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Osakepoiminta – kun haluat itse päättää sijoituskohteistasi | Femme x Nordea Salkunhaltijat 06

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Haluatko itse päättää sijoituskohteistasi? Tässä Femmen ja Nordean yhteistyöjaksossa Tiina Raininko Nordealta ja Kaisa Vanha-Perttula Inderesiltä sukeltavat syvemmälle yhteen kiehtovimmista sijoitustavoista: osakepoimintaan. Osakkeet vai rahastot - vai ehkä molemmat? Miksi itse valitut osakkeet voivat olla just sun juttu ja milloin taas rahastot ja ETF:t helpottavat elämää? Jaksossa puhutaan myös ylituoton tavoittelusta, erilaisista (osake)deittailijoista ja siitä, miksi tunteet saa olla mukana, mutta järjen kannattaa ohjata osto- ja myyntinappia painaessa.

Shares vs funds and ETFs – would you rather choose for yourself who you spend time with?

When you invest in shares, you own a small part of a listed company. You share in the company’s success if its business grows and it gains value – but you also carry the risk if it performs worse than expected.

Picking shares is a little like deciding for yourself who you want to spend time with. With funds and ETFs (exchange-traded funds), you invest in multiple assets at once. This may involve active management, where a professional makes the choices for you, or low-cost index investing.

Why choose individual shares over fund investments?

  • You are in control: You decide exactly what you own. You can focus on companies and sectors you understand – but don’t forget diversification. If you only invest in sectors you know, your portfolio may look very different from a broadly diversified market portfolio.
  • The joy of learning: Every company can teach you something new about the economy and the world around you.
  • Flexibility: You can adjust your investments over time and make decisions based on your own views.
  • Chance to outperform the market: Stock picking can help you beat the market, but this is neither likely nor risk-free. A poorly diversified portfolio can also lag the market significantly or lose a great deal of its value.

Why choose funds or ETFs over individual shares?

  • Less work: You don’t need to spend hours researching individual companies.
  • Broad diversification – even with small amounts: Funds give you exposure to a large number of companies in one go – and, if you wish, to fixed-income investments as well.
  • Options for different styles: Depending on your investment plan, you can choose an actively managed fund, an index fund, a balanced fund or an ETF.
  • Less stress: You don’t need to follow the ups and downs of individual shares quite so closely.

If you’re not sure yet which option suits you better, a widely diversified fund can be a good place to start. You can read more about this in the lesson “Why, how and where to invest?”.

What are you aiming for when you pick stocks?

The aim of stock picking is often to outperform the market by earning a return above the market average, also known as an excess return. You look for companies that have better prospects than what the market expects or whose share is attractively priced. 

You might, for example, search for a hidden gem that others have yet to spot but that ticks all the right boxes. With funds, someone else does the research for you – a bit like a friend doing research on your date and their potential before you meet. All you need to do is decide whether to turn up. This is not necessarily a bad option, but it may not feel quite as exciting as making the choices yourself.

A stream of dividends

Another popular aim is to build a steady stream of dividends. A dividend is the share of company profits a company distributes to its shareholders. With funds, the equivalent is generated by distribution units: a fund with distribution units can distribute profits gained by the fund to investors, whereas a fund with growth units will generally reinvest them. 

It’s a little like having a partner who regularly brings you flowers, adding a touch of romance to your everyday life. Just remember that dividends or fund distributions are not guaranteed and are not the only indication of an investment’s total return.

What kind of a (share) dater are you?

There is no single right way to pick shares, since we are all drawn to slightly different things. Just as in dating, one person values stability, another an exciting story and third a bold adventure. The most important thing is to find an investment style that feels right for you.

  • A growth investor looks for exciting stories. You look for companies whose revenue or earnings are expected to grow faster than the average. What matters most to you is their future potential.
  • A value investor is the heroine of a treasure hunt. You look for companies whose shares appear inexpensive relative to their earnings or assets. The idea is to buy cheap and benefit if the market later recognises the company’s true value.
  • A quality investor values security. You look for companies with a strong business, healthy profitability and moderate debt.
  • A momentum investor rides the trends. You look for shares that are already on a strong upward trend that you believe will continue. Momentum can turn quickly, however, so this style calls for more active monitoring and trading.
  • A small-cap investor is an adventurer. You seek opportunities in smaller companies with considerable growth potential. These opportunities often come with greater risk and volatility, though.

Why is investing in shares a good way to learn about the economy?

One of the best things about stock picking is that researching companies also teaches you about the economy, consumers and society. When you understand businesses, you also gain a clearer picture of where money comes from – and where it goes to.

Practical example

Take Walmart and Whole Foods, for example. Both sell food and everyday essentials, but their business models are built on very different foundations. Walmart focuses on competing on price and volume, and its slogan “Everyday Low Prices” says it all. Whole Foods, by contrast, has built its brand around quality, organic products and healthy living.

Imagine comparing two very different dating profiles: one appeals with its straightforwardness and practicality, the other with high quality and a polished impression. Both can be interesting, but for different reasons.

Where Walmart might sell a banana for 50 cents, Whole Foods could charge three times as much for a similar organic one. From an investor’s perspective, the interesting question is not simply which shop you prefer, but why one company can price its products so differently.

Once you understand that difference, you begin to spot the same pattern everywhere: why some companies compete on price while others can charge more for much the same thing. This can teach you something fundamental about how businesses work and what consumers value.

Listen to your heart, but let reason guide you

It’s fine to fall for a company when you’re stock picking. An appealing brand, a compelling story or promising prospects may be exactly what inspires you to take a closer look. But, as with dating, the initial spark alone doesn’t tell you whether the relationship will stand the test of everyday life.

Keep these golden rules in mind before you buy:

  1. Do I understand how the company makes money?
  2. Is the price reasonable?
  3. Does the share fit my portfolio and my risk appetite?

Your relationship with a company is often rather one-sided. A company doesn’t promise to love you back or ask whether a fall in its share price hurt. So keep you head in the game, even when your heart is in it.

Choosing individual shares involves a greater risk, but that is also why the return potential may be higher.

Up next: How does a company make money?

Before you can make sound investment decisions, you need to understand what a company actually does. In the next lesson, we will explore where to find reliable information about companies and how to make sense of it. We will look at where a company’s money comes from, who its customers are and how it has performed financially. Finally, we will test your understanding with one simple question: can you explain to a friend how this company makes money?

Important information about investing

This is an advertisement. The information provided on this website is intended as general product information only and does not constitute investment advice or recommendations. Past performance is not a guarantee of future results. The value of investment products may increase or decrease due to market movements, and it is not certain that you will get back the entire amount you invested. Before making any investment decisions, you should read the relevant prospectus and key investor information documents for more details about the investment product.

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