WealthDesign

This week the FMA provided a warning that perpetual subordinated notes are not for every investor. It is interesting that this comes out at the same time as the KiwiBank perpetual  note offer. Household names and high headline interest rates don’t make an investment sound, and these perpetual offers can be risky and complex.

I like simple investments. I like to know when I get my money back and perpetual notes don’t have a maturity date. I like investment grade assets because I remember the disaster of 2008, when sub-standard investments came back to burn investors. These bank issues aren’t clean or clear. The bank can stop paying or reduce the interest they pay investors; they can convert the notes to shares or even cancel some of the notes. Once you are invested, your only way out is to sell to someone else. If interest rates increase or the issuer falls out of favour, investors can lose capital.

Here’s the article:

 fma.govt.nz/news/media-releases/new-guide-to-bank-capital-notes-aims-to-boost-consumer-understanding

In a perfect world, the FMA might sort out the issuer rather than trying to tell the public after the event.

If you’re looking to invest, give us a call.  Quality, impartial advice is priceless.

John Barber

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I thought I would share my thoughts around the potential parity between our dollar and the Australian dollar.  In brief, this is great if you want to invest or holiday in Australia but a disaster for the New Zealand economy.  Australia is our second most important export market.  It might be great to be able to buy Australian goods cheaply however this is not going to help an export lead economy.

But there is an opportunity and smart, informed investors will take advantage of this. For example, $100,000 in bank deposits will earn around $4,500 (gross) at 4.5% compared to a potential 26% return by investing in quality Australian shares now.  There is risk involved in investing in any share market, but with good research and good timing (and some luck) this is an opportunity not to be missed.

At WealthDesign we purchase independent research on the Australasian share market. We always back up our recommendations with this third party information.

If you want to be an informed investor and take advantage of the strong New Zealand dollar, you know where to find me!

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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In the past three years the New Zealand Stock Exchange (NZX) as a whole, has increased by a whopping 77% in capital terms (tax free). On top of this, investors have received cash flow by way of dividends, making investing in our local markets very profitable.

History has shown that markets that go up, can just as easily go down, and now is a time for caution by investors. I am not a fortune teller so I can only look at the market indicators and make a judgement call.

The dramatic fall in dairy revenues, the fall in business confidence, the projected fall in inflation and our very strong currency does not bode well for our economy and therefore the NZX.  The New Zealand dollar is up around 18% from where it was three years ago, and while our Reserve Bank continues to talk about increasing interest rates in late 2015, our exporters will be in for some tough times.

The tough thing for investors is to find a reasonable alternative in which to invest.  Personalised advice will always be the best advice – advice that’s a match to your individual circumstances. For example for some investors, this will be to sell out and bank the profits; others however, will do well to broaden their investments.

My job is to help you build a successful investment portfolio.  I know where to look for investments that work just for you and your circumstances.  Experience counts in the investment game.  Call me to discuss your personal investment requirements today.

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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