Active vs passive management of KiwiSaver and other funds
Why I disagree with result of recent debate on this:
– A bias in who took part?
– Passive funds will always be average — that’s fine
– Will the rise in passive management ruin the way the market works?
Investors in shares — and most KiwiSaver investors — are doing “too well”
– Last year was exceptional
– Last decade was well above recent averages
– AND last decade was unusually “unvolatile”
– Don’t be lulled into thinking this will continue
– Shares are good investments, but…
Recommended changes to KiwiSaver
The Commission for Financial Capability has made 19 suggestions on how to improve KiwiSaver. Mary and Jesse discuss four of them:
– Set up “Small Steps”, so people’s contributions rise gradually each year if they wish
– Add “sidecar savings” to KiwiSaver for short-term emergencies
– Exclude fixed fees from KiwiSaver accounts with balances under $5000
– Show members how much their fees are likely to total over the years in KiwiSaver, compared with average fees for that type of fund
Also: an unusual letter from a listener — grow marijuana or join KiwiSaver?
What financial decisions would I do differently, with hindsight?
Based on an email challenge from a listener.
– Timing — in the share market and property market
– Gearing — borrowing to invest in a share fund
– A foreign exchange investment
– House buying
– Rental property?
– Higher paid work?
Also:
– My holiday message: Be terrific in traffic
Notes from a conference
Westpac Massey Fin Ed Centre conference on “Building financially capable communities: our pathways to success”
– Current Financial teaching in schools is not effective, especially for lower sociology economic kids
– Self efficacy — whether you believe your actions and effort will affect your outcomes — is more important to wealth than things like financial literacy. Can it be changed?
– Changes coming to regulate payday lending. Will they help?
Why are people not in KiwiSaver? – Part 2
Emails and texts from listeners:
– No income of her own
– Self employed
– Employer talked worker out of it
– Worries about investment
– Fees
– Ethical investing
– Too little money
– Too old
– Control of investments
– Don’t trust govt
– Lack of govt guarantee
Why are people not in KiwiSaver?
Analysis by Commission for Financial Capability of negative comments on social media and internet discussion boards, plus emails from listeners:
– Lack of security
– Government policies
– Other “better” investments
– Earning too little to bother
THE BEST WAY TO INVEST IN SHARES
A listener’s letter and Mary’s response:
– Starting early is good
– Drip feeding is good
– You don’t need to research companies
– Buy more or less randomly — but vary industries
– Understand a share’s volatility
Ways to boost your everyday saving. Last time we looked at setting a savings goal. This time, it’s other tips to boost savings: Open a separate savings account; Pay yourself first; Start small and gradually increase savings; Play mind games — take a “pay cut” or use a picture; Seize big opportunities when expenses fall or income increases; Take inspiration from champion savers or extreme saver movements.
How to set a goal for saving or debt repayment
Importance of setting a goal, Goals that work are SMART: Specific; Measurable; Achievable; (W)ritten; Time-bound.