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

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

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Ensure your $68,000 ends up in your hands!

Insurance does work, but you need the right team on your side.

A farmer I met the other day had a heart issue, 18 months ago. The result was a quick trip to Wakefield Hospital, and a long recovery back to health. The farm was sold and the family moved onto a lifestyle block. The bank was repaid and they decided it was time to review their insurance. No debt meant they didn’t need the life cover they had previously.

I was asked to go see these guys to help them in this process. They had a policy that had been in place for years and the person who had set it up had left the industry and no one had ever been in touch to review their policies. They didn’t really understand what they had in place, but felt they didn’t need to be paying big insurance premiums.

In the review process we found that the farmer had $60,000 of trauma cover and even though the illness that triggered a claim had happened 18 months earlier, with a little bit of work behind the scenes by WealthDesign, the insurer honoured the claim. In fact, they also repaid the premiums (another $8,000). This is great news and shows that insurance does work, you just need to have the right people on your team.

There are a lot of people out there who don’t understand what insurance covers they have, and don’t have a team like WealthDesign on their side who are working on their behalf! Paying for insurance that you don’t end up claiming on, is like taking your money and flushing it down the toilet! We understand how this can happen, however it’s totally avoidable. The key is to keep up your reviews, and work with a trusted professional who has your back.

The farmer was going to write to his insurer and just cancel the cover. If he had, he would have missed out on the $68,000, and never even known.

Give us a call to ensure you’re in the know when it comes to your insurance and financial affairs. We are there every step of the way.

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John Barber
WealthDesign – a life well planned

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Insured is not always insured

So you think you’ve got insurance and that you’re covered, right? People often think of insurance a bit like pregnancy – you either are, or your not. Not true, unfortunately.

When you sign up for your insurance policy, you don’t tend to read the policy wording – small print isn’t interesting, and we often think it’s just, well small print. Well that small print can become very LARGE instantly, come claim time, and an illegal act has been committed.

We all think we’re law abiding citizens, and that our insurance will give financial security to our family if we were to die in an accident. Just because you have a policy (and have been paying the premiums year in and year out), it doesn’t mean your claim will be approved when called upon.

Here’s an example. A claim was recently declined under the illegal acts exclusion, when a passenger in a car died because she had not put on her seatbelt. Mere forgetfulness can lead to claims being declined.

Here’s an example of some illegal acts that you may recognise from your own driving history:  straying over the speed limit, drifting out of the correct lane, failing to give way, and not to forget failing to wear a seatbelt.

Here’s an example of exclusions, straight from a New Zealand bank’s policy wording:

This Policy will not operate, and the bank will retain any premiums paid, if the Insured dies (directly or indirectly) or develops a Terminal Illness (directly or indirectly) as a result of:

  • An injury or an illness arising from an act which was intentionally self inflicted, within 13 calendar months from the later of the Commencement Date or the Date of Reinstatement;
  • The Insured’s involvement in an unlawful act whether or not the Insured is charged or convicted of an offence in respect of that act; participation in war (whether war is declared or not), warlike operations, insurrection or civil commotion.

I’m not picking on banks, nor am I implying that it was a bank policy that was declined in the example above, but I’m highlighting that not all insurance policies are equal, and people need to be aware of what can happen if you use the wrong insurance provider, with substandard policy wording.

All of this can be avoided though, by using an insurance provider with more consumer-friendly policy wording in their policies.

WealthDesign works from claim time backwards! We would never recommend a policy with such a large ‘get out of jail’ for the insurer. If you have a policy with this exclusion, I recommend you consider reviewing your insurance portfolio, as soon as possible.

Give us a call – we work for you, to get you the best possible outcome, in every situation.

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John Barber 
WealthDesign – a life well planned

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