11 years ago (when I’d just finished high school) I started an investment club with some of my friends and family. We made a decision that every week we’d each deposit $50 into an account. And this would be invested. Since then, we’ve invested in all sorts of weird and wonderful (and normal) things. Most people I mention this to have some interest in it, so I thought I would do a quick write up on our club…. and also write my first ever blog :)!
Being an investor
If you’d asked me the day after I’d transferred that $50 with a bunch of my friends into an everyday bank account if I was an investor. I would have answered YES! But ask me what I was investing in… Umm stuff.
This is one of the things that’s been really interesting while we build Sharesies. When we interview customers and ask about whether or not they want to be an investor, 100% of people say yes. But most of them didn’t consider themselves to be investors—even when they have a high percentage of their personal wealth invested in KiwiSaver.
Our first investment (outside of a bank term deposit) was the New Zealand staple investment—a property. We bought a place in Hawera, Taranaki. It took us somewhere between 6 months and a year of saving to have enough—it makes me laugh at how long it felt to make that first investment. Especially when you consider the savings that would have to go in individually to buy property today.
Since that first investment, our little company has invested in savings accounts, forestry, commercial property, a herd of cows, a sustainable fertiliser company in the Philippines, most recently a microbrewery—and a bunch of things in between. Not something I ever thought possible with $50.
Thank you, past Leighton
I hadn’t thought too much about the future value of the club until recently, when I did the math for this blog on what it will be worth when I retire (not something I think about often).
"It really hit home — if we continue tracking at our current average return and I retire at 67, my share of investments would be worth $6.6m (or $2.4m after being adjusted for inflation). That’s some motivation to keep prioritising that $50 a week!"
It was amazing to think that by starting early, $50 a week can turn into so much money.
To put in perspective, if I was to start doing this today, by age 67 my share of the company would be worth $1.8m (or $860k if adjusted for inflation). Such is the nature of compound interest.
Why did I start?
I can’t remember exactly what was going through my head at the time, but I am thankful for it. And I’m guessing a few of my friends and family are too. I remember feeling frustrated, even then, that a house felt like forever away… and that I want to invest in one.
I also remember being terrible at savings (and being just out of high school at the time, $50 a week was a huge financial commitment for me). But if I was really going to nail it, that I need to be held accountable. It’s amazing really that 15 of us have stuck to our payments this whole time. Still, I truly think if just a few of us of us had stopped, the whole thing would have fallen over.
The difference between savings and investing
In my mind, I’ve never differentiated between saving and investing. If it’s sitting in a normal savings account that I can access, then it might as well have ‘spending money’ written on it. I have to make a conscious effort to have that “future” money separate from where I spend. Because of this, I really do value the fact that my investment accounts are inaccessible—which is ironic because most investments have a liquidity premium priced into them (they’re priced higher so you can turn them into cash asap).
The important thing is I’m putting something away now for the future. And that can feel really rewarding—especially if it’s going into something cool or that is doing good at the same time. Which is why I have a preference for investments that are making the World a better place in some way (or at least not making it worse!).
I guess I’ve got that classic Millennial trait of ‘wanting it all’. And within reason, I believe I can. I don’t want to give up that daily coffee, or the holidays. But I’ve realised that trait isn’t going to change in the future, and time is on my side. So this is what we want to do with Sharesies, create opportunities for people to have it all—both now and in the future.