"Sometimes, I go to bed and dream about how I'm going to solve a specific problem in Excel. Even today, my 'treat' for getting other work done is working on my spreadsheets.
"I realise how nerdy that sounds... but 5 percent of people reading this know the thrill."
- Ed McKnight, property economist, Opes Partners.
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make.
As an economist who co-hosts the 'Property Academy Podcast', Ed McKnight loves crunching data. Confessing he dreams about using Excel to solve problems, he considers it a 'treat' for getting other work done.
Due to recent house price gains, a property purchase in Christchurch made him $145,000 in 18 months, he says.
But despite being logical, he admits to taking a punt on shirts and has signed a deal on a property without having finance in place.
1. Are you a saver or a spender?
I think I'm a spender, but people would call me a saver.
My colleague, Ollie once said that I'd eventually be the richest man in the grave. I'm definitely not rich, but I still took it as a compliment.
At 22, I figured out that if I invested $1 in the sharemarket and got an average return of 9 percent, at retirement that $1 would be worth $40. For a few weeks, I went around thinking, 'Would I rather spend that $1 now or have $40 in 40 years' time?'
That didn't last long, but it was a useful experiment.
2. What's been your biggest financial lesson?
To invest money, people don't necessarily need money: they just need access to capital.
Some will disagree with this, but the first property I bought was topped up with a small loan against my mum's house to get me over the line (I paid her back).
It made me realise that to invest right now, people don't need to have money right now - just the ability to access it. It's a concept that can take time to digest, but it's very powerful.
3. Why are you a fan of property investment?
I love the spreadsheets! Part of my job is to create spreadsheets to forecast cash flows and house values.
Sometimes, I go to bed and dream about how I'm going to solve a specific problem in Excel. Even today, my 'treat' for getting other work done is working on my spreadsheets.
I realise how nerdy that sounds... but 5 percent of people reading this know the thrill.
4. What tips do you have for first-home buyers and investors in the current market?
Consider investing in new builds.
The Government and Reserve Bank policies are trying to stack the deck in favour of investors building new houses.
In my opinion, compared to existing homes, for the same amount of deposit, new builds offer twice the value. And once legislation is finalised, they're expected to get a significant tax advantage.
New builds won't be right for every investor. But for passive investors who aren't into renovations, they're worth a look.
5. Give an example of a recent purchase that you consider great value for money?
Eighteen months' ago, I bought a property in Christchurch for $385,000. It's now worth $530,000.
The deposit I paid was $77,000 - that's an 188 percent return on my deposit. Due to recent house price increases, most of that was unexpected. At the time, I knew it was cheap shopping - but even still, I didn't expect that sort of return.
Because it's not known when the next bull-run will arrive, I advocate investing in a flat market.
6. What was your last impulse or 'fritter' purchase and how did you feel about it afterwards?
I bought three shirts without trying them on because I thought they were my size (they weren't).
My partner kept asking "are you sure you don't want to try them on?"
"No," I barked.
She was right. It just makes me angry at myself because I think about all the other things I could have spent that money on. I'll listen to her next time.
7. Does having more money increase happiness?
Yes. 100 percent.
According to the Commission for Financial Capability, 69 percent of Kiwis worry about money.
You can't tell me that removing that stress wouldn't make people happier!
8. The best money advice someone's ever given you?
It's: let's go looking at houses tomorrow.
While out for dinner with a friend, he asked me how much I had in savings. I told him. He said that was enough to get started and we went looking at houses the next day.
Within 18 hours of that conversation, I signed a sale and purchase agreement without any of the lending or finance in place.
People just need to get looking. The rest will sort itself out.
The views expressed in this article are personal and are not professional financial advice.