ick Scott, Nemo’s Senior VP recently featured on the Livehealthy podcast to a chat about the role of investments as part of a healthy lifestyle, and how Nemo can help in developing your financial fitness.
You can listen to the full episode here:
When we hear the phrase healthy living, we may instinctively think about nutrition and exercise. And with good reason. Those are the foundational elements of a healthy way of life. But do you ever consider how the shape of your finances affects your overall health and well-being?
Several studies have shown a positive correlation between financial stability, security and control with good health – both physically and mentally. Knowing your future finances are taken care of can help ease anxiety and reduce stress, allowing you to enjoy a happier, fulfilling and present life. (Can we get an ‘Om’?)
But all too often we see would-be investors putting off starting to invest due to uncertainty about how to invest, or if they even have enough to get started. We don’t want you to delay getting your investments in tip-top shape, and so Nick offers some guidance for first-time investors.
Think of it like a Nemo version of a beginners ‘get fit’ challenge, but for investing!
(Note: This guidance is personal opinion and shouldn’t be construed as professional advice. You’re always encouraged to do your own research and understand that investments, while potentially profitable, do carry risks too.)
Ok, with that legal disclaimer out of the way, let’s have a look at a few helpful tips to get you started in investing.
5 ‘fitness-focussed’ tips to help you start investing
1. Just do it – start investing, that is
(Absolutely no affiliation to Nike whatsoever, nor any copyright infringement intended, but if you did want to invest, you’ll find Nike in a few of our nemes, including Sports and Activewear Stocks to Watch in 2023.)
Adopting a healthier lifestyle isn’t limited to any particular age group, and the same applies to investing. It doesn’t matter when you start, the important thing is that you do! There’s an advantage to investing from an earlier age as you’ll benefit from a longer period of compound growth and longer-term market growth. But that shouldn’t deter you, even if you’re closer to your golden years.
While Nemo’s brand has a vibrant, youthful feel and visual identity, our purpose is to help investors connect with investment opportunities most suited to their individual needs, and to make the process from discovery to investment as easy as possible. And while that journey is ideal for first-time or 'lightly experienced' investors, it’s by no means limited to any specific generation, nor investor status.
2. Start small
Imagine a fitness challenge that aims to transform you from complete novice to being able to comfortably run 10kms. An effective plan isn’t going to kick off you off with a 5km sprint, is it? Your first training session may be a quick 10-minute walk around the block or compound. Or 5 minutes made up of 1 minute walk and run intervals. As you get stronger and more comfortable each week, you’ll extend the distance and up your speed, building up to your goal in increments.
In terms of investing, you don’t need to plug in your life savings on your first investment. Start with the smallest amount you’re comfortable with. Still think you don’t have enough? Well, with Nemo you can invest with as little as $1. Yup, one US Dollar! This is because we offer fractional shares. Simply, this means that we take the amount you’d like to invest and provide you with the corresponding fraction of the share that amount buys.
For example, let’s say a sports company has a share price of $10. If you have $1 to invest, that amounts to 1/10 - one-tenth - of a share. Any increase or decrease in price will be applied to your $1 investment at the same percentage. A 5% increase in share price would mean a total of $10.50 for the full share and $1.05 for your one-tenth of a share.
3. Set realistic goals
Much like there’s no magic pill to take that’ll turn you from a couch potato to marathon runner overnight, investing isn't a ‘get rich quick’ scheme.
Be realistic with your financial goals and investment expectations. It’s unlikely you’re going to 10X your investment in 3 months. Instead, history has shown that strategic, long-term investment in the stock market may outperform earnings from traditional savings accounts. Savings accounts offer nominal interest rates, which aren’t always sufficient to counter inflation, and the devaluation effect that it has on our money. Basically, when we leave our cash in savings, the ‘real-life’ spending value of that money decreases over time as we’re able to buy less with the same amount.
Ultimately, your primary investment goals would be focussed on growing your wealth. Just as you’d need to dedicate to a training regimen to build your endurance to run long distances, building your wealth through investment takes long-term commitment to a strategic plan based on realistic, achievable objectives for your personal circumstances.
4. Contribute regularly
Working towards and maintaining health and fitness requires continual and consistent effort. One too many ‘rest days’ in a row can detract from optimal progress and results. Investment success is similar. You’re not likely to find successful investors who have a ‘once-and-done' approach, rather they prioritise frequent contributions and continued evaluation.
For favourable progress towards your financial goals, you’ll want to consider what you could afford to invest on a steady, consistent basis. Ideally, monthly or in line with your regular income payments, but this is a guideline not a rule. Whether you choose to contribute smaller amounts more often, or a larger amount periodically, will come down to your own circumstances and situation. The core concept is that the more you build your base capital, the greater the potential returns, especially when you factor in compound growth and time.
5. Switch it up – diversify
If you’re repeating the same training over and over, routine fatigue can take hold and leave you feeling mentally bored and physically unchallenged. More seriously though, using the same muscles repeatedly increases the risk of overuse injury. To prevent this, you can mix up your routine by changing up the types of exercise, weights, distances or intensity.
When it comes to investing, holding a single stock or several stocks in the same industry can increase your risk of loss, as you wouldn’t have other investments to buffer or balance out any underperformance. Diversification is a critical aspect of risk management in investing and can be achieved by adding different types of stocks to your portfolio.
A convenient and cost-effective diversification strategy is to invest in ETFs (short for Exchange Traded Funds). ETFs are a collection of stocks, curated together based on specific criteria. Examples include stocks of prominent companies in a particular industry, or businesses on a certain stock exchange, or sometimes built to mirror popular stock trading indices, like the Nasdaq or the S&P500.
Explore Nemo’s ETF nemes.
A key difference between investing in individual stocks and an ETF is that with an ETF you don’t own the stocks, but rather a share in the fund, which holds the underlying assets. The fund is typically managed by a financial firm that oversees the weighting and administration, leaving you with more time to focus on other matters – like that next run, perhaps?
Flexing for financial vitality
Just as diet and exercise are fundamental to maintaining physical and mental well-being, financial stability, security, can indeed be considered a crucial aspect of healthy living. So, why wait? Start using Nemo to invest today and embrace a financially fit and healthy future.