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

Who said New Zealanders don’t save?

The total KiwiSaver balance for all investors is now $ 19.94 billion of savings. Who said New Zealanders don’t save?

With rising investment balances, investors need to consider the fees they are paying and which asset allocation they are invested into. In some cases they are paying top fees for the lowest return.

Category

Max TER %

Min TER %

Median TER %

Av 5 yr return %

Aggressive

1.89

0.93

1.27

10.66

Growth

1.99

0.66

1.07

10.30

Balanced

1.29

0.97

1.03

  9.21

Moderate

1.17

0.56

0.94

  7.89

Conservative

1.05

0.38

0.69

  6.45

 

We have access to independent research that can compare fund with fund and manager with manager. Fees and performance really matter, and you need to be an informed investor. This is especially important as most of the marketing around KiwiSaver focuses on things like access to your KiwiSaver balance; not the real issues of fees and performance.

Our door is always open and we are happy to help you become an empowered investor.

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MTC is a great sweetener for KiwiSaver scheme members.  As long as you have saved $1,042.86 by June 30th each year, you receive a full tax credit of $521.43.  For a number of reasons, you may not have hit this target but it isn’t too late.  If you haven’t saved this amount during the year, you can still make one off payments to maximise the tax credits.  You can either send a cheque or pay IRD directly or go via your KiwiSaver provider.

If you want to talk about your KiwiSaver or do not know who it is with, do not hesitate to call the WealthDesign office. We have the latest Morningstar research on all the KiwiSaver funds so you can see if your fund is right for you.

 

John Barber

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Goals –are your goal posts in sight?

a Soccer ball on a soccer field

 

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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Genesis Energy

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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