What if we told you there’s a quiet little trick that can grow your pūtea without you having to put in the hard mahi? It’s not a scam, it’s not a hack — it’s a not-so-secret superpower that anyone can use. It is known as; “compounding interest.”
Let’s dive into how it works — and why it’s one of the smartest money moves you can make (especially if you start as a rakatahi).
He aha te tikaka o te kupu “Compounding Interest?”
Compounding interest is when you earn interest on your interest.
That means if you save $100 and it earns $5 in interest, the next time your account earns interest, it’s on $105, not just your original $100. It’s like your money is working behind the scenes, slowly building up more money — and then that money earns even more.
Hei tauira:
Let’s say:
You save $10 a week
Your savings account gives 5% interest
You leave it untouched and keep adding each week
Here’s what happens:
📅 After 1 year: you have around $530
📅 After 5 years: over $2,900
📅 After 10 years: almost $6,800
Keen to work out how much you could save? Try the Sorted Savings Calculator: Savings calculator » Sorted
That’s the power of compounding — the longer it stays, the harder it works.
Now just a note on how this might show up on investments (vs straight savings). With investments there is always some risk that returns could be positive or negative so your money can go up and down depending on what the markets are doing at a particular point in time. The expectation is though that over the long term your money will grow.
Why start as a rakatahi?
Time is your biggest advantage, and when it comes to compounding interest, the earlier you start, the bigger the reward. Even saving just a little, regularly, can grow into something powerful if you give it time – e whakaarohia ana taku āpōpō, investing in tomorrow!
💭 Think of it like this: compounding interest starts slow at first, then it snowballs. Future you will be so glad you started now.
Where can you use this superpower?
You’ll find compounding interest in places like:
Savings accounts: (make sure they pay regular interest and watch out for fees)
Whai Rawa: Your account will get the benefit of your funds being locked in for three key withdrawal criteria and you have three fund choices to choose from.
KiwiSaver: If you’re enrolled inKiwiSaver, aged over 16 and contributing your account will also receive employer and government contributions to boost the balance as well as compounding interest.
How to unlock the power:
Here’s what you need to do to make compounding work for you:
✔️ Start saving and investing early – even $5 a week makes a difference
✔️ Leave it alone – the longer you keep it in, the more it grows
✔️ Be consistent – make saving a habit
✔️ Do your research – look for savings accounts that offer great interest rates
Compounding interest is like planting a pūtea seed. You water it with regular savings, give it time, and eventually it grows into something amazing.
It might not feel like a superpower at first, but trust us — this quiet money move could change your future big time!
The information contained in this document is intended for general guidance and information only and is not personalised to you. It does not take into account your particular financial situation or goals.
The links shared and associated content on this website have not been vetted or otherwise approved by Whai Rawa Fund Limited and neither Whai Rawa Fund Limited, nor Te Rūnanga o Ngāi Tahu endorse the linked material or its provider in any way. The information provided by these links and third-party providers is not personalised to you and your situation. Before making any investment decision, or taking any action or not, you should refer to the Product Disclosure Statement and / or consult a licensed financial advice provider.
Sign up now and get them delivered right to your inbox – piping hot and no delivery fee!