WealthDesign

We are very fortunate in New Zealand to have a guaranteed government superannuation scheme which isn’t means tested, and which is available to everyone over 65.  The amount is the problem.  It’s $374.53 per week for a single person or $288.10 per married person – enough to cover the basics, but nothing more.

The question is how to invest to top up on this base. Recently a pension provider, Lifetime Income Limited, introduced a new pension fund to the market.  Investors can lock in a pension for life, based on their age. Today the rates (after tax) are as follows:

Age at first                                 Lifetime withdrawal rate
withdrawal                                                       (after tax)

65 to 69                                                                5.0%

70 to 74                                                                5.5%

75 to 79                                                                6.0%

80 to 85                                                               6.5%

This won’t be for everyone, but will have a place in long term retirement planning in this country. 

Give WealthDesign a call to see if it is something that would work for you.

John Barber
WealthDesign – a life well planned

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Over the holiday season, we have all seen the demise of another well-known brand as Dick Smith was put into statutory management.  Kids lost the value of their vouchers and the press have had a field day, but there are some important lessons to be learnt.
A well-known brand means nothing if things go wrong.  Often goodwill is valued as an asset and hidden in the balance sheet.
Don’t believe the spin doctors.  How many times have we seen companies sold off by ‘merchant banks,’ fail badly?
Always buy shares in companies with real assets, not inventory.  Real assets aren’t normally going to sell at 30 cents in the dollar.
Beware of the debt trap.  Over the past ten years, a number of companies have been taken over by the banks, and shareholders have been left with nothing.
If you are going to invest in shares, do your research.  The internet is a great place to start.  The NZX has interim reports on file.  My advice is, don’t look at the glossy pages but go looking for the bad news.  For a start, what are the debt levels of the company like, is revenue increasing and what are the company assets?
Lastly, never fall in love with one or two companies.  Diversify and be interested where your money is invested.

John Barber 

WealthDesign – a life well planned

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Today if you invest into a term deposit in any of our major banks, you will receive about 3.55% (before tax). By the time you pay tax, the amount left is under 3%. This is a pretty safe investment but not very profitable. The banks happily borrow your money, and then on-lend it, to make a profit. This is something the banks are pretty darn good at, so why not share in the profits? That is, buy shares in any of the main banks.

For example, ANZ is selling today for AUD$26.79 per share. Morningstar has a fair value estimate of AUD$36.00 per share.  Also, ANZ is paying a dividend of around 7% (before tax).

On top of this, the New Zealand dollar is at around NZD$0.94 against the Australian dollar. If our dollar falls, ANZ shares (in New Zealand dollar value) will go up, as the shares are on both stock exchanges.

Even if the share doesn’t go up and the New Zealand dollar stays the same as today, you are still going to earn twice the return that you would in term deposits.

In life, nothing is guaranteed and everyone’s situation is different.  WealthDesign specialises in individual personalised advice – so if you want to talk about investing smart, give me a call.

John Barber
WealthDesign – a life well planned

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Here’s a quick tip about dealing with batteries once they’ve been replaced – in this case, I’m talking about your smoke detector batteries.  Check out the link below – it’s about an owner of a house that caught fire – caused by a used 9 volt battery.

Makes you think about how you dispose of your used batteries. Once I’d watched this video, I raced down to the Palmerston North Recycling Centre on Ferguson Street, and handed over my bag of used batteries I’d had sitting in my garage for some time.  Good to know they recycle them there, for FREE! 

House fire caused by used 9 volt batteries

Kristine Barber
WealthDesign – a life well planned

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So here’s the deal.  People who get financial advice for their investments, make smart financial decisions more often than those who don’t get advice.

Proof?  The number of investors who switch KiwiSaver funds because the markets are volatile has increase 500% on the back of increased market uncertainty.  Why is this not so smart? Because these investors have sold out of assets at a discount, and have missed the opportunity to buy assets cheaply.

It is understandable though when you can see your KiwiSaver balance gong down on your iPhone, plus you don’t have the insight of sound financial advice.  Losing money is never fun but investors need to remember, they don’t get the money today, they may have 25 years to go!   If you understand dollar cost averaging and how KiwiSaver makes money for you in tough times, switching to a conservative fund isn’t going to be in your best interests in the long term.

Advice counts! Talk to a Certified Financial Planner today about your KiwiSaver and make some smart decisions around your investment.  Remember, we’re here for the long haul, to help navigate the obstacle course that is life.

John Barber
WealthDesign – a life well planned

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