A beginner’s guide to growing your money

When Caleb Pearson was in his early 20s, he and a group of friends decided to set up a share club. Each would put in $20 a week and the money would be invested in companies they hoped would do well. Almost 12 years on, the club is still going strong – and property developer Caleb says the amount which once seemed insignificant, is now a healthy fund that he and his friends continue to reinvest in.

Watching their money grow has been gratifying, but Caleb says the key learning from the venture is that starting out small should never be a barrier.

“Putting $20 into a savings account to invest each week might seem insignificant, but it can make a massive difference down the track. Investing is all about taking a long-term view.”

Putting aside money for the future is all about mindset, adds wife Alice, who is also part of the club.

She urges others not to be intimidated by the idea of investing.

“You don't need to be an expert to invest,” she insists. “You can do it with a bunch of friends and create healthy habits together.”

There are many ways people can invest, including through shares, schemes such as KiwiSaver, savings accounts and property. For Caleb and Alice, who’ve renovated 11 homes in the past 12 years, investing is all about putting their money into an appreciating asset, something they know is going to be of greater value in years to come than the amount they put in now.

Says Caleb, “Albert Einstein described compound interest as the eighth wonder of the world. What that means is that each year you’re investing not only the initial investment but the growth as well, so the amount keeps getting bigger and bigger.”

Caleb is a huge proponent of New Zealand savings scheme KiwiSaver, where money is put aside from your pay packet each week and typically matched by the employer. He worked hard early on to increase his portfolio to get the benefit of time, and even directed pay increases directly into his KiwiSaver account.

“KiwiSaver is a great investment tool. When you invest up to 3% your employer generally has to match it, so straight away you're getting a hundred percent return on your investment. You can’t beat that.”

While Caleb has always been an avid saver, Alice admits she was late to the party. If she’d known what she does now about laying the groundwork for the future, she would’ve been more disciplined at a young age.

“I really thought all saving was, was saving to spend, not saving to invest and to see something grow. If I had put aside some money for my KiwiSaver to invest into my future, I would have a little bit more for our retirement than what I had coming into our marriage. Simply put, I think investing in the present is giving us the future that we want.”