Handling debt — from mortgages to buy now pay later.
– Worries — job losses, rising interest rates
– 2 types of borrowing — for things that grow in value and things that don’t
– Deferring payments — what that means
– Pay off highest interest first
– Set up automatic payments
– Add to mortgage?
– Buy now pay later. No interest but fees if late.
– In trouble with a loan? Talk to lender.
What to do about low interest rates at banks (and the demise of Bonus Bonds)
– Not as bad as people think
– But still many unhappy
– Suitable alternatives — safe, low volatility — offset mortgages, cash funds, low-risk KiwiSaver funds
– Be braver? — if long-term money — middle-risk KiwiSaver funds. Probably not higher-risk funds or shares or rentals
The next downturn — in shares, KiwiSaver and other managed funds — might be longer.
But first — comments on what to do about the demise of Bonus Bonds.
– FMA survey on investor confidence.
– Race between NZ and world share markets to recover from Covid downturn.
– Recovery not just shares rebounding, but also bonds.
– Next time we could easily have shares down for longer, and bonds also falling.
How much do you need to save for retirement?
– KiwiSaver statements give estimated total — but many not reading it
– Industry sometimes says you need $1 million-plus. Ridiculous!
– How to set a reasonable goal
– What to do if you’re unlikely to reach your goal
Economic wellness. Also National’s KiwiSaver idea.
– What ‘economic wellness’ means
– How can we achieve it
– Will our health improve if we achieve economic stability?
– Is it easier to be well if you have money?
Plus: Is National’s plan to let people withdraw $20,000 from KiwiSaver to start a business a good idea?
Why drip feeding (or dollar cost averaging) is often best
Example: Non-employees depositing $87 a month into KiwiSaver
– You don’t forget it!
– Easier to budget
– Probable better return in KiwiSaver than in bank
– Most importantly — spread your contributions out.
– Dollar cost averaging in other situations: employees in KiwiSaver, other savings, moving from one risk level to another, moving money between countries
– What about when you have a lump sum to deposit?
Invest in NZ assets rather than overseas ones? Is that wise?
– Which is better for you — NZ or international investing?
– Which is better for New Zealand as a whole?
– How to invest internationally
– How to tell if your KiwiSaver fund is mostly NZ assets — not easy
Mixed messages to New Zealanders these days
– Some examples: work from home vs support CBD businesses, Buy NZ goods vs imports
– In more depth: Encouraging you to spend vs setting up your emergency fund
– 2 recent surveys: How big are people’s emergency funds? What are people doing about that?
– The big question: Is it selfish to look after your own finances, rather than helping the economy to recover?
Keep your hands off KiwiSaver in economic downturn!
Commission for Financial Capability survey results. How we could do this better:
– Sidecar emergency savings fund attached to KiwiSaver
– More use of moneytalks.co.nz to access free financial advice and budgeting help
– Build up your own emergency fund
Important new info on KiwiSaver annual statements arriving about now:
– You’ll be told your expected savings at 65 (inflation adjusted)
– Also how much you will be able to spend per week until age 90 (inflation adjusted)
– (But you won’t get this if you’re new to that provider, under 18 or over 65)
– How these numbers are calculated
– What if you don’t fit the assumptions, eg you plan to retire before or after 65?
– What to do if your numbers are worryingly low