Established in 2018, Hatch is a digital investment platform that enables access to the US share markets for everyday Kiwis. Owned by Kiwi Wealth—a sister company of Kiwibank—as well as steering New Zealanders towards the world’s largest and most liquid share markets, they’re keen on getting Kiwi kids involved in learning money management skills early on, too. Verve sits down with general manager, Kristen Lunman, to find out more.
Hatching A Plan
“A number of us are from overseas, and we found it very frustrating that there were very few options for New Zealand investors to benefit from the success of the likes of Google, Amazon, Facebook and Tesla,” says Kristen. “So, Hatch was started to create those opportunities for wealth creation for Kiwis.”
During the research stage, the Hatch team made some interesting discoveries about what wealth meant to people.
“The answers were fantastic,” beams Kristen. “Rather than wishing for a private jet, most people were more concerned about choice and freedom—working less hours, having holidays and being able to help their kids out.”
With property investment becoming evermore out of reach for evermore people, Hatch provides a plethora of options to help your savings grow.
“We have a much lower barrier-to-entry than property,” says Kristen. “You don’t need to have a massive property kingdom—which often hurts people and exacerbates the housing crisis anyway.”
The two biggest feature requests were for family trusts, and the ability for parents to buy shares in their children’s names. Incredibly, Kristen says that based on the historical average, an investment of $2,040 in your child’s name in an S&P 500 fund (selected shares from the USA’s top 500 companies, and a popular, no-hassle option for investors) at birth, which you could then essentially forget about, would be worth $1 million by the time they reached the age of 65 years. But Hatch do not want you to forget about your shares, they want you to get involved—and Kirsten makes the point that unlike, say KiwiSaver, your finances aren’t tied up until retirement.
Insider Knowledge
As with any endeavour, it is of course beneficial to have some prior knowledge or experience, but Kristen emphasises that it is by no means essential as Hatch has been designed very much with novice investors in mind.
“You’re buying a slice of a business and giving it time to grow, recognising that that business, and your slice of it, will be more valuable in 10 or 15 years. You may not know a lot about investing, but you might watch a lot of Netflix, and your kids, Disney, and realise that the future of home entertainment is in subscription services.”
Does it become almost like a game that arouses children’s interest?
“I would say less of a game and more about connecting the dots between what they use everyday and businesses that they want to buy. It’s hard to teach a kid about interest or savings or compound growth because they can’t appreciate the future value of their money. There’s no concept of them putting their money to work. But if you ask them, ‘What is the best company in the world?’ they’re likely to say something like ‘Apple’ or ‘Roblox’ and if you ask if they want to own a part of that then they think that that’s really cool. There’s that connection that Roblox is using their money to get bigger. That helps children develop financial literacy.”
Are there options for ethical investments?
“We offer a gateway to over 4,000 shares, and that’s a mixture of companies and it’s a mixture of funds, which are really just baskets of companies. With self-directed investments, you get to choose based on your values and interests. These could, for example, be an interest in space, and recognising that as a growth area of the future—this is very popular at the moment—or it could be investing in innovators of clean energy. Another popular option is SHE, which is a fund that only ethical funds are usually referred to as ESG—environmental, social and governance—which grades companies depending on their initiatives, whether it be projects such as offsetting carbon emissions or developing communities.
Finances And Commitment
Kristen laments that there is still a prevailing misconception that investing is only for wealthy, cut-throat Wall Street types, and mainly men.
“We want to normalise investing and make it easier to understand,” she says. “Hatch offers a fantastic community, there’s a Facebook group where all of our investors can get together and learn from each other. It can be something you do once and forget about, or it can become a hobby.”
It’s also important to realise that the markets are prone to dips, that can last months or even a year, but the overall trend is always upwards.
“Short-term, you’re going to have these bumps. Even with the Covid-crash, there was 16 percent growth last year. These are publicly-listed companies, and their mandate is to become more valuable so they’re going to find more ways to become more competitive and innovative.”
What sort of numbers should the average professional Auckland family be looking at investing?
“We recommend that you start off by just throwing $100 into a company while you get comfortable with the ups and downs and figure out what’s going on. Then, as you grow your portfolio, start putting some aside on a monthly basis, ideally around 10 percent of your salary, with the aim of getting up to 15 percent.”
Obviously, the longer you invest the better, but what’s the minimum term you’d recommend?
“Two to three years. If you need your money back before then, don’t put it in the share market. Who could have predicted two years ago the Covid crash? If you needed that money out last March, then you would have been in trouble. That period could be getting your first home, or your kids into uni, or taking that holiday of a lifetime. But longer than that would be great, and best of all, it’s never too late to start!”
