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Our sport-loving Chief Operating Officer, Stephen, has plenty of experience when it comes to investing… and it’s fair to say he’s learnt some tough lessons along the way. But now he’s living the dream on Waiheke and letting his set and forget investment strategy do the work for his family’s future.

An early start to investing

Stephen’s investing journey started with a few Bonus Bonds and some shares as a kid. But a high school share club in the 90s was where he really became interested in the share market, or more to the point, investing to make money!

Putting his newly learned analytical skills into practise he invested a few hundred dollars into three stocks. He dabbled from time to time when there was a bit of media hype but unintentionally mostly forgot about his shareholdings having little spare.

When he sold his first business in 2005, Stephen had his first meaningful amount of money to invest. He chose a couple of Exchange Traded Funds (ETFs) and unsecured notes from 5 different finance companies – Then the GFC hit and 3 of the 5 finance companies went bust!

‘I lost a lot of money, but it taught me a lot about risk, default premiums and how markets operate,’ he says.

Creating a strategy with index funds from lessons learned

Stephen’s lightbulb moment came whilst studying towards his MBA in Cambridge. He was familiar with index funds, but it was only after reading a few finance books that he realised, trying to successfully pick stocks and time the market over the long term was just luck.

Now he’s a broad index fund devotee and a fan of the barbell strategy for asset allocation, that is, short term money and emergency savings in cash and everything long term in lightly leveraged property and shares.

And as an investor he takes a ‘hands off’ approach

‘I learnt the hard way that trading is hazardous to your wealth,’ Stephen shares. These days he makes regular contributions to his Kernel index funds – making the most of dollar cost averaging.

That said, he still enjoys a dabble! Investing 10% of his portfolio in thematic funds and individual companies – knowing I have better chances of better performance through sports betting. ‘I love the concept of the Kernel Moonshots Innovation Fund – putting $20 per week into that as a Quasi-venture capital fund.

Stephen loves that Kernel has provided a platform that can take advantage of technology, to give the average Kiwi easy and intelligent ways to gain knowledge and accumulate their wealth. At the same time, it offers suitable funds to investors without the misaligned incentives that are so common within the industry.

But what’s it all for?

With a young family to consider, Stephen’s goal is to accumulate wealth for the future. That way he can enjoy the choices that come with long term financial security and freedom.

His other investments include his emergency savings, Kernel shareholding, a KiwiSaver fund and a modest 3-bedroom house – although whether he would consider the latter an investment is another conversation…

He’s got a couple of helpful tips when it comes to investing

With several years of experience under his belt Stephen has a few gold nuggets to share.

  1. No one can consistently beat the market without relying on luck.

  2. A higher promised return is because the risk is higher. Amateurs tend to underestimate the chance of default, and you need to ask why the issuer are offering you such a deal, and why they couldn’t get the money from a bank or elsewhere cheaper.

  3. “Be greedy when others are fearful and fearful when others are greedy” – Warren Buffett. In other words, buy when others are selling (when the share market drops) and sell when others are buying (and prices are inflated).

And a few pearls of wisdom for young investors

His advice for those just beginning their investment journey is, get started with regular habitual saving into a chosen strategy. ‘It’s how you build wealth,’ says Stephen. ‘I hear many ‘big fish’ stories when 1 of 10 high risk investments is skited about for its exponential growth, but when you dig deeper, the portfolio performance is below average overall’.

Take care when choosing an investment, it’s important to understand the incentives of the advisers, agents, brokers, platforms and managers. ‘Be eyes wide open’ says Stephen, especially if they are paid for encouraging you to take an action that isn’t right for you.

He would also be weary of any investment that doesn’t produce an income. ‘Whether commodities, currencies or crypto, to be relying on a finite supply of any investment to mean that its popularity will mean someone in the future will pay you more for it has through history proven to be a dangerous gamble.’

Stephen Upton

Stephen Upton

Chief Operating Officer



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Indices provided by: S&P Dow Jones Indices