?? How do I know what to invest in?? ??
I get this question all the time from my Keep The Change readership and firstly I think it's the wrong question to ask. Because people don't get taught to ask better questions. To start here, I recorded a podcast on that:
Just to be clear, I don't provide stock tips, it's not my thing. I do write about the things I've done though and if people can learn from those things, great.
Enough about that, back to the question?
???How do I know what to invest in? ??
This is like asking someone 'whats the best way to lose weight?'
It's 2021 and we still don't have ONE answer so you'll get 1,023 different opinions.
What you want is a framework that works for YOU. Here's one I use.
?? Stick to things you know about (increases confidence)
?? Stop looking for ‘the best’ if it stops you from taking action
?? Spend some time researching the areas you know about
?? Go see if your gut feeling or knowledge exists in data
?? Remind yourself what you are trying to achieve
?? Part of investing is LEARNING and guess what? Sometimes our failures teach us plenty too. Don’t be scared to lose. You should be scared to lose AND not take any learning from it.
(The fact that Quade Cooper could miss that final penalty didn't stop him from trying to kick it).
EXAMPLE
?Q. What do I know to be true??
A. There are a lot of boomers in New Zealand.
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Q. Which is the best retirement village provider?
A. I don’t know and I won’t let it stop me investing in that space
Q. How can I invest in the retirement village space?
A. Hmmm maybe I should….GOOGLE IT! (Someone else has probably found the answers for you already).??
?? Stuff article from 2017: There are four retirement village development companies listed on the New Zealand Stock Exchange - Arvida Group, Ryman Healthcare, Metlifecare, and Summerset Group, while Oceania is a likely listing prospect in the near future. Millennials can cash in on the baby boomer lifestyle by investing in retirement villages.
(Look at that last sentence - someone basically told Millennials to cash in off the baby boomer lifestyle).
Q. I wonder if data supports my hunch that there are A LOT of boomers in New Zealand
A. Google it.
?? Treasury (they love numbers and data): is noting that 26% of the population is expected to be 65 years old or more by 2060, compared with 16% in 2020.
Q. What am I trying to achieve with this investment??A. (Different for everyone) Growth of my initial investment (EXCESS CASH I CAN AFFORD TO INVEST) over the long term because parking this in the bank sucks at the moment.
?? RISKS
This methodology isn’t risk free. No methodology is. Part of investing is making a bet on a future outcome. And sometimes outcomes have many moving parts or unexpected changes in circumstances. BUT when that happens you can always review the above methodology and assess whether you want to hold or sell.
?? EXTRA: Go and review the stock prices of Arvida Group, Ryman Healthcare, Metlifecare, Summerset Group & Oceania and check them back to 2017.??Go and review how many units each of these providers are currently trying to build. Read their annual reports. Read what they are doing, what research they’ve done and how they are trying to capitalise off the same hunch as you ‘There are a lot of boomers in New Zealand'.
?? FINAL THOUGHT: Too many of us want answers from other people instead of doing the work ourselves. Why? Maybe we are lazy....or maybe we want someone to blame when it doesn't work out....that's a losing mindset from the start....maybe investing isn't for you...
Oh and that proof thing to finish...