CONTACT US TODAY – Ph: 06 355 5844 | E:

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

Investment strategy counts

We have a new government and despite which side you of the political divide you sit on, one thing we all agree on is things are going to change.  Over 50% of the New Zealand sharemarket is foreign owned and what none of us knows, is how they are going to react to the new order.

One thing I know is we will read about their reaction in the paper the day after it happens. If foreign investors get spooked, they will sell and take their money out of New Zealand.  Our markets will fall and our dollar will go south. Interest rates and inflation in New Zealand will go up. Cost of fuel and living will go up and if we aren’t careful, New Zealand will have a very tough time.  There is already talk of wage inflation, as if just paying people more is good for our economy.

We are tiny on the global stage. Melbourne has more people than all of New Zealand, yet we think we are world leaders – oops, wrong! We are a little island nation miles from anywhere, and really the world doesn’t care (or in some cases) even know we exist.

For over 12 months we have been talking to our clients about building cash reserves and of paying down debt. Our investment strategy has been to buy quality companies with solid underlying assets. Focusing on companies with little debt and strong cash flows.

If and when the New Zealand sharemarket falls in value, our clients will be sitting on the other side of the table, happily buying any shares in quality companies that spooked investors (both foreign and local) are willing to sell, at a discount.

As an adviser, I’ve been through times like this before, and I’ve seen the winners and the losers. I know what strategies work. If you would like to have a chat, my door is always open. Remember, the first meeting is always free.


John Barber
WealthDesign – a life well planned

read on...

Exchange traded funds (ETFs) are the next trendy investments. World wide, there is around a trillion US dollars invested in these funds. Basically, these are funds that are listed on various stock exchanges around the world and fund/companies invest in other assets, much like a managed fund.

The portfolios held by ETFs are normally linked to different indexes and automatically rebalanced to that index, for example the NZX 50 (the top 50 New Zealand companies by size).

The problem is you could find yourself in a fund that only ever buys companies after their share prices have appreciated. For example, company A grows in value because their share value appreciates and becomes worth more than company B. An ETF automatically sells company B and buys company A. This seems slightly illogical to me.

Since 2008 every equity market around the world has appreciated and ETFs have shown reasonable returns on the back of this market recovery. The fees on ETFs are very low and they have been a ‘set and forget’ type investment. In a rising market, this has been perfect.

Unfortunately life isn’t that simple and we will see a market correction at some stage (and we are due for one any time, as they usually happen every 8-10 years). These passive, follow-the-index type products will be shown to be what they are – a proxy for the market. If the market falls by 25%, so will these ETFs.

Personally, I don’t have a problem with ETFs, however an investor must have a solid investment strategy. Some of these ETFs are better than others based on the underlying asset. They have a place in investment portfolios, but how they are used needs thought.

Give me a call to discuss your situation and your investment strategy. Let’s see if ETFs are going to be a good fit for your investment portfolio.

John Barber
WealthDesign – a life well planned

read on...

John’s to-do list for millennials

After last night’s workshop in Wellington, focusing on millennials and their finances, John has put together a to-do list. It’s aimed at getting you on the right track, if you’re a millennial or not.

  1. Do a goal setting exercise – where do you want to be in five years’ time?
  2. Get a Will and an Enduring Power of Attorney (EPA).
  3. Set up an insurance portfolio.
  4. Start a savings programme.
  5. Make sure your KiwiSaver is working as hard as you are.
  6. Get ongoing advice.


John Barber
WealthDesign – a life well planned


read on...

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

read on...