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:

Why Now Matters More Than Ever

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.