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

 Recently in the NZ Herald, some top financial commentators have highlighted five common misunderstandings held by New Zealanders. Here’s our bite-sized overview:

To join KiwiSaver you have to have a job

No!  KiwiSaver isn’t just limited to the employed.  Anyone under 65 can join KiwiSaver – employees, self-employed, stay-at-home carers, beneficiaries, and kids.  As long as you have permanent residency in New Zealand you qualify. 

The government has your money in an account

Again – no!  It’s your money.  There are many KiwiSaver funds, operated by fund managers who are investing the funds for the members.  Only the individual members can access their funds (for first home purchase, or once they have reached 65), as the accounts are held in the members’ names only.  In essence it’s like your money in your bank account – the only difference is, you can’t take out money, you can only put it in.

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You have to get out at 65

Yes it’s true that if you remain working after 65, your employer doesn’t have to contribute any longer, and you also won’t receive member tax credits from the government. However, you don’t have to shut up your KiwiSaver account, you can use it as a tool to manage your finances.

It’s a savings account

No, you can’t withdraw funds whenever you want.  You can use the money for a first home deposit, or under hardship circumstances, although neither is a guarantee that you can withdraw funds; there is fine print. If you join between the ages of 60 and 64, you need to leave your money in KiwiSaver for five years.

You get the best return in default funds

Your KiwiSaver needs managing, pure and simple.  Funds can fall in value and it’s important to seek out professional advice from a reputable, authorised financial adviser.  Once a member of KiwiSaver, you essentially become an investor.  Investors get financial advice to maximise their investments.  This isn’t an expensive process (which is perhaps another common myth held by many New Zealanders!).

We can explain KiwiSaver in a way that it’s simple and relevant to your personal situation.  Also, we believe no question is a silly question.  Give us a call!

 

 

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Bonus Bonds are a New Zealand icon, with investments of over $3.1 billion.  Basically Bonus Bonds are a unit trust, run and administered by ANZ. Each month prizes are allocated to some lucky unit holders from the income generated by the billions invested. Unfortunately the chance of winning is about 30,000/1. Good if it works and you are one of the $1 million winners, but not so good if you aren’t.

The prize pool is calculated by taking the income generated and deducting ANZ’s slice. Last year the after fees and expenses allocated to the prize pool equalled 2.03% on the fund and ANZ deducted 1.28%; not a great investment considering if you put the whole $3.1 billion on term deposit for twelve months, you could get a guaranteed 4.4% return.  It seems Bonus Bonds are great for ANZ and not so great for the majority of their investors.

But wait there’s more … investor’s capital isn’t guaranteed and Bonus Bond units can fall below a dollar and ANZ can charge withdrawal fees.

Anyone holding or thinking of buying Bonus Bonds should visit bonusbonds.co.nz/prospectus, and do some homework.

History has shown that often iconic brands and investment products can morph into something completely different over time and this has caught many people out over the years.

Our advice is to be an informed investor – avoid the simple mistake of not knowing where your money is.

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Wealthy people use financial advisers

Australian research shows that 89% of people that use a qualified financial adviser said the advice was good value and helped them select the right product for their individual circumstances.  Although common for households earning over $160,000, only 15% of all Australians use a financial adviser.

This is ironic as you don’t need to be wealthy to make informed decisions, however informed decisions will definitely move you towards your wealth.  Every life stage requires you make appropriate financial choices and it pays to get good advice. Often this doesn’t cost, and can be invaluable.

If you want to be put on the right financial path, knowing you have peace of mind and that you are aligned with your own personal goals and desires, contact us now and make a positive start to 2014.

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Deadline for UK pension transfers

If you have worked in the UK or moved to New Zealand and have a pension scheme in the UK, you need to take notice.

The UK pension rules are changing on the 31st March 2014 and the tax treatment of those funds, if moved to New Zealand, will be vastly different than they are today.

There are 48 registered schemes where you can transfer your pensions into but it must be done before March. Not all of them are top quality and some are down right dodgy. The fees to the uninformed can be extortionate.

It’s best to talk to a professional. UK pension transfers are part of an overall retirement  plan, which needs managing.  Give us a call; we’re here to help.

 

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When looking for quality financial advice …

Research shows that there are fewer than 1800 financial advisers authorised to give personalised financial advice in New Zealand. The scary thing is,  of these only around 360 are non-aligned or not linked to product providers, banks or insurance companies.  This minority aren’t allowed to advertise that they are independent.  So where do you go to get impartial, quality advice?

In my opinion, being authorised might allow you to give advice but this shouldn’t be the minimum level of qualification one should have, to provide quality advice. There has always been an education pathway before the latest round of regulations.  People should look for those advisers who believe in further education and who have demonstrated this by becoming either a CLU or CFP. These designations carry a higher qualification that AFA, providing their clients with the best quality advice in the market.

I advise you to ask what qualifications your potential financial adviser has.  It’s your life, so shop around to make sure you have the best adviser, someone that you’re comfortable with, and who is well qualified. 

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