FMA tells online investors to do their homework

The warning is part of World Investor Week and follows rapid growth in people investing through online platforms after the March slump when covid panic gripped markets around the world.

In New Zealand, local platforms report an estimated 120,000 Kiwis joined since the first covid-19 lockdown. This means an estimated total of more than 250,000 are using Sharesies, Hatch and InvestNow, with three-quarters of users aged 25-to-44.

The FMA said it has been engaging with each of the platform operators to understand how they are helping this new wave of investors understand the fundamentals of investing and navigate the landscape.

Poor financial literacy has been an issue for successive administrations. A major plank of the 2010 reforms was to make investing easier to understand so people could better judge the risk of an investment against the return on offer.