WealthDesign

The world of farm business is changing. In the past, if a farmer wanted to expand, he called the bank and borrowed the cash. Today around 7.1% of all farms are some form of equity partnership. Farmers are finding it is better to be part of something rather than risk all by over exposing themselves to any lender.

These investment structures are a joint venture between groups of individuals and can range from owning just the land to being part of the land and farming business. All equity partnerships aren’t equal and investors need to be wary. One needs to understand what they are investing into. Farming is a long term investment and the asset liquidity isn’t great but it can be very profitable over a ten year period. It is important to do due diligence with an informed third party.

It is important to understand the costs, both up front and on going.  Good governance is also vital.

My background as a Lincoln graduate, farmer and a qualified financial planner, puts me in a good position to assess these opportunities.  If you want advice on how to invest into farming by direct ownership, please give me a call.

John Barber

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There is an old saying if you don’t know where you are going, how you will ever know when you get there? In investments this is very true. Last week we had our annual external audit for WealthDesign and one thing that was drummed into me was the need to always have clearly defined goals (defined in a clear and measurable way) on file, for our clients. These goals should always be the benchmark that every investment decision is weighed against. In truth this is easier said than done, and takes discipline and thought to achieve.  Which got me thinking … this applies in all of our lives, not just our businesses.

For example, say you are a trustee of a family trust or you hold a power of attorney for your aging mother.  Having the basics right from the start, is vital.  You have to know what you are trying to achieve.  So work backwards.  What does the family member or beneficiary require to live comfortably and without stress?  This involves numbers!  You can’t just be airy fairy and say I want my mum to be happy and comfortable.  What will that look like? Discuss this with family.  Communication is vital.   You need to be able to formulate how much money your investment needs to provide to have the outcome desired. 

This is where we help you.  It’s often new territory you’re treading, so having the support at hand, with an expert on your team, is invaluable.  We care!  Call us!

John Barber

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I can understand If you feel a bit over the government selling state assets.  But the fact that the government has put assets on the market in a variety of ways has been good timing and a boost for the New Zealand stock exchange. This has created a win for the New Zealand tax payer and a win for potential investors.

Genesis Energy  is a solid business. It supplies 26.8% of the total New Zealand electricity market and 43.8% of the gas market. It pays strong dividends of around 13.5%.  In my opinion this share is worth having as part of a share portfolio.

Power Companies are great assets to have in a long term ‘buy and hold’ share portfolio.  The industry has high barrier to entry, tend to be inflation proof and recession proof and pays high dividends. 

The trick is not to be over weight in any one share. Today we have an abundance of power companies. Treat them as part of the portfolio. Don’t try and pick the “winner” but hold a percentage in each.  In ten years’ time, you will look back and think the price you paid was relatively cheap, and you will have had the benefit of strong cash flows from dividends.

If you want to talk about creating a New Zealand share portfolio, please do not hesitate to give me a call.

John Barber

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Lots of parents want to give their kids what they never had.  But where do you draw the line?  I recently came across Mr Money Mustache’s website, and he makes a good point not just about lavishing your kids with all the gadgets, toys and technology available, but also in regards to paying for weddings, gifting house deposits and paying for university.  You could well choose to do all these things, but how can you do so while making sure they learn how to make good financial decisions, and also learn to appreciate the gifts, rather than learn to expect them?

As Mr M says, “It’s all noble and generous-sounding on the surface. As a parent, you want to give your kids all the advantages you didn’t have when growing up yourself. You earn much more than your parents did at this age, and so it is appropriate for a person of your economic standing to splash it out onto your offspring. Isn’t it?

The only thing is, in most cases you’re creating a double whammy of wrongness. Wrong because you’re spending more money than necessary, which means incurring more debt, working longer, and having less time to live your own life. And more importantly, you are probably programming your kids to expect handouts, and displacing their own healthy learning, effort, and growth with the leather-upholstered La-Z-Boy of your easy flowing cash.”

Makes you think really. 

Regan Thomas

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The shadows of the 2008 global financial crisis (GFC) seems almost a forgotten part of history for some investors.  But it is time to be careful as an investor.

RETURNS COMPARED TO PRE-GFC HIGHS OF 2007/08

What this means is that share markets are above their all time highs.

Investors need to be wary of the potential impact of the changes going on in the US. The slowing of the economic stimulus and the potential rise in interest rates around the world will negatively impact on share markets and stock selection will again become very important. Blindly following the market could prove to be costly.

My advice is to think about where your money is invested and what would happen to capital values and cash flows when interest rates again hit 8.5%.

John Barber

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