02 Apr Happy Financial New Year!
This is a great time of year to take a look at how the last 12 months has compared to the previous year. It’s also a great time to set targets for the coming 12 months. For all our tax clients, we will be catching up about this over the next few months.
Golden years
A couple of months back, we wrote about spending and saving – how us Kiwis rack up far too much debt and do far too little saving. If you missed it, you can see it here.
So hopefully, you’ve taken heed and as a result, you’re not loaded up with bad, high interest debt, and have started actively saving money! Now, what to do with those savings? Much like our relationship with debt, us Kiwis aren’t great at making the most of our savings. Traditionally we have tended to invest in real estate. Certainly, in the last few years it has seemed hard to lose, although sooner or later (if it hasn’t done so already) it’s bound to come to an end.
Perhaps we should start by backing up a touch: what’s the point of saving and investing anyway? This is a serious question, and one that lots of people skim over. Many of us want to have a bit squirrelled away so that we can live in relative comfort in our golden years. However, research conducted by Horizon Research suggests that most people simply don’t save/invest enough, and as a result will be living solely off the pension 10 years into our retirement. This is despite most people expecting to live 20+ years after entering retirement. So, this means a decade or more living solely off NZ Superannuation… To make this even less appealing, who knows if NZ Superannuation will still exist in a decade or two’s time?
So, thinking about retirement now? The same study by Horizon Research showed that nearly 4 in 10 of elderly regret not having more financial advice to improve their incomes in retirement. Or put another way, this is a problem that moves with the speed of a glacier, which many people don’t realise until it’s too late. Massey University recently conducted a study about how much an individual would need in retirement, you can find a nice, easy to understand article about it from the Herald here.
Why does it pay to start early? The power of compounding returns. In simple terms, compounding returns is the income you earn on the interest/dividends etc you have already received. The same principle can apply to real estate; however, this is somewhat more complex with more choices as to how it is structured. But in general terms, the sooner you get started, the more heavy lifting your money will do for you.
So, where to start? A great place is on the Sorted website, there are a bunch of tools to help you figure out kiwi saver, savings, what type of ‘investor’ you might be plus many more. Check it out here.
We’re here to help you with your money. If you would like to talk through your money goals, contact us.
Facebook, Privacy, Personal information, Passwords and all that
Recent events have shown that your digital information held by social media entities is neither safe nor secure. The old adage ‘If you’re not paying for it, you’re the product’ rings true.
Often, we don’t see the pitfall of providing some information or photos. The question “what could go wrong?” does not come into our thinking. It is another warning when the NZ Privacy Commissioner deletes his own Facebook account.
Perhaps we need to have a wider debate about what is reasonable for these companies to do with our information. But in the meantime, perhaps its worth being careful about what we use these social media sites for.
Have a fantastic April!
