Financial wellbeing

Lean into your financial dreams.

- With Kristen Lunman

Our brains crave certainty. When we focus on what we can control, we thrive, and taking charge of our money is empowering and rewarding. Research shows when we look after our financial wellbeing, we lift our entire wellbeing. And it starts with defining your dreams. What fires you up when you think about the next five or 10 years? Starting a business? Growing a house deposit? Or do you want a retirement lifestyle you love? These dreams shape your financial goals.

You may already have good money habits. Kiwi women spend less and save more than men, according to 2021 ASB research. We’re less likely to live payday to payday, and a third have a rainy day fund. Where we falter is making our money work harder through investing. But the tide is turning. In the US, since 2018, female investors have increased from 44 per cent to 67 per cent – and women have been shown to be better investors than men.

Following record 2020 low interest rates, many acknowledg­ed that investing could grow bigger returns than savings or term deposits. Historical­ly, the US sharemarke­ts have averaged annual returns of 10 per cent, with a fund like the S&P 500 returning an average of 13.6 per cent for the last 10 years. While there’s no crystal ball, history shows us that having a long-term view when it comes to investing is the best approach.

Hands-on experience builds know-how and strengthen­s confidence. Lean into your potential with these four simple steps:

1. Fill the rainy day fund

Having money in a savings account makes sense. It’s instant to access and buffers against surprise expenses. If the last couple of years have taught us anything, it’s that being prepared for the proverbial rainy day is important. Fill your rainy day pot with 2-3 months of living expenses.

2. Find your community

Learn about investing with a friend and champion each other. Google popular investing books, podcasts and webinars. To spark investing conversati­ons, look for a mix of Kiwis who inspire you with achievable goals, and some internatio­nal investing all-stars who generously share their share market insights.

3. Learn by doing

Just $100 is enough to experience the psychology of investing; to understand how share prices move and how you respond. You’ll naturally see world news reflected in your shares, sparking curiosity. Many people start with a company they know and love. But if you’re not ready to choose a company, you can learn about ETFs (exchange traded funds), which are baskets of companies, some grouped by megatrends, like green energy or gender diversity. Or broad ETFs that own a slice of 500 of the top companies on the US sharemarke­ts.

4. Pay yourself first

Set-and-forget automatic payments every payday are your best friend when it comes to investing. Small and frequent investing in funds and companies means you create lifelong habits, are more likely to buy shares instead of shoes and you’ll grow knowledge and potentiall­y your nest egg over time. You may even love it!

You hold the power to fulfil your dreams when you lean into investing. Just take your first step today!

Kristen Lunman is the co-founder of Hatch, a digital investing platform that simplifies investing to help Kiwis live their best lives. Her goal is to empower women to invest.

NB: This article is of a general nature only and is not financial advice. All investment involves risk.

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