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

There are plenty of ways to buy insurance these days  – and in this fast paced world of online solutions to everyday problems, you would assume that an online insurance purchase would have you covered.

However, you could well be wrong – very wrong.  And you won’t know until it comes to claim time, unfortunately. (The very reason you’re buying the insurance for in the first place.) 

The difference between insurance companies and their products is much more than just price. Little things like having the wrong word can be the difference between having a claim paid or not. A simple example is the difference between ‘own occupation’ and ‘any occupation’ within a total and permanent disability policy. Basically if you have the ‘any occupation’ policy, you must be unable to work again in any occupation to get a claim, where as ‘own occupation’ policies are just what it says, if you can’t work in your usual occupation ever again, you can claim. ‘Own’ and ‘any’ are tiny words in and of themselves, but they have massive ramifications at claim time.

One word could cost thousands.

Insurance portfolio structure is also important. If buying insurance online, would you know which covers to have, which not to bother with, what impacts increased excesses, or length of benefits and what stand down periods they have? These all can impact the overall cost of the insurance package.

Ownership of the policies is also important and understanding how this fits in with the other estate planning tools such as wills, is vital.

On top of all this, the difference between policy wordings is enormous and getting the wrong policy wording can also cost thousands, as you lose the ability to claim on the policy.

We pay for independent research so that we can compare insurers. Not only on price, but on policy benefits.  After years of helping our clients (both setting policies up and also at claim time), we know how to get things right.

Yes I’m biased towards insurance advice, however,  there’s a very good reason for it! Find someone who knows their stuff before embarking on buying insurance.

Don’t be fooled – cost isn’t everything!

John Barber
WealthDesign – a life well planned

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The investing ‘selfie’

In Australia, self managed superannuation (the selfie) is huge; with investments of over 30% of all superannuation assets managed by the individuals themselves. These assets add up to close to A $700 billion compared to the NZ $42 billion in KiwiSaver schemes in New Zealand. In fact, the average balance in these accounts is much higher than the average balances invested by individuals in managed funds, such as the New Zealand KiwiSaver schemes.  They are very popular as the individual investors have control of what investment strategies/ investments they employ.

For over 20 years I have helped our clients manage and grow their wealth in New Zealand. These portfolios are very much like the selfies of Australia. I am a firm believer in having investors actively engaged in where their money is invested.  I like direct Australasian shares and this strategy has been extremely profitable. Unlike many financial planners, I like direct property and I’m not a fan of managed funds.

It might be 10 years since the Global Financial Crisis, but I still haven’t forgiven a number of managers who miss led the market and who still bounce around telling everyone how great they are!

For almost 10 years we have been in a market recovery/bull market, as the world has recovered from the worst equity disaster of all time.

Whilst investing in good times is great, the real advantage of buying and owning your own shares/assets comes into play in the tough times. You aren’t exposed to silly selling by uninformed investors. You get to choose if you hold or sell an individual investment or change your investment strategy – you are in charge.  In fact you are often on the other side of the table buying when every one else seems to be selling. This is when you really make a dollar or two.

In March 2008 I clearly remember an astute client ringing and requesting we buy Australasian banking shares (ANZ, CBA, NAB and Westpac).  These shares had fallen sharply and whilst investors in managed funds seemed to be pulling out and going to cash, my elderly client rang and said “they just don’t seem to understand, I’m happy with the strong dividend payments these banking stocks are providing and no government is ever  going to let the major banks fail, let’s make money out of the silly sellers.” History showed she was 100% right and she pocketed a pile of tax free capital gain.

Buying direct shares isn’t difficult and once you are set up, the system works really well. Information today is only a click away and if you understand and apply a solid investment strategy, it can be very profitable.

We have a number of investors that are regularly buying Australasian shares. These portfolios are performing extremely well but we are looking forward and watching to see what happens next. As I say sometimes investors make more money in the tough times than in the good. Simply, we aim to buy when others are keenest to sell.

If you’d like to talk about investing, please give me a call. There is no charge for the first appointment, plus there is no time like the present to take the first step towards owning a successful investment portfolio.

 

John Barber
WealthDesign – a life well planned

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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

 

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Investment strategy counts

We have a new government and despite which side you of the political divide you sit on, one thing we all agree on is things are going to change.  Over 50% of the New Zealand sharemarket is foreign owned and what none of us knows, is how they are going to react to the new order.

One thing I know is we will read about their reaction in the paper the day after it happens. If foreign investors get spooked, they will sell and take their money out of New Zealand.  Our markets will fall and our dollar will go south. Interest rates and inflation in New Zealand will go up. Cost of fuel and living will go up and if we aren’t careful, New Zealand will have a very tough time.  There is already talk of wage inflation, as if just paying people more is good for our economy.

We are tiny on the global stage. Melbourne has more people than all of New Zealand, yet we think we are world leaders – oops, wrong! We are a little island nation miles from anywhere, and really the world doesn’t care (or in some cases) even know we exist.

For over 12 months we have been talking to our clients about building cash reserves and of paying down debt. Our investment strategy has been to buy quality companies with solid underlying assets. Focusing on companies with little debt and strong cash flows.

If and when the New Zealand sharemarket falls in value, our clients will be sitting on the other side of the table, happily buying any shares in quality companies that spooked investors (both foreign and local) are willing to sell, at a discount.

As an adviser, I’ve been through times like this before, and I’ve seen the winners and the losers. I know what strategies work. If you would like to have a chat, my door is always open. Remember, the first meeting is always free.

 

John Barber
WealthDesign – a life well planned

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