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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The tax rules are reasonably clear but many New Zealanders still pay more than they need to and miss out on thousands of dollars in refunds.

Here are some simple tips:

1. Make sure you claim for any donations, especially school donations.
2. If you have income replacement insurance, make sure you claim the premiums, as there is a deduction for these as well.
3. If you are paying for financial planning advice, you can claim for this.
4. Make sure you have the right tax rate on your KiwiSaver. If you haven’t and you are paying too much, the IRD will not refund you, but if you’re not paying enough, they will charge you.
5. Make sure you are paying at least $1043 every year into KiwiSaver. This means you are getting a $521 tax credit. If you are not in KiwiSaver, on contribution holiday or paying below this level, you are missing out on a tax refund.
6. Check the ‘working for families’ entitlement. This is a great scheme but it can have a bite to it, if your income goes up. Make sure you get it if you are entitled, but don’t collect it if you aren’t. The IRD will come looking for you.

We’re financial advisers, not accountants, but we can help get the information you need to make sure you are claiming what is rightfully yours. For specialist advice we suggest you talk to a qualified accountant.

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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We all understand the concept of fixing our mortgages but fixing the cost of insurance seems a strange concept.

Today most people buy stepped or yearly renewable life insurance. It is a very cost effective way of buying life insurance, but unfortunately there is a loop-hole. The cost increases dramatically over time and research shows that people cancel the cover when they need it most.

The answer is to fix some of the cover. This option involves buying a ‘level to age 80’ policy. This way you know that in later years, the insurance cover will still be affordable.

Talk to us today – let’s look at your options.

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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