Got questions? We’ve got answers
Here are the most important things you need to know to get started with Hatch.
+ What is Hatch?
Hatch is Kiwi Wealth's digital investment platform. Kiwi Wealth is Kiwibank’s sister company and is run by Kiwis, for Kiwis. Hatch gives you easy and affordable access to the US share markets by partnering with DriveWealth, a US broker-dealer and member of SIPC (Securities Investor Protection Corporation). SIPC is a non-profit that protects your shares up to $500,000 if a member runs into financial trouble and your investments are impacted. We’ve broken down how it works here.
+ What are your fees?
Brokerage fees to buy or sell shares:
A fraction of a share: $3 USD
One or more shares: $0.02 USD, with an $8 USD minimum (i.e. it's a flat rate of $8 USD on all orders of 1 - 400 shares)
Exchange fees when you deposit or withdraw money: A 50 basis point (bps) fee is included in the exchange rate you see in Hatch. Our fee is lower than what most banks charge (which is usually about 1% of the money you exchange).
Tax processing fees: When you make your first deposit, a one-off $1.50 USD fee is deducted to cover the cost of processing the compulsory W-8BEN tax form. An annual $0.50 USD fee will be deducted from your available balance for processing your annual US tax return. That's right, all your US tax obligations are taken care of for you for $0.50 USD a year.
That's it! There are no hidden fees, and no management or custodial fees. We can do this because Hatch is a completely digital platform, which means we can pass the savings we make from using technology, directly onto you. Note: While Hatch doesn't charge any additonal fees, you can find the fees charged by each Exchange Traded Fund (ETF) by clicking on the 'investor centre' link when browsing in Hatch.
+ Is there a minimum investment amount?
There’s no minimum. You can invest as little or as much as you like.
+ What companies and funds can I access?
We provide access to over 2,900 companies and over 500 exchange-traded funds from Vanguard, BlackRock, and more listed on the NYSE and Nasdaq. Share criteria established by DriveWealth, our US-regulated broker-dealer, are that they are priced over $1 and companies have a minimum market cap of $1 billion.
+ Do I need to pay tax on my dividends?
In the US: Yes. But your US withholding tax is deducted before any dividends reach your Hatch account, so you don’t need to do anything. The US withholding tax rate on dividends is usually 15% after you’ve completed a W-8BEN form (which you do when you sign up to Hatch).
In NZ: Yes. If the cost price of your overseas investments (excluding any investments held in a PIE) total less than $50,000 NZD for the whole tax year, dividends you receive from Hatch are taxable income. If the cost price of your overseas investments (excluding any investments held in a PIE) total over $50,000 NZD, your overseas investments will generally be taxed under the Foreign Investment Fund (FIF) rules and you won’t be separately taxed on the dividends you receive.
+ What happens if Hatch goes under?
Hatch is a Kiwi Wealth brand and doesn’t hold your shares. We provide access to the US share markets via our partner DriveWealth, a US-regulated broker-dealer. If we decide to shut down the Hatch platform, you’d be given significant notice to sell up and get your money out, or transfer your shares from DriveWealth to a different US broker.
In the case of a DriveWealth insolvency, under US regulation, the customer (that’s you) is the first creditor. This means that your cash and securities flow back to you in the event of a liquidation. DriveWealth also has protections in place in the US such as Securities Investor Protection Corporation (SIPC). Each customer account is insured for up to $500,000 (with a maximum of $250,000 in cash). You can find out more here
+ How do I get started with Hatch?
If you’re over 18 and a tax resident of New Zealand only, you can use Hatch. It's free to sign up and takes less than a minute. You can immediately browse shares and start a watchlist. When you’re ready to invest, you’ll need to verify your identity and answer a few questions online to satisfy Anti-Money Laundering (AML) obligations. It takes less than 5 minutes and you just need your New Zealand driver’s licence or NZ passport handy.
+ I’m new to investing, is Hatch for me?
Delightfully intuitive, Hatch makes investing easy and rewarding for novices and experts alike. Thanks to fractional investing and our low fees, we’ve made it simple for someone to start with a small amount and learn as they go.
+ What is an ETF (Exchange Traded Fund)?
An ETF is a fund that you can invest in through the share markets (i.e. exchange traded). Think of the fund as a shipping container full of investments like shares and bonds. If you invest in an ETF, you buy a share in the container and own a tiny slice of every investment in it. ETFs allow for easy diversification. If you don't want to buy shares directly in multiple individual companies, you can buy a share in an ETF. This prevents your portfolio from being reliant on the success of one or two individual companies. Hatch lists over 500 ETFs, some aim to give you the most diversification possible by including all companies in an entire market in one fund (the US, emerging markets). Other ETFs let you benefit from trends, indexes, sectors and other investment strategies. There are so many ETFs available on Hatch that finding one that matches up with your investing goals is highly likely!
+ Do I own my shares?
Yes. But, for safety and convenience, your name isn’t on the share certificate. The certificate will show that the shares are held "in DriveWealth's name for the benefit of the Hatch customer". This is a common practice in the US and is known as “In Street Name”.
Holding your shares In Street Name doesn't diminish your rights as the owner. It removes the need to match each share certificate to each customer, which makes settlement faster and reduces the risk of loss that comes with the transfer of physical share certificates. It also lowers transaction costs, which is how we pass those savings onto you.
+ What’s with ICBCFS - a Chinese bank as a custodian?
Industrial and Commercial Bank of China Financial Services (ICBCFS) custodies Hatch customers’ shares. They’re a member of Securities Investor Protection Corporation (SIPC).
Headquartered in New York City, ICBCFS provides US equity brokerage, custody services, and global clearing in all major markets. ICBCFS offers a broad array of services to over 4 million corporate clients and approximately 430 million individual customers around the world. ICBCFS is a wholly owned subsidiary of ICBC Bank, one of the largest banks in the world. ICBC maintains a Moody’s "A1" and S&P "A" credit rating and operates in 34 countries with 252 branch offices.
Find more FAQs and answers in our Hatch Help Centre.