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

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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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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

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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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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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