How I Did It: Pene on Investing For Her Son’s Future
In our series How I Did It, friends of Crayon share their personal stories about how they tackled one aspect of their personal finances. While their journey is specific to their situation, we hope it inspires you to take action. Just keep in mind that, as always, Crayon and our guests are not providing financial advice.
First up: Pene Barton. Pene is VP of People at a global company and the mother of a money-conscious toddler, Hunter. Hunter’s arrival three and half years ago led to a huge mindset shift for Pene and her husband Peter. The questions they asked themselves and the decisions they made back then led them down the path of a lifelong investment journey - one they hope will give their little boy options and opportunities in his adult life. Pene kindly gave up time to share her investment learnings with the Crayon Community.
Pene, what motivated you to start investing?
Before having Hunter, we were only invested in our business and had a rental property. When it came to investing, we were thinking five to 10 years ahead. When Hunter came along, we suddenly had to think longer term. Kids grow so quickly, and thinking about Hunter being 20 years old already felt so soon.
We realised that when Hunter is 20, we’ll be in our mid-50s, and retirement will only be 10 years away! It was helpful to think about his life in those stages because suddenly, the milestones feel real. Hunter became a “time marker”, so to speak.
We want to give him a good start in his adult life. What type of schooling will he have? What if he wants to go to college overseas or start a business? We started working backwards from that, and it was clear that with the power of compound interest, the earlier we started investing, the better off he would be.
It sounds like this journey for you is about the options and opportunities that the money will provide for Hunter. Is that fair to say?
Yes, definitely. It’s knowing that many things in life are going to require money. I see 12-year-old kids starting their own business with $2,000 of seed money and turning it into something decent! We want Hunter to have options and not be confined to a set pathway.
How much did you invest, to begin with?
I wanted to start small, so I used the Best Start payments (one of the few pleasant financial surprises of parenthood!) to invest and then matched the Best Start payment once I returned to work. This was a great way to build my confidence and understanding over time.
The Best Start payment at the time was $60 a week. Slowly but surely, we invested around $3,000 over the first year. That quickly became over $3,500 (based on the returns at the time), and it kept snowballing. When the Best Start payments stopped, we looked at how much we could afford to put aside.
Having a child is expensive, but we invested the savings each time it became slightly cheaper. For example, when Hunter switched from pureed food to eating our regular food and when daycare subsidies kicked in.
Regarding tools, we track our spending into categories to see all our expenses clearly and put aside the variances (a spreadsheet does the trick). We also used a compound interest calculator to see what it could be worth in 20 years and played with different scenarios.
*Crayon has a Kids Investment Simulator that you can use to simulate what your investment could be worth down the track.
I like that you're using money that you wouldn't miss because it was money you were spending anyway. It reduces loss aversion because it doesn’t require you to give up something.
It’s a “fixed cost” approach. The fixed part is what it costs to look after Hunter. When those expenses drop, we take those savings and invest them. How much we invest varies depending on the different stages of his life. I am trying to make the most of that window - after the first year, when costs go down, and before school, when costs will probably go up again.
Hopefully, when I look back in 20 years, I’ll see these peaks in time and shifts in the investment strategy shifts that will correspond to life events (e.g. “that's when he turned three and daycare got cheaper!”). Over time, as he gets more involved, I’ll be able to point to those different moments in time and tell him how things have changed. I'm pumped to get him more involved and thinking beyond the piggy bank.
How did you decide where to invest the money?
We went with the easiest option available, which at the time was Sharesies. It was easy to connect with our bank and straightforward to set up an automatic payment.
We went with the most aggressive growth investments because this is a 20-year investment for Hunter. I’m okay with it going up and down, and I won’t be looking at it every month to see how it’s performing. We chose a combination of individual companies and stock-based ETFs (exchange-traded funds).
What have you learned, and how has your strategy changed over the last couple of years?
Over time, I’ve developed an interest in investing, and I’ve become savvier about fees, the types of investments and performance. We could see the growth and interest compounding within a short time, which motivated us to look into other platforms to access a broader pool of investments. We were initially only in the New Zealand market, but we’ve since bought shares overseas.
We now use a couple of different platforms, but we still have a Sharesies account because it’s easy to use, and we encourage our family to invest money for Hunter instead of giving him presents.
That’s a great idea and one that we recommend at Crayon: encouraging your family to invest for kids rather than buy presents for birthdays and Christmas.
Last year, we put a “one gift limit” in place for birthdays and Christmas because the amount of stuff just piles up! So now our family and friends put something into Sharesies, or if they want to give him a gift, they buy just one, so we don't accumulate lots of stuff. We've found people are much more intentional with the gift they select.
What resources have you found helpful on your journey?
It’s great to see how much more information is now available. There are good articles and podcasts that are easy to understand and digest. Here are a few that I followed:
Instagram: @francescooknz, @itsnosecretnz, @investingwithchris, @delyannethemoneycoach, @topflightinvestor
Newsletters: Crunchbase for updates on new companies and the general tech market movements
Podcasts: Investing For Beginners, Girls That Invest
It used to feel like you had to save up a lot before you could actually get into the game. A few years ago, you needed a minimum of $5,000 to enter many funds, and now you can start a lot smaller than that and get automatic payments going.
What are your words of wisdom for someone who wants to invest for their child but hasn’t started?
Start small, start early and find an easy-to-use platform to begin with. In addition, it helped us to reflect on how we invest and manage our money. Similar to learning your own parenting style and breaking patterns that you didn’t know exist, money and investing are the same. We considered things like:
What is the world our son will grow up in, and what does he need to be prepared for?
What habits and patterns are we repeating because it’s what we witnessed growing up?
What will our son pick up from observing us?
What habits can we help him build that set him up well for life? (ie. the one present rule, donating barely used toys when he gets new ones). He is only three, so he doesn’t yet get the concepts, but the more we do, the more habitual they’ll become.
If you want to learn more about investing for your child, check out our step-by-step guide.
Now for the important legal part: Investing involves risk. You aren’t guaranteed to make money and you might lose the money you start with. The information we provide is general and not regulated financial advice for the purposes of the Financial Markets Conduct Act 2013. Please seek independent legal, financial, tax or other advice in considering whether the content in this article is appropriate for your goals, situation or needs. The information in this article is current as at 5 October 2022.
