Low-risk funds — a good alternative to bank term deposits
(But first — a quick follow-up on share trading)
– Defensive and conservative funds, in and out of KiwiSaver
– Where to get info — Smart Investor tool. Look for low fees.
– Don’t panic when balance falls a bit
– Comparison with bank term deposits:
— Pluses: withdrawals, PIE tax, safety
— Minuses: fees, don’t know returns, some volatility
The wisdom (and otherwise!) of listeners
Runners up and winners of 5 copies of Mary’s new book, A Richer You — how to make the most of your money.
Some themes in the entries:
– Money and happiness
– Families and finances
– Shopping
– Investing in shares
Emergency — or rainy day — money
– But first — win a copy of Mary’s new book!
– Make emergency money your second to top priority
– When things go wrong…
– How much do you need?
– How to set up saving for this
– Where to keep the money
– Use your mortgage?
– Charity fund?
– If you use the money, top up again!
Follow-up from last time: If not paying extra off mortgage, where is best place to invest? Shares?
– But first: 2 texts commenting on last session
– Alternative investments need to be: high enough risk, long-term. Also: can you cope with volatility? Are you strong financially?
– 2 choices: property and shares. Are they over-valued?
– Rental property might work, but…
– Shares: Some people too fearful, others too brave.
– 2 ways to approach shares: trade, or hold for long term.
– 2 ways to select shares: pick individual shares, use share fund
– In a share fund, 2 styles: active and passive.
Is paying down your mortgage still the best strategy?
What to do with extra savings — beyond KiwiSaver minimums etc.
Also lump sums — inheritance, redundancy, win
– Mortgage used to be the winner — after include tax and fees. Now — with 2–3% loans?
– Other options: more into KiwiSaver, non-KiwiSaver funds, shares, rental property?
– The main issue: risk — needs to be high enough risk, long-term. Can you cope with volatility? Are you strong financially?
– Other issues: security (psychological and financial), simplicity, but diversification, learning about markets
– Penalties for paying fixed-term mortgage early
– Conclusion: perhaps do what you want!
Watch Your Spending
New Zealanders’ household spending is way up, compared with late 2019.
Spending is OK if not getting into debt
Why spend on non-essentials?:
– Happiness. But often short-term.
– Appearances.
– Pressure to spend on special shopping days.
What to do:
– Use credit cards?: pluses and minuses
– Estimate spending in different categories, then keep track for 2 months
– Change a habit for just a month. Letter to futureme.org.
– 2 birds with one stone: Cut spending on unhealthy things
– Help w budgeting: MoneyTalks. Free, confidential and non-judgmental, around NZ.
You don’t HAVE to jump on house buying bandwagon!
– First homebuyers and investors in rental property
– Market has gone mad! Prices and sales
– Last time sales were high — then what happened?
– First home buyers: wait and keep saving, or buy and don’t worry
– Investors: No high return with low risk. Do worst case scenario
The high costs of Christmas
– Survey — NZers value time with family way ahead of giving and getting gifts
– Ideas to cut cost of gifts
– Donate to charity in the name of family member
– Thoughts about Christmas food, drinks and decorations
– I wrote article on this — on RNZ website from December 18
Money and relationships
– Follow-up on last time’s financial knowledge quiz — angry comments about women
– Survey on money and relationship problems
– Worse for the young, and worse for low and high income than for middle incomes
– Conflict more likely if … overspending etc.
– What to do about it
Test your knowledge of financial basics
Commission for Financial Capability did a survey:
– 22% got everything right
– Men did better and so did older people
– The questions — and later the answers
– Women with children did worse — why perhaps?