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The term “Black Friday” originated in the 1950s, according to some sources, and described the heavy and disruptive pedestrian and vehicle traffic that occurred on the day after Thanksgiving. The term has come to symbolize the start of the holiday shopping season and great bargains and consumer spending over time.
Another American phenomenon has taken over New Zealand. Many of us know about Black Friday, whether we are more aware of consumer trends, want to capitalize on the pre-holiday shopping season, or use international e-commerce platforms.
So, my question is: Do many New Zealanders look forward to Black Friday to grab a bargain and find a deal?
Most people like to shop during a sale. We think we are getting a better deal and saving money, right?
Apply that same philosophy to your investing. Embrace a market downturn, ignore the noise, and remember that KiwiSaver is a long-term investment for many people, and you should also have a long-term approach for your other investments.
“It is about time in a market, not timing a market.”
KiwiSaver has ‘Black Friday’ sales. It is a wonderful time to contribute to your KiwiSaver or Managed Fund. History shows us that investment markets can experience downturns, which are periods of declining prices. Various factors can cause these downturns and they can have significant impacts on investors, portfolios, and the broader economy.
A declining market should not scare you. KiwiSaver is an investment strategy that requires regular contributions, which creates dollar-cost averaging by default. The key idea behind dollar-cost averaging is that it helps reduce the impact of market volatility and allows investors to buy more shares when prices are low and fewer shares when prices are high.
A declining market is what financial markets call a bear market. A bear market is a term used in the financial markets to describe a prolonged period of declining stock prices, typically characterized by a drop of 20% or more from recent highs. Bear markets often come with investor pessimism, economic downturns, and a general decline in market confidence.
So jump on the KiwiSaver or Investment Black Friday and Cyber Monday sales. Instead of a new TV, phone, or other tech gadget, set up a direct debit into an Investment Portfolio, or make an extra contribution to your KiwiSaver.
History shows us that consistent contribution into your investment will most likely be worth significantly more than a smartphone or obsolete gadget in 20 years.
Dollar-cost averaging, the compounding effect, and the growth of your assets in the investment will make your financial future brighter.
The first step is to assess your financial goals, have a strategy, diversify your portfolio, understand your risk tolerance, have some cash reserves, and take a long-term perspective. To make it easier, seek professional advice, talk to our investment specialists, and sit back and enjoy the ride.
Investing is as simple as making it a consistent habit, zoning out the noise, and accepting that we will have volatility, bear markets, and bull markets. A bull market is a term used in the financial markets to describe a prolonged period of rising stock prices, typically characterized by an increase of 20% or more from recent lows. Bull markets often come with investor optimism, economic growth, and a general sense of confidence in the financial markets.
Do an audit, figure out if there is any money left at the end of each week, fortnight, or month, or where you might be able to make some changes to create some free cash flow and start investing.
Things to consider: If you intend to use your KiwiSaver for a first home purchase, then please get some advice. The above is about taking a long-term approach to your investment journey. If you plan to access your fund in the short term, then you may want to review your asset allocation (fund type) to ensure it is aligned with your goals.
Happy shopping and/or investing!
Dean.
Hi everyone! My name is Dean, and I am a Financial Adviser and coach. I work with people to help them to achieve their financial goals and assist them to make smarter financial decisions. Drop me a line for a chat and to work through your goals. I work with you to become financially fit and together we create a game plan for your financial future D.
Disclaimer: Blair (FSP87402) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Dean’s disclosure statement on our website.