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

The NZX50 is an index of the top 50 companies on the New Zealand stock exchange. It represents 90% of the market by capital value. Today the NZX50 index sits at 7600; in 2012 this was only 3450.

This bull run is indicative of most of the financial markets around the world. Basically, a monkey should have been able to make money in this market over the past five years. Unfortunately, the financial world doesn’t stay like this, and every so often (around the eight to ten year mark) there is a market correction – a nice term for everything turning to shite and people lose money!

It seems in this part of the cycle, people start to forget the basics and they over pay for assets, and think things can only ever go up in value.

Today more than any time in the past eight years, investors need to have an investment strategy. This strategy needs to have a capital protection element built into it.

If you own shares, know how their underlying asset would handle a 20% market fall. Would the company handle people not spending, or interest rates going up by 50%? Know what the debt levels are of the companies you are investing in. Don’t just trust and follow fund managers based on past performances.

In great times, blind monkeys can lead the crowd, but when things turn south, have your eyes open and don’t be one of the crowd.

In this part of the cycle we’re putting various strategies in place for our clients, with the intent of reducing the downside when the bull run ends – not wanting to be a spoil-sport, but it will end!

Call us now to make sure you’re in a good position to benefit from the market correction when it comes.

This guy sits at our reception at WealthDesign, reminding me of the bull run that we are currently experiencing (along with a fun trip to Shanghai a few years back, where I haggled a good price for him!).

John Barber
WealthDesign – a life well planned

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This week a good friend of mine called with some tough news. She has breast cancer and will need an operation and time off work.

About four weeks prior, she had been in the bank and had been told by a bank worker that her insurance package was ‘a rip off’ and she should cancel it. Fortunately she came to see us before she did anything, and after talking to her, we found we could add the non smoker discount as she had given up smoking 12 months ago – with the reduction in premium, it didn’t alter the covers.

The outcome of this is that her trauma cover is going to provide her with much needed cash while she has time off work to get well. This is why we believe our clients need to have a good insurance schedule.  We always work from claim time backwards and design a plan accordingly.

Research shows that people often cancel their insurance at just the wrong time (and we see it all too often). This is done without coming back to talk to us (as people can feel awkward) and often it is on the spur of the moment. It can be triggered by off-the-cuff comments from people in the industry, but who are often not qualified, such as the conversation my friend had with the bank worker. 

At least once a month we see someone in a situation that insurance is going to make a huge difference to. We know how insurance portfolios should be planned and we know which companies pay the claims without causing you hassles. BEFORE you cancel your insurance, come and have a chat.  Every decision, even a decision to stop paying insurance, needs advice.

Our door is always open and we love nothing more than having a chat about what’s up in your life. We’ll listen, we won’t judge and we’ll give you good, quality advice.

John Barber
WealthDesign – a life well planned

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Operations are expensive!

Every week, one of our clients is unfortunately in the office organising the paperwork to claim on their health insurance, to cover their medical costs.

We’re a fan of medical insurance – as we’ve seen what happens to people without it.

Check out these examples of the current costs of some surgeries:

Cataract surgery                           $4,300 – $5,200
Endoscopic sinus surgery         $12,000 – $37,000
Wisdom teeth extraction               $3,000 – $5,000
Angioplasty                               $17,000 – $27,000
Single valve heart surgery        $48,000 – $60,000
Heart by-pass                           $35,000 – $50,000
Mastectomy                              $12,000 – $15,000
Hip replacement                       $20,000 – $27,000
Robotic prostatectomy             $30,000 – $45,000

New Zealand has an amazing health care system, but unfortunately, it is under pressure. Health insurance allows you to by-pass the waiting list, and this could be vitally important to your health at some stage in the future.

If you don’t have health insurance, give us a call. And if you do have health insurance, then let us check your premiums, to ensure they aren’t running away on you.

John Barber
WealthDesign – a life well planned

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Nothing stays as it is today – change is inevitable, and change in the global markets is on the way.

In good times, it seems investors believe that these times will always last and in bad times, investors think that things will only get worse. The problem with this is that in good times, uninformed investors don’t look at the fact that assets are becoming over valued, so happily keep investing, ignoring the risk that the market could change for the worse. In bad times, they don’t go looking for bargains.

The latest Morningstar economic briefing highlighted the fact that assets across the board now look expensive. With around $40 billion dollars invested in KiwiSaver schemes, it’s time for kiwis to concentrate on the risk that KiwiSaver portfolios could drop dramatically, if the world economy changes. Today people have KiwiSaver scheme balances that are often worth more than their car, and their KiwiSaver balance can make up a fair amount of their savings.

The markets never stay the same and turn they will. It’s been nine years since the last major economic meltdown, and today we have very high political risk, and potential military risk around the globe.

It is time to get advice. Don’t wait and hope that the scheme managers will provide you with individualised advice; they just don’t have the staff, time or reason to do so. Advice is cheap (in comparison to not getting any), believe me.

So don’t wait until you hear news that the world markets have gone pear shaped. Get individualised advice from a qualified financial adviser; one who is transparent and working on your behalf (not on behalf of the fund managers). Get yourself in the right position to take advantage of the markets, no matter what they are doing.

We invest in independent research to back our advice up. We make the complicated simple, so let’s have a chat. You’ll be surprised how we can make a difference in your life.

John Barber
WealthDesign – a life well planned

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Today’s best kept KiwiSaver secret

Today there is over $36 billion dollars invested into KiwiSaver schemes. Often investors have thousands of dollars invested in their KiwiSaver scheme, and don’t even know where their money is invested, as it isn’t right underneath their nose on a day to day basis.

As an investor, I like assets that have a capital base and a known income source, so moving my KiwiSaver scheme to a fund that invests solely in Australasian listed property, makes sense to me. The great thing is that the property stocks have pulled back in value and NOW is a great time to move into the market.

The fund I have selected isn’t widely advertised and only has $16.1 million invested, compared to the $7.4 billion invested in growth assets in various schemes. Just because people don’t know about this fund doesn’t make it wrong, it’s just that the average investor isn’t thinking about their KiwiSaver scheme balance yet.

While you can’t use past performance as a guide to the future, you can use it as a consideration. You also need to consider fees and volatility. In my opinion listed property stocks will always have less volatility than equities, as their underlying assets are real property. If you then consider currency risk, having funds in the local market again reduces this risk.

A positive thing about local listed property stocks is that you can research the sector and make your own decisions, whereas growth funds can be invested in anything and everything. There is no clarity around investing in growth funds, so if you are an ethical investor, local listed property stocks could be the answer for you.

Performance Comparison

Fund                          1 yr return      3 yr return       5 yr return  

Av. Growth Fund          3.7%                  8.5%             11.1%            
Aus. Property Fund      6.0%                13.5%             15.1%

(with fees generally being similar between the two types of funds)   

If you would like more information, contact me at WealthDesign; I’m happy to discuss this fund with you and how it would work in your situation.

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John Barber
WealthDesign – a life well planned

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