So, you want to learn how to invest? Kudos! You've already made the first step on your investing journey by reading this blog. Investing is actually pretty straightforward, and our guide to investing for beginners could make your first few steps a little smoother.

What is investing?

If we boil it down to its basic definition, investing is ‘the commitment of resources to achieve later benefits’. When you exercise and eat well, you’re investing in your health. When you’re spending time each week learning; you’re investing in your education. 

In the finance world investing is ‘putting your money towards something that you expect to generate a positive return (make more money) over time’. 

Most people learn how to invest to achieve a goal, like retirement (think KiwiSaver), a house deposit, or for their children’s future. Investing your money is not the same thing as saving it. If you’re ready to nail down a budgeting strategy and learn how to invest, let’s look at saving vs investing to help get you started.

Investing vs savings

Savings and investments have a role in helping you manage your finances for both the present and future. The simplest way to understand the difference between saving your money and investing your money is to know how each one could help you reach your goals.  We summarise the difference between saving and investing here:

‘Your savings can help pay for life’s big and little surprises, and your investments may help you grow money over the long term.’

There are pros and cons to saving and investing in the share markets - knowing the differences in how each works can guide you to choose which best suits your goals.

Read more: The difference between saving and investing

Investing in your knowledge

Learning how to invest starts with investing a small amount of your time to learn the basics. Whether it’s listening, reading, scrolling, watching, or chatting - there are resources that support your learning style to help grow your financial smarts. Just choose your favourite mediums, and you’re on your way!

Share Market Glossary

Save our share market glossary to your favourites to access simple investing terms on the go. Start with schooling up on core share market terms, like:

• Company - a legal entity that operates a business or businesses that people can own by having shares
• Dividends - the money shareholders receive when a company gives out a proportion of their profits
• ETF or exchange-traded fund - a basket of investments that can include companies, gold, bonds, or property
• Index fund - passive funds including ETFs that track or mirror an index, such as the S&P 500, which is the top performing 500 companies on the US share markets
• Shares - a single unit of a company’s stock that anyone can own
• Share market - a market to buy and sell shares, such as the NYSE and the Nasdaq
• Stocks - company assets that anyone can own
  

Next, get familiar with some basic investing strategies, like:

• Compounding growth - earning returns on returns over time; that is, growing money on top of your initial investment
• Diversification - lowering investing risk by having a varied mix of different investments, such as company stocks, index fund ETFs, property, REITs, gold, or bonds
• Dollar-cost averaging - an investment strategy to invest the same dollar amount in a chosen company or ETF at regular intervals that over time, can lower what you pay for your investments and help manage risk

School up on simple investing terms with our glossary

Investing for beginners’ course

Our free beginner’s investing Course teaches you the basics of investing and takes just 10 minutes a day over ten days. You’ll learn something new in less time than it takes to finish your morning coffee! Over 25,000 people have completed our course so far. What inspired them to take their next step? Join our free investing for beginners course delivered directly to your inbox daily to find out. 

For the latest US share market news and macroeconomic trends, subscribe to our weekly newsletter. ‘The Fry Up’ will be landing in your inbox every Tuesday. While you’re scrolling, you may also want to add these global and Kiwi resources to your favourites:

• Forbes - How To Invest In Stocks and What Is Investing? How Can You Start Investing? are practical guides that list steps to help you start investing
• Investopedia - this renowned investing hub is your one-stop shop to learn (almost everything) about investing in global share markets
• MoneyHub - How to Invest in Shares: A Step-by-Step for Beginners, uses language Kiwis understand, with loads of links to further resources
• Sorted - Top Guides for Saving & investing breaks down the differences between saving and investing with a jam-packed library of well-researched resources
• Wealthsimple - their Investing 101: Investing Basics For Beginners combines simple graphics and language, and kicks off with steps you can do before you start investing

Kiwi financial influencers 

For relatable content and money tips from Kiwis who have learned by doing, financial influencers on social media platforms like TikTok and Instagram could inspire you to take your next step. 

Our Kiwi favourites below share how to invest in stocks in simple, smart, bite-sized content sprinkled with their tried and tested finance hacks to help break down barriers:

• Aaron Hamkins
• Girls That Invest
• Investing with Tom
• Māori Millionaire
• NZ Everyday Investor
• The Happy Saver
• The One Up Project
• Top Flight Investor

Making money chat great again

Investing is now more affordable and accessible than ever. You may have friends and whānau who love to talk openly about money, or investing. Grab a moment with them to ask what inspired their first steps, which tools and platforms they use, their most trusted sources for information, and the highs and lows of what they have learned along the way - yep, even hearing their mistakes could help you to avoid yours. 

Ruth from The Happy Saver asks friends to invite her for coffee in exchange for sharing what she’s learned about finance and investing for beginners. So grab some mugs, fire up the Moccamaster, and settle in while they spill the tea on finance.

No mates? No worries! If you don’t have any friends keen on finance, make some. We’ve compiled a list of our favourite investing communities, websites, and podcasts for your learning pleasure. 

Already started investing with Hatch? Be sure to introduce yourself in our Hatch Investors’ Club and dive in with your pressing learner questions - everyone is happy to share their knowledge and experience.

Setting money goals and finding your ‘why’

Now that you’ve read up on the basics of investing, you might be ready to start setting your own financial goals. Knowing what you’re investing for - your why - is valuable for two main reasons:

• Your future - mapping out the timelines for your goals - study, buying a home, retirement - understanding your current situation, and learning your appetite for risk can help you decide what you might choose to invest in 
• Staying financially smart - using your goals to help day-to-day financial decisions can help you budget - and keep you on track with your finances when you’re tempted to veer off course 

Having a goal may help you decide how to diversify your portfolio. That is, spreading your money across a range of investments in a way that suits your investment plans. Sorted’s 6 steps to get your money sorted include a template for goal-setting, or you could write them in a diary, or the notes app on your phone. Put your investing goals out there to the universe - saying them loud and proud (even just to yourself!) - and work on making them a reality.

Choosing the best investment platform

When it comes to investing there is no one-size-fits-all. Be prepared to make a lot of active choices along the way. There’s a limit to the amount of time and money most of us have to spend on investing. So, considering fees and how much you want to DIY (or outsource) your investing can help you choose the investments and strategies to help reach your goals.

Whether you’re looking at interest rates on term deposits, searching for the lowest lending rates, or trying to find the best investment platform, you need to know your numbers. Set-up costs, exchange fees, management fees, percentage-based transaction fees, and taxes can impact your returns (the amount of money you make) over time. 

Flat fees to buy and sell shares can make it simpler when calculating what percentage you’re spending on fees. If you’re investing in overseas share markets, exchange fees are important to factor in each time you exchange your NZD for another currency. 

Then there’s the cost of your time! If you don’t have time to research individual stocks, you might consider looking into bundles of shares called exchange-traded funds (ETFs).

Choosing your first shares

At Hatch, you can choose to invest in more than 5,800 company stocks, over 1,900 Exchange-traded funds, more than 500 American Depositary Receipts, and 129 Real Estate Investment Trusts. But it can be hard enough to choose which show to stream! With this many choices available, where do you start?

Doing your research enables you to make informed decisions. Referring to your goals can be a useful place to start researching what you’d like to invest in.  

You can use our browse investment and search functions to research and compare returns for companies and exchange-traded funds (ETFs) and add them to your watchlist. Start your research by simply creating a free Hatch account. 

ETFs vs shares

Company shares and ETFs are different, so it’s worth taking the time to understand in which ways and how it may impact your investing. If you’re risk-averse or don’t want to spend time researching individual companies, ETFs may suit your investing style.

‍Read more: ETF vs Stocks: What’s the difference?

Buying your first shares 

Feeling warmed up and ready to hit the ground running? It could be time to start getting off the sidelines and making your first investment. Here is a step-by-step for how you can start investing in shares through Hatch. 

1. If you haven’t already, create your free Hatch account and verify your identity. You can then start browsing and watch-listing companies and ETFs and getting a feel for how the Hatch platform works
2. Make your first deposit into your Hatch account starting with any amount you feel comfortable with. It could be the cost of a meal out - to see how you feel - or more if you’re feeling confident and have done your research
3. Choose a company or ETF you want to own part of by adding them to your watchlist. Or if you’re ready to invest, head to step 4…
4. Choose how you’d like to place your order, and the amount you’d like to invest, and you’re done!
5. Keep an eye on how your investment is doing over the next few months. Your investment is likely to go up and down daily, weekly, and monthly - this is a typical way shares perform on the share markets. Don't let it rock you by becoming an emotional investor. Instead, watch and learn.
6. When you’re feeling confident, go back to your ‘Why’ and consider making a plan to invest regularly.

There are no magic tricks or flawless investment strategies. You’ll learn lessons about investing just by doing it (including what not to do; it’s all part of the process). Getting started is the biggest hurdle you’ll overcome, and with us by your side, you’ve got this!