The Money System Most Kiwis Don’t Question and Why They Should with Sam Stubbs

Today's special guest is Sam Stubbs, founder of Simplicity. We're going to talk about Kiwisaver. We're going to talk about wealth investing, stuff that I think we should all be talking about more openly and realizing that if we're lucky enough to live a long life, we're going to need some dough to have a good life. So enjoy the show, Sam. A huge welcome to the Lead On Purpose podcast. I'm so excited to talk about Simplicity. So often when I'm working with high performing teams or aspiring high performing teams, I often say to them it's all about simplifying your way to success because complexity kills execution. May I ask, why did you find simplicity? What's the need for it in this time?

Yeah, so it was founded, look, it was found for a couple of reasons. At a personal level, it's just a midlife crisis. So I got, I'm a Westie West Auckland kid and I felt increasingly guilty as I got wealthy myself that I wasn't looking after the people from West Auckland. I've just got this New Zealand egalitarian gene in my body. So it's a personal level, at a professional level or, you know, corporate level. Look, the finance industry is the most profitable in the country by far. Margins are massive and we knew that we could make them do the most good basically by redistributing some of those margins back into the pockets of New Zealanders. And it's pretty simple, you know, we call ourselves a dignity company. You have a life with dignity when you have choices. Choices give you dignity in life. How do you get choices? Money. So make people more money, they'll have more choices and more dignity. And that really matters the further down the income pole you go, right? A little bit really makes a lot. So that's why we founded it. But I, look, I'm a product of my parents, right? I love that phrase. If you make one decision in life, choose your parents well, right? So my mum was a primary school teacher, my dad a secondary school teacher. And they were always helping out, right? Like teachers. Teachers do. They're always doing stuff. And we lived in a very low decile part of Auckland. So teachers became almost like surrogate parents for a lot of these kids. And so we were out there, you know, and they were out there fighting the good fight for people who didn't have as many chances as others in life. And I just, you know, I picked that up and what a lot of my life has been, acquisition of wealth for its own sake. Later on in life now that I've had this, you know, midlife crisis and I'm working for purpose, it's night and day.

That's incredible. I think in a lot of ways you and I are similar in terms of our place of upbringing. So obviously my accent's slightly different than yours, but I grew up in a working class town in Northern Ireland, just north of Belfast, so maybe similar in a lot of ways to West Auckland. And so I grew up with this idea that money doesn't grow on trees. And I heard it a lot. And we didn't have a lot of it, but we always had food on the table and shoes on our feet, so we felt pretty fortunate. But actually I felt in a lot of ways in my late teens and in my early 20s, that mindset around money held me back from making money, learning about money investing. And a few things shifted for me, which was transformational. But for you, you talk about this shift around midlife. What actually happened there where you go, I've made a lot of money.

Yeah, look, I just think it's that hedonistic treadmill, right? So when you grow up and you think that if I'm going to have. Going to be happy and if I'm going to be rich, I'm going to be really happy, and then you become rich and you're not really happy. And there's a lot of like, cliches, but a lot of these cliches have truths behind them. Like, so I. Things owned me, I didn't own them. And the complexity of my life and the complexity of my material possessions and the complexity of the cash burden needed to maintain this life, that I looked really great on the outside was mentally exhausting. And so you. I think there's a lot of people who get to my age and my circumstances and then they get pretty depressed. You know, that's. You get. There's a high divorce rate, high depression rates happen, you know, I mean, money buys you a lot in life, eh? Like a little bit of money buys you an awful lot. But it's. It rapidly diminishes in terms of its utility in life. And it also risks actually making you miserable. I don't buy this thing that rich people are miserable or more miserable, but I certainly do buy and have experienced that I. A whole lot more money after, but it doesn't make any difference.

Yeah, there's like a point, I think it used to be around 70 or 80k, they said, I think it's maybe.

Up a little bit. It's up a little bit from the.

End, 21, 30 maybe, but after that, it's like it doesn't bring you any more happiness. Not many more choices.

Yeah, well, there's no obvious correlation. Right. And you just get that little dopamine hit from buying something new, and then it's just another thing. Right. It's just another car. And of course, what happens is you kind of get used to these things and then you feel, oh, goodness, I've got to work really hard now to keep that level. Right. You know, so, you know, trading down in life seems to be very hard. It's not. But, but, but it. I can understand that. So you get people on these hedonistic treadmills and, and it tends to be life for show, not substance.

Yeah.

And, and so, you know, that was just my personal journey. Other people, you know, it's all very personal to.

Of course, some people love their big cars and their boats, private jets.

I get that. And, and, and I don't begrudge anybody anything if that's what, what they want to do and turn them on, as long as I hope that they have some inclination of the feeling that I've had, which is that the satisfaction from giving is way better than the satisfaction from getting.

Hey, James here. I wanted to take a quick moment to let you know about something. Look, I get asked to deliver keynotes and workshops for teams and companies all over the world, from London to Antarctica, from America to Australasia, from armies to small businesses to large corporates to sports, sports teams. But I go in and deliver keynotes around the mindset of high performers, around the habits of high performers, about how we navigate change. If you would like me to come and speak to your team or speak at your conference or deliver a bespoke workshop, please get in touch with my team. Carolinejlochlan.com will be able to help. I'll also make sure that we put that in the show notes. I think we can all feel that. I live in Littleton and there's a gentleman who's been sleeping just outside the supermarket there for six to eight weeks maybe, and a really bright young man. It was a cold morning. I was meeting a client at 7am for a coffee. That's what got hot chocolate. Went over to him and him and I chatted for 20 minutes. And the joy, selfishly, that I felt from that for the rest of the day, I felt so awesome. Yeah, I felt selfish for feeling awesome.

About it as well. Yeah, I know. That's an interesting dilemma, isn't it? Because you can feel selfish for doing these things. But, you know, you shouldn't, because, I mean, even if you feel bad about it, you're still doing good stuff. Right. That person would have really enjoyed it. Enjoyed. Enjoyed speaking with you. I think the, you know, what I'm hoping is that, you know, New Zealand is becoming less equitable. Right. What I am hoping, though, is that the, the wealthy and the powerful still want to and still believe in the New Zealand that is equitable and so will redirect their energy and money or effort or whatever they can into making sure that, you know, people less fortunate are okay there and lots do.

And the Patagonia kind of model.

Yeah. Or just quite philanthropy. You know, there's a lot. I mean, there are a lot of amazing, wonderful rich people in New Zealand who give away a lot of money. Right.

But don't tell anyone. They just do it.

They just do it very quietly. And, you know, we work with a lot of them and they're fabulous individuals. And, you know, many of them have almost become accidentally wealthy, actually. What they did was they just wanted to do something really well and the money just arrived by virtue of just really good execution. Right. And love of what they did. So they weren't setting out to make money. It happened to be a byproduct of just loving something and doing it really well.

That's incredible. And it's interesting when we talk about money often with my clients, I'll say you're full of BS belief systems and you believe things about money, success, failure.

Right.

And my belief was money doesn't grow on trees, and therefore there wasn't really much of it around. And when it was, I'd spend it. Now, I firmly believe and I teach my son this money does grow on trees. And I don't mean that from kind of some complacent, arrogant point of view, but the tree is your mind. You water that with learning, being curious, giving back, making a difference, and that provides value, and that value is often rewarded with money. So there is money everywhere to be had if you add value to others.

Yeah.

What's your beliefs in money?

Well, look, I think it's. I think it's a. It's a byproduct of doing something well. I mean, there are lots of different things I think about money because I'm obviously working in it, but just a couple of things that I think really sort of anchor how I. How I believe in it. First of all, is like, it really matters. Like, let's not pretend any other way. It gives you choices and dignity. In life. So having enough money is incredibly important. After that it diminishes. I think that it is an amazing enabler at a national level as well as an individual level. So what we do with all this money that we're about saving Kiwisaver will really matter for the future of New Zealand. I'm sort of a. It's interesting, I call my. I sort of think my belief system about money is. I think capitalism is the best way to make money and I think socialism is probably the best way to spend it, you know, and there's equivalents of truths on both sides of that. But I think that, you know, I really love a New Zealand which is gentle and kind and the institutions that we have that really knock the rough edges off life. And by that I mean things like acc, eqc, pharmac, the Cullen Fund, all these things that actually make our lives hopefully a little less volatile and painful. And I really want the New Zealand us to nurture those institutions. And by the way, you know, free health and free education, these are amazing.

Things we can take for granted pretty quickly. But you go to some other countries where that's not the case. Well, we've got pretty good.

And they need to be affordable. Right. And so how do we afford them? We've got to grow because taxes pay for this stuff. How do we grow? We invest. And how do we invest? We save. Right. So, you know, the next 30 years are going to be the best in New Zealand's history if we make a few sensible decisions because we're now saving our to prosperity. So I'm really optimistic. Yeah, I think if you're a kid right now, I get that there's a lot of bad news out there and lots to be scared about. That is not unusual by the way.

That's been for centuries, right?

Yeah, that was the world I grew up in. There weren't any jobs when I, you know, it wasn't, you know, like the good old days weren't that good. So that's normal. But the New, New Zealand is a New Zealand where we are capital rich, not capital poor. That gives us options in life and that gives us, can give us dignity as a country. So. And I think if we preserve the great, the things that make New Zealand great and then embrace the stuff that just makes it even better. And there are things like. I was thinking about that today just driving along, man, I used to live in a racist world. New Zealand was a very racist place when I grew up.

I was here 20 years ago and certainly when I arrived, it was in Christchurch, I find that there was that racism for sure.

And now it's much more inclusionary, much more multicultural, and it's just much better.

I agree.

You know, and I think one of the beautiful things about New Zealand I'm so proud about is how so many different people who look different and speak different and are different get on. We are a remarkably harmonious country for one, which is so multicultural and that's wonderful. So, yeah, so it's how I think about money is, you know, you gotta take it seriously. Let's not belittle it. It's amazing how many people are scared of money and don't want to talk about it.

What drives that fear?

Look, I think the industry has a lot to blame on this. I think the finance industry sort of presents itself like a priesthood and they use these fancy languages and fancy words. And I think the. This is just my personal view. I think when you see a typical bank billboard which says happy families jumping into swimming pools, and basically the subliminal message that I read from that is, money is complicated and difficult. Don't just give it to us and we'll look after you and then you can have fun. Well, that's rubbish, of course, because that's an opportunity for them to make a whole lot of money out of you. So I think people get scared, but money is incredibly simple. The real basics of money you can learn, you could actually learn, I think, the most important things about money in about two hours.

Where would someone start? Someone's listening now, going, sam, where do I do that?

Yeah, look, I'm going to be selfish here. Well, two things. First of all, just go to the Sorted website. There's a whole lot of. Or MoneyHub is amazing as well. Just go there and read. These are people who are not, you know, paid to promote anything. I wrote a book called Money Made Simple, a book lit. Because I couldn't. I couldn't fit all the sensible about money in a book. It's not that complicated. You can read it in about an hour and a half.

I'll put a link in the show.

Notes for that as well. 180,000 copies have been distributed. It's free, you know, and it's just the real simple truths about money. And basically, I think most people, if they just took those on board, they'll be just fine.

It's the simple stuff done well consistently that leads to freedom.

Yep. And, you know, you've got the eighth wonder of the world on your side, compounding interest and, you know, you just keep it simple. Like all things in life, there are a whole lot of people who want it to be complex so they can make money from it. Right.

We see it everywhere, 100% in life.

Right. So keeping it simple means there's less opportunity for, you know, the most profitable and arguably the smartest industry in the world, the finance industry, to get, to get money from you.

Yeah. Well, it's interesting. I came here and wanted to have a house. It was a Kiwi dream. So I want to have my own house. So go to a local bank and of course they give me a loan. And I start to say, well, I'm not making much headway on paying this thing off and I don't really realize what this interest thing is, but it seems to be quite significant. So I go and talk to a loan broker and they say, well, actually James, we can help you structure this and we could represent you and go to the. And we'll get you the best offer. And all of a sudden you're going from 30 or 25 years to six or seven years. That's mind blowing. And it's free. There's no extra cost to do that. So simple things. And about 15 years ago, I read a book, there's a chunky book, Money Master the Game by Tony Robbins. And I was hooked. And I was reading it, underlining it. He was interviewing the world's best investors hedge fund a lot. I thought, this is interesting. So I then get my kiwisaver policy after I've read the book and I'm going through line by line and this is not usual activity for me. I'm like, big picture thinker, enjoy yarning. I don't enjoy detail like that. No, I'm going to do this. And I have 27 questions for my kiwisaver provider. After I'd read the policy and reading his book. So I ring them up. I've got a few questions for you. Oh yeah, go ahead. And I'm about 18 questions in and this person is getting very frustrated with me. But we get to about 20ish questions. I'm sorry, I don't have an answer to that. I've still got six more. Can we go through those? Yeah, I can't answer any of those. We don't have that information. It's interesting. So then we went up the chain a bit and spoke to them. In the end they couldn't answer two questions. And I'm going to go back. I can't remember those exact two questions. Go back. And I'll pop them in the show notes. But when I was talking to the top operator at that firm with my kiwisaver who couldn't answer two basic questions about what they were doing with my money, I walked very quickly. And so that got me excited about learning more about money and of course switch providers. But Tony Robbins, the whole idea I took away from that was fees really matter.

Yeah, they really do. Fees are huge, huge.

Because we look at performance. But past performance doesn't predict future performance.

No, it doesn't. And look, you know there are these studies called the SPIVA studies, standard and poor studies which have been going on for 30 years now. They're the studies that the industry never wants you to read but you can find them online and they basically show that there is a. It's very, very difficult to beat the market in terms of picking stocks over the long term.

You can do it for one year but then the same person will likely not do the second year and sometimes.

10 years and sometimes. But remember you're investing for 30 or 40, 50 years. So even if there's an individual who's a geni stock picker at that firm, are they going to be around for as long as you're saving? Right. So very, very hard to do that and that fees really, really, really matter. Let me put it into perspective. If you think about the government says that in a growth fund for Kiwisaver you should expect about a 5.5% after tax return. Well, if fees are 1% and that's about the average fee for a growth fund, that means that almost 20% of everything you're making is going in fees right now. But they don't put it that way. No 1% sounds bad, 1% doesn't sound.

You think of 101 out of 100.

Yeah. Imagine that as a rates bill. Imagine if you had a million dollar house and your rates bill was $10,000. You'd be angry. People are angry with councils when they find out the kiwisaver industry this year will make pretty close to if not more than a billion dollars in fees this year or this upcoming year. And you know that is on no regulatory capital. They don't have to put any money with a reserve bank like a bank would have to. To give you an example, we run a non profit operation and our fees are significantly lower than the industry, like in some cases a quarter of the entry. So that's what it actually costs to run a lot of the rest of that is profit. So there's a good reason why you see so much Kiwisaver advertising. There's a good reason why when you go in the bank they ask you about the Kiwisaver.

There's a fada system there to use.

That it is an incredibly lucrative. Now Kiwisaver is great, don't get me wrong, and it's a fantastic scheme, but the fees are way too high. And that's one of the reasons why we set up simplicity.

Incredible. Can we talk a little bit about what makes simplicity unique? And of course there's so many providers available to everyone, but you have a very unique approach. So what is it that sets you apart?

If I said it in one line, it would be this. It was that Time is our friend. And what I mean by that is this. We run, you know, Southern Cross Healthcare, right? So we just copied Southern Cross Healthcare. So we're the Southern Cross of finance. Southern Cross, look at them as an example. They're a charity which owns a non profit business in medical assurance. Medical insurance is a competitive business. There are for profit providers. But Southern Cross have 75% market share after 75 years. So you can be hugely competitive being a non profit. You don't have to be a for profit business to win in a competitive market. If you don't need massive amounts of shareholder capital, if you don't need to build factories or buy a lot of stuff. And a lot of businesses are now tech driven so they don't require that much money. So if you think about them, what we do, okay, so we're not going to make any money. That means we're not worth any money, which means we'll never be bought or sold, right? So we have a mentality, we deliberately set this up, that we will be here forever. Now when you have that mindset, then time is your friend because you don't have to do everything in a hurry. I don't have to make shareholder returns in a hurry. I don't have that. In some cases that's a very positive driver if you want to make profits. But in some cases it can force you to make short term decisions. So the differentiator there is we make very long term decisions about how and that changes the way you think. So for example, none of our competitors that I'm aware of are getting into the build to rent housing business because that is a hard business to make a lot of money in in a short period of time. But it is a very good investment long term and it involves you building houses, right? This is hard, right? These are hard things to do, but they're ultimately very rewarding things to do for investors. So we can have a very long term view on that. And we've just launched a company called Infra Kiwi, which hopefully will get a lot of KiwiSaver money invested in the infrastructure we will use in New Zealand. That once again is a 10, 20, 30 year project. Right. So when you have that, that then becomes a competitive advantage because that means you can do things your competitors can't, you can be patient in a way that they're sort of unable to or find it difficult to, and then also you can think institutionally. Right? So the decisions that I am helping make, and I'm just one of many decision makers at Simplicity, but we are making decisions that we know will long outlive our individual tenures there. Right? But when you're an individual working in a bank or whatever, you are thinking in terms of your career, you're thinking, how can I make this win? So I get paid for this now, you know, short term, me. Well, it's individually focused and I understand that. I mean, there's nothing wrong with that per se. You know, our competitors are wonderful human beings just trapped within organisations which are thinking short term. And the irony of that, of course, is that the money they've been given to look after is very long term. When someone signs up for KiwiSaver, this is going to be hopefully a 20, 30, 40, 50 year relationship. And yet if you're not thinking about investing that way, then you can get. This is where businesses get over leveraged, make overly risky decisions, try and win in the short term and end up actually falling over. I'm not saying I don't think a KiwiSaver scheme will. It's very well protected by the government. But you can make investment decisions which are very short term. I think about being a parent. Decisions you make with your children or decisions for your family are long term decisions. Right. They're not short term decisions. You know, you're not thinking about how do I make this child the best adult they can be, but I'm only going to think out two years.

You're thinking 30, 40, 50 years ahead.

Yep, yep. And so that's our competitive differentiator.

That's brilliant.

And it's a very powerful commercial differentiator. Because the other thing also is, of course we don't need to make any money. So we've dropped our fees seven times in seven years.

Unheard of.

Every time we get scale, we just keep on. And I'm just going to Keep on doing it. I think our fees are still way too high. I want all of that benefit of scale to pass through to members.

That gets me excited as someone who's not with simplicity yet going, oh, I want to keep an eye on that because that interests me, because I understand fees and I understand the power of that over time. And it's interesting, the first principle in my book is always play the long game. And it sounds like we resonate with that. It's about 40, 50, 60 year.

It really is.

And it's interesting. Someone will be sitting and going, oh, yeah, but what's your current and short term performance like? Are you still able to get good performance?

Yeah, absolutely. And so the, you know, and we rank well in the performance tables, but you know, we've only just started. This is nine years. If you start benchmarking yourself, that's a very short term period. Right. You should be thinking very long term on this. I sort of equate it to the tortoise and the hare. We're the tortoise. But you know, who wins? It's not sexy being the tortoise, but you want to win in the long term. Right. And I think also that long term thinking is also really good for New Zealand because we're about to enter this period now where we have Kiwisaver. So we are where Australia was in about 1985 when they started. Australia are much wealthier than us because they have five times our population, but they have 35 times our retirement savings. They are just much richer.

That's unbelievable.

It's incredible.

It's a contribution some 9 to 11%.

It's about 12.5% now in Australia. Right. And so they've got over $4 trillion saved. Right. So. And that's why, you know, when you go to Brisbane, which is the same size as Auckland, it looks and feels richer. It is, it feels brand new. Yeah, yeah, yeah. Because these pension funds, Aussie pension funds, have put a whole lot of their money into the infrastructure. So we have this amazing opportunity. Our economist Shamobile Jakob has done the numbers and look, if nothing else changes in Kiwisaver, I mean it will, it will get to be compulsory, but let's just assume nothing changes in the next 25 years. If KiwiSaver managers keep 30% of their money in New Zealand, which is what they currently have, they will have another $295 billion to invest in New Zealand. Wow. It's huge.

Humongous.

That is our infrastructure gap filled. Right. So we are now we're entering this period now when we can afford. I talked about money gives you options and options gives you dignity. We're about, I think we're in a place where as a country we can invest our own money to the benefit of our investors because they get the same investments. But I can buy infrastructure overseas. You get the returns, but also you get the jobs when you invest it domestically. So we can generate the returns, we can generate the jobs and the economic growth that will give if as a nation it will give us more money, more options and more dignity.

And so I are spending time with our politicians.

Yeah, yeah, well, yeah. And they're beginning to get it. I mean, you can see now all of the political parties now are talking Kiwisaver next year is going to be a Kiwisaver election. That's hugely important. Right. Even national have now done a complete, well, a U turn in the last two years from being a detractor of Kiwisaver, always taking away the benefits to actually now growing it. So everyone's on board that it's a good idea because, you know, we've saved 130 billion doll and people can now see their kiwisaver balances growing. Over 3 million people have it. None of them have gone bust. A lot of people bought their first homes with it. You know, it's helped a lot in hardship as well. So it's a really good thing. So as a nation what I'm really excited about is we've seen our relative competitiveness decline as we've had this amazing place with free education, free health, acc, eqc, all of these what I'd call amazing institutions, institutions. But we've been slowly running out of money to fund them. Right. And they've been frayed at the edges. Right. Imagine if we kept those same institutions and just gave them more money and had more money and more tax revenue and that would make, I think, New Zealand like. I mean this is going to sound a little bit sort of evangelical, but it's almost like a paradise place to be if we had our citizens wealthier, more tax revenues and going back into those institutions that we know are really good. Right. When I grew up, I grew up with a system, a primary school system that was the best in the world.

When I came here because I see New Zealand as being a paradise, as being very forward thinking. And in the last three, four years, maybe a little longer, I felt that things have got stagnant. Maybe not even gone backwards, but just stagnant, progressing.

They're defraying at the edges and that's a function of money. And the more money you have, the more choices you have. So we used to be a richer country, we're a less rich people country at the moment. But boy, I'll tell you what, we are where Australia was in 1985. Get ready the next 30 years, I mean, I'm not saying it's going to be all up and all good news, but we now have a rising tide of capital in this country because all of that money that's being saved in Kiwisaver. Here's another way of thinking about it that would have otherwise gone into buying investment properties, rental properties, right? That's how Kiwis got rich. Well, first of all, that's fine except that only 62% of New Zealanders own their house now, right? So that was good for the 62% but not good for the 38. But. But all of that money is being channeled back into what I call the real economy. Now that is not money which is paying off a mortgage. That is money which is going and being invested in New Zealand and internationally. Not only does that diversify at an individual level diversifies your investments, but it creates this river of money that if appropriately invested, will basically underwrite a much happier future for the country. And that would be. That's the New Zealand I want my kids and grandkids to live in.

I've got a nine year old and I'm thinking of him, I'm like, what country do I want him to be living in? He's already talking about la and I'm like, goodness, yeah, well, you know, go there and check it out and then see what you've got back here and.

Then come back home. That's why people came back. I mean, I went overseas, I was 10 years overseas. I came back here.

You were in Hong Kong and Hong.

Kong and London and at the time in New York and stuff. And I sort of but went over and came back because wanted to bring up my kids here for what New Zealand represented. And that is still there. That has not gone away, it's just frayed at the edges. And so now we have the money, we're going to have the money to be able to rebuild that in fact and arguably build it even better.

I love it. I'm going to ask a very tactical question. So I was chatting with Mary Holm recently and just talking about Kiwisaver and then Vanguard S&P 500 index and so I do both. I've been in Kiwisaver For a long time I've been doing S and P and essentially she was saying, james, you should consider, if you put the minimum amount into your Kiwi Saver, you get the contribution from the government and then put the remainder into this. Is there actually a benefit, though, to me and the country if I go? Actually, I'm going to funnel more into my Kiwi Saver.

Yeah. Well, look, if you stick it into the S and P, none of that money will end up in New Zealand. You'll still get the returns and it's your money. You should be allowed to do what you want to do with it. But if you put it in KiwiSaver, generally more of it will find its way into New Zealand. The returns, it depends what KiwiSaver fund you're in. Maybe more or less, depending on your risk profile, versus the S and P, which is all shares. So they're different investments. And Mary is. She's just completely wonderful in this advice. She asks all the right questions. So that's a very personal thing. But what I do hope is that we don't have so little to invest in in New Zealand, that the money largely goes overseas, or even more of it goes overseas.

You've got me thinking. I'm thinking, well, I was just going to do more S and P, but now I'm going, well, why would I not?

I mean, you need the options, right? So one of the reasons we set up this company in for Kiwi and hope to list it as soon as we can, is that it gives New Zealanders an option to invest in the infrastructure that they're using. I love it. And it'll be only New Zealand investors. There won't be any offshore investors because.

I know Singapore's got a big relationship.

Yeah, none of it. We don't need that money anymore. We can do it ourselves. And if we do it ourselves, that means politically it's much more acceptable. Like most New Zealanders would not want to sell their ports and their airports and their water systems to offshore buyers. In fact, we've just seen a couple of interesting transactions fall over because it was offshore buyers. And the locals are now saying, no, we've wised up to this. We want New Zealanders owning it and we're now coming and saying we can. So individual KiwiSaver providers can do that, or we can do that via other companies like Infra Kiwi, which we're just setting up now.

That's incredible. And if we think about the everyday Kiwi, is it possible for them to have A nice retirement. To retire and have the luxuries that they want. Whether it's just food on the table, a trip down to Queenstown twice a.

Year, the answer is yes. But start early. There is this incredible force we've mentioned. Albert Einstein called it the eighth wonder of the world. It is. It's compounding interest. It's incredible if you start saving a little bit of money, how quickly that adds up. Now, I'm going to get these numbers a little wrong because I don't have the calculators here. But you can go onto Sorted or moneyhub and work this out really quickly. But for example, if a kid born today had $1 a day saved in their kiwisaver, they'd have something like $20,000 by the time they were 18, right? That then becomes well over a million dollars by the time they've retired. If you just save the traditional kiwisaver amount. And the important thing is, it's almost like Warren Buffett. He's a really interesting phrase. He says, I like to be almost negligent with my investments. I just want to buy them and hold them forever. And the great thing about something like kiwisaver is you kind of forget about it.

I check mine every 12 to 16 months. I jump in every night.

And then you go, oh, okay.

And every time I jump in at that point, that timeframe, it's generally going in a positive direction. If I jumped in every month, it probably wouldn't be.

No, it wouldn't be. But you have a very, very powerful tool. And the great thing about that, to me is it's not even the quantum of the money. It's the fact that you don't have to worry about it. And it just carries on accumulating over time. So, yes, the answer is you can. If you say, and look, this is not kiwiso, this is life. I mean, you know that your grandmother told you, look after the pennies and the pounds will take care of themselves, right? Or my grandmother did.

I remember that saying.

And yeah, that's true. And you know, and societies that have saved are always better off than ones that have borrowed.

Let's chat about that. So I think about my number. Like, what number do I need to be financially retired? I actually don't get excited about retirement. I love people. I love working. I love being industrious. I hope my body and mind might let me continue working for many years. Right. But financial retirement seems pretty attractive Again, options and freedom. So how does someone work out what their number might be? Because everyone's going to be a bit different in terms of what they might need.

But if you.

Have you got any suggestions or how do you work?

So I've got a pretty simple rule. You know Scott Galloway. Have you heard of Scott Galloway? Right. So Scott Galloway has this great phrase about how to work out if you're rich. Right? There's a very simple rule to work out whether you're rich. You're rich if your outgoings are less than your earnings. Right? You are rich if you have passive investment income from your investment kiwi saver or whatever it is that is more than you are spending. So forget about the number. You will feel rich if you know that you can afford whatever you want to buy within reason from your investment income. So work out what you need, work out what you need to spend in retirement or what you need from that income and then you can apply any number of calculators to work out. Okay, so how much do I have to have in order to pay that bill? Right. And it's actually interesting, for many people it's less than they think. It's not as hard as they think, and particularly if they start early because a lot of people think, oh, this is depressing. Everyone says I've got to have a million dollars in my kiwisaver or 2 million dol. These are headlines that make the prep, but they just scare people off. And remember also that we have national superannuation and all this thing as well. So there are any number of calculators. We have one on our website as well, which decumulation, show you how long it will last.

I'll pop a link in the show notes for that as well.

Sure, thanks. But basically just work out how much you need. The other thing is, remember that I think you're absolutely right, this notion that we work and then we retire at 65 and we stop working and then we have to live on this money forever. That's so not how the world's operating. Right. It is a remarkable number of people over 65 who are still working part time, full time, whatever. And that, you know, I agree with you. I mean, I don't think I'll ever retire.

Why would you?

Why would I? I mean, it's just, it's too much fun doing stuff like that.

Exactly.

And what is retirement or what is working? Right. So volunteering is working. It's just, you know, but anyway, staying active, mentally and physically active. So that's one misnomer that's gone. The second one is you'd be Surprised how little you can live on when you're older, actually, your high consumption phase of your life. You know, kids are expensive. Right. You know, international travel, international. All of these things that you. And, you know. So there's a lot of people who live on remarkably little. Now, of course, there are the costs of living. Power and rates and all that sort of thing are still all there and they go up. But it's possible, it's very possible to do this. And one of the things I love about Kiwisaver is it kind of does a lot of the heavy lifting for you, just as long as you start, you know, if you start with good habits. So I'm personally in favour. I think we should enrol every child at birth into Kiwisaver and I think the government should give them like a dollar a day.

Amazing.

And if that happened, that would be fiscally neutral. We wouldn't have to spend any more money on subsidies than we currently are. And, you know, every kid in the country ends up with 20 grand. Now, if you're a Pasifika family in South Auckland and you've got, say, four kids, four times 20 is 80 grand. That's starting to feel like a house deposit. And so there's a lot of free. And if you could use that money to offset education costs or if it's available for hardship or however this will work out, if we have some deferred spending, saving a little, and use the power of compound interest at an individual level, but also at a national level, that's how you get rich.

And we start to feel like a country like Switzerland or Denmark, where there's a lot more of this happening. Yeah, it's interesting when Finn. So Finn's nine, when he was born, that week he was born, I opened up an account from. It's like an s and P500 or something like that.

Well done, dude.

And, yeah, put a little lump sum in there and then thought every month, just 50 bucks. Yeah, so it's not lots, but 50 bucks a month. And it's just automated.

Yeah.

And so who knows? I don't even know what it's sitting at right now.

But no, Exactly.

When he's 18.

And, you know, keeping it simple and just letting compound into it's incredibly powerful. And I just think now, I think the tragedy though, of it is that of course that there are people who don't know that they want to do that or don't feel as if they can ever afford it or just inaction, you know, for whatever reason, but it's those people who most need it. This is why KiwiSaver needs to be compulsory, because the people who don't have it are the people who will most benefit from it later on in life. Right. So. And we'll get there. I mean, this is a staged process.

Kiwisaver being compulsory just makes sense. But I guess common sense isn't always common practice.

Yeah. And look, and I understand politicians, because as soon as you feel as if you're taking money away from people's discretionary spending, it can sound unpopular. Right. So you've got to do it in a way which makes people feel as if they're not losing money. And there are ways of doing that.

Yeah. It feels empowering to them rather than the opposite.

Yeah. And of course, once they realise that, they get money in there. I mean, I used to run a default provider, Tower Insurance. We were a default provider. We used to have a team of people who would phone up people who'd been put into Kiwisaver but didn't know they had a KiwiSaver account. Right. And the conversation would go something like this. Hello, you know Sam, I'm from here, from Tower. Did you know you have KiwiSaver? No. Oh, yes. No. You've got some money. Do you know what's in it? No. How much? And then you tell them. And the average balance was about $8,000.

People were happy with that.

Yeah. But you know what the next question was? How do I get it? Right. So they want to spend it.

Right. They want access.

They want to spend it. They say $8,000 windfall. Oh, no, no, no. You can only spend it and this, this and this. And they're a little bit disappointed, but they still had money they never knew they had. Right. So, you know, if everyone in the country is in that situation, because I think also it makes people a little bit more curious about money. As the kids kiwisave accounts, they get interested in it. How much have I got in it? And, you know, places like Sharesies have been fantastic in terms of getting people interested in money. So, you know, it's.

Money's quite exciting and it's fun. Well.

Sometimes it can be as boring as, you know as well, but it's better that everyone has some knowledge than a whole bunch of people have none right now. And our industry wants to scare you away, with exceptions.

The big terms and the jargon.

Yeah. And the feeling of powerlessness and helplessness about it. Right. Because most people struggle to manage their daily finances and money is just an Unpleasant thing for them, or at least it's probably a cause of more stress than more relief. And so they always think about it in terms of earning more money. How do I get a better paid job? Or keeping their costs down. But just that, man, that the options you get in life by having a little bit of money saved are enormous.

And making that a habit. To me, that's one of the best habits we could pass on to our kids.

And it's almost a habit you don't even have to have. You said do it once, set it up, up, it's almost set and forget. Now, of course everyone would say you shouldn't do that. You should review your kiwisaver. But of course you should from time to time make sure you're in the right fund. But one of the great powers of savings is stuff. Just get on with your daily life and don't worry about it.

Do what you love doing, your zone of genius. Focus on that. I'm not going to try and invest in stocks and pick stocks. That's not my zone of genius. I have not bought a single stock in my life. But I've been investing in indexes and kiwisaver for me too.

Me too.

Keep it simple.

Keep it really simple and just do what you do. Which goes right back to where we started. I always tell my kids, it's amazing how lucky hard working people are and it's amazing how hardworking people are who love what they do.

Essentially. I say the harder you work, the luckier you get.

Same thing, right? Exactly. So you will get rich by. I tell kids this all the time, talk to schools and stuff. I tell, look, it doesn't matter what you do, just do it well. Because the best in every occupation do well. The best hairdressers do well. The best plumbers, the best builders, the best coders. The best just be good at what you do and so like it and work really hard and the money will sort itself out because, you know, people will pay for excellence.

Yeah, pay for quality. I agree with that. Often people get worried about AI and we're going to be all irrelevant. And I always think, you know what? There will always be room at the table for greatness. So if you're great at what you do, there will be a seat at any table for you.

And I'm going to be the old man in the room here. You know this AI, I've heard this three or four times in my life. This is going to happen with the Internet. This was going to happen with computers. This was going to happen with spreadsheets, this was going to happen with driverless cars. People are always. It's easy to be doom and gloom about this but you know, I've never met a successful pessimist and generally this technology is generally enabling and generally creates a whole lot of new jobs and generally creates a better life for us. I agree as witness. Now, because of all this technology, even the poorest person in New Zealand lives better than an emperor did 200 years ago. They have antibiotics, flushing toilets, cars, aeroplanes. These things just never exist. It doesn't matter how rich you were, you couldn't get access to that.

It doesn't get any better than what we've got currently.

The best time to have ever lived is right now. And a lot of people romanticize the past. I mean, even in New Zealand we talk about the good old days, right? Well, there were some really good things there. Free education, free health. We generally have those who are a bit afraid. But they weren't the good old days if you were mori. They weren't the good old days if you were a woman. They weren't the good old days if you were gay, right? And they weren't the good old days if you didn't have access to advanced cancer treatment treatments like you do now. Right? The good old days weren't that good. And remember how when everyone smoked, you know, and all that sort of stuff everywhere, you know what? So this is a really cool time. The best time right now is the best it's ever been and it's going to get better.

I agree.

And if we have people with that embrace that attitude and embrace that there's a future worth saving for investing in and you know, we can. We already have the elements of a little paradise down here in New Zealand. I think we take a lot of the fantastic stuff we have here for granted sometimes, but goodness gracious me, the next 30 years are going to be an amazing abundance of opportunity.

It's a bless to be. Yeah, it's interesting.

One of them, yeah, for sure.

I agree. Well, I spend a lot of time equipping leaders and teams to be possibilitarian leaders, looking through the lens of what's possible and I see lots of that in what you do. But I think there's certain things you've got to do to be a possibility leader, to maintain curiosity and an open mind. What do you do to inform how you think? Because clearly you're a creative thinker, very lateral thinker. What are you reading? Do you have mentors?

Sure. Look I'm a pretty pretty vociferous reader, and I like history. I'm not a very good reader of fiction, and I probably should be, but anyway, lots of nonfiction. I'm just curious. So, as I say to my kids, there's two things I could give kids. It would be curiosity. Just stay curious and find out what you do, and then resilience. Right. Because life will throw curveballs at you all the time. You just got to be able to be prepared to get knocked down and get up again. So I do a lot of reading and a lot of podcasts.

Good. Glad to hear it.

Heaps of them all the time. I'm forever. I'm just. Yeah, I don't like having downtime too much.

You like to stimulate the mind all the time.

I'm gonna get in my car and there'll be a podcast on it every second till I get to the next thing. The other thing I do, and this may sort of surprise people a little bit, is that I, you know, I like to sort of aim, aim, aim, aim, aim, and then fire. Right. So a lot of preparation time, but you don't always know if you're gonna hit the target when you fire anyway. Right. So you have to be prepared to throw it out there. And what I usually find is that most things will work out. If you feel in your gut that is, let's call it morally correct or the right thing to do, generally, if you apply a lot of energy, then you will get that outcome. But I've tripped up in life where I've said, I know this is expedient. I know this is easy, and I know I can do it, and I know it will work for a while, but fundamentally, it's not the right thing to do. Right. And so I think your moral compass is an important thing. And sometimes you just do things without working out. You know, you just don't quite know how you're going to get there, but you want to get there. So, you know, with Infra Kiwi, we want this to be the biggest company in New Zealand. We want it to be, you know, owning and operating a lot of the infrastructure we own. We don't quite know how we're going to get there, but we know that the idea is right. And so if you get an amazing group of people together, and that's the only. The only superpower I have is the ability to identify amazing people and then bring them into a common purpose and then let them be magnificent. Right. And so. But I'm very honest with them, and Saying, hey, listen, I don't quite know how we're going to get here, but I think this is the team that can do it. If anyone can do it, this is the team. Get behind them and trust them and let them shine.

Is failure a key part of the businesses that you've been a part of? Uncertainty, simplicity, failing and learning from that.

You have to be prepared to fail, but you've got to be careful about. This is other people's money you're talking about. The risks you take are very measured and careful. You can mitigate a lot of that by diversification. Right. So if you fail, it's just a small failure within a very, very big group of investments. So yeah, we've tried things that haven't worked. They haven't cost anybody any money, but they didn't work. But you know, as I say, aim, aim, aim, aim, aim, AIM and fire. The most successful organizations I've ever been are not. I'll give you an example. I used to work for Goldman Sachs. Right, Right. Big investment bank, highly successful. Two interesting things about that organization. From the outside it seems like it's really Machiavellian. It's actually the most amazing teamwork environment I've ever been in. Amazing. What merits are ability just to get really successful individuals realizing that and emphasizing that they can't do it all themselves. You cannot operate in that world without having a highly functioned team of specialists who actually really rely on each other. So amazing teamwork environment. So that taught me the power of a team. And also being in a team is also much less exhausting because otherwise you're trying to do everything yourself and micromanaging that. So I think that was one thing. The other interesting thing about Goldman is you think they're high risk takers. They're not. They're paranoid about risk. That's where I learned the aim. Aim, aim, aim, AIM and fire. Right. We spend a lot of time preparing and working out would something work? What are the risks? What could go wrong here? And so when we made the public announcement, everyone went, whoa, that was really ballsy and risky. No, it was actually significantly de risked by the time we did it. So lots of preparation. That was the thing where time is your friend, right? Yes. Because if you're getting ridden by your boss saying I need results this quarter, how are we going to do this? How are we going to do this? It forces you into short term thinking and behaving, which may achieve that over a period of time, but you will ultimately be outmaneuvered by somebody who has the luxury of time and in our case also we have the luxury of money. So we can not only invest, but invest a lot of money over a long time, which is how we say simplicity living. We've gone from a standing start five years ago to be one of the biggest home builders in the country now.

Incredible.

Within five years. That's the power of kiwisaver, by the way. That's all that money coming in, which means we don't have to be dependent on banks.

I was sitting at dinner last night with the CEO of a large supermarket and said, I'm catching up with you today. And he went, oh, I've been with simplicity for ages and it's just been amazing. He talked exactly about the side of the infrastructure and the buildings and he's been watching it, James. It's a joy to watch. I really get excited about what they're doing. He's right in behind what you do.

Yeah. Oh great.

It's cool.

It's here now. It's like. And it's for real, it's tangible. You know, this is putting roofs over people's heads. It's making housing more affordable and making long term renting an option. In New Zealand, which it really hasn't.

Been and it should be. When you look at other countries, I think Germany's a country where there's 60% of people long term renting, but it is their home and they dress it up and design it, furnish it.

Absolutely, totally. I met a family in Berlin a while ago, the fourth generation in the same house that they'd rented. They didn't even think about the concept of owning versus this is just the way it was.

Imagine what they can do with other funds and invest in.

Well, that's what happens. It goes into the real economy, right? Actually funds, startups and growth and all that sort of stuff. And this is the New Zealand we're getting into. And that's why I'm so excited about it because our dream always was buy a house and then national super will look after you in retirement in 1980. 82%. 1980, 82% of New Zealanders own their own house now only 62% do.

Big difference.

So 38% are renters. Right? So. So pinning the New Zealand dream on home ownership is no longer the New Zealand dream for a big thing. So what else do you do? Okay, create long term rent rental as an option if you can't and make that safe and secure. There is dignity and joy in having a roof over your head and a Warm, dry place to live. That is a, to my mind, that is a human right.

I agree.

You know, a country must divert its energy into providing that. New Zealand used to do this. My parents lived in a state house and then they bought it with a cheap loan from the government. That was the New Zealand dream. That is no longer the New Zealand dream for a lot of people. So, okay, so that dream has to change. But that dream must have a warm, dry home. I mean, you know, it's the ultimate fence at the top of the cliff. Right? Because otherwise a whole lot of social problems happen with, you know, insecure housing, mould in the house, cold homes, you know what start in life for a.

Kid is that it's not good from a health perspective, even just from an environmental. You're a product of your environment often. So when you're in an environment that's unhealthy, you're thinking in a different way. You don't have the same opportunities as others.

And it's the same all around the world, right? And yet look at New Zealand. It's insane. We have all the land in the world, we have all the building materials in the world, we have all the builders, and now we have the money and yet somehow we have unaffordable housing. It's dumb.

It's got to change.

Well, we're doing our bit, right? To show how it's possible to build faster, better and cheaper, which we are doing. And in scale.

It's amazing.

It's cool. Yeah, really, it's just a wonderful reason to get up in the morning.

I'm with you. I want to be mindful of your time. I've got two last things I want to chat to you about. So one is I've been learning more about you over the years and following you and following your journey and I deeply admire that you're a values based leader. And something recently come up where you had an opinion on something globally.

This is the Charlie Kirk thing, was it?

Exactly. And so I followed that and I read that and I went, I know where Sam's coming from because Charlie love him or loathe him personally. Some of the stuff he said I find very disturbing and troubling and it angered me at times and upset me and I get freedom of speech 100% get it. So when you put the post up, I went, I get where he's coming from. But then the backlash came, all the keyboard warriors came and you're a public figure. But then the best part came after that, that it was that you Owned it. And you went. Actually, you know what, you came back with another comment. Yeah, I could have approached that differently. That is leadership. That's learning from. Hey, I could have done that differently.

Yeah, yeah, no, I definitely made a mistake. It was a sort of an anger driven response when I first read it and so. And so. But did it change my belief in what he said? No, absolutely not. I don't like people who look, he's. His free speech is as valid as mine, of course, but the messages were messages. There were too many messages of hate and division agree there. Right. And actually some of the stuff I agreed with him on too.

Well, some of the stuff is high intellect and very smart and actually made sense. But then there was the hateful kind of nasty stuff too.

But I think I learned that from my mother. And I don't want to portray myself as any sort of saintly figure here, but bad things happen when good people do nothing. Right. And, you know, and things like democracy dies in darkness, you know, you, you. My mum would stand up for kids, you know, she'd go and knock on the doors of parents who were just. Weren't parenting well and would let their kids stay behind from school and she'd say, he's got to come to school, he's got to come to school. Or he would. We in West Auckland, we helped sort of fundraise for the first marae, the Hone Waititi marae. And she would get angry about people who were racist and saying things and doing things which were belittling the Mori people. And so when you observe someone, because what I observed was that she didn't really get knocked down or hurt, she stood up and fought and generally you win. Sometimes you don't. So I'm fighting for the people of West Auckland. I'm fighting for ordinary New Zealanders who, you know, I'm lucky, mate. I'm a white Caucasian male. I have a voice and I have people who will listen to me. But there are a whole lot of people who are unheard out there and they don't have a voice and, you know, they need help and they also need to live in a New Zealand that gives them a fair chance. Agreed. You know. Cause fairness is the thing that flows through. If there's one word that made New Zealand, New Zealand, it's fairness.

I agree. You see it in sport all the time with Kiwi sports teams.

We talk about freedom, we talk about fairness. Well, yeah, I get angry when people don't get a fair deal when they're not being treated Fairly. And so if you have a kid that is not growing up in a warm, dry house, that is unfair. I agree.

You know, can you remind me what you wrote about in my home when you made a mistake? There's something. You wrote it beautifully in the follow up post. It's something that when you fail or you make a mistake, you own it and you move.

Yeah. Basically, you're like, you just. You. Yeah, you just. You have to be honest with the fact that you're wrong sometimes. And no one is perfect. And everyone knows that too, by the way. You know, like, we can all get holier than our judgment or social media sounds like that. But we're all human beings, right? We do not lead Instagram lives. And so if you make a mistake, stand up and admit it and apologise because you can hurt people. And I did hurt people's feelings in that one. So I apologise for how you did that. But what you do has to be anchored in your own moral compass. And you will have your own idea of right and wrong, but do not be swayed by the noise or by other people's opinions. If you've grown up with a moral compass, then stick to it. And, you know, that was the case. What was interesting about the Charlie Kirk thing too, though, is, I mean, obviously I got a tirade of negative comments, but it was amazing how many positive. Way more positive than negative, actually. But a whole lot of people come back saying, look, I couldn't say anything, but I'm really behind you. A whole lot of people are frightened.

It's interesting. I don't have commented on anything, but I seen it and I thought, well, I'm seeing Sam soon, I'll have a yarn with him. So I'm one of those people that didn't.

Yeah, yeah. And there are a whole lot of people who are scared by that. And I get that, I understand that. But I'm not like that. And my mother wasn't like that. And I'm not gonna put up with wrong and injustice. And I'm gonna say what I feel. Sometimes I have to say it more diplomatically and more sensitively because that was a murder of a human being. That was so wrong. But, you know, you have to stand up for what you believe in because, you know, otherwise, what sort of society did we live in?

Yeah, I really admired it and I deeply admired how you owned it. To me, that's the most important part. And as a leader of an organization, like the fact that you can go, I can make mistakes, but I will own it and I will be honest. I think it says a lot. So. Yeah, well done.

Thank you.

Thank you. And final question.

Yeah, yeah, sure.

So if we were to fast forward many years into the future and you were highly aware that it was your very last day here on Earth.

Yeah. Right.

And someone young came into there, maybe a grandchild, and you love them dearly and they say, sam, how do I go about leading my life on purpose? What might you say to them?

Yeah, I would say three things. Two of them I've already said. I would say be curious, stay curious, don't stop asking questions, and don't stop loving learning. I would say try and be as resilient as you can. And by that I mean go and do the stuff which is tough, you know, go and do a shitty job, go in and sow. So get yourself into situations that are tough and hard, and then you'll learn that you can get through anything if you want to. And I guess the third thing I would say is love, you know, the joy of being a human being as other human beings. And so stay close to and love the people who love you unconditionally. And because you know, you can waste. And I have. You can waste a lot of energy on trying to impress people who don't really think about you very much and divert that energy from. And that takes energy away from the people who really love you. So I think if you have curiosity, resilience and love, those are just wonderful tools to have to get on in life. That's beautiful.

Sam Stubbs from simplicity. Thank you so much.

Thank you.

Absolute pleasure.

Yeah, likewise. Thank you very much. Awesome questions.

Thank you.

Cheers, man.

Cheers. Thank you.