to see what proportion of your investment portfolio should be in shares.

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Many share investors these days get started with small dollar amounts on DIY platforms like Sharesies, Kernel, Hatch or Stake. And that’s a good thing, since we all learn by doing. We can get a lot out of the investing experience, and many of us are buying investment assets – which are things that can put money back into our pockets – for the first time. But as you get going, it will be useful to have a plan and a strategy for your investing. You want your shares to fit in with your financial goals. Here’s our investor profiler to help.

The important thing is to invest on a platform authorised by NZX, the New Zealand Exchange. Sharesies and other platforms are, but many more are simply scams. Remember that your money is a target, so be careful where you invest.

What you want is a ‘buy and hold’ strategy – to buy shares that you’d like to keep theoretically forever. That way you are not forced to sell them in a crisis for a lower price than you want to. Ideally you will be investing ‘little and long’, drip feeding your money into your portfolio of shares, or share fund, over many years. This way it does not matter if the market is up or down when you invest, and you can take advantage of companies’ growth when it comes.

Instead of having a professional fund manager do it for you (like we do in KiwiSaver), you can select shares of your own, either through a financial adviser or bank, or on a DIY platform like Sharesies, Hatch or Stake. The apps have made it easier than ever to trade fractionalised shares, which are tiny slices of a company, for as little as one cent.

It’s easier than ever to get started investing in shares on a DIY platform like Sharesies, Hatch or Stake. Because these apps have lowered the barriers to investing – in the past you’d have needed tens of thousands of dollars to get started – you can get going straight away with very little. Since we all learn by doing, this is a good thing. And when you are ready to risk more for a greater reward, you can step up your investing in other ways.

Instead of taking the plunge into share investing, you can start by testing the water with just a few dollars at a time – play money you can afford to lose. Some online platforms offer a simulator without any money at all, which can give you the experience of share investing without risking your hard-earned cash. To get the rewards of share investing, you’ll eventually have to risk real dosh, but at least you’ll have a better idea of how it all works.

In many ways they are one of the best wealth-building assets to own, but whether something is a good investment depends very much on what you are investing for. What is your goal for the money you’re investing? If it’s longer term, shares can be a good option. To see how well shares fit in your future investment mix, give our investor profiler a go.

Yes! DIY platforms allow you to gift shares, and there are now gift cards even. Have a look online at your favourite investing platform.

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