KiwiSaver millionaires are set to become a common thing in New Zealand, writes Martin Hawes. (Photo: Getty.)

BusinessSeptember 2, 2019

Keeping Up with the KiwiSavers: How the saving scheme can make you rich

Guest writer

KiwiSaver millionaires are set to become a common thing in New Zealand, writes Martin Hawes. (Photo: Getty.)

It’s entirely possible to save a million dollars in your KiwiSaver account if you start early and follow a few basic rules, writes Martin Hawes.

Over the coming years, we are going to have a new breed of millionaire: KiwiSaver millionaires. Who knows, you might be living next door to one.

Currently, there are a few people who have KiwiSaver accounts with over $1 million in it, although they are rare. Nevertheless, the number of KiwiSaver millionaires will grow, and I can confidentially predict that in the decades to come, they will become increasingly common.

This poses a question: how do you join this select group? And what do you have to do to get your KiwiSaver account to $1m or close to it? The answer is four-fold:

1. Contributions are king

First, remember that the savings rate usually beats the investment rate. By this, I mean that the amount you can tuck away into your account will usually be more important than the investment returns you get.

When it comes to KiwiSaver, contributions are king. Make sure you are contributing an amount that at least gets the maximum contributions from your employer and the government.

If you really want to be a KiwiSaver millionaire, maybe you should contribute even more than that. If you contribute 6%, 8% or 10% of your salary, or add lump sums, you are most likely to accelerate progress to KiwiSaver millionairedom.

However, KiwiSaver is not a liquid investment – you cannot draw the money back out at any time. Therefore, beware making contributions beyond those necessary to get the employer and government contributions unless you’re certain you won’t need the money before you retire.

2. Grow your career, grow your salary, grow your KiwiSaver

Secondly, remember that your contributions ought to increase with time. This will probably occur naturally (ie: as your salary increases, so too will your contributions). You should get pay rises to match inflation, and your earning ability will also increase as your career advances and you get better jobs.

Therefore, grow your career and you grow your salary. Better jobs do not just give you more to spend today – they should also look after your long-term future.

3. Right-size your fund

The third point is to make sure you’re in the right fund. This is a two-step process: decide the amount of risk you are willing to take, and then look for a well-performing fund in that risk category.

The first part of this is more important to get right, and there are some good online calculators that will tell you whether you should be in a conservative, balanced or growth fund. Remember, the type of fund that you are in will dictate your investment performance more than anything else.

The second part – picking the right fund in your category – is more difficult, and it’s important not to decide on fees alone. Instead, have a look at independent sources which set out how the various funds are doing.

4. Time is your friend

Someone who starts contributing to KiwiSaver at age 18 is likely to have more than someone who starts at 55 years. Much more.

Of course, there is nothing that the older person can do about this as no-one has yet invented a way to wind back the clock. However, there are plenty of things younger people can do, like signing up when they are young and taking a little time to manage their KiwiSaver fund well.

Younger people have a fine chance to become KiwiSaver millionaires. Good careers with good and growing contributions to good funds should see them well on the road to millionairedom.

Meanwhile, older people should not give up. They may not make millionaire status but they can, at least, secure a comfortable retirement. We should all remember that if you shoot for the stars and miss, you may still hit the moon (or a million dollars).

Martin Hawes is the chair of the investment committee for KiwiSaver provider Summer.

Keep going!

parkable

BusinessAugust 30, 2019

Parkable, the ‘Airbnb for parking’, raises $4.6 million led by Spark

Jihee Junn

Contributing writer

parkable

Spark ramps up its Internet of Things (IoT) network with a leading investment in Kiwi tech company Parkable.

Auckland-based startup Parkable has raised more than $4.6 million in its first funding round led by telecommunications giant Spark. The funds will be used to increase Parkable’s international expansion and continue developing its technology and product. Currently, the company operates throughout New Zealand, Australia and most recently in China.

Aimed at making the most of unused parking spaces in cities, Parkable is a sharing economy platform that allows companies and individuals to rent out their empty parking bays. Customers who need parking can then find and book these spaces via the Parkable app.

Parkable CEO, Toby Littin, and Spark Future of Connectivity lead, Renee Mataparae (Photo: Supplied)

Spark, which is understood to have contributed a significant amount to the $4.6 million raised, sees Parkable as a key addition to its increasing role in the Internet of Things (IoT). IoT devices are internet-connected devices that ‘talk’ to each other, also referred to as ‘smart devices’. The rise of IoT has been a major factor in fueling the race for 5G which promises a more IoT friendly ecosystem.

“[Spark] has built this brand new shiny IoT network and now they want things to put on it, and we’re a commoditised solution for car parking that they can sell,” says Brody Nelson, Parkable co-founder and chief technology officer. “We’ve got a few different sensors and one of them is an in-bay sensor that detects whether the vehicle is present or absent. It’s a magnetometer that can be connected to Spark’s IoT network.”

He says most IoT solutions to date have been bespoke whereas Parkable targets a tangible pain point for many corporations – parking – adding further value to Spark’s IoT network. In turn, Parkable will have access to Spark’s vast array of corporate and small and medium-sized business customers.

“We see parking as a key vertical in our IoT segment and this is a strategic investment for us,” says Renee Mataparae, Spark’s Future of Connectivity lead. “The Parkable platform offers a unique value proposition in this space for our customers across many industries. It truly demonstrates one of the early use-cases for IoT technology – providing a valuable service for consumers and businesses alike and allowing for better asset utilisation.”

Earlier this year, Parkable launched into Australia after buying Park Genie, a smaller parking technology company in Brisbane, following a previous funding round involving Spark and NZ Venture Investment Fund. Recently it launched in Shanghai as part of a joint venture with Chinese investors.

“We believe our Parkable for Business product is the best corporate parking optimisation solution in the world,” says Toby Littin, Parkable co-founder and CEO. “We want to push that very hard now, both in our existing markets in New Zealand, Australia and China, and in new markets where we know there is increasing parking scarcity.”

In addition to Spark, new investors include Movio co-founder Peter Beguely and renowned tech investor Rowan Simpson. Early-stage investors and advisory board members Jason Kilgour and David Brain have both increased their holdings. The Spinoff’s managing editor Duncan Greive is also a shareholder.