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Investor Stories: Ben Hutchison

At the ripe old age of 20, third-year Engineering student Ben knows he’s got time on his side when it comes to investing. With a long-term goal to create a passive income, Ben would like to build a future with options. That is, with the option to retire early or work part-time or the option to continue working but on his own terms.

After an early stint attempting DIY investing, he’s a firm believer in the set and forget strategy. He likes to let his money work for him which gives him more time to do the things he enjoys. Like gaming, reading a good fantasy novel, or learning about space!

Where it all began

For 10-year-old Ben, the business section in the newspaper was an enigma. With hundreds of numbers across the page listing share prices, dividend yields, P/E ratios etc, young Ben had no idea what any of it meant… but he was curious! Learning from his dad, his interest in investing gradually began to grow.

It was during Ben’s last year at high school, that he and a few friends first tried their hand at investing. Scraping together any spare money they had and investing it in a few exchange-traded funds (ETFs) that ‘sounded interesting’. Study periods turned into investment research sessions and in true teenage style it became a competition to see whose portfolio was ‘winning’. Not something we’d suggest though!

Looking for the quick win

After a while, the steady returns from ETFs became boring – hey he was 19 and there were companies with 50% plus annual returns out there. Ben wanted a piece of the action! Reading annual reports and NZX announcements he spent hours each week picking stocks and trying to keep up to date with the markets… And for what? Turns out, looking back that the funds he had abandoned had the same if not better returns than the single shares he had selected. Ben’s DIY investing days were over.

The Kernel discovery – fees and tax

On returning to ETFs, Ben realised he was paying a lot for transaction fees. So, he started looking around for a new investment platform and discovered Kernel! ‘I really liked the sound of low management fees and the lack of transaction fees. The fact that Kernel’s index funds were more tax-efficient than many of the ETFs I was previously invested in was also a big seller,’ Ben says.

What investors don’t always realise is that fees, tax inefficiencies, and dividend drag can pull down the relative performance of NZ ETFs Kernel PIE funds offered Ben an efficient means of holding shares and low management fees meant more of his money is working for him.

What sort of investor is Ben?

Being young, Ben has taken a fairly aggressive approach to investing; with 90% invested in Kernel equity funds and the remaining 10% in an emergency fund, held in cash. ‘I believe that I can have a portfolio with this asset allocation as I’m going to be in the markets for a long time. I doubt I will need that money soon, so I am less phased by the market volatility that also comes with these higher-risk assets, ’ says Ben.

He’s also a big believer in dollar-cost averaging. In other words, investing a regular amount into an investment each week or month. This averages out the price you pay for your investments and removes the need to try time the market. Not to mention calming your nerves along the way.

Then it’s set and forget! ‘I believe that you shouldn’t look at your portfolio too often, just let the markets do their thing, and if you leave your money alone for long enough, you’ll come out on top,’ Ben says. Makes sense to us.

What about some lessons from the financial journey?

  1. Index fund investing – It takes the weight off your shoulders! ‘You’ll worry a lot less and have more time on your hands if you just go with some index funds,’ suggests Ben

  2. Diversification is key - By spreading your investments across a number of countries, sectors, and companies you can reduce the risk of a fall in any one are a having a large impact on your portfolio. Ben learned this the hard way. ‘When I started out investing, I just stuck with what I knew, NZ shares. Worse still I had all my money in just six companies. Kernels Global 100 fund has given me a lot more reassurance that my portfolio is truly well-diversified.’ he says.

  3. Reinvest dividends to double down on the magic of compounding. By reinvesting any dividends paid, not only are you increasing the total investment amount, but also the overall return you earn (that then compounds over time). Read more about compounding here.

And for young investors like yourself?

Firstly, just get started! Even if it’s only $10 a week invested in a few funds, like those from Kernel.

Secondly, if you’re tempted to pick your own companies, start with a virtual portfolio first. Put together a spreadsheet and track the share price of ten companies you would invest in. Then compare those returns with the fund and see which performed better. And if you did beat the fund, ask yourself, whether it reflected what you anticipated and importantly can you do it again and again and again.

The chances are you won’t be able to. In fact, there’s a 75% chance you’ll pick an individual stock that will underperform the market average. Check out the supporting data here.

Lastly though – just listen to the professionals. I’m 20 years old and still learning.

Christine Jensen

Christine Jensen

Marketing Manager



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Indices provided by: S&P Dow Jones Indices