"Fast forward 10 years, and it still pains me to think about all the returns I missed out on."
The majority of New Zealanders are investors, whether we are aware of it or not. The Kiwisaver scheme has been around since 2007 and was designed to help us save for retirement and subsequently, the purchase of our first home.
When I chat to my friends about their Kiwisaver, I often hear:
“I don’t know who my Kiwisaver is with”
“I have no idea what fund I am in”
“Isn’t my Kiwisaver like a savings bank account?”
“I don’t really care about investing, it seems dodgy”.
“This isn’t something I need to worry about for now”.
Like many other New Zealanders, KiwiSaver was not something that I remember discussing at home. When I got my first job, my mum told me that it was time for me to open a Kiwisaver account with my bank. I distinctly remember sitting in the bank office at 12 years old. The woman from the bank asked if I knew how Kiwisaver worked, to which I responded, “Isn’t it like a savings account for when I’m older?"
From what she explained, the concept of investing sounded terrifying. These people at the bank were going to put my money into companies and stocks, all the while I have no control over it? What even is a stock?!
The woman at the bank showed me three separate graphs that compared the difference between growth, balanced and conservative funds over a length of time. None of these graphs really made sense to me. She explained these three options, a growth fund which meant higher returns over time but higher risk of losing my money; a balanced fund, or a conservative fund which meant lower returns over time and less risk. I remember thinking, “Why on earth would I want to put my money where I could lose it?!”
My 12-year-old brain made the decision that a conservative fund sounded safe.
Fast forward 10 years, and it still pains me to think about all the returns I have missed out on.
It wasn’t until I was 21 years old that I began to learn about how investing actually worked. I was shocked to realize that the money I thought was safe in my savings account, was already being invested by these banks who were earning a big profit, while only giving me low-interest returns and fees. This began to spark some questions. If this was happening with my savings account, then where on earth was my Kiwisaver going and what was my money being invested in without me knowing?
That specific moment is what sent me diving headfirst into the world of financial literacy.
The first thing I did was check who my Kiwisaver provider was and find out which fund I was in. To no surprise, after 10 years in a conservative fund, my money had generated very low returns for me.
Next step, I wanted to know what my money was being invested in.
To do this I went online to Mindful Money, a charity that promotes ethical investments through their online “Fund Checker”. This shows what your investment/Kiwisaver fund is invested in along with providing an independent comparison of your options for investing, using their high ethical standards and credible verification. They aim to empower New Zealanders by providing information and facts, so they have the option to use their money to be invested ethically.
Mindful Money conducted a survey in 2018, which showed 72% of New Zealanders want to invest responsibly but only 8% invest in a credible fund. Turns out I was one of those statistics when I saw that over 10% of my investments were going towards animal testing, fossil fuels, human rights and environmental violations. This was not something that aligned with my values, and I knew it was time to switch providers.
At this point in my journey, I already knew two things for sure:
I wanted my money to work for me and generate good returns
I wanted my money to be invested in things that aligned with my values.
I wanted my money to support human rights, renewable energy, gender equity and animal rights.
I discovered Pathfinder through an Instagram AD that Ethically Kate had posted online. After having a brief search online, I jumped on a call with someone from Pathfinder who talked me through how their funds are managed. They explained to me that Pathfinder invests 100% ethically, they are carbon negative, and invest in companies that support and model gender equity. I was stoked at the realisation that my money could be invested with companies that seek to build a world I could be proud of.
Pathfinder have an “Aware, Fair and Care” ethical investing policy. They do not invest in companies where research shows poor human rights, nor do they invest in the exploitation of animals through testing. Pathfinder will not invest in a listed NZ company that does not have at least one female board member, as they believe that greater diversity equals greater decision-making.
It’s good to feel good about your money - but the follow-up question of course was, what about fund returns? It became very apparent that investing with a conscience did not mean lower returns. In fact, all three Pathfinder’s Kiwisaver funds (Conservative, Balanced and Growth) ranked in the top three for returns in both 2020 and 2021according to recent Morningstar data. That’s a win for the planet, and for my savings!
When it came to selecting my fund, I wasn’t sure if I should be putting my money in a growth fund, or a balanced fund. This is because I am not clear about when I will be looking at purchasing my first home (something that many Kiwis ask themselves these days). Someone explained that I didn’t need to choose between one or the other. I could actually do both and select what percentage of my Kiwisaver could be invested in a growth fund, and what percentage I wanted to be in a balanced fund. This would help diversify my risk and better support my future aspirations for whenever my timing became clearer.
It took me all of two minutes to fill out a form. I didn’t have to deal with my previous provider at all because Pathfinder took care of everything.
I know that my initial Kiwisaver experience is one that many Kiwis share. Having no knowledge of what investing is, who their provider is, what fund they are in, and where their money is being used. Taking control and checking your current set-up could result in a huge win for you- and your money.
The Kiwisaver and fund you are in matters. It can make thousands of dollars in difference by understanding what fund is right for you, and knowing what your values are when it comes to investing.
Pathfinder gives me peace of mind knowing that my money is working to generate good returns over time whilst invested in companies I stand behind. I now feel empowered because I’ve taken control of my finances and I hope to encourage other Kiwis to do the same.
Author Bio: Mireia is a Gen Z who is passionate about financial literacy. She is a proud member of Pathfinder and is eager to help spread the word about the work this particular KiwiSaver Plan is doing. She lives in Wellington where she works for Te Puni Kōkiri as an advisor.