BusinessDesk investments editor Frances Cook responds to emails from readers each week to answer questions about money. Below, you will find her expert advice. Send your own questions to [email protected].

Hi Frances,

I want to sort my retirement! I’m in my late forties, have been a single stay-at-home mum for a kazillion years, have a grand total of $4,500 in my KiwiSaver and am just about to embark on a three-year nursing degree to secure the remainder of my working life.

I’ve always been super savvy with my money and have zero debt (and a credit score I recently discovered was at 924!!) other than a mortgage, which I’ve always paid much more than needed on.

Not bad for a lowly beneficiary!

But now is MY time, but I feel time isn’t really on my side.

When my studies are finished, I will be within a couple of years of being mortgage free, but I really want to invest in stocks.

However, I won’t have a huge amount of time in the market before hitting retirement age.

How can I maximise my investments so I don’t need to totally rely on the pension? I’d love to have a decent portfolio, but I'm not sure it is achievable in the 15 or 20 years left of work. Advice?



Hi H,

Congratulations on doing well, so far. I know it might feel as though you don’t have a lot of assets, but getting through life without a bunch of debt and other liabilities is also something to be celebrated, especially if you’ve been on a low income.

It’s certainly not too late to invest in stocks. One of my favourite sayings is: “The best time to plant a tree was 20 years ago; the second-best time is today.”

Could you have made more progress with stocks if you’d started earlier? Of course. Is it still worth starting now? Definitely.

You’re about to start a nursing degree, which is very exciting, congratulations. We certainly need more nurses.

So, let’s run some numbers on what you could achieve.

Getting started

You’ve done well living on a low income. So, while you’re studying, will you have even a small amount of money that you could put into shares? Even something like $5 a week could be useful.

This gets your money working and earning, which is important.

But more importantly, it gets you into the habit of investing, and you’ll start to learn by doing.

I’m going to assume you’ve done some homework and know that the share market usually goes up and down in the short term, but in the long term is a great way to build your wealth. 

The problem is, it’s one thing to know that and another to experience it.

The first time the market goes down is usually a nerve-wracking experience. You have to white-knuckle your way through staying invested and sticking to your plan. 

It’s much easier to stay calm if you only have a little bit of money on the line. So starting to invest when you only have a little spare cash can actually be a great strategy.

Then, by the time you’ve built up more money and the market dips for the second or third time, you’re used to it. You know how it goes by now. And the experience helps you stick to your plan.

Levelling up

Once you graduate and start working, you can start investing more seriously.

The Careers NZ website says a registered nurse often earns $60,000 per year, going up to between $85,000-$136,000 for senior roles.

So, if we say that you graduate to that $60,000 annual pay, once your KiwiSaver, tax and student loan repayments come out, you’re looking at about $800 a week in the hand.

Now I have to make a few assumptions so that I can run numbers for you. 

Your actual situation might be different, but let’s say that you can afford to invest $100 a week. We’ll also say that you graduate at 50, in order to keep everything in nice round numbers.

I’m going to assume the sharemarket keeps giving its average return of 10% a year, but take off some points to account for fees and things like inflation. 

To do that, we’ll calculate your investment returns based on an average of 7% a year, in order to give a “real” number – what you’re likely to get in the hand.

Putting in $100 a week from 50 until 65 means you get a nest egg of $120,619. You put in $70,000 of it, and the other $50,619 is sharemarket earnings.

Not bad for something that just requires you to put your money in and leave it alone, hey? Certainly better than $0.

If you've paid off the mortgage by then, your low living costs mean that nest egg could go quite far.

The good news

But it might even be better than that. 

For one thing, you may choose to keep working past 65. For another, your money can stay in the sharemarket, and therefore earn money for you, well into your retirement.

The general rule of thumb is that shares are for money that you don’t plan to touch for at least five years, maybe more. The average time spent in retirement is about 20 years, so there’s an argument that some of your money should stay actively invested.

When I researched my second book, Your Money, Your Future, the best split for many people seemed to be 75% of investments into shares, and 25% into bonds.

The bonds are a good, safe investment that generates a reliable income. The shares are a riskier part that earns more money over time, but you have to be patient.

The two together can be a retirement dream team.

Please bear in mind that I’m talking about what works for most people here. A quick chat with a financial adviser could help you decide if this is the right strategy for your personal situation.

However, if you take a strategy like that, your money can keep earning and growing to help you get through retirement even more comfortably.

Let’s say you retire on the dot of 65, with your $120,619 nest egg. Some of it goes into bonds, producing income so that you can enjoy your retirement.

Keeping our eyes on the future, let’s say for the next 20 years after retirement, your investments produce an average 4% return. 

That 4% is because you’re spending some of it, you’ve moved 25% of it into a safer, lower-return investment, but you still have 75% growing in shares.

If you put nothing more in, you can still grow your nest egg to $264,291 over that 20 years. 

Again, that's while spending some of it. Not a bad deal.

If you want to run these numbers yourself, based on your actual budget instead of my own incomplete assumptions, check out the compound interest calculator here.

Long story short? 

You can still make huge progress with 15 years until retirement age, and you can even choose to continue making progress through retirement, if you choose.

There's no time like the present for putting this plan into action.

Good luck with your studies and thank you for going into such an underappreciated field.

Send questions to [email protected] if you want to be featured in the column. Emails should be about 200 words, and we won't publish your name. Unfortunately, Frances is not able to respond to every email received, or offer individual financial advice.

Information in this column is general in nature and should not be taken as individual financial advice. Frances Cook and BusinessDesk are not responsible for any loss a reader may suffer.