Low-interest savings might mean missing out on future wealth
With low-interest savings being eroded by inflation, more New Zealanders are being caught by what experts call the ‘waiting tax’: the missed growth potential from delaying investing.
“Across the board we see a lot of people with money in low-interest savings accounts, particularly as the OCR (official cash rate) continues to fall,” says Blair Willems, Head of Tempo, a guided investment app backed by the expertise of Forsyth Barr.
“If they intend for this money to be saved over the longer term, they are potentially missing out on the benefits of investing. That’s essentially what we are calling the ‘waiting tax’.”
It’s a reality that resonated with Merryl Scott, 29, a primary school teacher from Wellington, whose savings weren’t doing enough in the bank.
“My main goal was just to start investing consistently so I could grow my savings, rather than leaving them sitting in a regular savings account,” she says. “Tempo made that feel simple and achievable. It took away the guesswork and gave me the confidence to take action straight away.”
Willems says no amount is too small to begin. “The most important thing is getting into the habit and putting a plan in place, and contributing what you can, even if it’s small.”
The cost of waiting isn’t just theoretical – compound interest shows why it matters. Investing $100 per week – using a return of 7% per year – could hypothetically grow to around $507,000 over 30 years*. Wait ten years to start and it only reaches about $220,000. That’s a shortfall of around $287,000.
Some wonder if KiwiSaver is enough. Willems says it depends on your goals. “You can’t access it until retirement or for a first home, so if your goals sit outside that, like retiring early, starting a business, or building a kickstart fund for your children, you need a different plan, and might be better off making any additional contributions outside KiwiSaver.”
Tempo starts by helping users define those goals, whether it’s saving for a home, retirement or financial independence. Unlike many digital tools that simply set and forget, it combines a user-friendly platform with proactive advice as your circumstances or markets change. These settings are designed by Forsyth Barr’s investment committee, drawing on the firm’s 89 years of expertise managing wealth for New Zealanders.
It then builds a tailored strategy, drawing from 13 diversified funds across equities, bonds, and a variety of growth options. That expert oversight, Willems says, helps users stay on track with confidence, and focus on the outcomes they want from investing.
Arna Cunningham, 36, from Wellington, says the app has made her feel more confident.
“I used to find investing intimidating, but Tempo makes it simple and approachable. I set my goal and risk level, and instead of guessing which funds to pick, I get expert recommendations and ongoing advice, which helps me feel confident in my investments.”
For many, the biggest hurdle isn’t money – it’s the perception that investing is too complex. Mitchell Bennet, a 34-year-old software engineer, admits he waited too long.
“Investing always sounded complicated and like a lot of effort, so I kept putting it off. With Tempo I can get ahead financially by letting the experts guide my investments for me. I only wish I started growing my money sooner!”
Willems says Tempo is designed to support both new and experienced investors.
“Where we see one of our greatest strengths is with anyone settled into a career, often already saving, who is looking to optimise their savings and investment strategy. They can benefit from having a clear plan.”
Tempo helps create that plan and recommends a diversified portfolio suited to your timeline and risk appetite. From sign-up to being ready to invest, the process takes about 10 minutes.
“We think that’s a real game changer for New Zealanders, and we’d love people to give it a go,” Willems says.
Thinking about investing but not sure where to start? Download the Tempo app or visit tempo.co.nz to set goals, try the quiz and see how easy investing in your future could be.
There’s no pressure to commit – you can set goals, try the quiz, and explore strategies before deciding whether to invest.
Investing involves risk, including the possible loss of capital. Returns are not guaranteed and the value of investments can go down as well as up. This column is general in nature, has been prepared in good faith based on information obtained from sources believed to be reliable and accurate, and should not be regarded as financial advice.
*Using Sorted’s savings calculator. The illustration does not take into account inflation or tax.