Alexandra Lipski is a 28 year old lawyer based in Wellington. We chatted to her this week about her research into the gender investment gap, project with the Financial Markets Authority, and first time investing.
Tell us a bit about yourself!
I'm Alex, a self-proclaimed nerd who will happily watch an opera concert one night and a kickboxing tournament the next, in between my days as a big-firm corporate lawyer.
You did some research into the gender investment gap. Can you tell us more about what you found?
As I was learning about investing, I stumbled across US and UK articles discussing data showing that women tend to hold their assets in cash, while men are more likely to invest their disposable income. Add this to the gender pay gap and you end up with a vast difference in wealth that gets bigger over time due to the effects of compounding interest—the power of which had impressed me at high school, before fading from memory (like most of the rest of my maths classes).
What was your project with the Financial Markets Authority?
I went to the Financial Markets Authority (FMA) looking for New Zealand data on the gender investment gap to see if we had the same problems here, wondering if KiwiSaver might have made a difference (nope, women still have lower KiwiSaver balances and are more likely to be in default funds). That conversation took us to the problems the FMA was facing with KiwiSaver, including low engagement by younger women who never opened their KiwiSaver annual statements. The FMA then launched a social media campaign targeting young women, and even used social influencers, which is a rather bold move for a regulator.
Why did you start investing?
I started investing following the realisation that some of my (male) friends had been investing for some time—the last 10 years in fact. This surprised me, maybe because women don't tend to discuss money (a US study earlier this year found that 61% of women would rather talk about their own death than their finances). With disposable income earned from a few years in my law career, I had no excuse not to get my finances in order. No dependants or mortgage, plus a long investing timeframe, meant I had a healthy risk appetite, and I wanted to get started before other life priorities took up my time.
Tell us about your first investment!
I am both curious and deeply risk averse, so I wanted to educate myself about the finance industry (hooray for the internet) before I handed my money over. I spiralled down Investopedia rabbit holes for weeks, learning the mechanics of stock markets. Eventually I was comfortable in picking an index fund by comparing the fees charged by the available online platforms (including the second level of fees charged by the funds themselves). Once I was happy with my choice, I put in a big lump of cash initially, then set up automatic payments so it would be drip fed straight out of my pay. That gave me confidence, which has led me into other (riskier) investments.
What would you do differently, if anything?
Give me a time machine and I’d start investing earlier: to borrow a Chinese proverb, the best time to invest was 20 years ago, the second best time is now.
What do you like about having an investment? Why should people try it?
I enjoy building financial freedom, mixed with playing a game that satisfies my competitive side. If you can't or don't want to buy a house, investing is an alternate way to grow your income. There are lots of options out there from picking stocks, investing in startups, cryptocurrency, managed funds, bonds, etc. You can also look at impact investing if you want your money to make a difference. There's a world of options to suit everyone out there, you just have to get beyond the shroud of financial jargon and your own doubt.
How did you feel after becoming an ‘investor’ for the first time?
I felt I had encountered another chapter of the "how to adult" manual that some people seem to have memorised, while others haven't even found a copy. I am a long way from feeling like I have life sorted, but financial independence will be a big part of that.
People often think you need loads of money to invest. What tips would you give to everyday New Zealanders who might not think it’s possible?
Exchange Traded Funds (ETFs) are a great starting point, because they often only require a small amount to get started. ETFs also allow you to drip feed in more money without constantly paying transaction costs, so you can slowly build up from a small start. If you have slightly more money, you can look at a managed fund, though you'll need to do a careful analysis of fees.
What is the best piece of advice you’ve given (or been given) about investing?
Pay off high interest debt, save a few months' salary buffer for emergencies, then go hard with investing.