Some need to know, with a bit of WealthDesign nice to know thrown in.

KiwiSaver is ten years old now. There is more than $43.2 billion invested collectively. Of that figure, do you know the details of your slice of that pie?

Even today, 20% of members still have their funds invested in a conservative default scheme. These investors are missing out on potential returns as the average default scheme returned 4.1% for the rolling 12 months, compared to 7.8% for the average balanced fund. If you do the numbers, that means that if you have a balance of $30,000 in your KiwiSaver fund, and it’s in a default fund, you have lost out on $1110 in just this year alone! When you compound that up (over however many decades until you turn 65) it could make you weep!

We have been doing some research and we are finding that:

15% of people don’t know who their investment is managed by.

62% of the members don’t know if their fund is doing okay compared to the market.

43% don’t know if their PIR rate is correct.

53% of members have never had any KiwiSaver advice.

Of the 47% who have had advice, 13% of members got it from a qualified adviser and 19% got advice from a bank employee (who can only give information about their bank’s products).

The trends are interesting. Those who got advice, seemed to understand and have invested in the right fund for their age and stage of life, and they tend to have an understanding of the tax implications. They also understand market volatility and how it will impact on their individual KiwiSaver.

It is nine years since the global financial crisis smashed the global equity markets. For those investors who don’t understand risk (the chance their balances could fall), a market correction could cause a lot of sleepless nights when they see thousands wiped off their KiwiSaver balance.

If you are one of the 53% that has never had KiwiSaver advice, or one of the 47% who wants to ensure management of your KiwiSaver fund is optimised, give me a call and come and have a coffee. I don’t charge for the first appointment. Let’s first see if we are a good match, and then we can go about optimising your investment plan for you and your circumstances.

John Barber
WealthDesign – a life well planned

 

read on...

John’s to-do list for millennials

After last night’s workshop in Wellington, focusing on millennials and their finances, John has put together a to-do list. It’s aimed at getting you on the right track, if you’re a millennial or not.

  1. Do a goal setting exercise – where do you want to be in five years’ time?
  2. Get a Will and an Enduring Power of Attorney (EPA).
  3. Set up an insurance portfolio.
  4. Start a savings programme.
  5. Make sure your KiwiSaver is working as hard as you are.
  6. Get ongoing advice.

 

John Barber
WealthDesign – a life well planned

 

read on...

Nothing stays as it is today – change is inevitable, and change in the global markets is on the way.

In good times, it seems investors believe that these times will always last and in bad times, investors think that things will only get worse. The problem with this is that in good times, uninformed investors don’t look at the fact that assets are becoming over valued, so happily keep investing, ignoring the risk that the market could change for the worse. In bad times, they don’t go looking for bargains.

The latest Morningstar economic briefing highlighted the fact that assets across the board now look expensive. With around $40 billion dollars invested in KiwiSaver schemes, it’s time for kiwis to concentrate on the risk that KiwiSaver portfolios could drop dramatically, if the world economy changes. Today people have KiwiSaver scheme balances that are often worth more than their car, and their KiwiSaver balance can make up a fair amount of their savings.

The markets never stay the same and turn they will. It’s been nine years since the last major economic meltdown, and today we have very high political risk, and potential military risk around the globe.

It is time to get advice. Don’t wait and hope that the scheme managers will provide you with individualised advice; they just don’t have the staff, time or reason to do so. Advice is cheap (in comparison to not getting any), believe me.

So don’t wait until you hear news that the world markets have gone pear shaped. Get individualised advice from a qualified financial adviser; one who is transparent and working on your behalf (not on behalf of the fund managers). Get yourself in the right position to take advantage of the markets, no matter what they are doing.

We invest in independent research to back our advice up. We make the complicated simple, so let’s have a chat. You’ll be surprised how we can make a difference in your life.

John Barber
WealthDesign – a life well planned

read on...

Today’s best kept KiwiSaver secret

Today there is over $36 billion dollars invested into KiwiSaver schemes. Often investors have thousands of dollars invested in their KiwiSaver scheme, and don’t even know where their money is invested, as it isn’t right underneath their nose on a day to day basis.

As an investor, I like assets that have a capital base and a known income source, so moving my KiwiSaver scheme to a fund that invests solely in Australasian listed property, makes sense to me. The great thing is that the property stocks have pulled back in value and NOW is a great time to move into the market.

The fund I have selected isn’t widely advertised and only has $16.1 million invested, compared to the $7.4 billion invested in growth assets in various schemes. Just because people don’t know about this fund doesn’t make it wrong, it’s just that the average investor isn’t thinking about their KiwiSaver scheme balance yet.

While you can’t use past performance as a guide to the future, you can use it as a consideration. You also need to consider fees and volatility. In my opinion listed property stocks will always have less volatility than equities, as their underlying assets are real property. If you then consider currency risk, having funds in the local market again reduces this risk.

A positive thing about local listed property stocks is that you can research the sector and make your own decisions, whereas growth funds can be invested in anything and everything. There is no clarity around investing in growth funds, so if you are an ethical investor, local listed property stocks could be the answer for you.

Performance Comparison

Fund                          1 yr return      3 yr return       5 yr return  

Av. Growth Fund          3.7%                  8.5%             11.1%            
Aus. Property Fund      6.0%                13.5%             15.1%

(with fees generally being similar between the two types of funds)   

If you would like more information, contact me at WealthDesign; I’m happy to discuss this fund with you and how it would work in your situation.

john copy

John Barber
WealthDesign – a life well planned

read on...