Peter Lyons: Seeing young thrive huge thrill for a teacher

The students were taught the basic principles of investing - of analysing different companies and other investments that trade on the New Zealand sharemarket. Photo / Getty Images

Opinion

Those who can, do; those who can't, teach. I have heard this mantra many times. Initially my response was that I don't see many people queuing for my job.

Now I suggest the person perform an unnatural act on themselves. Teaching is likely the only occupation that almost everyone has a strong opinion on, because almost everyone has experienced schooling, for better or worse.

Teaching is a strange job which I came to with a little maturity after trying a number of diverse occupations. It is a job where each day you hold a mirror up to your own mood and personality.

A secondary teacher may have to relate to over 150 - sometimes reluctant - learners each day. Primary teaching is no easier and their teaching year is longer.

My response to critics of teachers is that supply and demand suggests it is not a much sought-after career option. There is no hiding if you are having a bad day.

But every now and then an experience in teaching gives great satisfaction. In a few weeks' time I am going to catch up with a group of students I taught several years ago. We will have a few beers and a few laughs likely at my expense.

They will hopefully leave with a lot more money than they arrived with.

This is because four years ago when they were at school, we set up an investment fund.

These students are now in their early 20s. Many are completing their tertiary studies. I haven't seen some of them since they left school four years ago.

The investment fund we set up involved $20,000 of initial funds that we all contributed to. The students were taught the basic principles of investing - of analysing different companies and other investments that trade on the New Zealand sharemarket.

I am not an investment guru. I am not Warren Buffett. I taught these students the rudimentary basics of investing and share analysis. I wanted them to realise that investing is not rocket science or gambling. It involves a large degree of common sense.

The four-year time horizon of their investment was just sufficient to meet the requirements of a long-term buy and hold strategy. Most dividends were automatically reinvested in the companies held.

First, each student had to analyse and present on three shares listed on the NZX. After several weeks of presentations the group was required to select 10 shares that we invested in. Discussion was robust and informative. They were a bright and capable group.

This group of 17-year-olds, taught only the basic fundamentals of investing, managed a net return of 12 per cent per annum over four years. They got hit with brokerage fees of $30 when they bought each share and again when they sold.

The brokerage firms that control access to our sharemarket seem to have a cosy arrangement in the fees they charge. This penalises small-time investors.

When we set up the brokerage account to allow us to buy the shares, none of the firms was willing to negotiate on fees. One broker even stated that the sharemarket is for older, wealthier investors.

It is interesting to note the returns on this novice fund compared to the returns by professional fund managers operating KiwiSaver funds. Investing mainly in shares equates with investing in a KiwiSaver fund labelled as a growth fund. The average return on KiwiSaver funds labelled as growth funds is 7.4 per cent. Maybe we were just lucky.

But I would suggest that the fees charged by many KiwiSaver funds significantly reduce the returns to investors.

I would also suggest that many fund managers would struggle to outperform a small group of smart 17-year-olds with a basic understanding of the principles of investing. I may be too cynical about the financial sector in New Zealand, but given its history, I doubt it.

It will be great to catch up with these guys after four years and share a few yarns. Many have gone on to study subjects such as maths, history, drama, law, finance and accounting. I taught them economics. Apparently I have a unique capacity for stimulating an interest in other subjects.