A Yachtie's Guide to Personal Finance

Finances for Kiwis

Being a kiwi I have spent a lot of time getting to know what I consider the best investment options in New Zealand and to put my money where my mouth is. I can tell you that I am well invested (NZD$70,000 plus) in the platforms I discuss below. I know there are heaps of kiwis in the yachting industry who keep their money in an NZ bank collecting dust. Term deposits in NZ are fairly generous compared to the rest of the world, I have my 10k emergency fund in an ASB term deposit with a 3.35% return per year. However, if you want more than this, this article will show you how you can achieve it. After all KIWI does stand for Keen Individual Without Intelligence – reading this article can change that.

There are two major investment platforms I focus on, Investnow and Simplicity:

(Remember, like all investments, risk and tax is involved.)


InvestNow (IN)

I have been investing through this platform for over a year and it was my first experience in investing with relatively large amounts of money. Essentially IN is a middleman/platform that allows kiwis to have access to some of the major index funds available. Being as major index fund providers (passive management) such as Vanguard or Fidelity are not accessible to kiwis, this means we have to use other platforms to gain access to such funds. For this, IN is an excellent choice compared to other providers such as Sharsies or Smartshares as it’s fees are very low and it has a good selection of international funds on offer. To save you from boredom I have done an analysis of each provider and personally believe that InvestNow is the better option.

In InvestNow there is a minimum one-off investment of $250, and after that, well, that’s it. If you choose you can contribute a minimum of $50 whenever you like (weekly, monthly etc.) or you can simply leave the initial $250 in and watch it rise and fall. I cannot suggest which funds you invest it, however, I invest in USF500 and Vanguard International Shares Index Fund (NZD hedged) and have seen good returns (10.62% last year).

USF500 is the S&P500 which tracks the 500 biggest companies in the US.

Vanguard International Shares Index Fund (NZD-hedged) overlaps with the above fund but this has more international exposure and is considered by some less risky due to it’s diversification. The NZD-hedged part basically means I am protected against currency fluctuations, it can be described as ‘locking in’ an exchange rate.

To check their website click here https://investnow.co.nz/

An example of companies the USF500 invests in

Simplicity

Did you know there is an alternative to KiwiSaver? Again, I have run the numbers and Simplicity has come out on top due to their low fees, aggressive growth fund and charitable qualities. Fifteen percent of their profit (what we pay them in fees) goes to local charities and all of their funds are ethically invested – they do not invest in funds that might harm people or the environment. They strongly support the passive, long term investing structure that we like here at themoneydock. The only limitation of Simplicity is the minimum account balance of NZD$10,000 which is quite significant. I do realise this is steep, however, if you becoming more serious about your finances this should be do-able. Although I prefer Simplicity this is not to say that other providers are bad, it is merely my choice, as always become familiar with fee structures. I am invested in the growth fund and have over $20,000 invested. This is low compared to my other investments but will increase as I get older.

Click on the link to see more https://simplicity.kiwi/

A bit boring! But this is a great breakdown of the fees

Of course there is a lot more information than I have given but I hope there is enough for you to realise the benefits. If you are a kiwi citizen, a yachtie, and have money, you would be in a financially good position if you had any of your money in one or both of the above mentioned platforms.

Look at the difference a 0.5% fee vs. a 4% fee, this demonstrates the importance of low cost investing.

Fees will kill your investment! Stick to low fee funds
An example of how fees can erode returns
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