Ep.1 – How To Handle Your Economic Future Post Lockdown

With 40,000 members and $1.5 billion under management, KiwiSaver fund Simplicity is a growing player within the growing base of our own domestic capital. As a non-profit with low fees, a charitable arm, venture investment and even a disruptive mortgage offering, Simplicity aren’t just helping to drive our collective capital but also giving individuals some long-term security. At times like these, it might be hard to think about the long-term but for many reasons, Simplicity founder Sam Stubbs is optimistic. We talk to him about lockdown and beyond.


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We are talking to Sam Stubbs, the founder of the coolest KiwiSaver fund in the country. Is it FMA approved to say that?

I hope so. Well, you said it.

So you’ll be up to 40,000 members today?

Yeah, it’s amazing. This morning we woke up with 39,992 members and we seem to be getting about 30 to 40 a day at the moment. We’ll hit 40,000 members, which is amazing considering we started three years ago from nothing.

So the lockdown hasn’t completely shut things down? People are still thinking long-term?

No, a lot of people, when they’re at home, they think about their savings. They start looking. We’re a 100 percent online business, so it’s easy to find us and switch and so on. We’ll be getting about half to two thirds of the new members a day that we would normally would get. So it’s pretty good.

I think people are pretty smart. They think through the crisis right now, they know that they’ve got to save for their retirement. There are a lot of people opportunistically investing in the market now too. They’ve seen the market come down and they’re looking around and saying, ‘Yeah, I don’t mind investing right now.’

The marvelous thing about KiwiSaver is as long as you’re employed, you keep on contributing and you’d benefit from something called “dollar cost averaging”, which means that this week, you’re buying things cheaper than you bought them last week. And that means that when they go up, you own more of them. You buy more of them this week than you did last week. When they go up, as they will over time – financial markets always go up over time – you would have some bargains.

With almost 40,000 members, you’ve got a pretty good spread of industries, of investors from around the country. What’s your feeling on the feeling?

About a week ago, when we were in maximum panic mode, for want of a better word, we had a huge rush of inquiries. We probably had four to 500 people a day getting in touch, wanting to discuss it. But looking back now, only about 2 percent actually did anything, in terms of switching from a growth fund or conservative fund or whatever. So 98 percent of people are doing exactly what they did beforehand and they’ll be better off as a consequence.

Over the long-term, it might be the right thing to do, to de-risk your investments right now, but for the vast majority of people, it isn’t. Lots of discussion, lots of inquiry, but not much action and that’s a really good thing.

Warren Buffet, probably the world’s most famous investor said, “You should almost be criminally negligent with your investments.” By that, he means that you should make very, very few decisions and just buy them.

All of these people who’ve come in in the last three years with us and they’ve chosen the right fund for them for the long term, as long as they stay in there, they’ll do just fine. As we speak today, the financial markets have bounced significantly. It’s a very, very hard time in the markets. It’s a fool’s game trying to pick when they go down and up.

If you’ve got, particularly with KiwiSaver where it is a percentage of your income, if you’ve got no income and you’ve got no employment, it’s hard.

It’s impossible to do that and I totally get that. It is just not possible. It’s just not an option for some people and that’s a tragedy. I’m not trying to gild the lily too much here, these are real tough times. We’re heading into a recession and that’s going to be very painful for a whole bunch of people. But it’s not all bad news and for people who can afford to save, in hindsight, this would have been a great time to do it because you’re just buying things.

Let me just give you a real world example. Auckland Airport a couple months ago was trading at almost $10 a share. Now it’s more like $5 a share. It’s half its current value. We know that no planes are going to be landing and taking off the way they used to for a while, but Auckland Airport is a monopoly supplier of a vital service.

So long-term, if I said you could buy something for half the price, you bought it a few months ago, and long-term things will return to where they were, or very close to where they were, it sounds like a bargain, doesn’t it? It’s very hard right now to think.
It feels brave to buy Auckland Airport shares, it feels like you’re almost taking a risk. Actually over the long-term, if you just carry on investing in your KiwiSaver, you’re buying a few Auckland Airport shares every single day – that’s what we’re doing, we’re just buying a few Auckland Airport shares every single day – that will turn out to have been a fantastic investment in the long-term. Right now, it just feels very brave.

Would there be any advice that you would give to people dealing with the now, sitting at home? There’s probably a few dimensions there as well, in terms of dealing with the mental side of things and getting through the next couple of weeks.

I’ll do two things. First of all, and you might not want to hear me say this because you’re in the media, but don’t pay too much attention to what you see in the media. Because it’s all gone bad and scary. You’ve got to get yourself into a mental position where you realise that it’s not that bad, because right now what you’re getting is nothing but bad, nothing but scary.

What I’ve done is I’ve decided to read optimistic books. I’m reading a book called Enlightenment Now, which Bill Gates has just said is his new favorite book ever. It’s by a Harvard sociologist/psychologist called Steven Pinker. It gives you a very positive view of the trends that have been happening in the world and why the world is just getting to be a better place this whole time.

It basically takes the enlightenment of 200 years ago and shows you how that’s worked through to how we just live so much better a life than even people did 30 or 40 years ago. How things keep on improving.

I would carry on doing that. If you don’t want to read that one, a simpler version of it is a book called The Rational Optimist by a guy called Matt Ridley, which is really, really good. Or if you just feel like getting online, go and listen to any of the lectures by a guy called Hans Rosling on Ted Talks, and he’ll show you what’s happening. Get yourself into a positive mindset because the long-term trends here are very positive.

Second thing is, when you start actually saving money and you start doing positive things to get cashflow in your personal finances in line, that’s a really good thing. I’d go to the MoneyHub website and they’ll give you 10 things you can do right now to save money. It’s to do with insurances and bank accounts and how you manage cash with real practical advice.

The third thing is, I’d appreciate this time for what it is right now, which is an enforced holiday. I’m reintroducing myself to a whole lot of people I haven’t caught up with in a long time, catching up with old mates and Zoom conferences all over the bloody world. Everyone’s laughing because somehow we didn’t have the time to talk but we have in the last week. I’ve had the best catch ups with some old mates in a long time.

I do those things now. Listen, I’m not belittling. It’s going to be bloody hard. I can’t imagine what it’s like being an Air New Zealand pilot right now with a mortgage and being told that you’re redundant. It’s super hard, but equally for all of us, it’s not all bad. There were some real positive things you can do. I’m also trying to get fit too.

So it’s read something optimistic, don’t pay much attention to the media, look at how you can save your money now and then get fit. Would that be it?

Yeah and have a nice drink, kiss somebody beautiful, all that good stuff.

If you are able to run your business from home as you’re able to do, have you got any advice in terms of how to keep your team motivated?

Yeah, that’s a good question. We’ve been operating virtually for two weeks now. We have about 16 in our team. We have two dial-ins; one in the morning, one in the afternoon. The one in the morning’s sort of compulsory, the one the afternoon’s optional. We just do a round the table, we tell each other what’s going on. It’s a very free and open discussion. There’s a little bit of guidance in a few areas from myself or other people, but it’s very much a team thing.

We try and keep it pretty light. We have quarantinis on a Friday afternoon, we all dial in at five o’clock and have a good old chinwag. We’re a positive place generally, just forever pumping out the good things that are happening, not necessarily the bad things.

It seems to work just fine. Everyone’s sitting around and thinking, ‘Hmm, maybe we don’t need a bigger office. Maybe we can work a four day week.’ Maybe when all of this finishes, I will come in at 11 o’clock in the morning when the traffic’s light.

I think a lot of people have found it surprisingly easy actually so far. It’s getting a bit Groundhog Day now. We’re in day 12 of the lockdown. But, I think some people have been pretty pleasantly surprised by how they can function.

What’s the first thing that you’re going to do after lockdown?

Mate, I’m going to go and have an Eggs Benedict and a coconut latte at my favorite cafe and I’m going to be so thankful someone else is doing the cooking, someone else is doing the dishes. I can just basically hang out and read M2 in a cafe. Just the real simple things in life like that. I’d like to go and give my mum and dad a hug too.

It’s funny because it’s all about social distancing at the moment obviously, but we were designed to shake hands.

We’re totally social creatures. People will discover that Zoom is really good for having calls like this. But if you think that people aren’t going to get on planes to see each other, you’re kidding yourself. So much information gets transmitted in face to face contact.

People are talking about the fact that it’s the new normal, it’s the new New Zealand. We’ll never be the same again, things are going to change. Do you think it’s going to be like that or do you think there’ll be some shift back to how it was?

People often talk about these things being switches, it’s one or the other. But inevitably, life is a dial. Where’s the dial going to move and how’s it going to move? I don’t buy this ‘Everything’s going to be different now.’ I don’t buy that.

Very, very few things in life change a whole society, change the way society thinks. You really need a massive depression or a world war or something like that and I don’t think we’re anywhere near any of that happening. But I do think the dial moves a little bit, in terms of how people think about how they organise their daily lives. I think also that in New Zealand, we will think about how we invest in our future and what really matters to us.

For example, we spend $600 million on the defense department at the moment. Who’s the real enemy? Turns out that it’s viruses and cyber-terrorism. Maybe we deflect some money away from expensive warships and stuff like that, towards more hospitals?

I think, individually, we’ll rethink our days, how we might organise our days. Those are small, but they might be significant changes. Then as a society, I think we are going to come out of this pretty optimistic about our future and I think there’s going to be a little bit more national spirit about all pulling together to create the New Zealand we want to live in.

It’s going to be hugely assisted by the fact that by 2030, KiwiSaver will have $200 billion. The ACC, NZSuper and Iwi and we tell investors we’ll have another $200 billion, so we’ll be able to afford to fund the New Zealand we want to live in. $400 billion is a huge amount of money and a lot of that will be invested in New Zealand and probably more of it will be invested in New Zealand than there’s ever been. If you have to look at the KiwiSaver fund now, it typically has about 37% of its money invested in New Zealand. That’s probably going to go up and it’s going to go into infrastructure type stuff. We’re going to be investing in the hood and that’ll be cool.

On an individual level, where are the opportunities within that? What peace of mind could you give to an Air New Zealand pilot?

Here’s why I’m more optimistic than the doomsdayers and the media and economists. By the way, economists have predicted 11 out of the last three recessions, so be very, very cautious about where you hear that. You don’t get on camera by being optimistic, you only get on camera saying the sky’s going to fall in.

Here’s why I’m optimistic. First of all, if you have a look at what has happened here, this is a medical issue. It’s not to do with the banks going bust. It’s not to do with any infrastructure. It’s not to do with any terrorism. None of the things that make our society operate have been destroyed here. We haven’t lost any physical assets, no institutions, the banking system’s going fine. Our ability to rebound from this is actually pretty good because we haven’t lost any critical national infrastructure.
The second thing is that the response of the central banks and governments globally has been admirable. They’ve actually thrown the kitchen sink at this. The United States has put $2 trillion in already. Our government is currently spending $500 million a day on subsidies and it’s probably costing the economy about a billion dollars a day, but there’s a huge amount of money going and the Reserve Bank has collapsed interest rates and so on. They’re doing everything they can to make sure that this crisis is as muted as it possibly can be.

The reason I’m so positive about that is that it is completely the opposite to what governments and central banks did in the Great Depression. When that happened last time, what they did was they closed down trade barriers, they went into an austerity program, they spent much less money because that was the accepted economic wisdom in those days. That’s what you did. If you didn’t have the money coming in you, how can you possibly spend it?

Now what the government’s doing is saying we’re going to borrow a whole lot more money, put it into the economy now and get it back on an even keel. I think that’s a much smarter way of doing things. That’s just the second reason why you should feel optimistic, that the policymakers are doing the right thing.

And the third thing is, long-term all of these people who are employed are still putting money into KiwiSaver. We’re still investing in the stock every single day. We are going in and investing money in the markets. We’ve just put some money into Icehouse Ventures, we’ve committed to put $100 million in over five years into high growth companies. That hasn’t changed at all. More KiwiSaver providers are going to do that, well New Zealanders are going to do that.

We’re going to go from being a capital-starved country to a capital rich country over the next 10 years. It’s already actually started to happen. There’s already a lot more money around for good ventures, or there has been up until the last two weeks.
If you have a look at what that will do to New Zealand, have a look at what it did to Australia over the last 30 years. Australia is probably going into a recession right now. It’s their first recession in 27 years. Their superannuation savings now has $3 trillion saved and more than half of that has been invested in Australia.

That’s why Australia is the economic miracle that it is. Not because they dug iron ore out of the ground, that would have made them more like Nauru, a boom/bust economy. But they’ve reinvested and that’s why when you go to Brisbane, similar-sized city as Auckland, it’s got much better roads, much better sewers, much taller buildings, much better everything. There’s just more money.

So we’re about to get a whole lot more money. If you are in business, you are going to be attaching yourself to that money one way or the other. There’s just going to be more opportunity that comes with money or there’s going to be more money for a good idea. If you are in any other occupation that hangs off business, for example, if you’re in government, more money equals more investment equals more tax dollars equals bigger government. Every problem is less of a problem when there’s more money around.

Was that part of your strategy from the start? To be a part of this domestic capital base, but then also the arm for the venture side of things, did you see that connection from the start?

Yeah, in the sense that we could see if we had billions of dollars to invest and we just wanted to make our members wealthier – because we’re a nonprofit, that’s all we care about, making our members wealthier – then there’s a whole lot of opportunities that come there. There’s a lot of opportunities in private equity. There’s a lot of opportunities in taking stakes in some of the biggest family-owned companies in New Zealand. There’s a lot of opportunity in the stock market of course, as well.

We’ve just offered the lowest cost mortgage in the country, we’re now the lowest cost mortgage lender – 2.8% variable, by far the cheapest. That’s really good for our KiwiSaver members who are funding that because they make more than they would have made in the bank by lending it on mortgages.

It’s really good for the people borrowing to buy the house because they’re paying $50-100 less a week in interest. There’s a lot of win-win situations there. When you’re managing tens of billions of dollars, which I hope we will be in due course, then you think about what we could do on the benefit of our members.

Let me give you an example. It’s to help medical emergencies right now. Why wouldn’t we, a KiwiSaver fund, own your local hospital? Why wouldn’t we own the building, build the building and just rent it out to the local district health board or the government, so we could build that hospital faster? For our members, they’d be property owners, there’ll be a rent just like any other, but we would want a reasonable long-term return.

We’re not trying to make a fortune, we’re not trying to be property developers. For the government, that means that they don’t have to borrow the money, they don’t have to put it on their balance sheet, so maybe we could build more hospitals. I’m using that just as one example. It might be schools, it might be storm water drains, it might be power grids.

When there’s 10s, soon to be hundreds, of billions of dollars, saved by New Zealanders invested in New Zealand and that money comes in every single week like a rising tide – it’s not a tidal wave of capital, it doesn’t do any damage, it just rises over time – that’s a really, really optimistic future. And we’ve never had that in our history. We’ve always needed offshore investors to invest in us, but now we’re going to do that ourselves.

Can you paint a bit of a picture for what that looks like? As well as having local ownership over infrastructure, over hospitals, how does that reshape the SME scene, for instance?

Yeah, all of that’s possible. Let me use an example, you featured them heavily – Rocket Lab. Let’s think about Rocket Lab or Weta Workshop or any one of these amazingly successful international New Zealand businesses. By and large, they’ve set up and it’s just been a Kiwi with a great idea. We’ve got lots of those, New Zealanders are so creative.

What happens is they get their first little money here domestically and then they have to go offshore. They can’t find the money here domestically because it hasn’t been around. When Peter Beck raises his first money here, that’s fine, but then he has to go offshore to raise tens, and then the hundreds, of millions of dollars he needs to grow the business.

As a KiwiSaver fund, we’ve just done it, we’ve just committed that first $100 million for Icehouse. We want to own chunks of these businesses and we want to carry on owning it and carrying on funding their growth right through to when they get listed on the stock exchange and then we want to own them when they’re on the stock exchange.
Simplicity’s goal is simple. We just want to own 5 percent of every fast growing company in New Zealand. Leave it to the angel investors for the first three years. There’s lots of people who are prepared to invest the first little bits of money to get companies going. Then once they get into what we call the ‘series A’ to ‘series D’ funding rounds, the bigger funding rounds where they need tens of millions of dollars, we’ll just carry on being committed and we just carry on earning 5 percent. Just write out even more checks as you get more successful.

Now, if we ended up owning 50 to 100 of those companies in a portfolio over two decades, that will be a highly successful investment because we know that the majority of them will fail, but a whole lot of them will do spectacularly well, and one or two of them will literally go to the stars, like Rocket Lab. The really important thing there is that that means a local entrepreneur can start up a business knowing that there will be more local money to fund their growth.

We don’t want to own all of these businesses. We still want them to go and raise money offshore. We just want them to get on that plane and go and raise money in Silicon Valley, being able to say, ‘Hey listen, I’ve got a local pension fund behind me.’ A local player has committed money and that makes it much easier for them to raise money.
And we want the best ideas from Silicon Valley. We want the international investors and their networks and their connections and so on. It’s a much better world for the next Peter Beck if they’ve got a bunch of KiwiSaver managers invested in them as well.

Speaking of failure, there’s probably a lot of people in charge of an SME right now. The revenue’s completely shut off and they are looking at the next few weeks of uncertainty. Would you have any advice in terms of when do you pull the plug or do you go into hibernation or do you reset?

Yeah, that’s a tough question. It’s super hard because it’s so personal. First of all, this is not going to go on forever. These things usually improve faster than you think. There’s this phrase, it’s always darkest before dawn.

For most of those businesses, the trick is survival. Just survive. Do whatever you need to do to survive. And then, by virtue of you being standing when times get better, you’d then be in a position to thrive. But if you’re not alive, you can’t thrive. That’s the most important thing. That’s a cashflow management issue.

The other thing I would do is, I’d go to the banks and be pretty bolshy with them, quite frankly. They’ve been well supported by the government and the Reserve Bank. You should be pretty demanding of them being very accommodating to your circumstances.
The idea of a bank foreclosing on you and using coronavirus as the excuse to me is unpalatable. The government has just given them billions of dollars of extra funding for small and medium enterprises. The government has underwritten 80 percent of the risk, banks will make 100 percent of the profit. Some of that money should be yours.
And then just go and get advice because old guys like me have been through this. Just some simple advice about how to manage cash flow and how to actually survive in the short term. It’s a survival game right now, but it will get better.

Any particular areas where you would advise getting advice from?

I would always go to your mates who’ve got business experience. You’d be amazed at how many people want to help in these circumstances. Don’t be afraid to go to anyone either. This is New Zealand, everyone takes a meeting from everybody. Ask around and just don’t be ashamed or afraid to do it.

People want to help out. If anyone wants to give me a call, my number is 021 491547. I probably won’t be able to help because I don’t have any experience in your industry, but very, very happy to try if we can.

So in terms of industry stuff, what are the big opportunities in terms of industries that are really going to kickoff thriving after lockdown?

I’m a natural optimist, so I always see the silver lining here. If I think about globally, how New Zealand will be viewed at the end of this, I think our reputation will be even further enhanced. We went into lockdown early, so far it seems as if we have coronavirus under control.

The government worked very effectively with the Reserve Bank to smooth out the economic impacts. I think we’ll look good. Also people will start thinking, ‘Where can I work from? Where do I have a reserve backup office? Where in the world would my employees want to be?’ And I think New Zealand ends up relatively in a very good spot.
The other thing too is if the world goes into recession, what do people spend their money on? Food. The agricultural industries and the food supply industries will probably be a very, very good place to be.

Small luxurious like magazines, by the way [laughs].

It is those simple beauties. Food, coffee, all those sorts of things, they actually do very well. People may actually decide that those are the things they want to spend money on and not the frivolous luxuries that they didn’t enjoy so much.

There’s a very good reason why Hermes and Gucci and so on, have switched manufacturing from shoes and clothes to masks. They know that masks are going to be an essential fashion item. Everyone’s going to be walking around with a mask in their purse.

For an optimist, you’re very cynical.

Unfortunately I’ve been around too long. But I think that the industries that satisfy the basics in life, that will be power companies and power generation, people spend more time at work, the whole basic infrastructure generally. I think governments and private industry are going to use this as an opportunity to revitalise the infrastructure of a generation, pretty much in the same way that in the Great Depression effectively you got a massive amount of infrastructure built on the government’s dime.

I think that’s going to happen as well. Anyone involved in those industries, it’s going to be great for architects, designers, engineers, all those sorts of things. Previously, you’d had very low interest rates and people like me banging on the government’s door saying, ‘Spend more money, spend more money. We need a whole new generation of infrastructure.’

Now they’re going to have to do it in order to keep people employed. That’s a much more powerful political reason to do it other than this is a good way to economically spend money. I think that any industry involved in the rejuvenation of the nation’s infrastructure is going to do pretty damn well.

Likewise, environmental industries as well, because it feels to me like the world’s taken a bit of a breath at the moment and everyone’s appreciated the fact that we actually want to live in a world that has clean water, fresh air, all that sort of stuff. In the pursuit of the simple pleasures of life, the environment that we live in will also be an important one.

In terms of the essentials, the primary industry, it is looking good.

Don’t write off the tourist industry. These are at zero right now, but when people want to enjoy themselves, they go on holiday. There’s no reason why they won’t after this. So it may not be what it was, but it certainly won’t be nothing. Goodness gracious me, absolutely not.

I’d heard you talk about New Zealand becoming a bit of a safe haven in a lot of ways in terms of investment, but just purely for people to come and set up as well. Is there an element of a zero sum game globally, where some economies are going to lose out over others that had maybe a better approach?

Yeah, they will. If you look at the economies that are managing coronavirus well, versus those who aren’t, it’s a pretty good bellwether for where you might see economic activity. And so, I personally think the big geopolitical shift is going to happen and it will be further towards China now. They got into this faster, they got out of it faster.

I’m getting the reports from friends in China now about road utilisation, factory utilisation. China’s back at work now and they’re going to use the next couple of months to significantly broaden their reach, not only economically by setting up supply chains that they can reliably rely on. Remember, the world’s a competitive place.

I’ll give you an example. The forestry industry in New Zealand now is really struggling because the Canadians are nicking all our contracts to China because the Canadians are working. But I think China is going to not only arguably be even a bigger supplier to the world of the goods and services, because it’s shown that it can get in and out of this crisis faster, it’s also basically going to project its soft power.

If you’re Italy right now, China was selling you plane loads of ventilators and masks, America was just saying ‘We’re not going to allow you to buy masks made by companies in America.’ It’s a very different message the country’s getting from the two global superpowers.

China projects soft power this way all the time and it’s using this as an exact opportunity for it to get more influence. You’ll see that in the Pacific. Expect China to become more aggressive, not less.

It’s interesting because you’d hear people talking about the opposite. I was. I would’ve thought that we’d be moving more to more local-based production. More nationalism.

That’s something I don’t buy because if you’re a business person, it doesn’t matter what the government says they’d like you to do if you can buy something cheaper in China. What about what has happened in the last month makes you less confident about China’s supply lines? And if anything, supply lines from America, Europe, they’ve been way more flaky.

China switched off their factories quickly but they switched them back on again now as well. I think China emerges from this in a significantly more dominant position globally, in terms of economic influence, than it has had in the past. Yes, we will manufacture some masks locally. Yes, we’ll manufacture some ventilators. Yes, we’ll have some vital commercial supplies coming, but not much. I think we’ll buy more from China as a consequence of this, not less.

I think this is very bad news for the United States in terms of how they feel about their position in the world. Let me give you an example. This is really left field, but right now we spend $600 million on our defense and we buy these expensive frigates and these planes from Boeing and so on. One of the reasons that we do is the Five Eyes club, which is the United States, United Kingdom, Canada, Australia, New Zealand. They’re supposed to be a special place to get to belong in terms of intelligence sharing and so on. That’s the price of staying in Five Eyes.

I think now, people like me are going to say, is that a price worth paying? Look how the UK, the US, Australia have handled coronavirus. Is this a club we want to belong to? I know we have a common heritage and we have a common set of beliefs and so on. But do we need to be spending $600 million to get circled preferential intelligence from countries that have shown that the intelligence that really mattered – how to find out about a pandemic and deal with it – they were unable to do it.

They failed. Whereas China, I’m not saying we get our intelligence from China, but you start to question these precepts. So I think we actually rethink some of the things that we’ve previously taken for granted.

And quite frankly, there were some incredibly wonderful people working in the defense forces in New Zealand. But would I like our Navy to be more like a coast guard? Would I like it to be spending less time traveling around the world in frigates and more time traveling around our coast protecting our maritime protection zone and providing more relief to the Pacific Islands if there are hurricanes, and so on and so forth? Absolutely, I would.

Is it protecting us from the real enemy? The real enemy is environmental degradation in New Zealand. There’s not the possibility of getting invaded by somebody.

Brilliant. One more question. We’ll go from the big macro global stuff to just someone sitting at home in the lockdown grappling with the uncertainty. One last bit of advice that you’d give them.

Go and read a book. If I was you, I’d go online and I’d get Steven Pinker’s Enlightenment Now and read it and believe it. Because for all the noise right now, we are in the middle of an era of progress and improvement across so many fronts.

In my lifetime, when I think about what’s happened with LGBT issues, when I think of what’s happened with the economic opportunities for women, when I think about what’s happened with life expectancy, medical advances, technical advantages, so on and so forth, that will put into perspective what we’re going through right now. There’s a lot of data in there, for the people who like charts and tables and so on. It’s not just decisions, it’s provable things. So that will put it into perspective.

Apart from that, kiss someone you love, have a nice glass of Chardonnay, read M2, enjoy yourself, because we’ll be back before you know it.

Wonderful. Actually, I tell a lie one, one final question. Can you talk to us about the magic of dollar cost averaging?

Financial markets are hardwired to go up, because capitalism works. That’s basically it. The world improves and the world gets richer. Let’s just say all of the financial markets were one company and let’s say the one company has a share price of $1. Every single week you invest $1 in that company, every week you buy one share.

Let’s say we have a financial market crisis and the value of those shares go to 50 cents. That means the dollar you invested now buys two shares next week. And then when it goes back up again, let’s say it goes back up again to $1 and you’re buying one share again. You just bought two shares for the price that you bought one share for.

You think about that over a long period of time, that means if you are investing the same amount or a little bit more every time, every single time the market dips you’re buying at bargain prices. As an investment manager, I love bear markets because you can just buy more for the same amount of money.

Imagine you go into a shop and you want to buy that dress or that pair of shoes or that suit a month ago. Imagine if there was a sign in the window of the shop and everything was on sale 50% percent off, do you want to buy more of those things now? You’re buying the same thing for half price and because the suit’s going to be the same beautiful suit on you regardless of the price you pay, you might as well pay less for it. That’s what dollar cost averaging is, dollar cost averaging is like buying a wardrobe over your lifetime at sale prices and it’s a very, very powerful financial tool.

There are a few things you get for free in investing. One is diversification, you can diversify massively at no extra cost. For example, when you invest in our KiwiSaver funds, we’ll give you 3,000 different investments in 23 different countries. It doesn’t cost you a cent more to have the advantages of all that diversification.

The second thing that you get for free in financial markets is you get basically the ability to effectively dollar cost average so that for the same amount of money you put in, there will be times, if you just carry on putting the money in, where you’ll buy stuff way cheaper. It won’t be anything that you’ve done, you’ll just take advantage of other people’s emotions.

We’re taking advantage of other people’s fear and other people’s panicking. They’re selling stuff to you at prices that are way cheaper than they were selling them to you last week. You get that for free, as long as you stay investing. But if you stop investing or if you panic and sell, you’re just selling it to somebody else at a bargain price.

And what’s Warren Buffet’s statement, almost have criminal neglect?

You should be almost criminally neglectful of your investments. Decide what works. Put in a little amount each week, the same amount every week. Benefit from dollar cost averaging. Put it in a KiwiSaver fund or an investment fund where it’s well-diversified and just get on with what you do best in the world. Get on with doing the very best you can and the things where you have a competitive advantage and you will find that your money will work for you magnificently.

I’ll give you an example, if you have a kid and that day you set up an account and you put a dollar into their account every day, the price of a quarter of a cup of coffee. How much do you think that will be worth in today’s dollars when they retire? The power of compounding interest. That’s the third thing you get, compounding interest. The eighth wonder of the world; interest on interest on interest. It’ll be worth about $300,000, for a dollar a day. It depends on the assumptions, but some people are even higher.

It’s a huge amount of money. That’s just because you’ve benefited from dollar cost averaging, buying stuff cheaply and also compounding interests that you make a little bit and it stays in the account and you earn a little bit more on that. Einstein called it the eighth wonder of the world. So diversification, dollar cost averaging and compounding interest. It’s all you need to know about money investing, you don’t need to know about anything else.

If you just benefit from those three things and you just set yourself up, which is what you do when you’re saving a certain amount in KiwiSaver every week, you’re benefiting from all of those things automatically. You’re preset for success and the earlier you start, the better off you’ll be. It’s as simple as that. It really is.

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