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

KiwiSaver – income for your future self

Maximising the income that will provide the lifestyle for your future self, is how to approach your KiwiSaver. And you may be surprised to learn that if you don’t have your finger on the pulse of your KiwiSaver scheme, your future self may be a little short-changed.

The KiwiSaver initiative is not a set and forget sort of deal, with a ‘bells and whistles’ app on your phone that gives you your balance instantly (can you tell I think the sales pitch for this gimmick is utter BS? But that subject can wait for another day!). It needs managing as it’s an investment like any other long term investment.

An example arose recently when a client’s tax rate was 28%, rather than 10.5% At 6% return on his money, he had paid $1050 more than he needed to. Unfortunately the app on the phone doesn’t prompt you to manage your KiwiSaver scheme balance wisely, it just tells you what’s in the account at any given time.

When was the last time there was a rendezvous between you and your KiwiSaver scheme balance? If you have over $50,000 in yours, recent research (by Westpac) reveals you are in the top 13% of men and the top 4% for women in New Zealand. And if your balance is over $30,000, you are in the top 27% for men and the top 15% for women in New Zealand.

These are scary statistics when you consider a 65 year old male will need enough money to live on for another 19 years from his 65th birthday. It is even worse for women, as they tend to out-live the guys, yet their KiwiSaver scheme balances are on average, much lower than males.

Here’s what’s important.

Join KiwiSaver as soon as possible. When is the right time to join? Yesterday. When is the next best right time? Right now.

If you know you are in KiwiSaver and you’re not sure where yours is at, contact IRD and they will give you the relevant details. Or click here to find out more.

Secondly, ensure you’re in the right fund for you, plus you have the right tax rate for you. How do you know? Give me a call – I’m here to help.

It really makes my day when I ensure people are optimising their KiwiSaver investment.  So come and talk to me about your KiwiSaver scheme – your future self will thank you!

 

John Barber
WealthDesign – a life well planned

read on...

Check your credit score

Do you ever check your credit score? Did you know you could check your credit score?

Like many of us, I’ve never really given this much thought but I was reminded today that I should check.

Behind credit (borrowing money from the banks or finance companies) there is an industry of recording our private information. Information we don’t even know exists, let alone check.

Things like late payments to your credit card or utility bills are monitored. Even when you change telecommunication suppliers, your credit rating will be checked.

After hearing this, I went on to creditsimple.co.nz and checked mine. My credit score was ‘pretty healthy.’ Hmmmm … I wasn’t that happy about this, given my lifestyle and occupation! So I checked further, only to find a late payment to KiwiBank, due to their administration error, which had given me a black mark beside my credit rating. On creditsimple.co.nz you can comment on this, and your comment will stay on file. As you can guess, this is exactly what I did!

Without looking this up I’d have never known that a small administration error would show up somewhere in cyber space on my credit score.

So take five minutes and check that your credit rating is in line with what you think it should be.

creditsimple.co.nz
checkyourcredit.co.nz
centrix.co.nz
mycreditfile.co.nz

John Barber
WealthDesign – a life well planned 

read on...

Considering signing up to Airbnb?

The Airbnb ethos resonates with New Zealanders – real people, real experiences – it’s just how we roll. I stay often at Airbnb places and think it’s an awesome addition to the accommodation industry.

More and more people are signing up to Airbnb, seeing it as a way to share their little corner of paradise, whilst earning a bit of spare cash.

There are some important things to know though, if you would like to become part of the Airbnb world.

  1. The revenue is income and subject to tax. Don’t think you can do a ‘cashie’ or you could run foul of the IRD. Consider running your Airbnb like a little side business. Keep records and claim whatever expenses you are legally allowed to claim. This way, you only pay tax on the profits.
  2. Make sure your insurance company knows you are listed on Airbnb. The last thing you would want is someone burning your house down and the insurer walking away on this technicality. Most insurers don’t cover intentional damage, however theft is covered. Ask your insurer about their policy around illegal drugs. You don’t want to become ‘cook-a-batch’ (as opposed to book-a-batch!), and find you’re up for expensive clean up costs, due to contamination.
  3. Check out the automatic insurance covers offered by Airbnb, as it may pay to carry these additional covers.
  4. Be careful who you invite into your home. This way you can mitigate many of the risks. I believe people are generally reliable and caring when they use Airbnb, but not all people, unfortunately!

Enjoy the Airbnb experience, yet be prudent about how you do it!

 

John Barber
WealthDesign – a life well planned

read on...

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

read on...

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

read on...