72. An inheritance goes a long way!
PODCAST TRANSCRIPT: Episode 72 - SEP 21, 2022
Will was one of many who emailed me when I did a call out for some younger people to get in touch. Today you will be hearing all about him and his wife Priya. These are not their real names, they wanted to remain anonymous, which is fine by me. Both of them are 31 years old and they currently live in Auckland.
Will grew up on a family farm in a small rural community in the mighty Waikato, called Pukeatua. Just the mention of that place name should be enough to have his sibling, apparently an avid listener sitting up and taking notice. Will says “surprise” and Hello! Now Will's Mum is Swiss and his Dad a Kiwi. His Mum had actually come out to Aotearoa on a farm exchange on Will's Dad’s family farm which has been in their family since the late 1940’s, she bumped into Will’s Dad, and never left basically. He’s the youngest of four kids, with two brothers and a sister.
Priya also comes from a farming community between Auckland and Hamilton. Whereas Will’s family farms livestock, Priya’s are vegetable growers. Both of Priya’s parents are Indian, her Dad is from New Zealand and her Mum came over from India when they married. They went on to have four children and Priya, like Will is the youngest in her whānau too.
There are many similarities between the two families. Will said that both of their dads are farmers through and through. That is their life and they live, breathe and talk about farming all the time. He said that when they all get together, the dads talk about farming and their mums talk about the farm, but more so about what it takes to run a home.
Priya and Will met about 11 years ago when they were both studying at Waikato University.
When I asked Will to think about what it was like growing up and whether money was ever mentioned he said that they were always very occupied at home with farm work, they were 30 minutes from the nearest town and it was a busy farm to run. So, they didn’t ever see much money being spent, because they didn’t go to town that much and when they did go in, his Mum was buying in bulk because it was a long time between visits to the shops.
Basically, they only spent on things they needed, and he never really saw money spent on entertainment or frivolous stuff. If money was being spent, it was on new equipment or supplies for the farm and it was always ingrained in him that any spending was well thought out. So money was not so much talked about, it was more learning by observation.
Like many, his money lessons were pretty basic, more about getting a savings account with your bank, and putting your money in there. And that when you buy something, you use your own money, never credit.
His parents were more the type to let their kids make their own mistakes and learn from them, so with that philosophy didn’t come heaps of advice but they feel they have given their kids the right guidance. If he asked his Mum or Dad’s advice on something, they would say yes or no, but they didn’t steer them in any particular direction or offer much advice around money or jobs.
Because they lived so far out of town he went to boarding school so he learned to be independent from that point on. For whatever reason he was always interested in money. When he was still a teen, he would find and read financial books just because he was interested in the subject.
After a conversation and a bit of direction from a careers advisor, he ended up going down to Lincoln University in Canterbury to study valuation and property management and his idea for going there was he wanted to learn about property because that is what a lot of those books talked about as a way to grow wealth. What better degree he thought to use for both his professional and personal life.
It didn’t quite pan out like that and neither the course or the location was really resonating with Will. So, even though he had left school by then, he went back to the careers advisor and they talked about further options. He restarted his studies at Waikato doing a Bachelor of ECommerce with a double major in supply chain.
Priya was also studying there, and she completed a three-year course doing Bachelor of Social Sciences Majoring in Industrial Relation, Human Resource Management and Geography. She then did a 4th year for Honors which was Bachelor of Social Sciences with Honors (First Class) in Labour Studies.
Fast forward to today, they are now married and both of them are putting their educations to good use and Priya works in HR and Will works in supply chain management.
They both paid for their education with student loans.
Will shared with me how he also worked to support his study.
Growing up he always worked on the farm and up to the age of 18 his parents paid pocket money of $20 - $40 a fortnight. During holiday breaks, he worked more on the farm and got paid a bit more.
As he got older he would do relief milking, filling in on the family farm and then gradually gaining the skills to fill in for others around the district, working with a total of about 12 or so different farmers in the end. Per milking, he was paid about $40 - $50 and if he was sole charge he would earn about $70. Given you milk cows every day this could be a steady income. Once the milking was done, he was working during the day doing all sorts of other farm work.
So, given he had some good holiday income coming in, did he use that to pay for any of his university costs. No, none of it.
Although he had been keen on reading books, he still didn’t really know what to do with his money. He mentioned the book Rich Dad Poor Dad and back then, that was your go-to guide for money, but it didn’t really offer any daily money-handling information. That book title is often dredged up but I’m pleased to say that thank goodness there are much better books around these days to educate with daily money management. If I was going to give a shout-out to a book for that purpose, it would be to read Scott Pape’s book The Barefoot Investor as it's a practical guide.
Although his parents had said ‘be wise and have a savings account’, there was nothing taught about investing and no thought went into what university actually costs to attend, so no money was set aside to pay for it. When working with his parents and the careers advisor, they just looked at the course itself, not the costs. The cost was irrelevant, you just get a student loan.
I thought, surely not, surely for Will there was some talk about the cost of uni. No, not a single person talked to him about the costs, meaning he also had absolutely no idea about paying it back either. Or that it was even something to worry about. He had no idea that once he started working that his student loan would take 12% of his paycheque.
This upsets me, money forms a part of much of what we do, and it’s my view that it should be discussed right alongside course choices. And I believe that it needs to be discussed when kids start high school. Currently, I’m mentoring a Year 10 student for a school project and she has her heart set on becoming a vet. So, we are researching the cost of the course per year, the living costs per year and it has been a really useful exercise. She has three more years of school in front of her but already, if uni ever comes up in conversation, the total consensus amongst her young peers is that you have to borrow money to go to uni. That is just not true, and it’s been really enlightening for the both of us to research what an education costs.
His parents did help out with living costs, paying his $70 a week rent for him and providing meat for the freezer. Whether it was the work of a good accountant or a quiet year on the farm he did receive a student allowance to help with his costs, and he did borrow his course-related costs to the tune of $1,000 each year. When I talk to former students, it’s always this $1,000 per year debt that annoys them the most because they all take it out with the view that it’s free money, mainly because it’s so easy to come by. But it’s not, you have to pay that back too.
When Will finished his study he had about $35,000 of student debt and Priya’s was about $50,000.
He began work and for the next couple of years his student debt began to be nibbled away at because of those 12% deductions from his paycheque.
But, when he was about 24 he was fortunate enough to inherit a large amount of money from his grandparents, about $100,000. This coincided with the IRD offering a 10% discount for lump sum payments made on student loans. Three years into working full-time, he was able to use a chunk of this money to pay off his student debt, which he said, felt very nice indeed.
Priya was also chipping away at her debt from deductions from her pay and in her second job out of uni she worked for Fisher and Paykel and they offered a now discontinued scheme where instead of the employer paying into KiwiSaver, they diverted that money into your student loan instead. She did this for two years and it helped, but wages were low straight out of uni and she had a bit of a mountain to climb.
Eventually, they both left New Zealand to work in London and in another student loan surprise they learned that they had to make payments while they were away, otherwise they would start to incur interest on their loans. No one had pointed out this fun fact to them either. So, while they were away on their O.E., they had one foot in New Zealand still as they had to make payments to keep on top of their loans.
They came home, got jobs and Priya continued to pay towards her debts as normal, and finally, with the deductions from her wages and with her parents chipping in about $10,000 she paid hers off sometime in 2021.
So, what would their advice be to future students. They would say to ask people about the reality of taking on student debt and that you should learn the whole process. From how and when you start to take it on, to how exactly you pay it back and the length of time it is likely to take you given your future income. Plus the implications of having a student loan if you go overseas.
The onus is on you to learn as much as you can, because you won’t come across it otherwise. My advice is to speak with current and former students, because they have lived the experience and many are paying it back 20+ years after they graduated. And that is the reality of the situation.
Just an observation is that at the end of the day, for both of them family chipped in to help them clear debt and I can’t help but wonder, had everyone learned more about student debt on the front end, they might have been able to reduce their debt burden from the get-go.
Coming back that that inheritance of Wills. With his student debt gone, he was left with about $80,000 sitting in his bank account. And while he was always interested in money, it didn’t mean he knew what to do with it.
The books he read all talked about property, but still, no one in his family ever talked about money or the finer details of it - apparently because it's rude to do so.
Thankfully I never got that memo.
Will pointed at that when you are trying to learn about money, you need to be mindful of the agenda of who you are talking to, and seek wisdom and information widely.
When he was younger and was earning money from relief milking he went into the bank and asked how he could grow the money instead of leaving it in a bank account. They simply referred him to term deposits. He did ask what return he would get if he put in money, after allowing for tax and fees, and they said they would have to get back to him. Which they never did. He said it was an example of trying to learn and reach out but getting nothing back in return from one of the biggest financial institutions in the country, who obviously didn’t think this small timer was worth their while.
He said that at that time he had a brief bad habit of betting at the TAB and he remembers thinking he could earn more by betting on a really solid team in the NRL to make the top 8, and they were able to tell him exactly how much he would make or lose, but his bank couldn’t even tell him what a term deposit would earn.
The takeaway. Consult widely and don’t assume they have your best interest at heart.
But seek and you shall find. He came across this guy at uni that he got on well with because they were both interested in how money works; he was a year younger, switched on and bright.
This guy, who had a full scholarship to take care of his university costs, told Will about shares and explained that because he didn’t need it to study, he invested his money instead, which sounded pretty smart to Will.
His tip was to invest in Auckland Airport and other large blue-chip companies. Why Auckland Airport? It is he told Will the gateway into Aotearoa and his view was that it won’t and can’t fail, plus he thought it had a strong growth trajectory. Clearly this was well before Covid 19 wreaked havoc on the travel industry and although he was probably right that they won’t fall over, their share price can still take a beating.
To try the process he purchased $1,000 worth and then spent six months watching and learning.
After a while, sometime around 2013 Will did invest $50,000 of his inherited money in Auckland Airport.
He then went on to invest a further $25,000 in 2020 for a capital raise, before selling the lot in October of 2021 for $164,000.
After buying into Auckland Airport he went on to try to pick a number of other companies to invest in as well.
The hardest thing after finding one company to invest in, is trying to find the second, third, fourth and so on. This was my own reality when I too started to invest. I started with Meridian Energy, thanks to the government of the day telling me that it was a good idea, but then I drew a blank.
It was when using some of the inheritance money to take a holiday that Will and Priya happened to find themselves in the stunning small town of Tutakaka, staying at a holiday park, when he spied a newspaper. There was an article about Wynyard Group, a tech company that he tells me was into cyber security, which he thought was a pretty cool industry to be in, and it COULD be the next best thing after Xero. He invested $9,000.
As I was writing this up I found some NZ Herald online articles about Wynyard Group and they detailed that it listed on the NZX in 2013 at $1.15 a share. It went as high as $3.12 in March of 2014 and Will said of the experience, “boy oh boy, welcome to shares, it was an interesting journey and a lesson in volatility.
Remember the more recent GameStop share buying frenzy, well this was smaller, but still similar. His friends started buying it, everyone started plowing into it, but they were too late, buying when the price had already risen to its peak.
Between 9th of Jan when he purchased, and the 3rd Feb when he sold he doubled, then tripled his money, then settled on doubling his investment, selling out less than a month after buying them when the price was on its way down, but still he grew his money to almost $16,000. Shares dropped as low as 21c, then the company went into liquidation in I think late 2016.
Will was extremely lucky, many were not.
Next he purchased shares in F&P Healthcare. In early 2014 he invested $15,500, held it and reinvested all dividends etc and sold it all in October 2021 for $123,000.
He also invested $15,000 into Sky City, selling that a few years later for about $20,000.
With these investments, if they had an offer that he thought he could benefit from he invested a little more, plus he always reinvested his dividends in the hope that they would make more money. Which more often than not, they did.
This mix of investments did work out OK for him, they went up in value, but it also gave him insight that it can be a volatile journey. He said that he struck gold with Wynyard and F&P, while others lost out, but that had nothing at all to do with skill, more with good timing.
When they were making their way back to New Zealand from their long stay in London, they backpacked through South America for five months. In a hostel in Bogota, they got chatting to a guy about digital currencies, a completely new thing for Will. The guy talked about Ethereum and the 2,000% increase in his holding and that had Will intrigued. It seemed outrageous to have such a big increase, but sure enough, when he looked into it, it was true. He put it to the back of his mind and they kept travelling, eventually, four months later, he opened an account and bought £125 of Bitcoin when the price was at £4,583 per Bitcoin, just to see how it went.
Start small and see how it goes, the same approach he took back in 2013 with Auckland airport.
One short week later he put in an additional £220 when the price was at £4,700. He started to watch the ride closely, and it was similar to the Wynyard Group run of luck. Then he went big, in total putting about $23k NZD in. Litecoin and Ethereum got 30% each of that money, Bitcoin 40%.
The price started shooting up with the value jumping up by hundreds and sometimes thousands of dollars overnight, which he said was quite a euphoric feeling while the two of them were travelling on a shoestring budget.
The outcome was similar to his investments into Wynyard Group where he didn’t sell at the peak but between October 2017 and January 2018, in stages because that was what his platform, Coinbase, made him do, he sold out and turned his $23,000 NZD into $35,000 NZD. Their staggered selling meant he missed out on some gains.
Although he made some money in a relatively short space of time, he experienced a few problems with this type of investing. It was speculation, not investing and he found that he was checking the price all the time and at times he had a hard time sleeping at night due to the volatility, especially when the price was coming down and he felt he was losing money, a feeling he just didn’t enjoy. He decided that from that point on these speculative investments were just not for him and that this would not be part of his approach going forward. He said, you need to be comfortable with your investment decisions and strategy and going to sleep content each night is certainly part of the plan. Crypto showed him what he didn’t want.
Will loves to share his knowledge when asked and a while back, when GameStop was in the news, a young guy he has been imparting wisdom to shared that he was setting an alarm for 2am every morning to check the price of his GameStop shares, which completely reminded Will of his experience with crypto.
He kept telling the guy that a good investing strategy does not involve waking up every morning at 2am to check shares, the only thing it will achieve is to make you more anxious and potentially scare you off investing if and when you lose money. There is a strong mental well-being element to investing and having a well-thought-out strategy that you are comfortable with means you should be content each night you go to sleep and should not have to check prices at all.
You will note that he sold all of his individual shares around the same time in late 2021. Why was that I had to ask. He said there was a period in 2020/2021 where he got deeply into personal finance and he couldn’t absorb enough content.
He got into podcasts like Paula Pant, Bigger Pockets and NZ Everyday Investor and books based on investing and property. He signed up to the share portfolio tracker that I also use, Sharesight, and began monitoring his investments.
A side note on that, Sharesight are an affiliate of mine and if you go to my website you will find a link that gives you four months free. But they also have a free version.
So, this self-education showed him that while, yes, he did well with individual shares, he was lucky to beat the NZ50 index or the US500. He could not put his success down to skill, which meant it would be hard to replicate his success. He learned that he had no diversification by investing into just a couple of individual companies and that his current investment strategy was complicated, needing him to monitor and check it frequently so that he could buy or sell as and when needed. He had worked out that a good investment strategy should be easy to manage and set you up for long-term success, but that was not what he was doing.
Everything he read taught him to keep investing simple and that a good solid average return is enough. He learned that instead of gambling, which is effectively what he had been doing you should pay yourself first by investing a decent portion of your income into, you guessed it ETFs, aka index funds.
So, when he sold up all his investments he used the low-cost investment provider Investnow to purchase three funds, and put a third into each: the Smartshares NZ50, US500 and the US Equities ESG ETF fund. He said that it works like clockwork and that over the long run he will reap the benefits of this approach.
He is aware he said that there is a lot of overlap between the two US funds and he is interested to see if there is a difference in returns, but from a values perspective, they are happy with their choice.
So, just a quick recap, because it’s always nice to see some numbers:
Next year he will have been an investor for ten years, an exciting milestone to cross off. Back in 2013 he made a $1,000 investment to put his toe in the water, by the start of 2014 he had invested his full $80,000. In October 2021 - during a global pandemic I should remind you - he sold it all for a total of $570,000 and reinvested it across those three funds I just mentioned, plus a few other bits and pieces.
Since that time, the share market has wobbled about, but he has continued to invest a portion of his pay each fortnight, buying whatever the price, he doesn’t worry about the price anymore, but fair to say, it’s mostly on sale, given what the share markets are going through at the moment. The plan is to keep investing as much as he can until he needs to harvest some money from it in the future.
He was kind enough to let me see his Sharesight portfolio which shows he still has about $12,000 invested in crypto, Ethereum and Bitcoin, both of which were significantly down. Plus he had just $500 spread across two Kernel funds, the NZ Commerical Property Fund and S&P Hensho Electric vehicle innovation fund, both of which were down. Of his Smartshares investments both the NZ50 and the US Equities ESG funds were down since purchase, but the US500 was up.
It’s a bumpy ride out there at the moment but the systems he has set up he said are working like clockwork.
So, that was a fascinating look at how he got started in investing and it has really worked out for him. His grandparents I’m sure would be really happy with how the money they left him has grown.
But all that talk was about Will, and I wondered how his wife featured in all this?
In the early days he was always the one interested in the money side of things, and when he tried to talk to her back in the day, she was not interested and his approaches felt like an attack where she thought he was trying to compare what he had with what she had. So the conversation was shut down. His thinking was how can we do better as a couple, but clearly he didn’t articulate this as well as he perhaps could have.
Today they have both joint and separate finances and they are much more aligned in their values. Whereas she is more free-flowing, he leans to being more controlled, so they are working to find ways to set things up so that they both feel heard and comfortable.
With a baby on the way they have created bank accounts for all sorts of sinking funds for all sorts of things like a baby fund, maternity leave cover, saving for a new car and a holiday. Over the last couple of years they have even saved up to pay cash for some minor surgery. Sinking funds are fantastic at helping you set money aside for just about anything, and I love them.
They have a whole lot of combined accounts he said for things like insurance, house maintenance, and tradespeople. Bascially, if there is a known expense coming up, they have allowed for it and are saving towards it.
Both have a credit card linked to the same account.
When a bill comes in, they pay the portion that represents each of them, plus they allocate themselves a weekly float, give or take $300 to pay for groceries etc. He writes down every transaction so he knows what is being spent where and at end of month, he says what they each need to pay.
I’m not going to lie to you, it was confusing for me to try to understand their banking set-up, which I don’t mind, as long as they like and understand their own systems.
But he did say himself that even as the CFO of the household, their systems were a bit loose and a bit messy and required a lot of administration. If you have two people in a relationship, and one is like Will and more into the details and the other is like Priya, less interested in the details, a complicated system can be a bit of a turn-off if you bring it up over the dinner table.
I believe in people handling their money in a way that is simple, but I do see a lot of complexity in the way couples younger than me handle money these days. My thoughts are the same as the last episode I did, if you are going to have a baby with someone, surely you can trust each other with your bank accounts? I don’t mean to be grim, but I also think about sharing all money from a practical perspective. If one were to die, the other needs to A) Have immediate access to money and B) Understand how it works.
Will sounds very aware that his system may need some tweaking and I wish them both well.
Between 2015 and 2017 they lived and worked in London and when they returned to Aotearoa they tried shared living and renting, but they wanted a home of their own.
He rang his parents for some guidance about how to buy a home. Their question was “how are you going to pay for it”? It was at this point, about four years after he had received his $100,000 inheritance from his grandparents that he told his parents that he had invested almost all of it in the share market. He explained that the total value at that time, when he was speaking with them, was now at about $300,000
He said there was a long quiet silence and then they said ‘that is pretty good’.
His parents dwelled on it, and came back to them with the advice to keep the money in shares, and they would like to forward him an early inheritance, so they could see him enjoy it. They felt it was appropriate to give them money when they actually need it, not having to wait. They gave them an incredibly generous $200,000 to buy their first home, which was a journey in itself.
He was of the mindset to buy an entry-level house and pay it off asap and they began looking at houses in Auckland in the $800 - $900 K range. Despite the huge sum of money, much to their dismay, the houses they saw were pretty darn average. They looked at house after house and eventually sought the point of view from a professional. They spoke with a financial advisor Darcy Ungaro, and he was advocating that based on their deposit and incomes they could spend up to $1.5 million.
In 2018 they ended up purchasing a home for $1,065,000, borrowing the enormous sum of $852,000, meaning their deposit was $213,000. Clearly they failed to save for a deposit themselves and have his parents to thank there.
They are so pleased that they did not take the advice of the professional and stretch themselves up any higher. They did end up buying a home that they will be in for a lot longer than a starter home, it needs no work done on it and they are happy living there. Had they taken the advice to spend up to $1.5 mill, that additional financial burden is not what you need when you want to start a family he said, but it did give them an interesting insight into how others have different perspectives about housing and debt.
The main thing he took away was that, like taking on a student loan, they knew nothing about the process of buying a house. He said they were taken to school by real estate agents whose main job was to push the price up. All up he hated the process. And I can’t blame him. When the stakes are so high it must be incredibly stressful.
You won’t be surprised to learn that the bank now values their home at about $1.4 million.
In the first year they put the entire 30-year mortgage on a one-year fixed rate, just to get used to how it all worked. In hindsight he said it would have been nice if their financial advisor had told them about other ways of structuring their mortgage, such as revolving credit.
Since refixing their mortgage more recently, they now have an $80,000 portion on revolving credit - and they offset their savings into this account which he tracks on a spreadsheet. In the second year of home ownership, interest rates went down and they kept paying the same, meaning they were overpaying a little. But things are changing as the mortgage interest rates are increasing and he thinks they will have to begin to top up their payments by $700 - $800 a month to keep on top of it. He is happier than ever that they didn’t push the lending any higher as they were advised that they could.
I’ve heard a lot about Will's foray into investing, and the fact he has successfully grown a large share portfolio, but what about Priya?
When they had been together about 3-4 years and she got more familiar with the fact he was investing, she did give him some money to invest for her, a few thousand dollars that he put into Auckland Airport. While he was enjoying the learning experience of DIY investing, it didn’t really spark her interest.
But as soon as they returned to NZ, they decided to both get more serious about their finances. She signed up with large investment advisory firm Craigs Investment Partners where she could have an advisor working with her to guide and teach her how to grow her wealth. She new she would pay a fee for their service but she hoped to benefit from learning from someone who was not her partner!
She invested every month, but it was only mildly successful he said. Craig’s invested her money into just four different New Zealand companies, which is not very diversified. And the contact she had was done by email and it felt antiquated to use it so she didn’t learn as much as she had hoped.
But, these experiences are still worth it, because she did learn something, that this firm was not for her. Instead, she switched to Investnow, investing into the NZ50 and US500 and started educating herself via personal finance books and content.
Now, for the last two years they create a monthly budget for all expenses, a portion of which is invested and Priya is now discussing with her own friends about how investing works. And that is pretty cool.
She now has about $28,000 invested via Investnow, which includes those two funds I mentioned earlier, plus $20,000 in company shares with her current employer. A phenomenal result in a short period of time.
When she first started to give her KiwiSaver the attention it deserved back in 2019, her balance was only $7,000, today her KiwiSaver is with Simplicity in a growth fund with a balance of about $30,000. It’s moving in the right direction.
Will’s advice on additional investment opportunities being offered by your employer, is to learn all about them and sign up, which both of them have done. Even if they have requirements for you to be there for a certain period of time before benefitting from the scheme, sign up. He notes that colleagues are missing out because they thought they wouldn’t stay long, but they have. So, don’t miss out on a good opportunity and speak to your HR department and colleagues about any scheme on offer. He has been in the fund offered by his employer since 2019 and now has an investment valued at $40,000 and growing.
Will’s KiwiSaver is with Juno, with a balance of about $60,000. Like Priya, his company also offers a private superannuation scheme which he has signed up to.
Why Juno, I asked? He said that he likes the young start-up disrupters in this space but having learned a lot since moving to them, if he had his time again, he would not use them, his preference is to be in a passively managed fund, not an active one.
Equally, he is ok with his choice for now. Their performance has been both great and terrible, which is the price you pay for active management but he said that for him, it is all part of the learning experience of having an actively managed fund in your portfolio.
His KiwiSaver is one of his regrets. He got signed up in his first year of study, one of the banks was on campus and all he recalls is that they said you get $1,000 for signing up. Which, don’t get too excited, this signup bonus was scrapped by the National Government in 2015. Other than that, his fund languished until about 2018 when he realised that he was in a conservative fund the entire time. Had he known better it would have, it should have, been in a growth fund from day one. Not only was it in a terrible fund, they were not aware that they could have made voluntary contributions to it the entire time, even while overseas, something they were not aware of.
So, yet again, for those listening to this, learn from Will and Priya and educate yourself about what fund you are in and what you contribute to it. Forecast out what you will have when you turn 65. Today, both of them contribute the minimum amount to their funds to get the employer match and they set their contributions this low, because as they have explained, they invest outside KiwiSaver too, which all adds up to a higher rate of investment.
Now, I’ve covered off a lot, so where are they at now?
Every month they write down their net worth, noting down the value of their joint and individual investments, and tallying them all up to get a total figure, just to make sure they are moving in the right direction with their debt level shrinking and their investment balances rising.
Their mortgage is now at $700,000, meaning, with the house valued at $1.4 million, they have $700,000 in equity.
Will’s total portfolio of investments, including his retirement savings is sitting at about $680,000, Priya’s at about $120,000. Collectively, all up, including money in the bank etc, their net worth, not including their home is about $825,000. Add their home and it's $1,525,000.
He said that at the moment they are all about trading time for money to grow their net worth and they have I think got themselves into a rare position for a couple still so young. With the focus in Aotearoa being so heavily on property, and many having such high debt levels on that property, most having been encouraged to drain their KiwiSaver to buy, to have grown substantial investments outside of their property is a big deal. A huge deal. They will continue to add to those investments which will in turn continue to compound and grow. Already, in theory, they could apply the 4% Rule to this and it could provide a passive annual income of $33,000. The higher it grows, the higher the passive income potential.
Next year they will be adding to their family and by steadily paying into their investments and decreasing their mortgage, it is moving them in the right direction to make work optional in the future.
Both are in jobs and careers that they enjoy, but are very clear to say that they work to live, not live to work, neither are intent on climbing the corporate ladder but are instead both happy-go-lucky, enjoying work, but putting more focus on people and relationships.
He earns an annual salary of $134,000 and she earns $120,000 but also receives a 10% bonus on top of her salary of company shares.
What a fantastic foundation these two have built themselves, he said that it's quite liberating to see the spreadsheet and play with projections. Given how far they have come in a short space of time, the future looks bright.
It was interesting to see the balance between debt payoff and building investments concurrently.
As I mentioned, Will loves helping people who want to learn about money. And amongst his group of friends are his siblings. They all received the same inheritance as him and they each did different things with it. They are all on the journey now and they all talk more candidly and openly about money and the systems they each have in place. He gets a real kick about them being interested and setting themselves up for the future.
Now, just a few bits and pieces here.
When they add to their family, his employer offers him three months of fully paid maternity leave and she will also take a six-month maternity leave. They carry basic Southern Cross health insurance and Priya has free reign with her employer to work from home or in the office. They didn’t want me to name where they both work, but I wish I could have because her employer in particular sounded pretty awesome. They both get four weeks of annual leave but she gets gifted extra annual leave over Xmas, and some bonus company shares.
So, what was their greatest financial flop?
In 2015 he bought a car for about $11,500, and two years later he sold it for $6,500 when they moved to London. The lesson it taught him was that cars go down in value and don’t help you build wealth. They are currently saving up a decent amount to buy a car, probably an EV, within the next five years to replace either their Honda with 200,000 kms on it or their Suzuki which has 120,000 kms on it.
How about one piece of advice (good or bad) that his parents taught him about money?
His Mum would say “want, don’t get”. This apparently stopped nagging kids in their tracks. They also told him not to buy something on tick, or finance. If you don’t have the money, don’t buy the thing.
In hindsight he would have liked to have more open and transparent conversations around the principles of what you should do with pūtea as he was growing up. For example, it would have been handy to learn some good systems about how to divvy up a pay cheque, simple concepts for him to take with him in life.
What is their money elevator pitch? A sentence that would sum up their approach to money?
Everything he does with his money has a purpose and an intention. They make sure everything is sorted and they can run their life, with money set aside for the fun things in life and some set for the future.
As for his three main financial habits, things that he just automatically does?
They automate their finances as much as they can. As soon as they are paid, auto payments go out into all their sinking funds and investments.
He looks at their bank accounts every day to see what is happening
Since he started his first job at 22, he has been tracking and documenting everything he, and now they spend and writing down their net worth. It shows them they are on the right path. He does it by hand, because it's a cheap way to do it, but he did admit that it does take up a bit of time, probably too much time.
It would be easy to listen to this episode and think, well, it’s alright for Will and Priya, they inherited first $100,000, then $200,000, that’s not my reality.
But as you would expect from me, I have a couple of thoughts on this. He said of himself, he is an average Joe, who has had some good luck with an inheritance.
I’ve met countless people who have received lump sums of money when young, yet today they are in a really poor financial situation. It’s what you DO with an inheritance that counts. Will chose to pay off debt and invest. And while his investment strategy back in 2013 was similar to throwing a dart at a dart board, at least he tried. His biggest financial triumph he said has been the fact that he took an interest in working out how to grow wealth, he took the time to educate himself and then he actually took action.
He’s the first to admit that he had a lot of luck on his side, winning with Wynard Group and crypto, when others lost a lot of money when Wynyard went broke. He has taken big risks with investing in individual companies that have paid off big time, but learned along the way and has now settled into an investment routine that requires little work and lets him sleep at night.
When someone is new to investing, their default strategy is still to pick an individual company, invest in that, and hope for the best while they try to pick another company. And another after that. There is a documentary out on Netflix called Get Smart With Money and I’d advise any newbie investor to go and watch that before you open a share account. Learn about how all of your money works, before you start to invest. And once you do start to invest, take Will's story on board and don’t pick stocks, just buy the whole market instead in the form on an ETF or index fund. Will promises that you will sleep a lot better at night.
That inheritance that he received in his early 20’s is still invested in the share market today, albeit no longer in individual shares, instead it’s in ETFs which will continue to grow and compound over time, especially because of his ongoing fortnightly investments into his funds.
His parents hearing that he didn’t blow his grandparent's money, but instead multiplied it by three, I’m sure gave them the confidence to forward him and his wife such a hefty house deposit, and leave his investments in place. By his actions, he had gained their trust.
He said he is the type of person to sacrifice now for the future, while Priya is a bit more inclined to live life in the moment, whilst also having a conscious thought for the future. They are a good pair and their different personalities each bring something into the marriage. He has learnt to enjoy spending a bit more, and travel a bit more while Priya has learnt to invest and grow her wealth, and their wealth. Will said to me that he thinks they have found a nice balance and are aligned well with their money and I’m sure that the interweaving of their lives and their pūtea will continue into the coming years.
And finally, I just wanted to add a huge thank you to Will for speaking so openly about his money with me, and also, to thank Priya for letting him share some of her details as well. I really appreciate it and I’ve no doubt that people listening to this will have found the way they have built their wealth to be a really interesting journey.
