It’s a journey he’s sharing with his son Ashton, who at age four, is surely one of New Zealand’s youngest share investors.
Leung believes a mix of frugal living, hard saving, and investment in low-cost passive share funds will get an average guy like him to a comfortable retirement.
And to put his plan into action, he’s turned to investing in funds through a new generation of online channels.
Online fund investing has taken a great leap forward through a happy conjunction of three forces: Rising comfort in fund investing thanks to KiwiSaver, the rise of Fintech, and benign investment returns since early 2009.
Leung’s chosen route into funds is to invest in Vanguard passive funds through InvestNow, a Fintech business that launched in March, as well as directly from Superlife, Simplicity and NZX’s Smartshares.
In just two months, InvestNow has facilitated more than $50million of fund investments for self-directed investors like Leung, with its growth fuelled by word of mouth.
Leung’s investment philosophy is to be “smart and lazy”, to achieve financial freedom by being smart on just a few things, and then to be “lazy” by not doing much else.
Among the most important lessons he’s learnt is that starting early matters, which is why he’s started Ashton’s financial education through investments in NZX’s passive Smartshares.
“I wanted him to learn early. When you start invested early, the difference is humungous,” Leung says.
InvestNow general manager Mike Heath, says Leung fits into one of a number of distinct customer types that have taken to self-directed fund investing.
“We have retired chief executives, grandparents setting up portfolios for their grandchildren’s education, young people saving to buy first homes, and large established family trusts with significant assets, all using InvestNow’s online investment platform.”
SELF-DIRECTED, AND YOUNG
“We’ve been really impressed with people in their early 20s. Their investment knowledge seems to be high,” says Anthony Edmonds, the founder of InvestNow.
“My pick is it’s because they have grown up with KiwiSaver,” he says.
But they are a generation that has also learnt to research online, and is heavily influenced by money bloggers like Mr Money Moustache.
Some are seeking funds they can invest in alongside KiwiSaver to build their house deposits, without locking one more cent into KiwiSaver than they need to.
Through InvestNow, they can make contributions as low as $250 a time.
Not all are passive investors though, Edmonds says, though “There’s a definite focus on fees, and a definite interest in index funds.”
InvestNow is “agnostic” on the active versus passive debate, and offers many active funds from the likes of Harbour Asset Management, Fisher Funds, Devon Funds Management and Mint Asset Management as well as passive managers like Vanguard and Simplicity.
FOR THE CHILDREN
Leung’s desire to invest for his children as a means of teaching them to be good with money is a common theme among InvestNow users.
“Often it is grandparents setting up portfolios for their grandkids, or parents setting up portfolios for their children,” Edmonds says.
“It’s about educating their kids about money.”
They money tends to be invested in the child’s name, so control passes to them when they reach adulthood.
It isn’t only families turning to online Fintech companies to invest in funds. Trustees of large family trusts are also doing it.
Some have even developed their own “statements of investment policy and objectives” to feel sure they know what they are doing is in the best interests of beneficiaries of the trusts they oversee.
Their levels of expertise can be very high, Edmonds says.
THE NEXT EVOLUTION
In the US online fund investing has blossomed as roboadvice services like Blooom and Betterment, not only give people access to funds online, but provide them with advice on what to invest in.
New Zealand lags other countries in allowing “roboadvice”, which can make online fund investing more attractive to people with less investment knowledge and confidence.
The issue here is that advice can only legally be given by a human.
So the likes of KiwiSaver providers and InvestNow can only provide “tools” to guide people in their decision-making, rather than deploying artificial intelligence to advise them on how to invest, and what to invest in.
But plans are afoot to see whether there may be a shortcut to allowing Roboadvice rather than going through the long and tedious process of changing the law.
Andrew Parks from the Financial Markets Authority said a consultation was being drafted on whether the regulator had the legal authority to use if “exemption” powers to allow roboadvice.
Ramesh Naran from KiwiSaver provider KiwiWealth welcomed the FMA’s move.
“If we wait until 2019, New Zealand will be left behind because Roboadvice is really taking off overseas.”
The FMA has said it was keen to increase the availability of advice to KiwiSavers, and Roboadvice provided a means to do that, he said.