If I gave you $50 right now, and you had to do something with it in the next 5 minutes what would you do?
We’ve interviewed over 200 people in the last few weeks and only 5 of them chose an option to save or invest the $50. Bills, online shopping, coffees, vouchers, food, cigarettes and beers were all more popular options.
But all of the people we interviewed said they want to invest.
Why does this matter?
The typical kiwi investing story is largely focused around ‘getting on the property ladder’. Saving enough for a deposit for your own home, and then investing in a second ‘rental’ property once you’ve knocked off a bigger chunk of the mortgage.
But, with property prices rising home ownership is becoming less attainable the reality is most kiwi’s will be unable to own their own home (including people who earn really good money). According to Shamubeel and Selena Eaqub, economists who have written a book about this very issue, named Generation Rent,
“Currently a young couple in Auckland needs to spend nearly half their income on mortgage payments to buy a modest home”, explain the Eaqubs, “[and] if household incomes continue to rise at their historical rate of 3.5 per cent per year and house prices rise at the 8 per cent per year that investors expect [then] mortgage payments will be a staggering 80 per cent of a young couple’s income by 2020”
Of the people we spoke with, majority would choose to spend their money then put that $50 towards house savings — because home ownership just feels too far away. But without an alternative way to invest their money, people are struggling to get ahead.
Too many barriers to invest
There are investment options available, but they’re not accessible to people who don’t know anything about investing. Only 25% of people we spoke with said they knew where to go to start investing.
They also feel like they need a lot of money to get started, need to know more, and just too many hoops to jump before they can get started. Traditional investment firms are focused ‘wealth management’ not ‘wealth development’.
When he was 18, Leighton, one of the founders of Sharesies, started an investment club with 13 of his friends and family. They all agreed to deposit $50 a week into an account to invest — and still make that deposit today. 11 years later, they’ve researched and owned, among other things; a herd of cows, commercial and residential property, forestry, shares and most recently a share of a company that is developing sustainable fertiliser from chicken manure in the Philippines.
Before starting in this group he didn’t even know you could invest in some of these things — and now Sharesies wants to give other people the same opportunity.
Where we’re heading
We want to make this generation the most financially literate. Starting with making investing easy — by breaking down the current barriers that stand in the way of investing today. We want someone with $50 to have the same investment opportunities as someone with $50,000.
We have an opportunity to make a real difference to how people manage their money and growing the wealth of everyday New Zealanders. We want our friends and others like them around buying and selling shares, comparing portfolios and giving each other tips to grow their wealth. Getting gratification from spending $20, not just on brunch, but investing in the the portfolio sitting in their pocket.
From the whole Sharesies team: Brooke Anderson, Leighton Roberts, John Scully, Ben Crotty, Martyn Smith, Richard Clark and me.