HATCH
Dec 1, 2019
Way back in February 2019 I created an account with Hatch, they were a very new startup at that time and many people had sent me emails asking me to look into them. Part of Kiwi Wealth (sister company to Kiwibank), they had burst onto the scene the year before. An entirely digital investment platform which would let you and I access the US share markets and buy and sell US-listed shares in “over 500 index, industry, and style-based options” or directly into some of the world's most recognisable companies such as Hershey, Lockheed Martin, IBM or GM. We have the option of over three thousand individual companies and index funds to choose from!
Wish me luck choosing one!
Investing in American shares or funds when living in New Zealand had always been possible via using a broker or a fund manager but, to be honest, it put most of us off (myself included) and particularly those of us with only small amounts to invest. It sounded daunting, difficult and it was expensive to do and I remember reading questions and comments on social media where people were asking how they could invest in the NYSE (New York Stock Exchange) and the Nasdaq from New Zealand and the answers always sounded complicated to me. Because it was complicated.
Hatch has done for those wanting to invest in America what Sharesies have done for those wanting to invest in New Zealand, they have created a simple and intuitive platform that has cut out a lot of the jargon and brokerage fees and made it pretty straight forward for you and I to invest in the biggest companies in the world.
But, here we are in December already: Procrastination as an investor is a blessing and a curse.
Although I had created an account, I’d done nothing else. And when you procrastinate you miss out on valuable time ‘in the market’ but it does also give you time to learn a lot. I was initially prompted to sign up because someone emailed specifically asking how they could buy into the American marijuana industry. I had just heard the Hatch founders talk on the NZ Everyday Investor podcast and they mentioned this industry, so I thought I had better do a bit of research and this included completing their sign up process. As is now our expectation with these websites, it was easy to do.
I was already investing in the US markets and the top 500 American companies via the SmartShares US500 (USF). So, I may not have made a transaction via the Hatch site, but I have kept my ears and eyes open as to what they are up to because what they are offering is a game-changer for many. Over the last year, I have read a fair bit about them plus I’ve heard their General Manager Kristen Lunman and their Product, Marketing and Customer Manager Natalie Ferguson speak on podcasts, plus I’ve chatted in person with Natalie a couple of times.
And over the last year, their platform has continued to expand and grow with the number of customers or users increasing along with their funds under management. With the likes of a single share in Berkshire Hathaway costing $330,000 USD EACH when I wrote this, you can thankfully also buy fractional shares (that is a piece of a share) and there is no investing minimum amount and you can now also set up auto-invest so you can set and forget.
As with everything, there are fees involved, but they keep these as low as they can:
Hatch - Fair & transparent fees explained.
It’s no different to when you exchange money into a different currency when you travel, you will pay a fee for this. So, although a better option than paying to use a broker, there are no escaping all fees I’m afraid.
In order for me to invest, they must first change my money from NZD to USD. I will pay FX fees (foreign exchange fees) each time I buy and I don’t want to confuse myself or anyone else here, so to put it simply:
If the base exchange rate is $1 NZD = $0.67 USD
Then the Hatch rate is $1 NZD = $0.6650 USD - so I’ve lost a tiny bit in the transaction.
There are no account management fees or custodial fees for investments.
So, I find myself in a tricky spot here. Before Hatch came along I had created a portfolio for myself that is working well. I automatically invest into three funds without fail and I’m not really looking to add anything else…
BUT, for the sake of blogging...
I’m not a shopper BUT it’s hard to leave the store without buying just one small thing, just to test it all out…but what on earth should I buy? One commentator summed it up well when they said that Hatch offers “a tremendous number of options”. And they sure do, it’s so hard to make a good decision and it’s down to me to choose and with no financial advice being offered by them, that is not an easy task.
And this is where the few conversations I’ve had with Natalie, unbeknownst to her, have guided my selection. Talking to a woman who is in business and so motivated to do well, inspired me to support other woman who are also leaders in their field.
Her goal is to encourage and empower investors both new and old into the world of share investing, whether it be via a fund (which is my preference) or via buying a single share in a single company that appeals to them. Natalie told me that she was introduced to investing at an early age and she has personally experienced how being involved in share investments over a long period of time can seriously grow your wealth. And the bit that really appealed to me was her desire to really encourage all women to prepare for their own financial future in a systematic and calculated way and to help myself and others learn that the investment industry has become way more complicated than it ever needed to be, she wants to break down those barriers and get us all to just start something, to watch and observe, to grow our education and continue to invest over our lifetime.
Well, she was preaching to the converted here and it was during this conversation that I knew she was much like me, she has a genuine desire to help other people learn about investing. It is rare for me to be given the opportunity to “blather on” as my Mum would call it about investing with such and articulate woman (or man for that matter) and I really enjoyed our conversation.
So, based on our conversation I narrowed in on exactly what I could invest in using Hatch. They are offering investment in what they are referring to as Mega Trends and they have the SHE exchange-traded fund which invests in companies led by women. It allows me to invest in the 25 Fortune 500 companies with female CEO’s and this appealed to me (those companies I mentioned at the start of this blog post all have female CEOs btw).
I had previously used their simple process and deposited $100.00 NZD into my Hatch trading account, which left me with $61.27 USD available to invest (after I also paid an exchange rate fee). An interesting note is that because I procrastinate this money was actually sitting for over a month in this account before I did anything and any spare cash I leave sitting in my Hatch account is swept into an overnight Money Market Fund, which pays out monthly dividends into my Hatch account until I choose to use it. I had actually been paid a dividend of $0.06. Obviously, this is stuff all, but I have been asked in the past in relation to other providers what happens to the money once it’s left your account and is awaiting investment. To my knowledge, the likes of SmartShares don’t pay out on any income they earn from that money (I need to look into this further).
My available funds to invest.
With my money converted into USD, I’m choosing to buy “SHE”. I do not have enough to buy one entire share, so I’ll be buying a fraction of a share. I also could have set a price at which I’m willing to buy, but that just adds another layer of complication that I’m not willing to entertain (those who are active share investors who know their stuff will set the number of shares they want to buy and the price they will buy them at, known as Limit Orders).
Buying a fraction of a share in SHE exchange-traded fund.
And because their markets operate at different times of the day to us I just went ahead and placed my order but had to wait for their markets to open for it to be fulfilled. So, I placed my order on Monday morning NZ time and when I sat down at my computer Tuesday morning the US markets had been trading all day and my order had been filled.
Hatch screen showing my holding in SHE.
Well, I must admit that was a bit of fun and now I’ll go and add it to Sharesight where I track all of my investments and I’ll keep an eye on how it’s performing.
Also, an additional thing to note here, I still have $5 USD left in my wallet to invest. WHY? I thought I was investing the lot? It’s easier for me to just refer to their Q+A to explain this:
When you place an order, Hatch estimates how many shares you’ll get. If the share price changes before your order is completed, the number of shares you end up with might be different.
Changes in price may mean you receive more shares than estimated (yay!), or a full share instead of a fraction of one.
To avoid your order being rejected, we leave enough money in your Hatch account to cover the minimum cost of buying full shares ($8 USD), even if you’ve only ordered a fraction of one. If your order is completed and you’ve only received a fraction of a share, you’ll be charged $3 USD. Your $5 USD will be sitting in your account once the order is completed.
This fiver may languish here because I have to be perfectly honest here and say that I’m unlikely to buy more and that’s simply because I’m already very well set up and it does not make good financial sense for ME to spread my dollars over too many platforms BUT I can see the appeal it will have for others. I love that as a self-directed investor who makes my own decisions that there is a world of opportunity out there for me to choose from BUT that very thing does also make it hard to narrow down WHAT to buy.
With these platforms, currently there is no financial advice being offered, it’s all down to me, to the knowledge and biases I have as to what I will choose to buy into. And that is a problem that I overcome by just buying into a large fund which is made up of a large number of companies. I know my limitations, personally I don’t think I have the skills to handpick individual companies and nor do I want to even try. You, however, might have the time and patience to pore over the information released and reported about a specific company - and that is what you really do need to do before you buy anything. Do your research.
I’m all about Index Funds - ETF’s and I think I read that there are 450 to choose from via Hatch and I like that for just a small amount of money I can get involved directly in the US markets and cut out a lot of the costs and confusion that is associated with using a broker.
Via the emails I receive I’ve always noticed that when people begin to invest they get excited (which is awesome) but they have too much of a scattergun approach and buy either too many funds or not enough individual companies. One option spreads their dollars too thin, the other is not diversified enough because choosing just two or three companies is risky. So, before you buy, plan your strategy and stick to it, keep those exchange fees in mind, commit to purchasing on a regular ongoing basis and build up your portfolio over time, look at it from time to time and then just get on with enjoying life. In fact, since purchasing them I had not even checked on them. I just did and I’m currently up 0.96% or in dollar terms...wait for it…$0.51NZ… Good things are going to just need a bit more time...
Happy Saving!
Ruth
Get a $10 top-up
Sign up for free now and get a $10 NZD top-up when you make an initial deposit of $100 NZD or more.
Full disclosure, Hatch has provided me with an affiliate link, which means that if you use my link to sign up you will get a $10 NZD top-up when you make an initial deposit of $100 NZD or more and I will receive $10 from Hatch. This is one of the ways you can help support me and the work I do. Thank you 🙏🏼
