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An acquaintance asked for suggestions on "worthy" investments in the range of a few hundred to a few thousand dollars. My reply became long enough to do double duty as a blog post :)
~~~
Advice no. Opinions and a little experience.
Rule 0. Don't invest (lend) anything you can't afford to lose.
1. A lot depends on what you want to get out of your investment, usually defined as income (periodic dumps of money into your daily account) or growth (it just sits there getting bigger - hopefully).
1a. There's a third approach, since you use the descriptor "worthy", and that is assessing your "return" based not on dollars but on social good. See below.
2. (NZ specific) if you aren't in / making that minimum ~$1050 into Kiwisaver each year, top that up first. The government 50% match is hands-down the best return available.
2a. (aside) as a young person if you are in a 'default', conservative Kiwisaver scheme get yourself moved into a growth scheme ASAP.
3. If you think you will need to free up that money in the short to medium term just put it in a term deposit, (lightly) managed/index fund or maybe Bonus Bonds.
3a. (Bonus Bonds) the anecdotal consensus seems to be that you need ~$5000 in Bonus Bonds before it becomes worth it. Initially I was getting about net 4.8% which is significantly better than current term deposit options, but that has dropped back recently so I may just have had a few lucky months.
4. If you want to go directly into the share market - probably don't unless you have the time to spend schooling yourself on how it works and on the companies you are looking at investing in, and the discipline to stick with an investment strategy during the down periods.
4a. (I have nothing but the family silver (energy company) shares that the National govt was giving away the past couple of years; every few months that has resulted in $30-$60 worth of dividends; past performance is no indicator of future performance etc.)
*Higher risk options*
5. If you can afford to lose the money or are more interested in outcomes than returns the place to look for "worthy" investments right now are the equity crowdfunding sites. Examples of projects I have funds committed to are Carbonscape (a cleantech company with technology capable of converting waste biomass into Green Coke and other valuable products) and Breathe Easy (developing an inhaled medicine for the treatment of Cystic Fibrosis)(both through Snowball Effect) and Powerhouse Wind (developing a single-blade turbine)(through PledgeMe)
5a. These generally require a minimum of ~$1000 per project.
5b. I haven't had the spare funds to personally experiment with this yet (it's on the list), but Harmoney does NZ peer-to-peer lending.
6. There's always the direct option if someone you trust is trying to get a business going. The model I suggest for this is to agree on a total amount to be repaid (capital plus some) and then they repay it at a rate of $x per sale or $% of each sale. That generally means you recover at least some of your money in short order and they can factor the repayments into their prices as an overhead rather than stressing about finding the money to repay you if they have a quiet month.
YMMV, IANAP, etc etc
~~~
@todo as part of the conversation I have become aware of http://smartshares.co.nz/ which I will need to investigate closer next time I am looking into managed funds.
~~~
Advice no. Opinions and a little experience.
Rule 0. Don't invest (lend) anything you can't afford to lose.
1. A lot depends on what you want to get out of your investment, usually defined as income (periodic dumps of money into your daily account) or growth (it just sits there getting bigger - hopefully).
1a. There's a third approach, since you use the descriptor "worthy", and that is assessing your "return" based not on dollars but on social good. See below.
2. (NZ specific) if you aren't in / making that minimum ~$1050 into Kiwisaver each year, top that up first. The government 50% match is hands-down the best return available.
2a. (aside) as a young person if you are in a 'default', conservative Kiwisaver scheme get yourself moved into a growth scheme ASAP.
3. If you think you will need to free up that money in the short to medium term just put it in a term deposit, (lightly) managed/index fund or maybe Bonus Bonds.
3a. (Bonus Bonds) the anecdotal consensus seems to be that you need ~$5000 in Bonus Bonds before it becomes worth it. Initially I was getting about net 4.8% which is significantly better than current term deposit options, but that has dropped back recently so I may just have had a few lucky months.
4. If you want to go directly into the share market - probably don't unless you have the time to spend schooling yourself on how it works and on the companies you are looking at investing in, and the discipline to stick with an investment strategy during the down periods.
4a. (I have nothing but the family silver (energy company) shares that the National govt was giving away the past couple of years; every few months that has resulted in $30-$60 worth of dividends; past performance is no indicator of future performance etc.)
*Higher risk options*
5. If you can afford to lose the money or are more interested in outcomes than returns the place to look for "worthy" investments right now are the equity crowdfunding sites. Examples of projects I have funds committed to are Carbonscape (a cleantech company with technology capable of converting waste biomass into Green Coke and other valuable products) and Breathe Easy (developing an inhaled medicine for the treatment of Cystic Fibrosis)(both through Snowball Effect) and Powerhouse Wind (developing a single-blade turbine)(through PledgeMe)
5a. These generally require a minimum of ~$1000 per project.
5b. I haven't had the spare funds to personally experiment with this yet (it's on the list), but Harmoney does NZ peer-to-peer lending.
6. There's always the direct option if someone you trust is trying to get a business going. The model I suggest for this is to agree on a total amount to be repaid (capital plus some) and then they repay it at a rate of $x per sale or $% of each sale. That generally means you recover at least some of your money in short order and they can factor the repayments into their prices as an overhead rather than stressing about finding the money to repay you if they have a quiet month.
YMMV, IANAP, etc etc
~~~
@todo as part of the conversation I have become aware of http://smartshares.co.nz/ which I will need to investigate closer next time I am looking into managed funds.
