5 Investment Strategies for Beginners and Busy People

We’ve all got a bit on at the moment. Trying to afford life, exercise, eat healthy-ish, work, and maybe even raise children - it’s more than a full-time job. Most of us don’t have time to go full Warren Buffett and become investment gurus - investment needs to be easy.

With that in mind, we’ve shared five investment strategies that are perfect for busy people and beginners. All that’s required is a commitment to invest regularly over the long term, a little light research, and to leave the market to do its thing.

For any investment strategy to work long-term, you need to understand a few fundamentals. These should all be baked into your strategy, whatever it is:

Why are you investing? Whatever your goals are, it’s a good idea to write them down first, then design your investment portfolio around them.

Read more about setting financial goals

Once you know your goals, you should have a rough idea of how long it’ll take you to achieve them - or in other words, when you’ll need your money back. This is your investment horizon. If your investment horizon is further away (measured in years), you can afford to take more risk and accept higher volatility, but if it's coming up soon, you might want to be more conservative.

Read more about investment horizon

Don’t put all your eggs in one metaphorical basket. Specifically, make sure you invest in different companies across diverse sectors, asset classes, and geographical locations. If you’re buying individual shares, the famous “modern portfolio theory” says 12-20 companies across different industries will do the trick - but for beginner investors, index funds and ETFs that are already diversified are usually the easier option.

Read more about diversification

You’re probably not going to pick the next NVIDIA or perfectly time the next stock market boom, but you don’t need to. Successful investing isn’t about timing the market; it’s about time in the market. Investing regularly over years or decades can generate huge returns, without requiring you to spend your evenings figuring out what’s going to happen next (let’s be honest, these days nobody knows). Plus even if you can exit before the bottom, re-entering the market at the right time is actually harder. These moments are only signposted in the past.

Read more about the relationship between time and investing

Paying high fees on your investments isn’t an inherently bad thing; what really matters is the value you’re getting. The thing is, actively managed funds typically have higher fees, and yet independent scorecards such as SPIVA show that over longer time periods, the majority of active funds in almost all categories underperform their benchmark after fees. That’s why for most investors, it’s worth considering low-cost, passively managed options like index funds.

Whilst markets can be volatile, fees are one aspect of your investments that you can control and, like compounding works its magic over the long term, the fees you pay add up too.

Read more about investment fees

We try not to pick favourites, but sometimes we can’t help it. Core-satellite investment is a fantastic strategy for the vast majority of investors, from beginners through to experts. In a nutshell, it requires allocating the core of your portfolio (80-90%) to broadly diversified low-cost index funds, and the remaining 10-20% to satellite investments. These satellite investments can be a bit riskier, but they may offer the potential for higher returns (satellites include thematic funds or investments in single companies).

Setting up your portfolio using this framework can be relatively quick and easy, but it’s a great way to ensure diversification and low costs. Meanwhile, your index fund holdings will generate market returns, and your satellite portion can provide a chance to outperform the market. Equally, if your satellites underperform, it’s contained to a smaller proportion of your holdings.

Read more about core-satellite investing

The most time-consuming part of the above core-satellite strategy is usually the satellite part. Choosing a more volatile investment like shares in a single company, crypto, or thematic funds usually requires a little extra research and due diligence.

So, if you’re time poor and want maximum results from minimal input, you could just keep your strategy super simple with funds and indexes. Choose a few that suit your goals, appetite for risk, and values - follow the investment fundamentals above - and you’re likely to at least earn market returns (which over decades or years will add up).

If you’re really time poor, you can also consider something like diversified Kernel funds such as cash, conservative, balanced & high growth. That way, you don’t get too caught up with having too many options.

Read more about choosing an index fund

You don’t have time to master the many secrets of investing, but what you could do is copy the portfolio of someone who has. There are various ways to copy the entire portfolios of various prominent investors in real time using share trading platforms, but if you’re a beginner, you might be better off buying shares (or ETFs) that do the heavy lifting.

For example, part of your portfolio could be invested in Berkshire Hathaway via Kernel Shares & ETFs. That way, you’ll benefit from the Oracle of Omaha’s knack for picking long-term winners, without having to do the work yourself.

Find out more about Kernel Shares & ETFs

You don’t need a financial advisor to invest. That said, many Kiwis find advisors to be really helpful, especially if they’re time poor and don’t have a particular interest in investment.

A good advisor can help you lay out your goals, then design a portfolio that will help you achieve them. They can help you take an appropriate level of risk, continuously monitor your portfolio, and ensure your investments continue to match your changing lifestyle and circumstances. And beyond all that, sometimes it’s reassuring to have an expert you can call to ask questions and find reassurance.

Read more about working with a financial advisor

There’s no need for beginners or busy people to trade shares, watch the market, and try to pick trends or predict the news ahead of everyone else. There are many traders with way more time and expertise than you who still fail to beat the market, and that’s before you put a dollar value on their time spent.

Instead, for most beginners, it’s usually better to choose a more passive strategy - we’re talking ETFs, managed funds, index funds.

Setting up a direct debit, or automatic payment to purchase a diversifiedportfolio regularly, over a long period of time, is a perfectly valid investment strategy.

If you’re following investment fundamentals and mixing this strategy with a core-satellite approach, you may be surprised at how much you can achieve with so little time.