KEY POINTS:
Investing in the share market should be as simple as buying a burger - quick, convenient, and with no mess. That was the thinking behind Burger Fuel's decision to put a quarter of its equity on the market last year.
A gourmet burger chain with an irreverent, homegrown
outlook, it wanted to find first-time investors within its customer base, which is dominated by young males. The firm hoped those customers would put their faith, and finances, in their favourite fast-food outlet.
Those who did, including members of the "Very Important Burger Connoisseurs" loyalty club, have had a rough ride. The share price has plunged from $1 to 42c and is still fluctuating. The situation raises an interesting issue - stereotypically, high-school students are apathetic towards the markets, and university students are too broke to invest.
But is it possible ordinary youth are, in fact, willing and able to play the game, and if so, where are they hiding?
The other issue is that, with the arrival of KiwiSaver, even high-school students with a low-paying, part-time supermarket job will be forced to learn about the markets so they can decide how to invest their KiwiSaver funds, and with whom.
It seems the right time for a check-up on financial interaction, but for young, first-time Burger Fuel investors, that may be too little, too late.
"I'm losing money, people," exclaims one investor on social networking site Bebo. "How come the shares aren't doing well?"
Analysts had warned that the share deal was a "speculative punt", and for seasoned investors, the numbers were crystal clear.
Perhaps this was not the case for impressionable first-timers, who had been wooed by a slick marketing effort. Prospectuses were downloaded, and shares bought, online. In-store share "ambassadors" helped first-time investors, whose curiosity had been piqued by a series of slapstick adverts in the media.
"If young people invest $1000 or $2000 and get burned, they'll be less likely to invest later in life," says property investor Steve Brooks. "If the market doesn't look after them now, that source will dry up. They will be the ones with cash to invest in the future.
"[But] their spending habits aren't consistent, and many aren't budgeting. I have mates who want to invest but have a huge hire purchase, a car loan, and spend a couple of hundred a week on drinking."
Christchurch-based Brooks left school after fifth form, then gave up on a business diploma which didn't seem relevant to the real world. He became a millionaire last year, aged 19. He insists that any ordinary teenager could do the same.
Brooks says young people really need to "school-up" before investing willy-nilly in a company that takes their fancy, which he likens to pot luck.
The risks of dabbling in the markets hit home for so-called "mum-and-dad investors" last year, with the collapse of finance companies in which some had invested all of their savings. The crisis highlighted the need for financial literacy for youth. The accounting curriculum for secondary students covers the bare basics of share trading, but does not cover dealing strategy or structure.
Allan Williams, of Spicers, says even older people are still scared about the share market after the crash two decades ago - "any nasty experience taints someone's views for the wrong reason".
He believes fund managers need to get around schools and universities in person to teach the basics of share investing. He points out that young American investors, who own more investments than ever, seem savvier than young New Zealand investors these days.
Williams says: "If you use a cellphone, why don't you buy shares in Telecom, because they're clipping your ticket each time you send a text to your mate? Those are the types of questions young people must be asked. With KiwiSaver, they'll need to decide which fund manager they want to go for. It's better to invest in shares, because the country gets something out of it, unlike property. Young people haven't lived through a property depression - they think that house prices only go up."
Rich Fourie, 22, attended a wealth seminar with his father when he was a teen and has been hooked ever since.
He runs the "Young Millionaires" website and aims to be a millionaire by age 25. He also puts funds away into secure accounts as a back-up.
He says emotional health is needed for investors "to handle the fear and greed that creeps in", which is a hard thing to educate youth about. Fourie doesn't see a lack of life-experience as a barrier for youth.
"Young people don't have families," he says. "They don't have responsibilities. They often live at home, their disposable income isn't tied up, and can afford hundreds of dollars in booze each week. What an opportunity to reach into that market. I have 25-year-old mates who have got married and have had salaries for a few years but nothing to show for it."
The minimum subscription for the Burger Fuel share deal was $1000, but that figure is much higher for most other companies. Most younger people have limited savings but with interest-free student loans, some students are choosing to invest their own cash in a bank account rather than paying back their student loan.
The Government has said that behaviour is "deplorable" but Allan Williams says that's "absolutely human nature", and that with an 8.5 per cent return in a low-fee, low-risk bank account, and often in the lowest tax bracket, those youth get a common-sense return.
"We want to see young people engaging with the share market," says Geoff Bell, of NZX, "not on an uninformed basis by picking a single stock, but by portfolio investment.
"There probably is a lack of knowledge, but I am not convinced that [young] people being educated will actually change their [investing] behaviour, because there's not a lot that actually drives them to invest."
That is changing with the arrival of KiwiSaver and the challenges it presents to young workers. There are ways to school-up, including the New Zealand Stock Exchange's online challenge. For a fee, one can join a real-world simulation of the stock market over a number of weeks, using novelty cash which can be invested in real portfolios, as a learning exercise.
On a more local, personal level, some businesses and organisations are also taking the initiative.
The Canterbury Property Investors Association has a Young Punters Club, which meets over coffee. Members don't need to own property or have portfolios, there is no minimum age, and they just need to be keen to learn more about how to get started.
Early interaction with the share market can turn young people into lifelong investors, a prospect that presents a challenge for the market. They won't all become teen tycoons like Brooks, and only some will amass nest eggs before leaving high school.
But, with any luck, they will close their share portfolios with more than enough loose change for a decent burger combo.
