For the last 3 years, I’ve been working at a Kiwi Wealth backed startup called Hatch. We created Hatch for people like us: Kiwis who want to do better with their money, without having to deal with the jargon, complexity and distrust the investing industry can be known for.
As part of my job, I’ve been doing a lot of research into our money habits. After talking to hundreds of Kiwis, I agree that many of us are clueless and deluded about money. I think we’re forced to be.
Lack of quality financial education aside, look around: what options do you actually have for your money? Independent advice is scarce (and expensive!), the share markets feel like an old boys club, finance companies have a reputation for going bust, and property continues to become less affordable. The only option we seem to have left is to put our heads in the sand, our money in a savings account, and assume somehow she’ll be right mate.
We’re saving ourselves poor
A lot of us have far too much money sitting in savings. The word ‘saving’ is probably inaccurate as well – these days it’s really ‘storage’. Interest rates are so low that inflation wipes out the pitiful interest we earn – as the cost of living rises every year, the money we’re diligently saving is simply not keeping up. If you are earning 1.5% interest and inflation sits at 2%, you’re literally saving yourself poorer.
Savings accounts do play a valuable role – they are a great place to store money you may need in the near future. The problem is, we’re using them as a one-size-fits-all solution, and it’s costing us.
It’s extremely hard work to be bad with money.
Here’s the kicker: we’re working harder than ever, for longer than we should. We sacrifice quality time with our families, struggle to balance work and life, and spend sleepless nights worrying about the future. It’s stressful, it takes up too much brain space, it causes fights and leaves us stuck in jobs we don’t love.
And yet, somewhat ironically, the idea of getting our hard earned money working hard for us is the thing that feels, well, hard.
Change starts with access to quality investment options
When we launched Hatch 2 years ago, our initial goal was to give New Zealanders access to quality ways to put their money to work. We were the first to allow everyday Kiwis to become shareholders in some of the world’s most innovative companies. Since then, over 50,000 people have signed up and own shares in companies from Tesla, to Apple, Berkshire Hathaway, Google, Beyond Meat and 3,000 or so other businesses we know and use every day.
Access is great, but what we really want is to help New Zealanders make a real difference to their futures. That life you imagine after winning lotto? That’s what investing your money can help you achieve. We like to think of it as getting rich slow.
Good returns, bad reputation
Phrases like “only invest money you can afford to lose” drive me crazy. Our KiwiSaver accounts are full of money we can’t afford to lose, and most of it is probably invested in shares. That’s a good thing! Over the last 100 years, the share markets have grown investor’s money by an average of 10% a year. That growth is why your KiwiSaver balance goes up far more than the amount you put into it. It’s also why your balance sometimes drops – an average of 10% a year isn’t the same as 10% every year.
It’s time to stop thinking about investing money you can afford to lose, and start investing money you won’t need for 5-10 years.
The share markets are not a casino
These days, discount share trading platforms are cropping up all over the show – making it very easy and very cheap for people with no experience to dive in and start buying shares. Good? Bad? No one knows yet, but the 1980s give us a bit of an idea.
Because Hatch is part of Kiwi Wealth, we’re not trying to maximise short term revenue, or attract new funding rounds, we are trying to solve a big problem. It’s easy to see why the share markets appear to be another outlet for gambling. Chucking $50 in to buy shares in a company just because the price is rocketing up, well I can see why it feels like betting on black.
But that’s not putting your money to work, it’s a lottery.
Two straightforward ways to start putting your money to work
Here’s the conundrum: You make buying shares sound like an effort, and a lot of people will never get started. You make it sound too easy, and it feels like gambling. Fortunately, there is a middle ground – straightforward ways to start, without acting like a drunk at a Blackjack table:
Learn by doing
A lot of Hatch investors take a small amount (say $100) from their savings and use it to buy their first shares. They don’t think of their first purchase as an investment, instead, it’s an affordable education in the mechanics of buying them – which incidentally is just like online shopping. $100 is not going to get you rich, but it may change your life. Once you own shares in a quality company, everything changes. It’s amazing how more interested you become in learning about good money habits when you become a shareholder in a business you believe in.
Start by learning
If you’re like many other Kiwis and prefer to get your head around the basics before beginning, Hatch makes that easy too. We’ve created a free online course so you can learn everything you need to know to buy shares. We deliberately made it easy to fit around real life – you can complete it in just 10 minutes a day, over 10 days. We break down the concepts into bite sized chunks and let you take one small action a day so, by day ten, buying shares feels like a small step to take.
Take ownership over your money
A focus on education is a weird path to forge in an industry that’s having a glamour moment. It would be much easier to jump on the bandwagon of ‘buy now, the going is good!’, but we’re doing it for a reason. I genuinely believe the best time to start is today, but I also know the best way to start is by taking real ownership over your money. And that means knowing what you’re doing with it.
Hatch investors tend to be over 30 – savvy, ambitious Kiwis who know that investing their coffee money won’t lead to their dream lifestyle. So turning that first $100 investment into a serious portfolio is the next step. The good news is we spend a lot of time creating straightforward, entertaining and educational information to help you grow your nest egg in a way that works for you. When you understand what you’re doing, it doesn’t feel like gambling, it feels like a sensible investment in your future – one that doesn’t require a scarified lifestyle today.
Be better with money
The reason people stick with savings is because they feel like they know how it works. My feeling is they don’t. Your money is still being put to work, but the bank is the one benefitting. We should change that.
Not by gambling on share prices, but by taking a little time – probably less than what you already spend thinking about money, and learning about shares. Not throwing your life savings into the markets, but drip feeding amounts in and building up a quality nest egg over time.
We get messages from people every day about how investing in shares has changed their lives. Mortgages have been paid off, holidays have been had, families have started learning together and confidence has grown. None of these people got there by having insider knowledge, or day trading their way to success. They just put in place a seriously straightforward plan that worked around their own lives, and stuck with it.
If you’ve made it this far and want to give Hatch a try, our Wellington based team are on hand to help with any questions (nothing is too hard or dumb!). I also have a referral code too, which will give you (and me) a $10 NZD top-up when you sign up and make an initial $100 NZD deposit.
The post Why Kiwis are bad with money and what we can do about it appeared first on Simple and Loveable.
