WealthDesign

China is the world’s second largest economy yet Western investors continue to ignore the investment opportunity that China represents.

Wage growth in China is running at somewhere between      15 – 25% p.a. and the Chinese economy is changing from a mass producer of cheap low quality goods, to a more mature market.

Up until now investing in China has been problematic. This is how it worked.  Chinese incorporated companies had A-Shares that only Chinese investors could purchase.  These companies also had B-Shares available to non-resident investors (non-Chinese).  These shares were on the Shanghai and Shenzhen Stock Exchanges (mainland China).

However from November this year, these stock exchanges will merge with the Hong Kong Stock Exchange.  This will mean that A and B Shares, that couldn’t be purchased outside of mainland China, will now be accessible via the Hong Kong Stock Exchange.

The outcome of this will be that Chinese listed companies will be accessible by the rest of the investment world (for the first time).

Watch this space … the investment world will take this opportunity to buy into Chinese companies. 

If you wish to talk about how you can participate in this changing investment scene, give me a call.  I’ll be happy to talk you through this exciting opportunity.

John Barber

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The media has invented the phrase ‘housing crisis’ and repeated it so many times that many now believe we have one. Yes, people are buying houses off each other in some parts of the country for ridiculous prices; even an uninhabitable villa can go for $1,000,000 in Auckland. But that doesn’t mean we have a crisis.

Auckland has a supply issue, particularly with land – which makes up 60% of the cost of a new house in that city. In Christchurch, where over $3,000,000 a day is pouring in from insurance funded repairs and new builds, there is a mega-boom going on. That also doesn’t mean we have a crisis.

Veda have said that people aged under 28 are borrowing more often for personal loans and credit cards and less for mortgages. With four consecutive Official Cash Rate (OCR) hikes this year, the well-publicised 20% deposit requirements and constant reporting of this so called ‘crisis,’ who could blame them?

Since the previous boom peaked in 2007 house prices in 16 areas across New Zealand have increased, but have fallen in 37 and remained stable in 19 – including Palmerston North. Around Manawatu there are plenty of houses under $200,000 that would be suitable for first home buyers, and if you look just outside Palmerston North, there are several small towns that offer houses for even less.

With KiwiSaver’s first home withdrawal, Housing NZ’s first home grant and the Welcome Home Loan Scheme, many people are still buying houses. There are many more who may not even be aware of just how close they already are – banks are still able to lend to 90% (just not all the time), and the LVR restrictions do not apply to new builds (so a 5% deposit may do it).

Some in the media have been saying that first home buyers need to reduce their expectations around how much they can spend on a home, where that home should be and the size and type of property they can buy first up. There is merit to that, but there is far too much misinformation out there too.

Rather than giving up, people just need good advice. They need to speak to someone who knows what is really going on, and who has a sensible and realistic approach. Give us a call – we help make the complicated simple.

Regan Thomas

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In New Zealand we are fortunate to have a world class accident compensation scheme. We all hear the sad stories of ACC not meeting people’s expectations, but it is still a great scheme in my opinion, and has many benefits.

At present we are seeing a lot of insurance advisers giving blanket advice to reduce ACC and take out private insurance. In some cases this is prudent, especially if your income would continue in the event of a period off work i.e. dairy farmers. But it’s not for everyone and this is where I get concerned.

ACC pays out after seven days versus private insurance that pays only after 30 days off work (at best). ACC covers you even if you have risky hobbies such as motor sport or mountaineering.  Most private insurers would exclude these types of hobbies. ACC also has an accidental death benefit built in as well.

The other thing we see is clients with back and knee exclusions on private cover, and advisers suggesting reducing ACC, just based on a short term premium savings on ACC. This doesn’t always bring about the best outcome.

ACC is a complex product and needs specialist advice.  Before you change ACC because of a sales pitch, ask for a written report, as for the proof that the person actually knows ACC in depth.   Make sure you are talking to someone who really knows the complexities of ACC and not just someone using ACC as a way to make a sale.

If you want quality ACC advice, or you want to double check what you have had recommended, give us a call and we can refer you to a firm that does nothing but handle ACC. 

John Barber

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Think again. Financially, working to age 70 can really help to top up the retirement savings. This is a really important point for some baby boomers, as they haven’t had time to build up a large nest egg in KiwiSaver.  So for those who are heading towards New Zealand Superannuation in the next 15 to 20 years, perhaps it’s time to reconsider all your options.

Working until age 70 can add around $80,000 to a savings plan (if the extra cash from New Zealand Superannuation is just saved for the extended period of one’s working life). When this is added to KiwiSaver, plus a bit of extra savings, the retirement plan starts to come together.

In my opinion, this is a real win-win. Many people aged 65 and over are highly skilled and add much to the New Zealand economy and society by working longer. There are even studies that show working longer is good for your health.

Financial planning isn’t about chasing the best returns – it’s about having a strategy to help you live your best life. If you are 50 plus, it is time to sit down and consider your options as you plan for what the next 20 – 30 years will bring.

John Barber

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Spike Milligan once said “All I ask is the chance to prove that money can’t make me happy”.   While most of us would not consider having financial wealth as an automatic ticket to health and happiness, there are subtle connections. People who are financially better off often use their money to access better health care and advice.  People who suffer poor health are sometimes financially poorer because of extra health costs and limitations on their ability to produce income.  As a result of stress and worry their happiness suffers also. People with good health tend to have more financial resources, because the reverse is more or less true too.  Which one comes first is moot, but the link is becoming clear. 

In our role as ‘financial coach’,  we help you build as well as protect your financial resources.  We want to make sure you can handle a period of limited income and extra cost if you suffer ill health.  And we know a few shortcuts. The prudent use of insurance can fill the gap between having enough financial resources to access better health care, and being self-sufficient.  Insurance can ensure that a prolonged period of limited income is no threat to your household. 

We teach people how to reduce stress and worry.  We help people to be their own version of wealthier, healthier, and happier.  

Regan Thomas

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