A Kiwi mum who is using the sharemarket to teach her kids about money says returns from companies such as Tesla and Roblox are making more money than leaving it in the bank.
Her comments come as record-low interest rates prompt Kiwis to look at investments offering potential for higher returns such property and shares, rather than savings accounts and term deposits.
Single mum-of-two Rachael Fitzjohn says over the past 18 months, the money she and her kids have made from the sharemarket is better than having their money in the bank.
Fitzjohn is using shares to teach her kids, aged seven and nine, how money can grow. In addition to having a personal share account with online investment platform Hatch, Fitzjohn recently opened kids' accounts, putting $100 per month into each.
Longer-term, she aims to increase that amount, seeing an opportunity for herself and the boys' father to contribute as co-parents and build a chunk of money for their future.
Each month, her boys are allowed to spend a few dollars investing in companies they're personally interested in - a strategy she also uses for her own investing. At the moment, they're interested in Roblox, a game they love to play.
"They're showing interest in Roblox...I will obviously be investing in their accounts on their behalf, but I do want them to have a little bit of control so they can learn about it," Fitzjohn says.
"Already they're making more off Roblox than the same money in a bank account (it's currently up 4.75 percent)," Fitzjohn adds.
Having started investing in shares around 18 months' ago with just $500 - an amount she "could afford to lose" - to spread her risk, Fitzjohn sets aside a portion of money to invest in a shared managed fund, set at a higher level of risk according to her age.
As with her boys, Fitzjohn hand-picks a few shares in companies and people of personal interest, including Tesla, Beyond Meat, Aurora Cannabis and Zoom.
The returns fluctuate, she says, but over the last 18 months, her savings have grown. Estimating her share portfolio is up 73.05 percent compared to when she started, Fizjohn says one shining example is Tesla.
"Over the last year, I've got a return of 257.56 percent on Tesla - that's been incredible," Fitzjohn says.
"There's no way I would've been able to make anything like that with a savings account - not even a term deposit," Fitzjohn adds.
As share prices fluctuate (share prices of two other companies she invests in directly have dropped in the last year), Fitzjohn says she prefers to check her balance once every week or two, bearing in mind the investment is long-term.
"The longer-term strategy is that most businesses want to succeed...so they will be doing everything they can to do that," she adds.
Financial adviser and author Martin Hawes said among the risks of investing in shares directly is if the investments don’t make money, people may be scared off the sharemarket for life.
For people new to share investing, Hawes suggests sticking to the New Zealand market and investing in companies they’re familiar with. To start, this may mean overall returns are more steady than spectacular. It’s also important not to get caught up in social-media driven stampedes to buy or sell.
"They should buy well-established companies that have good income...that means avoiding start-ups," Hawes says.
Director of JMI Wealth Andrew Kelleher confirmed last year was an extraordinary time and volatility in share prices was high.
Over the year to March 19, returns on Tesla shares were up 511.38 percent, Roblox were up 56.32 percent, Zoom shares were up 99.50 percent and returns on Aurora Cannabis dropped -7.60 percent.
Kelleher suggests investors avoid speculative stocks and focus on future growth, spreading their money across a range of different companies.