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

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.

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John Barber
WealthDesign – a life well planned

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The shape of our families in 2017 looks somewhat different than the family shape in 1977. Today many families are blended families and often with more than just one set of children.  Blended families can make financial planning just a little complex!  Often there are issues around how assets are split if one or both partners die untimely. 

We are now seeing KiwiSaver scheme balances getting up to the stage that they need to be considered within the estate planning process too.

There are legal issues and often people don’t want to open the door and play the ‘what if game’, but from my experience, planning for the worst and expecting the best is always best done before a crisis.

Once you can articulate what you want to happen, planning requires an input from lawyers. One of the largest issues we see is that people get the first two parts right, but never finish the paperwork. The outcome can be a basket full of pain, despair and wasted money.

As financial planners, we have experience in organising this process, and understand where insurance can play an important part.

Expect the best and plan for the worst – give us a call today – we make the complicated simple. It’s just what we do.

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John Barber
WealthDesign – a life well planned

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The KiwiSaver HomeStart grant is designed to help eligible first home buyers with a grant up to $5,000 per individual towards an existing home, or up to $10,000 for a new build. This, on top of the ability to access their KiwiSaver scheme balance, has helped thousands of kiwis buy their first home.  There are around 140 grant applications per week processed by Housing New Zealand.

It’s great, in fact it’s brilliant in my opinion, but there is a problem. The applications get declined – at a rate of one in twenty!  That is 28 applications per week, where potential first home owners are left bitterly disappointed.

This can be for a number of reasons such as already owning land or property, living with someone who has an interest in a property or just not getting the application in on time. It can be mistakes by lawyers not getting the paperwork into Housing New Zealand in time or just sloppy handling of a vital piece of the puzzle.  Another overlooked issue is that KiwiSaver investors have had to pay a minimum of 36 regular payments, and KiwiSaver payment holidays can mean applications are being declined.

These people may miss out and may never get the chance again. Once settlement has occurred, you can’t access your KiwiSaver balance, or the grant. There are numerous stories of people going into unconditional contracts to settle on homes, only to find they can’t access their KiwiSaver scheme balances, leaving them short of cash on settlement day. An example was a guy who had transferred his Australian superannuation to his KiwiSaver, not knowing that he couldn’t use these funds to purchase a house. He happily went unconditional, but couldn’t access all of his KiwiSaver, leaving him short on settlement day. Again, people don’t know that they can’t use their Australian superannuation to buy a first home, even if it is in their KiwiSaver scheme.

My advice is to talk to someone who knows what the rules are. Don’t leave the paperwork to your lawyer; you control the process, to ensure you don’t receive a shocking surprise on settlement day.

We are happy to help with advice – forewarned is forearmed, so give us a call, and we’ll talk you through the process.

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John Barber
WealthDesign – a life well planned

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After almost 30 years in the financial services industry I am a firm believer that investing is not a paint by numbers sort of deal, and that investors don’t all fit in some theoretical box. The investment theory is we are all somewhere on a ‘risk’ scale; from a conservative investor to an aggressive investor. You only need look at the design of the KiwiSaver schemes to understand how this theory is reinforced.

What the theory doesn’t take into consideration is people. We are a weird bunch and we are all different. We have different abilities to understand and handle volatility (so called risk, when our asset values go up or down). Understandably we like it when our assets appreciate in value, and hate it when their value goes down. We also have different time frames and different balance sheets. We also have different abilities to manage investments.

The theory doesn’t take into consideration timing. Timing is really important. There are times when it’s great to be a conservative investor and have lots of investments in bonds or fixed interest. Then there are times when even these defensive investments do not reward the investor for the risk they are taking.

Now is one of those times. If you consider a moderate bond portfolio will only be yielding around 4% and there is a risk of capital loss, why would you invest in bonds at this time (especially when bank deposit rates are around 3.6% and there is very little chance of capital loss)?

We are all different, so personalised advice is vital. Get an adviser on your team who looks at your whole financial picture and gives you advice that suits you – not tells your which ‘box’ you fit into, providing an off the shelf, ‘she’ll be right’ solution.

An adviser with a wrinkle or two helps, as being in this industry for a while means they’ve been through the financial cycles, and if they are still here, they must be doing something right! Knowledge and experience will definitely be the way to go when it comes to investing in your future.

Give me a call today, and see how a great investment strategy can help you to reach your financial goals. Our first session together is complimentary; in that time you can decide if working with me, will work for you.

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John Barber
WealthDesign – a life well planned

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I see it happen regularly. People have a habit of cancelling their insurance just before they need it.

Statistics show:

The average age of a death claim is 62, yet often the people cancel their cover at around age 50.

Trauma cover is often cancelled at age 44, yet the average claim is paid out at age 52. 

With income protection, the story is the same. The average claim is paid to 47 year olds, yet the average age when people cancel is 44.

If you are 50 plus, you are in the ‘transition phase’ of your life. You should be getting yourself set up for retirement and your KiwiSaver scheme balance should be starting to grow nicely, BUT don’t ignore your risk management plan.

Before you ever think of cancelling your insurance, come and have a chat. We won’t try and talk you out of anything, but we will give you some BIG picture considerations. This may make a very big difference to you and your family’s life in the future.

Life changes and so do your insurance needs. The best plan of action is to have annual reviews – they cost you nothing – but keep you on track, at each stage of life.

Don’t become one of these statistics – make sure you and your family are sorted, if misfortune happens to knock on the door uninvited!

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John Barber
WealthDesign – a life well planned

read on...