The Power of Early Inheritance

At Kernel, we’re all about empowering Kiwis to build wealth that lasts, not just for today, but for the generations ahead. In New Zealand, the way we think about inheritance is changing, and we believe it’s time to rethink when and how we pass on financial security. Instead of waiting for traditional inheritance to trickle down later in life, imagine the impact of gifting a small amount early -say, to your grandchildren, and letting the magic of compounding grow it over decades. This isn’t just about money; it’s about giving the next generation a real head start at a pivotal moment in their lives, whether they’re launching a career, buying a home, or even starting a business.

In New Zealand, there’s no comprehensive database tracking inheritance patterns, but insights from local research and comparisons with Australia, where data is more robust, tell a compelling story. According to reports like those cited by Public Trust, inheritances in NZ are getting larger but arriving much later in life, often when recipients are in their 50s or 60s. This mirrors trends in Australia, where studies estimate AUD$3.5 trillion will transfer between generations by 2050, with the average inheritance around AUD$706,806 per person and received on average at 55.

Given the economic and demographic similarities between our nations, NZ is likely on a comparable path, with significant wealth tied up in property and savings among older generations. Of course, these averages don’t reflect the large divergence in wealth levels across the country, but we highlight below how even a small nest egg can have a big impact on future generations.

But here’s the catch: receiving a lump sum at 55 often goes toward conservative goals like paying off a mortgage. What if we redirected even a fraction of this wealth to younger generations at a more impactful time?

Let’s look at this factoring in the time value of money, something many inheritance discussions overlook. Imagine setting aside NZD$15,000 for a grandchild at birth in a Kernel High Growth fund. Assuming an average annual return of 8% (a realistic long-term estimate for a growth-oriented portfolio, after fees and before tax). By the time they turn 25, that initial gift could grow to over NZD$32,400, thanks to the power of compounding. That’s a substantial pot of money at a stage when they’re making big life decisions like studying, starting a career, or saving for a first home. Starting early isn’t just a financial strategy; it’s a game-changer.

To illustrate the power of compounding over time, check out the table below. It shows how different starting investment amounts grow at 8% annually across various time periods—whether you’re planning for a child, grandchild, or beyond. The numbers speak for themselves: even small amounts can become significant assets with enough time. Here is the table with the provided information:

As we live longer and start families later, there’s a strong case for passing at least some wealth down two generations rather than one. Receiving funds at 25 versus 55 can have a profoundly different impact on life outcomes. At a younger age, that money offers choices—whether it’s the confidence to start a business with time on their side, pursue further education, or put a roof over their head. In a future disrupted by AI and rapid change, having a financial cushion early can be the difference between merely surviving and truly thriving.

It fuels innovation, boosts wellbeing, and drives productivity for our country as a whole. By contrast, an inheritance at 55 often gets funnelled into safer, less transformative uses like clearing debt. Early wealth isn’t just a gift; it’s a catalyst.

At Kernel, we make it simple to invest for the future with tools designed for every Kiwi. Whether you’re setting up a small nest egg for a grandchild or planning your own financial legacy, our diversified funds and user-friendly platform let you start with as little as a few dollars. Open an account for a child or grandchild today, automate regular contributions, and watch that investment grow over time. A small step now—say, NZD$50 a month—could turn into tens of thousands by the time they’re ready to take on the world. Plus, with our focus on transparency and low fees, more of your money stays invested for the
long haul.

It’s time to shift the narrative around generational wealth in New Zealand. By investing early for our grandchildren, we’re not just passing down money—we’re passing down opportunity, confidence, and the power to shape their own futures.

At Kernel, we’re here to help you make that vision a reality, one small
investment at a time.

Got a little one in your life you’d like to set up for success? Start their journey with us today, and let’s build a stronger tomorrow together.