"Don’t fall in love with an investment.
"I remember being a big fan of Baycorp when it was a listed company.
"Over a period of years, its share price went from 50c to $12.
"Then it started sliding."
David McEwen, share market analyst and Stockfox founder.
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make.
As founder of Stockfox, a share market investment advice app, David McEwen says keeping money invested in a share without considering company performance - past and present - can be a mistake.
In the current market, investors need to be flexible and prepared to act quickly, McEwen says.
His best saving tip is to consistently save and invest 10 percent of total income.
1. Are you a saver or a spender?
I tend to enjoy the finer things in life, so I'm typically a spender.
2. What's been your biggest financial lesson, success or failure?
Don’t fall in love with an investment.
I remember being a big fan of Baycorp when it was a listed company. Over a period of years, its share price went from 50c to $12.
Then it started sliding. I didn't sell because I thought the company would turn things around.
Eventually, it lost almost all its gains.
A dispassionate look at the risks associated with Baycorp’s expansion in Australia might have encouraged me to exit the share much earlier.
3. Give an example of a recent purchase that you consider was great value for money?
I recently bought shares in A2 Milk.
They've been beaten down severely by the market, but in my view they still have attractive prospects longer-term.
4. What's your preferred form of investment and why?
Shares: I'm a member of a number of share clubs.
These are where a group of friends contribute funds each month into a trading account and get together every few weeks or months and pick a share to buy or sell.
By contributing money to the market regularly and not making hasty decisions, it is amazing how some nest eggs can grow.
5. Have you seen a shift towards shares following the Government housing announcement?
I think many younger people are giving up on the idea of owning a home, because affordability is extremely low.
Thanks to new technology such as phone apps that allow quick and cheap trading, people are looking to build up their wealth through the share market.
We're in uncertain times and a lot of the tools investors have used to pick shares in the past no longer apply. Be prepared to be flexible and act quickly.
6. Examples of promising picks for share investors in the current market?
Without being too company-specific, I'm very hot on the food and agriculture, aged care, and medical sectors.
All these sectors look to have bright long-term growth prospects.
7. What's your best saving tip?
It’s okay to have a good time on up to 90 percent of what you earn.
Just make sure you save and invest the other 10 percent consistently, and you'll do well financially your whole life.
8. The best money advice someone's ever given you?
Warren Buffett famously once said: 'In the short term, the market is a popularity contest; in the long term, it's a weighing machine'.
That always resonated with me. It's encouraged me to avoid investing in whatever other investors are chasing at any given time, especially if prices have been driven up.
The views expressed in this article are personal and are not professional financial advice.
