There’s an episode of The Simpsons that always pops into my mind every time I think about investing. In the 12th episode of season four, titled “Marge vs. the Monorail”, a charismatic conman comes to Springfield and convinces the town to build a monorail. In that episode, Lyle Lanley, the conman in question, says this iconic quote:
“You know, a town with money’s a little like the mule with a spinning wheel. No one knows how he got it, and danged if he knows how to use it!”
See, I’ve always thought of myself as that mule when it comes to anything money-related. I know investing is a thing I should be doing — now that I’m a real adult with real bills and a somewhat real job — but I’ve just never found the time or motivation to figure out the best way to go about it. Thankfully, one of the perks of my somewhat real job is I can skip the whole research part and pester experts who actually know what they’re talking about with as many questions as my little mule heart desires.
That’s where Brendan Doggett comes in — he’s the Australia Country Manager at investing business Sharesies. He was kind enough to lend me some of his wisdom.
Gizmodo: Hey Brendan, so what are investing platforms and why should everyday Aussies care?
Brendan: Investing platforms have democratised the investing space. Traditionally, you would need to go to a broker, often with higher fees, to invest. Investing platforms provide you with the ability to buy and sell shares directly from your phone or computer. The newer investing platforms also make investing more accessible with educational content and easy to understand language. This means it’s easier than ever for Aussies to start investing.
Love that. Okay, so what are the key things new investors should take into consideration when choosing an investing platform?
Thinking about what your investing goals are will help you select an investing platform that’s right for you. If you want a passive approach, investing small amounts of money, then perhaps you are interested in micro-investing. If you want to work on your investing knowledge and invest for the long-term, then looking for a platform that offers a bit more choice of what to invest in and some education to build your skills and confidence could be useful. Or, if you want to be a trader and love trying to time the market, then there are platforms that focus on that too with added resources to help you make your buying or selling decisions.
Other things you might want to consider include: How do the platform’s fees work? What investment options does the platform offer? Which exchanges are available for me to invest in? Who are the people behind the platform? Are they a business that aligns with my values?
When it comes to investing platforms, is it one-size-fits-all? Or do different platforms suit different investors better than others?
A lot of investing platforms tailor themselves to specific types of investors, which can roughly be broken into trading, long-term investing, and micro-investing. For instance, some encourage trading behaviour, so trying to time the market and regularly buying and selling.
Then there are micro-investing platforms, which focus on investors who want to invest small amounts regularly, and they typically offer a smaller number of portfolios you can select to invest into, so it’s more of a passive approach to investing where you’re happy for someone else to decide what to invest in.
While micro-investing platforms can be for long-term investing, there are other platforms focused on long-term, but more active investing where you decide what companies or funds to invest in. They might offer features like auto-invest, where you decide what to invest in and then your money is regularly invested which helps to average out the price which you invest at.
I see, and where does Sharesies fit into all this?
We class the Sharesies platform in a bit of a different category. The Sharesies platform was formed first and foremost to reduce barriers to entry, whether it be that you were priced out, jargoned out, or generally felt excluded from the investing space. With no minimum investment, you can invest as little as one cent into companies — and funds — that you know and believe in across Australia, the US, and NZ. Coupled with our emphasis on education, we see a lot of newer investors starting their investing journeys with us. But we also have many seasoned investors on the platform that like our low prices and the freedom buying shares and portions of shares provides.
What are the most common mistakes beginners make when embarking on their investing journey? And how can they be avoided?
I think the biggest mistake is not investing at all. The best time to start investing is now — don’t get too caught up in trying to time when it might be best to begin your investing journey. It’s important to also think about what your investing goals are and then stick with them, even as the market goes through ups and downs.
Newer investors might begin with long-term investing goals in mind, but get nervous and sell early if they see their investment dip down. At the same time, it’s important to keep an eye on your investments, and have an idea in mind of when you might want to sell if it’s not performing the way you want.
It’s pretty cool that we live in an age where basically anyone can pick up a smartphone and start their investing journey. What was the world of investing like before the advent of online investing platforms?
Investing was a whole different world before investing platforms. You would traditionally need to go to a broker and pay often what were higher fees and have higher minimum investment – leaving many feeling excluded from this space. With online investing platforms, this gives power to the people to take control of their investing journeys directly. Now you can get information about your investment options and make decisions for yourself, all within a matter of minutes.
It’s pretty clear platforms make prospective investors’ lives easier, but what does the platform get out of it?
All platforms have fees, which get charged in different ways. There might be subscription fees, transaction fees, currency exchange fees, and more. Platforms sometimes get money from the funds they offer as well.
Some platforms also have purposes behind why they exist. Like for Sharesies, we were founded on the idea that investing should be even more accessible, which is why the Sharesies platform requires no minimum investment. Our purpose is to help create financial empowerment for everyone, and we invest just as much into education and helping our investors grow their wealth and knowledge in this space.
Keen to invest too? Sign up to the Sharesies platform and use promo code “UINVEST” for $10 in your account, ready to invest.
All investing involves risk. T&Cs and fees apply for use of the platform provided by Sharesies Limited. $10 applies to new accounts only. Promotion T&Cs apply and for use of the platform provided by Sharesies Limited. Brendan Doggett is a sub-authorised representative of Sanlam Private Wealth. This article is provided by Sharesies AU Pty Limited, as an authorised representative of Sanlam Private Wealth Pty Limited (AFSL No. 337927). Image shown does not represent a real portfolio.
And if you’d like to learn more about investing, check out the Unlikely Investors podcast.