It's never too early to invest in your financial future (Photo: Getty Images)

Easy money: Why investing for retirement starts the day you’re born

You’re never too young to start investing for your retirement – or start talking to your kids about their financial future. The new Kids Investment Account from Hatch is designed to help make that happen. 

Talking to our kids openly and honestly about financial matters has never been a particularly Kiwi trait, but then again, neither has financial security. But with a growing wealth gap, clear links between money problems and poor overall wellbeing, and with an economic future as uncertain as ever, our national “she’ll be right” position doesn’t seem to be serving us – or our kids – as an effective financial strategy.

When it comes to taking control of our financial futures, avoidance is a common approach. For many of us, the subject of money carries a significant emotional weight, and when things aren’t going right, it can be easier to put our head in the sand, ignore the future in favour of more immediate obligations, or to fritter away what we do have for instant gratification.

But consider this: historically, US share markets have grown 10% a year on average, before inflation. Given that fact, if you were to invest just $2,040 on the day a child was born, by the time they turned 65 they would have over $1 million invested. 

Such is the magic of compounding growth. Once again for those in the back: long-term million dollar financial security for a child can be accessed for a one-time investment of $2,040.

The trick is, of course, to start early, so time is on the side of young investors, who can do a lot with a little and easily ride out short-term market waves in the interests of life-changing long term gains. 

Young potentials

So far so good, but sometimes logic is one thing, and a child’s mind another. Have you ever tried to encourage an eight year old to save for their retirement? It’s not as easy as it sounds.

It’s a conversation we have to have however. One initiative bringing the better money management message to young New Zealanders is Banqer, a tech platform designed to teach primary and secondary school-aged kids financial literacy. But while Banqer is a definite step in the right direction, there’s no replacing real conversations about real financial matters in the home. 

“Money conversations aren’t happening at the family level, and if they are happening, they’re often just too boring,” says Kristen Lunman, co-founder and GM of Hatch, a digital investment platform which provides Kiwi investors easy access to US share markets. 

“That’s a huge pity, because investing isn’t boring. Putting your money to work is actually really interesting and exciting,” says Lunman. 

Kristen Lunman (Photo: Hatch/Pat Sheppard)

To prove it, Hatch has just launched its Kids Investment Account product designed to ingrain long-term investment habits – and financial security – in New Zealand youngsters through simple engagement with the US stock market. 

Lunman says that high-profile, recognisable brands offer parents a way to build lifelong investment habits while using small sums to demonstrate solid investment principles. 

“It can be really hard for parents to convey financial concepts to kids, and it can be hard for kids to connect the dots as to exactly what’s going on – let alone get excited about learning,” she says. 

But if you take a teenager who wants to wear nothing but Nike, and offer them ownership of a piece of that company – as well as the financial rewards that can come with that – the nature of the game changes, says Lunman. 

“Together, parents and kids can take $100 and literally buy a slice of Nike and that’s powerful. As that company grows over time – that is, as more kids out there start wearing Nike products – that invested $100 grows, and you benefit from the company’s success,” she says. 

“It suddenly becomes easy for parents and kids to make that connection.”

And if those stocks drop, well, that’s a teachable moment too, as parents and children investigate the possible reasons together, and parents reinforce the wisdom of long-term holding in the face of short-term losses. 

Fast track your future (Photo: Hatch/Pat Sheppard)

Investment values

When it comes to getting kids excited about controlling their own financial futures, it’s not just the popularity of global megabrands that can be put to work. Investment is about faith in the future. 

This gives parents a chance to talk about what the world is going to look like in 10 years and the influence children have on what it could look like. Backing companies doing good things provides a way for young people to invest, literally and figuratively, in the future. 

Kids love space? Leverage that interest through investment in a space exploration via innovation funds like ARK, or space-bound companies Tesla or Virgin. ‘Tweens passionate about a green future? How about investing in plant-based meat-alternative business Beyond Meat? Fundamentally, it’s a message of hope, says Lunman. 

“We need to recognise the kind of value we can create in the future and over time,” she says.

“You don’t need NZ$10,000 to get started. You don’t need NZ$5000. Even $5 a week can end up being a million bucks. It’s never too late, and for kids, if they start early enough, they can all be millionaires by the time they need to access that money.”  

This content was created in paid partnership with Hatch. Learn more about our partnerships here




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