T recently informed me that he can buy shares in his company. And as dorky as it sounds – that got me really amped.
It’s been increasing revenue every year, expanding throughout the recession, and launching new brands and stores – both in Australia and New Zealand. He tells me it’s also on the brink of acquiring a pretty significant chain, so IMO, if we’re going to get in, we should get in quick.
Meanwhile, I’m writing about Kiwi companies doing amazing things and experiencing good growth (my job, obviously – not on here), and I can’t help but want to be a part of it! A lot of them are still private, but there are certainly a few that I could invest in.
The questions really, then, are: Can I afford to? How much would I need to get started? How long would I expect to tie up my money for/how much would I hope to make? And of course, due diligence: are they really solid bets?
I wouldn’t plan to put a ton of money into this – I have too many other short-term goals already vying for my pay – but I obviously want to get in to turn a bit of a profit, not lose cash. And rushing into decisions is a sure sign of foolhardiness.
Better go get some books out on investing, then.
Do you ever invest in individual companies? How did you go about getting started?
You’ll have to open an account with a Kiwi brokerage service – not sure what’s available there compared to here (U.S.) but I’m sure there’s something. Typically, investing in individual companies is tricky if you don’t have much to put in because if the broker charges you $10 to buy and $10 to sell, if you only invest $100, then the price needs to increase by 20% before you even break even on fees.
If T can buy shares in his company, it’ll probably work differently, but the tricky part here is that you’re already invested in your company by working there – if the company goes bust, you lose your salary AND your additional shares bought. So it’s totally fine to buy in, especially if he thinks its a good company, but just don’t put 100% of investments there, of course. (People did this at Enron in the U.S., and at the time, especially to employees, it seemed like it was a wonderful company.)
Thanks for the tips! Yeah, I’m not sure at this point whether it even makes sense to invest in individual companies at this point – but can’t hurt to educate myself now anyway. I don’t have much to put in so fees would probably eat into that heavily.
Very true! It’s unlikely that either of our companies would go bellyup entirely (although it is of course possible either of us could be made redundant). We’re both in Kiwisaver, our main investment vehicles, so anything else would just be an extra bonus.
I own some indiviual stocks. My rule of thumb is no individual stock can represent more than 5% of my total portfolio.
The only individual stocks I have are some that I received as income from my employer a few years ago. I don’t plan on keeping any more that they give me or purchasing any more I’m other companies. It is such a lengthy research process and so difficult to predict which companies will do well and when to buy into them and I don’t feel like that’s a valuable use of my time.
That being said, investing a small amount in T’s company could be an interesting experience for you. I would make sure that you are comfortable with the amount and the possibility that you could lose the entire investment before proceeding.
Personally, I don’t invest in individual companies. I believe that one needs to have inside information to be a good corporate investor. I prefer trading the entire index.
Is he going to get a discount on the shares? That often happens in larger US companies.