You're listening to the Saturday Morning with Jack Team podcast from newstalk z'b quarter.

You're listening to the Saturday Morning with Jack Team podcast from newstalk z'b quarter.

To eleven on News talkszb Ed mcnight from Obi's Partners is here with us this morning. We're talking money ed and an alternative to trying to time the market, because buying at the bottom of the market is all well and good in principle, but of course timing the market is nigh impossible. Then you've got a better option dollar cost averaging. So yeah, why is this better than trying to time the market? Do you reckon?

To eleven on News talkszb Ed mcnight from Obi's Partners is here with us this morning. We're talking money ed and an alternative to trying to time the market, because buying at the bottom of the market is all well and good in principle, but of course timing the market is nigh impossible. Then you've got a better option dollar cost averaging. So yeah, why is this better than trying to time the market? Do you reckon?

Well, I suppose us keyws have this obsession about trying to invest at the absolute lowest point in the market. And I think implicit in that is this idea that buying at the bottom of the market gives you the lowest price. But that's not always true. And I remember reading an example from a great book, Girls That invest Who was written by a friend of mine's some Curve, and she gave us awesome example about, well, what if you started forty years ago and you put two hundred dollars a month into investments, But you Jack in this case, you're a market timing genius and you're able to perfectly predict the bottom of the market. So you start forty years ago, you put your two hundred dollars a week away, and you save it. You save it the next month as well, you save it the next month as well, and as soon as the market crashes, your piling your money, and you keep doing this for forty years. Well, after forty years you would have made about nine hundred and fifty grand, which is a great, great nest egg. You'd be very happy with that over forty years. Shows you the power of compounding interest. But Leeds say, in said forty years ago, you said, okay, I've got my two hundred dollars a month, but I'm just going to put it into investments and shares, and I'm not going to care whether the markets aren't, the markets down, I'm just going to do it. Well blow me down. You forty years later would have just under one point four million dollars in the bank. And I thought, this is fascinating. So why does this happen? Well, it's because share markets and all asset markets tend to increase in value over time. And so I'll give you an example that I'm not that a little bit clearer. The bottom of the market for the S and P five hundred, they had a bit of a dip September twenty twenty two, there was a bottom of the market. But if you invested into an index tracking fund at any time before March twenty twenty one, you would have had a cheaper price. Right, I'll give you another example market bottom down S and P five hundred again, March twenty twenty COVID lockdowns. But if you'd invested in an index tracking fund any time before September twenty seventeen, you would have got in at a cheaper price. And so what sometimes people think markets do is they start at ten dollars, they go to twenty dollars, they go to ten dollars, they go to twenty dollars. But that's not how it works. All types of assets tend to increase in value over time, and so often the earlier you get in, the cheaper price you'll get, and often lower than the bottom of the market. I've got one more example for you, just in terms of property prices as well. So again I work with them, is a lot they all want to buy at the bottom of the market. Well, the bottom of the market in Auckland was twenty twenty four. But again, if you had purchased an investment property or any sort of property at any time before September twenty twenty, you would have bought at the lower price. December two thousand and eight, there was a crash again because of the GFC, but if you had bought it any time before January two thousand and six, you would have got in again at a lower price. And so I just want to challenge Kiwis to think, Hey, it's not always about trying to time the market perfectly, because you probably can't do that anyway, But it's about continuously investing through the ups and through the downs, and often you'll come out better than just even if you were able to time that market perfectly.

Well, I suppose us keyws have this obsession about trying to invest at the absolute lowest point in the market. And I think implicit in that is this idea that buying at the bottom of the market gives you the lowest price. But that's not always true. And I remember reading an example from a great book, Girls That invest Who was written by a friend of mine's some Curve, and she gave us awesome example about, well, what if you started forty years ago and you put two hundred dollars a month into investments, But you Jack in this case, you're a market timing genius and you're able to perfectly predict the bottom of the market. So you start forty years ago, you put your two hundred dollars a week away, and you save it. You save it the next month as well, you save it the next month as well, and as soon as the market crashes, your piling your money, and you keep doing this for forty years. Well, after forty years you would have made about nine hundred and fifty grand, which is a great, great nest egg. You'd be very happy with that over forty years. Shows you the power of compounding interest. But Leeds say, in said forty years ago, you said, okay, I've got my two hundred dollars a month, but I'm just going to put it into investments and shares, and I'm not going to care whether the markets aren't, the markets down, I'm just going to do it. Well blow me down. You forty years later would have just under one point four million dollars in the bank. And I thought, this is fascinating. So why does this happen? Well, it's because share markets and all asset markets tend to increase in value over time. And so I'll give you an example that I'm not that a little bit clearer. The bottom of the market for the S and P five hundred, they had a bit of a dip September twenty twenty two, there was a bottom of the market. But if you invested into an index tracking fund at any time before March twenty twenty one, you would have had a cheaper price. Right, I'll give you another example market bottom down S and P five hundred again, March twenty twenty COVID lockdowns. But if you'd invested in an index tracking fund any time before September twenty seventeen, you would have got in at a cheaper price. And so what sometimes people think markets do is they start at ten dollars, they go to twenty dollars, they go to ten dollars, they go to twenty dollars. But that's not how it works. All types of assets tend to increase in value over time, and so often the earlier you get in, the cheaper price you'll get, and often lower than the bottom of the market. I've got one more example for you, just in terms of property prices as well. So again I work with them, is a lot they all want to buy at the bottom of the market. Well, the bottom of the market in Auckland was twenty twenty four. But again, if you had purchased an investment property or any sort of property at any time before September twenty twenty, you would have bought at the lower price. December two thousand and eight, there was a crash again because of the GFC, but if you had bought it any time before January two thousand and six, you would have got in again at a lower price. And so I just want to challenge Kiwis to think, Hey, it's not always about trying to time the market perfectly, because you probably can't do that anyway, But it's about continuously investing through the ups and through the downs, and often you'll come out better than just even if you were able to time that market perfectly.

Think it's sort of you have to sort of almost break with a kind of intuition, you know what I mean, Like, Yeah, you have to, like it's a classic like using logic and rational thinking to kind of, yeah, to override what your natural impulses might be.

Think it's sort of you have to sort of almost break with a kind of intuition, you know what I mean, Like, Yeah, you have to, like it's a classic like using logic and rational thinking to kind of, yeah, to override what your natural impulses might be.

I think it's just about resetting our expectations around. Well, yes, we do want to get the lowest price possible so we can make them both the best gains possible. But it's just well, what's going to do that for us? Is it going to be trying to time the market perfectly or is it realizing we can't do that and actually the better returns come in by getting into the market sooner. And I think we all do this anyway with our Kiwi savers. Yeah, even if there's a market crash, it's not like we all go and say, right, let me raise my contributions now I want to put more into Kiwi Saver. We just keep doing our three percent to our four percent every single week, month, fortnite. However, often we get paid and one day you open up your bank cap and you're really surprised at actually whether the market was up or whether the market was down. I actually did okay out of this.

I think it's just about resetting our expectations around. Well, yes, we do want to get the lowest price possible so we can make them both the best gains possible. But it's just well, what's going to do that for us? Is it going to be trying to time the market perfectly or is it realizing we can't do that and actually the better returns come in by getting into the market sooner. And I think we all do this anyway with our Kiwi savers. Yeah, even if there's a market crash, it's not like we all go and say, right, let me raise my contributions now I want to put more into Kiwi Saver. We just keep doing our three percent to our four percent every single week, month, fortnite. However, often we get paid and one day you open up your bank cap and you're really surprised at actually whether the market was up or whether the market was down. I actually did okay out of this.

Yeah.

Yeah.

It also means you can kind of save yourself the anxiety that comes with the volatility, especially with the stock market like it is right now, right up and down and up and down, and the president who can tweet out something and things change in a moment. You know, you can save yourself all of that anxiety by just trying to form a habit. We're by you dollar cost average over time, thank you so much. Those are fascinating examples, and we really appreciate it. That's evening night from Obi's Partners with Us This Morning.

It also means you can kind of save yourself the anxiety that comes with the volatility, especially with the stock market like it is right now, right up and down and up and down, and the president who can tweet out something and things change in a moment. You know, you can save yourself all of that anxiety by just trying to form a habit. We're by you dollar cost average over time, thank you so much. Those are fascinating examples, and we really appreciate it. That's evening night from Obi's Partners with Us This Morning.

For more from Saturday Morning with Jack Tame, listen live to News Talks d B from nine am Saturday, or follow the podcast on iHeartRadio

For more from Saturday Morning with Jack Tame, listen live to News Talks d B from nine am Saturday, or follow the podcast on iHeartRadio