Thinking of investing but keep putting it off? How to take the plunge

OPINION: There's no perfect time to start investing, but procrastination can equal lost opportunity. Frances Cook shares tips for getting out of your own way.

Most people don’t fail at investing because they pick the wrong fund. They fail because they never get started at all.

The sharemarket is now easier than ever to buy into, with a minimum buy of $1 on many apps, that can be accessed from your phone.

Yet the dreaded analysis paralysis can hold people back, sometimes for years, and stop them from taking those first steps to financial independence.

Tom Hartmann, personal finance lead at government education platform Sorted, said people often treat investing like a high-stakes puzzle where one wrong move will blow everything up.

If you don’t know what you’re trying to achieve, or which tools are even meant for that job, it’s easier to just leave your money in the bank.

“Savings is setting aside money for the future,” Hartmann said. “But investing is really going to buy something, and going to buy assets that can increase in value over time or spin off an income.”

Hartmann said many people had heard investing was important, but would get stuck hunting for the "perfect" option that would outperform all others. But that not only created an impossible hurdle, it wasn’t necessary in order to do well at investing.

“We can't tell the future. Not enough people say this. We don't know how it's going to turn out in a given fund going forward. We can see how performance has been in the past, but it's no indication of what's going to happen next.

“You’re really just looking for something solid, where fees are reasonable, and the provider is reputable, and communicates well with you.”

Dean Anderson, founder and CEO of digital investing platform Kernel, said the explosion of choice was a double-edged sword.

“It's very easy in today's world. With everything being digital, in a couple of clicks your dollars can be invested into almost anything,” he said.

Bringing it back to basics could help people feel more in control of their investing journey.

For those who are comfortable with their KiwiSaver experience, they could branch into investing outside of KiwiSaver by looking for similar products.

“You take a high growth fund, it can be a combination of index funds already pre-made for you,” he said.

For many long-term investors, “that is actually probably a really great place to start, and for a lot of people, all they need for their long-term journey as well.”

Even once people know the theory of investing, perfectionism gets in the way.

“We never feel ready,” said Kristen Lunman, co-founder of career platform PowrSuit and former co-founder and chief executive of investment platform Hatch.

At PowrSuit, their principle is that “you can learn by doing”, and Lunman said investing was no different.

“If you just switch your mindset to, you're not trying to find the best investment, just like with your career, not trying to find the best time and the perfect time,” she said.

“What if you're trying to find a good investment that you can stick with or a good decision that you can stick with?”

That shift matters, because perfection tends to turn into procrastination.

“Best and good are very different goals,” Lunman said.

“Best often paralyses us, whereas good just releases the pressure and you're like, I'm just gonna start something today.”

For Lunman, there is a difference between genuine danger – such as “a really hot tip and there's a new crypto coin” dished out by a stranger you meet on a plane – and normal uncertainty in a reputable, researched investment.

“Just like in life, the risk of doing nothing is often worse,” she said.

The money world often asks you to think about how much ‘risk’ you’re willing to take on, but the word is used slightly differently from how it’s used in other areas of life.

In everyday life, ‘risk’ often describes the things you’d avoid at all costs, whether that’s house fires or speeding cars.

But Lunman said real-life danger and investment risk were not interchangeable.

Investment risk was closer to the uncertainty you accept when you move cities, start a business, or have a child. You don't take the risk because you love uncertainty, but because the potential payoff is worth it.

“We take risk all the time,” Lunman said. “And all it means is that we're stepping into something that's slightly uncertain, but we step into that territory because the payoff… is worth it.”

If you keep circling the idea of investing but never quite start, you’re not alone. Here are the tips these experts agree could help break the loop, without totally throwing caution to the wind.

A good first question is, when will you need this money? If it’s within three years, it’s probably best in savings accounts or term deposits.

Three to five years often does well in cash funds, or bonds.

And five years or more can be when property or the sharemarket shines.

Perfect doesn’t exist. Good does.

A diversified fund that suits your time horizon will do more for you than months of comparing line-by-line performance histories.

Sorted has a whole website of independent tools which can be found here.

The Smart Investor tool makes it easy to compare investment funds, while the Fund Finder is a quick and easy comparison for KiwiSaver. Best of all, it’s free.

The first investment isn’t necessarily about the money, it’s about removing the psychological barrier.

Even $20 is enough to learn how the process works and build confidence.

Once you’ve done it once, you stop imagining it as a mysterious high-stakes decision.

If emotions are the problem, then it’s time to remove yourself from the process.

A weekly or fortnightly automatic investment means you’re contributing even when you feel uncertain.

It also stops the constant “is now the right time?” anxiety loop.

The information in this article is general in nature and should not be read as personal financial advice.