NZ Herald 10 December 2011

AGood thinking. You make the road trip sound fun. Two other readers, in the next Q&As, thought along similar lines. What’s more, most of the ideas and comments would apply equally to younger readers.

AThis advice comes from someone who knows what he’s talking about — Colin Taylor, writer/editor of the Herald’s Weekender Commercial Property section.

ASounds as if you speak from experience. Cheers from me — and the couple themselves. Read on.

AIt’s been a real pleasure. I was also thrilled to receive 26 letters from readers — plus more than 30 comments on the Herald’s website.

Some of the more personal messages I simply forwarded to you. But there are still some letters that not only you but other readers might find helpful that haven’t made it into the paper.

As this is my last 2011 column, I’ll include a selection of those letters at the bottom of this column.

AIt’s good to know you’re not chasing returns — switching into whichever fund has recently performed well. That’s a waste of time, because past performance often doesn’t continue. Still, it’s fair enough to ask how long you should put up with repeated poor performance.

There’s no easy answer. It rather depends on whether the fund manager can explain what went wrong and how it’s going to improve. And AMP does that quite well.

The main problem, says George Carter of AMP Capital, is the way the aggressive fund — and to a lesser extent most other AMP funds — have invested in property.

They’ve done so via a property fund that invests directly, buying buildings and so on. Most other KiwiSaver funds invest indirectly in property companies listed on the stock exchange.

While these two fund types usually perform roughly similarly, direct investing turned out to be way better before the global financial crisis, but way worse since then — from around the time KiwiSaver began, says Carter.

In the last couple of years, AMP has reduced its funds’ exposure to direct property, and this shows in more recent returns, with the aggressive fund’s returns being about average.

What about AMP’s default fund, which has almost no property? This fund holds about 70 per cent cash, unlike the other default funds, which have significantly more fixed interest, says Carter.

Recently, with interest rates falling, the other funds have performed better. But if — or we should probably say when — rates rise again, AMP’s more cash-heavy fund is likely to do better.

Carter also points out that Morningstar’s numbers sometimes differ from AMP’s, because of different ways of measuring results. “I’m not trying to say if we looked at the numbers differently it would all be okay. Our performance has not been what we would like. It’s just that it’s difficult to do the analysis when there are different ways of reporting performance.”

Clearly we need all KiwiSaver providers to report their returns — and fees — in a comparable and easily understood way.

Officials at the Ministry of Economic Development have been working on improved KiwiSaver disclosure for many months now, in connection with the proposed Financial Markets Conduct Bill. They say that every provider thinks there should be changes, but getting any group to agree to one approach is a challenge.

I bet they all think their own way is best!

The officials plan to discuss their proposals with their new minister early in the new year. What happens then will depend on ministers and Cabinet, but changes aren’t expected to come into effect until 2013.

However, says one official, providers “appear keen to improve disclosure and are working constructively with officials. MED hopes that disclosure of returns and costs is improved sooner rather than later.”

In other words, some providers may make voluntary changes. Fingers crossed.

Meanwhile, should our reader switch providers? Says Carter, “Much of AMP’s relative underperformance came in 2008 and 2009 and this will slowly roll out of the longer term numbers. There’s certainly no reason to suspect that the AMP funds won’t perform in the future.”

Sounds reasonable. But — as I always say when asked which investment will do best — I don’t know.

MERRY CHRISTMAS!

This is my last column this year. Many thanks to the growing number of readers who send questions and comments — the large majority of which, unfortunately, don’t make it into the column. It’s still useful to hear from you. And putting your thoughts in writing should help if you seek guidance elsewhere — or if you just want to vent your spleen!

One of my favourite spleen vents this year — unpublished until now: “I have noticed they are now changing the rules to KiwiSaver. YOU are one of the problems that probably helped water down this scheme, by continually going on about the $1000 kick-start and encouraging people to sign up their teenagers and babies.”

I’m tempted to respond: “Okay, from now on I won’t tell you about good stuff.” But then where would this column be?

Here’s to safe, relaxing and joyous holidays for everyone. See you back here on January 21.

MORE READERS’ ADVICE TO THE COUPLE WANTING WORK:

Please note that I’m not endorsing readers’ recommendations — just passing them on.

THIS IS THE RAINY DAY

We are in a very similar situation. We had a good look at our finances — $600,000 mortgage-free home, two older, but reasonably good cars, KiwiSaver and $200,000 in term investments for a rainy day, or to sweeten our retirement.

We asked ourselves, if this is not the rainy day we had been saving for, how much worse would it need to get? We worked out that with $30,000 a year we could live just fine. (That is actually a bit more even than we made with both working our butts off.)

Our savings will last us for almost seven years and that is enough until we both qualify for superannuation.

We realise that this is not ideal and certainly not what we had planned.

I need some security, or at least to know we can make it. So, thinking about all the ifs and buts, we accepted that in the worst case scenario we could even sell our home and trade down to something a bit cheaper.

We discussed it with our children too, who were all very supportive and would rather have us live happy and make it to a ripe old age, than focus on us saving their potential inheritance.

And, with a few dear friends passing away recently and well before retirement age, well, if we do not live all that long either, surely this is still the better option!

That saying “when life hands you a lemon, make lemonade” comes to mind. We do some regular volunteer work, do the odd job, have a huge vege garden and really enjoy life.

EXPERIENCE VALUED IN INSURANCE

I have some empathy as I was in a similar position at a similar age a couple of years ago. A friend suggested that I join him in the insurance industry, servicing clients who are business owners/self employed.

It has worked remarkably well for me as it is an area where I feel clients value advice from advisers who are experienced both in life and business. The qualifications that your correspondent has would be ideal for this type of work. Some of the aspects that have appealed to me are:

• I’m independent, but under a very professional support umbrella organisation.
• The rewards are excellent (but it does take some time to get rolling).
• I choose the clients that I want to work with.
• I work the hours that suit me — I am currently full time, but can scale back when I choose to and still have a good income.

TRY BUSINESS COACHING

The person in your letter applied for jobs through a formal process, such as sending in a CV for over two years. This is not how getting a job works.

According to the book “What Colour is Your Parachute”, only 20 per cent of jobs are found this way, and it is only going to get worse in the future for people that are not the “wanted” job seekers, such as migrants, disabled people and older people.

Here is my advice for him: Try to be a business coach, not necessarily joining some of the franchises, but rather by working at a slightly reduced rate or with success guarantees. This is a self employment option that is fairly riskless due to its basically hourly charge, and requires barely any outlay (computer, internet and mobile phone).

As marketing avenues I would recommend: Join the Citizens Advice Bureau; join Business Mentors New Zealand; attend any suitable “meetup” on meetup.com; go tramping in groups and clubs (people can’t walk away!)

All of these also have no financial risk and barely any cost, just time.

SIX TIPS FROM A SURVIVOR

Something similar happened to myself and the following are points I learned:

• Get used to where you are now and be happy you are freehold and secure, if not within yourselves, then financially.
• The loss of worth you are feeling will take at least three years to come to terms with unless you accept where you are.
• Look around. Accept that this challenge is an opportunity to take you in a new direction. I took to Linux and computers as a challenge. What would you like to do? If you like working so much start your own business. The skills are there; create something in your “man-shed”, you are after all an engineer!
• Join KiwiSaver as Mary suggests. It will cost you each $40 per fortnight for five years but the return will be a bonus when the time comes. I think ours comes available next year.
• Finally, this is a time in your life which can be the freest as you are no longer caught in the 9 to 5 rat-race except by your own choice. You are in control. Take advantage of this time and rather than making someone else rich make yourself rich — not necessarily with money. I’ve been doing it for 10 years now.

I went through all this and being freehold was the key to a better life. Now I’m in the best part of my life. I’m still alive! Not dead from stress worrying about not having a job.

START BY VOLUNTEERING

I returned to New Zealand after a time in Aussie, following a serious heart attack and bypass, at too young an age, not yet 50. No one in Aussie would employ me — in case I dropped dead at work? So home to good old New Zealand. Still no luck. Managed to eventually get a commission sales job, which I really did not like.

Then I had an idea that meant becoming a volunteer, which got me out and about, meeting people and making contacts. About a year later I heard of a job that sounded like me, applied for it and got it, and I love it! Been there for over 13 years, and have no thoughts of giving it up, just yet. Our body, soul and mind need to be active, and working.

With the qualifications the gentleman has, he could easily set up at home (and it is great doing it) as a consultant in management, business, or engineering. Local bodies are always paying out good money for a good consultant, even the New Zealand Government does it.

But definitely volunteer for something that you are really into, and do it. Coaching sport, music, whatever, just get out and do it.

A LONG TWO CENTS’ WORTH

I read your NZ Herald column regularly online even though I’m in India. I’ve never written to a newspaper before in my life but when I read the story of the 60-plus couple who’ve lost their jobs and the impact it had on their lives I had to write back, if only to say: there is life after “normal” jobs.

My two cents:

• Make sure you have sufficient computer skills. Revenue can be generated from the net, and it brings you in touch with a much larger potential clientele. One hears of ad revenue from popular blogs or networking on sites like LinkedIn. I haven’t done any of that (but know people who have — successfully) but I do know from experience there is a lot of freelance or project-based work available on the net if you plug into the right professional groups. New Zealand is such a small economy/market, accessing an international arena could help.

  I work 100 per cent via the net and earn more than my 9-to-5 office job friends, while retaining the flexibility to travel when I want etc. I don’t waste time or get stressed commuting, I eat healthy meals at home and don’t need an “office wardrobe”. I’m a translator — clients send me files as email attachments, I translate them and send them back via email.

• A home office is not expensive or difficult to set up. You literally just need: space (or not, I worked off a laptop and dining table for years, but a nice space helps), a phone and internet line and a computer. I find a laptop best, because of the mobility factor.
• Don’t limit yourself just to whatever line of work you once worked in. If you have a hobby you like, try and transform that into a profession. The owner of a translation agency I work for is a photography buff and does freelance photography assignments on the side.
• Go back to school, join courses in your locality and learn new skills, especially if you can access them free or at low cost. Again, it brings you in touch with a new world, new people and possible opportunities for paid work. My entire translating career can be traced back to language classes I used to do in the evening. I have a degree in History, not much use professionally. All my history colleagues are languishing in low paid jobs or struggling to find work. (Note: I wouldn’t recommend languages unless you already speak a second language since you need to start younger in this field. This is just my experience; I’m 37.)
• Do not give up. The initial period of working on your own can be a real slog (especially in today’s economic climate) and can be utterly depressing. But when things finally click, it is definitely worth it. Perseverance pays and working from home is a low-cost enterprise. Your investments are basically your time and skills.

My only expenses apart from that are the computer and the internet. Work can initially be sporadic and there is no job security. Networking is good but delivering results is equally important. Word of mouth can do wonders.

Once clients find you are reliable, deliver good results and will go the extra mile, they stay with you and will even recommend you to others. Just yesterday out of the blue I got an email saying “xyz (a common friend in Boston, USA) suggested you as a reliable translator… can you translate this (tight delivery deadline of course)?”. And I’ve picked up a new client, who is based in Santiago, Chile.

When you work with multiple clients, if one client is going through a slowdown, only a part of your income takes a hit.

Our generation is so lucky to have the Internet, which didn’t exist in my parents’ generation. It literally opens up new worlds. It allows me to run a house in Auckland while sitting in Delhi.

There should definitely be project-based work in marketing, engineering, HR and whatever area his wife works in that can be done virtually or otherwise. Freelancers save companies money, they don’t have to pay them professional benefits etc.

Outsourcing is a growing trend. I have a friend who does freelance engineering assignments on weekends in addition to his normal job. His wife often says: the two of you never say no to freelance assignments. The ability to say “No” is one of the biggest perks of being a freelancer, but one I rarely exercise, except with truly problematic clients.

Work done remotely simply depends on your ability to deliver, it doesn’t matter how old you are or where you are located. New Zealand has a reliable communications system. In Delhi our state-run phone and internet hasn’t been working for 10 days. I’m currently working off a back up mobile USB stick.

• Tell everyone you know that you are looking for work. There is nothing embarrassing about it, especially in today’s new reality, and work can come from the most unexpected sources. Jobs are often never advertised.
• Print business cards and always keep a couple with you. I’ve found new clients at dinner parties chatting with strangers and once on a plane. You don’t even need a job title, just your contact details are fine. You can even make it at home in Word and print it on nice paper and cut them up.
• To take a bit of the financial stress off currently: if it is possible in your current house (and it also depends on where you are located) why not rent a spare bedroom to a lodger or visiting tourists?
• There are all sorts of “oddball” professions out there. Freelance writing. If you’re a good cook, bake from home (supply eye-catching handcrafted cupcakes to cafés or home cooked meals for time crunched corporate types), coordinate events, restore cars, teach English to foreigners, be a virtual assistant, if you are in the country grow and prepare premium organic vegetable and herb hampers, homestays.

  Almost everyone I know (all in regular jobs) cannot conceive of working freelance, but it has loads of potential. As the saying goes: If you do what you like you’ll never work a day in your life. Kiwis are some of the most innovative, go-getting, can-do people I know. It’s one of the things I love about New Zealand.

• Lastly, both of you, if you can: take a break for a couple of days, get in a car, drive somewhere in that breathtaking country in which you live. Tramp, camp. Get your sanity and marriage back. Enjoy the fact that you have the time to do that rather than being stuck in an office. Then come home and write a travel article and earn some money from the trip.

I think it is ridiculous that people think you should be put out to pasture just because you are over 60. With all that experience it’s a great time to start doing something new and follow your interests. Better than when you’re 90!