WealthDesign

Money makes the world go around! Today, money has never been cheaper – for example BNZ have announced their lowest two year fixed rate ever recently, of 4.39%. Awesome! But before you rush out to go borrow some, there is a trick. You need to understand the difference between good and bad debt.

Bad debt is money borrowed on depreciating assets. It is debt paid out of tax paid dollars. And the very worst bad debt is money borrowed to spend on consumption (I can feel some people’s hearts sink!).

Good debt is tax deductible debt used to buy appreciating assets and with historically low interest rates, you can borrow money to make money.

An example of bad debt we often see is property investors with personal debt on their homes and free hold rental properties. A little smart planning could save these people heaps on their taxes. With a little planning we can transform bad debt into good debt.

We often see people who could increase their monthly mortgage payments by as little as $20 a week and save thousands of dollars in interest over the term of the loan.

If you have debt and you need to discuss how you can save money or plan smarter, give WealthDesign a call.

A little time invested today could save you thousands of dollars in the long run.

John Barber
WealthDesign – a life well planned

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We told you in May and now it’s our last reminder before the cut-off date. 

Each year, the government will contribute 50 cents for every dollar you save in your KiwiSaver, with the maximum contribution being $521. To get the full amount of $521 you need to have contributed $1,043 in the twelve months prior to the cut-off date of June 29th 2015.

Even if you haven’t contributed the minimum of $1,043 up to this point, you can add a lump sum prior to the cut-off date to take you over the threshold – this will give you the full contribution of $521.

It may not seem like much, but it’s what being a ‘kiwi’ who is saving is all about!  For example a  24 year old in KiwiSaver,  who is over the threshold of $1,043 yearly (and therefore receiving the full $521 contribution), could end up with as much as $50,000 more in their retirement fund, when they reach 65. 

Be the optimal ‘kiwi’ saver by giving us a call.  We’ll help you to save smart – easily and relatively painlessly

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The tax rules are reasonably clear but many New Zealanders still pay more than they need to and miss out on thousands of dollars in refunds.

Here are some simple tips:

1. Make sure you claim for any donations, especially school donations.
2. If you have income replacement insurance, make sure you claim the premiums, as there is a deduction for these as well.
3. If you are paying for financial planning advice, you can claim for this.
4. Make sure you have the right tax rate on your KiwiSaver. If you haven’t and you are paying too much, the IRD will not refund you, but if you’re not paying enough, they will charge you.
5. Make sure you are paying at least $1043 every year into KiwiSaver. This means you are getting a $521 tax credit. If you are not in KiwiSaver, on contribution holiday or paying below this level, you are missing out on a tax refund.
6. Check the ‘working for families’ entitlement. This is a great scheme but it can have a bite to it, if your income goes up. Make sure you get it if you are entitled, but don’t collect it if you aren’t. The IRD will come looking for you.

We’re financial advisers, not accountants, but we can help get the information you need to make sure you are claiming what is rightfully yours. For specialist advice we suggest you talk to a qualified accountant.

John Barber

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Who wants the best interest rate for their term deposit?  We have collectively negotiated preferential interest rates for WealthDesign’s investment clients. 

The great thing is your account is in your name – meaning there are no fees based on the amount you have invested.   

If you’re interested in comparing all the current bank term deposit rates, head over to interest.co.nz.  Then give John a call to see what WealthDesign can offer you for your term deposit.

John Barber

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Financial planning – just for the oldies right?  Not so much!  If you’re generation Y, just finishing university, finished your apprenticeship or starting out in the working world, there are a few financial planning issues you need sorting.

Firstly it’s wise to be in KiwiSaver, as soon as you join the workforce. This is one of the four pillars of financial success. You need to understand the first home subsidy rules and how KiwiSaver works. You’ll be targeted by the bank teller who is trying to meet his/her daily KPIs of selling a certain number of KiwiSaver plans, but it pays to get valuable, qualified advice. You really need to understand what you should invest, and why you should invest in the right fund – and your local bank teller is not qualified to give such advice.

You need to make your first Will and get an understanding around the relationship property rules.  A good lawyer will help educate you on the basics. (As part of our role, we team you up with the right people, to support you on your financial journey.)

Lastly you need to get your insurance in order. If you’re off travelling or working outside of New Zealand, getting insurance set up is vital. The sad fact is, if you work globally and something goes wrong, financially you can be clobbered.  The good news is this isn’t a costly exercise. 

Quality, objective financial planning advice pays dividends.  It’s also empowering you to take control of your own life – getting the basics tidied up to bring you peace of mind – freeing you up to go and live your life, however that looks for you.  An initial chat is always free of charge, so it’s well worth a call to us at WealthDesign, to tee something up. 

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