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

The increasing number of retirees and the increasing longevity of these retirees will create opportunities and challenges. Expect to see changing spending patterns within the economy as the power of the grey wave starts to hit. Healthcare, travel and entertainment will be likely winners.

The investment conclusion from all of this, the grey wave is going to want more income assets that provide long term inflation hedging.

For more information about planning into your future, give us a call.

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Fees matter

It amazes me how many people invest using expensive reporting platforms where the adviser fee is linked to the size of the portfolios. Even worse, these advisers then invest into managed funds that add another layer of fees.  If the investment market goes up by 15%, should the adviser get a 15% pay rise? Even worse is where the fund manager charges a performance fee!  The market does what the market does.  Advisers and fund managers promising alpha (to beat the market) may be telling tall stories. And as far as paying themselves a performance fee benchmarked off cash returns –  in this market – words fail me.

 Fees do matter because at the end of the day, what is left is the return to the investor.

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The age revolution

We know about yuppies (young professionals living a luxurious lifestyle), dinkies (double incomes no kids) and now we have dippies – not drunken Lincoln or Massey students,  but over 65 year olds,  still working (double incomes, plural pensions).  These dippies think 65 is the new forty – not a bad mind-set, I think!  These guys are people over 65, still working and, in some cases, still caring for young children (thanks to a second time around marriage/partnership). But, they are collecting the pension.

Today over 55 year olds comprise 24.7% of the population but own 54% of the nation’s wealth. In 2031, baby boomers will make up 32% of the population and hold even more of the country’s wealth. We are working harder, staying in our jobs longer and focusing on staying  fit and healthy.

 Are we going to out live our money?  What does your retirement look like? 

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Transfer your super fund from Australia

Did you know you can transfer your Australian super fund to New Zealand?

If you have worked in Australia, you can search for your super balance by going to www.ato.gov.au.  You will need your name, date of birth and your tax file number.

Transfers became possible from July 1st 2013, but make sure you get qualified advice before you sign up for anything.

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Interest rates – up – up and away

One of the weird things about being human is that when things are good, we think things will always be good, but when things are bad, we seem to think things will stay pear shaped.

Interest rates are at an all time low. The base official cash rate (OCR) is at 2.5% and you can get a floating mortgage at rates below 5%. For a borrower, the past few years have been great but don’t think life is going to stay this way forever. The wind of change is blowing and borrowers and investors need to take heed.

Researchers are highlighting a move back to higher interest rates in New Zealand.  In particular, analyst’s expectations that the Reserve Bank of New Zealand (RBNZ) will initiate an increase in the OCR of 0.25% to 2.75% in March 2014. This is then expected to be followed by two additional 0.25% increases over the course of 2014, with the OCR ending the year around the 3.25% level.

 In contrast, the expectation is that the Reserve Bank of Australia (RBA) will undertake an additional 0.25% cut to their OCR in August this year and for their cash rate to remain unchanged at a historic low of 2.5% until the December 2014.

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The impact of this will be increasing interest rates in New Zealand and a probability of a stronger New Zealand dollar against our major trading partners.

Forward planning is vital. If you have a mortgage and you want to take out a bit of the interest rate risk, now is the time to be getting advice. If you are investing in Australia, you need to understand the likely impact of these economic drivers.

Check out the market mortgage rates or the currency charts on the homepage of our website at wealthdesign.co.nz.  Then give us a call to help guide you through the changes.

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