WealthDesign

I remember calling my father the “old man” when I was 18 – now I’m older than he was, back then! But I never thought getting older would be so much fun. I have got to travel, I have the privilege of working in a field that I love and I have a family I adore. It’s just at 18, old is anything over 30!  

I heard this cool story the other day, about one American man who made his fortune later in life, proving that life doesn’t end when you’re 50.  I liked this bit!

His name is Stewart Horejsi and he turned a modest $10,600 investment into an $8,016,867 fortune. Horejsi piggybacked on the success of a man who rewrote the rules of investing.  You may have heard of him. His name is Warren Buffett — the billionaire share market investor.

Like Horejsi, Buffett amassed his wealth later in life too. In fact, as Buffett blew out the candles on his 50th birthday cake, he had just 1% of his current fortune. Think about it – at an age when most give up hope, Buffett was just getting started on the remaining 99% of his fortune!

Which means it’s never too late for you to build your wealth, too. See, Buffett got rich by picking the right type of shares and holding on to them for years.

But I know what you may be thinking. Shares are risky, who do I ask for advice, what should I buy instead?

We all hear about the disasters – the ASX is a bloodbath right now and picking the wrong shares could harm your wealth. Which is why I think you’ll want to lean forward in your chair and listen in now.  The best way I know to create wealth is with dividend shares. These are companies that make a profit year in year out and pay a large percentage of that profit out to investors.

If it is good enough for 92.5% of Buffett’s portfolio to be invested in dividend shares, then it should be a strategy for us all. These shares are one of the keys to how he systematically amassed his riches.

One of the obstacles is knowing which shares to buy. At WealthDesign, we pay for independent research on the Australasian share market. We are happy to show you our strategy around selecting local shares, providing you with the research and advice on your options. We will give you this research, as we believe investors are smart enough to understand the marketplace.  They just need to be shown how.

John Barber
WealthDesign – a life well planned

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Isn’t travelling a right of passage for us Kiwis? Unfortunately, for the next generation, things aren’t as simple as buying a plane ticket and loading a pack with jeans and a few tee shirts.

Here’s what you need to do:

• Make sure you have quality travel insurance for the whole time you are away.  Asia might be a cheap place for a holiday, but you wouldn’t want to be hospitalised in a third world country.  Not all travel insurance policies are equal, so get good advice.
• Check you KiwiSaver payments. If you are away and stop paying into KiwiSaver, you might find yourself back to square one with the ‘first home subsidy’ rules.
• If you have a student loan, know the rules.  If you are only out of the country for 183 days and have lived in New Zealand for the previous 183, your interest on your student loan is written off.  If you are outside these rules, you are going to be paying interest and the government expects you to make the repayments.
• Australia has always been the alternative work place of choice.  Unfortunately, Kiwis are clearly discriminated against in Australia.  If you plan to work over there, make sure you get your insurance sorted before you go.  Cover such as trauma, total and permanent disability and income protection cover taken out in New Zealand, will cover you while you work in Australia.
• Lastly, make sure you have all the right visas etc.  Flying 10 hours to spend 20 hours in a holding cell and then sent back home, isn’t fun.  This happened to one of our clients – yes, it does happen!

Travel is great – it is important to get out of New Zealand to realise how small and insignificant New Zealand is on the global stage. It also makes you appreciate this great country we are privileged to live in. 

We know what possibilities could arise, because we’ve seen them. Give us a call and before you know it, you’ll be packed, prepared and ready for the adventure of a lifetime!

John Barber
WealthDesign – a life well planned

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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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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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Kiwis are a mobile breed – we love to take flight and nest down in locations all over the world.  Sometimes this is on a permanent basis, other times just for a year or two.  If you or someone you know is planning to head overseas, there are some financial matters that will need some attention.

KiwiSaver – in some instances you can take it with you, but keep in mind, there is some fine print you’ll want to know about, BEFORE you leave. 

House insurance – will you rent it out or keep it unoccupied for a while?  Check out the insurance implications.

Travel insurance – definitely not just for tourists.  In fact, you won’t want to get caught in a predicament overseas without it.

Life insurance – your existing life policy probably works wherever you live,  or some policies can be ‘suspended’ while you are away.

New Zealand life insurance companies always ask questions about residency, but few people have an idea what the implications are.  For example, if you are about to head off to Afghanistan to work in the ‘security’ industry, insurers would consider that an important titbit of information.

Before hopping on that plane, give us a call to ensure your financial matters are taken care of.  An hour spent with us can avoid time, suffering and money!

Regan Thomas
WealthDesign – a life well planned

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