Q&As
Like a free lottery
QOh, to have the problems associated with winning Lotto outlined in your 6 July column!
My concern lies with people spending their money on Lotto and not winning. As I’ve written to you before, “It is as simple as knowing the Lotto odds that, on average, one spends more than $300 to win Lotto’s minimum monetary prize of about $25.”
I do not buy Lotto, but I win thousands of dollars’ worth of goods, services and money each year at no cost to me. Since 2006, I have won over $82,000 worth, or about $4,500 each year on average, by entering free online competitions. I am yet to win a car or overseas travel, but I have won, for example, a heat pump, laundry appliances and NZ travel. In the last two months, I have won tickets to two movies and three music events and a box of snack foods.
You can search for individual competitions on commercial websites, such as radio stations, or go to a website that provides lists of competitions. Examples include contest.co.nz, where the members post the competitions, or a commercial site such as competitions.co.nz.
However, I hope not too many of your readers go to these sites, as they might reduce my chances of winning!
AOh dear. Making your letter the one with the headline won’t help! But I love your suggestion. Competitions are, as you say, a much better bet than Lotto.
As another reader rather unkindly put it, “I read somewhere that buying a lottery ticket is a tax on stupidity.”
Thanks for sharing the idea and the websites. Let’s hear from other readers who take up your idea and win something big.
Shocking
QYour suggestion last week that a big Lotto winner should give the money away and just keep a couple of million has given me a shock.
I would have spent about $30,000 on tickets over 40 years, won nothing, so if I finally win I should give the money away?
What someone should do is buy commercial property and maybe borrow money as well and wait until income tax has been paid on the investments, and then that money is available to help family members.
What I am saying is grow the business, don’t blow it to bits at the beginning.
AFair enough. If you want to invest your winnings in a business, go for it. I was thinking more of people we hear about who fritter the money away.
Would a fib be helpful?
QIf you want to give yourself a chance of being happy, there’s a very simple rule for lotto winners — don’t tell anyone.
You assume that because you’re deliriously happy, your friends and family will be happy as well. Wrong! They will feel envy (“I wish I’d won; just think of what I could do with that money”) and greed (“I need money. Gimme some.”).
Keep your mouth shut. Stick the money in the bank and cool off. Then think about how you can spend it without being obvious. Come up with a cover story — tell your friends it’s an inheritance, tell your family it’s a sharemarket windfall. And don’t spend first. Tell them you’re going to get a lot of money and ask for advice on spending it.
Sure it’s a pain having to be careful, but like a lot of other things in life, curbing your emotional impulse pays off big time
AI mentioned this issue last week, but you have some suggestions for handling it. However, they do involve lying. And anyway, I’m not sure friends and family would be less envious or greedy if you received a large inheritance or investment gain.
Help with handling inheritance
QI’m 67, am ADHD and dyslexic. Have nothing, meaning no home, no hire purchases and no investments.
My Pop passed away two years ago. I’ve been left $50,000. What do you recommend I do with it please?
I don’t understand maths, percentages, or flash business language. The money is just sitting in the bank, don’t even know if it’s making any interest there either? I pray you can give me some help.
AThat’s wonderful that your father left you that money. I suggest you go to the MoneyTalks website, or phone 0800 345 123, and book a meeting with a free financial mentor.
The mentor “would sit down and work out if you are entitled to any other financial assistance, or debts that are overwhelming. Then they would encourage you to speak with your bank and have a sit down with them and see what they offer as a return,” says Ange Smart, team lead at MoneyTalks.
“If you feel overwhelmed by this, often a financial mentor is able to go with you and act as your advocate to help ensure you understand all that ‘banking language’. Generally if you are with one of the four big banks, their term deposit rates are on par with the others. This will save you having to try and open another account just to chase 0.25 per cent. Best to work with your strengths and if the hard paperwork is done, then getting this money working, the quicker the better, is the aim,” she says.
Once that is set up, you could arrange regular withdrawals.
Another idea is KiwiSaver. “If you are with KiwiSaver, then you can put the funds directly into your account and you can seek advice directly from your provider too. As you are over 65, you can access the money immediately,” says Smart.
If you’re not in KiwiSaver, I expect the financial mentor would help you join a low-risk fund. You could then arrange for money to be sent regularly from there to your bank account, say, every month.
I also asked Smart how MoneyTalks was coping, given news that some similar services are receiving less government support.
“MoneyTalks secured the contract for the next three years from MSD to deliver the nationwide financial helpline, last September. We have a contract that will go until 31 March 2027. While we have not had any funding cut, we have had no increase either,” she says.
Her final message to everyone: “Times are very tough out there. Please do not be ashamed to ask for help. Working with power companies, banks, loan providers etc before you get into hardship is the way to go. Call us and we will help make a plan to ensure the power is left on and there’s kai on the table. There will be a new nationwide advertising campaign starting Monday 22 July, so listen out for it!”
Guilty on one charge only
QOver the last few weeks a few of your recent correspondents, and your responses to them, have been quite condescending. This most recent week is prompting me to write.
Someone wrote in two weeks ago to berate another who wondered whether they should use some money for an overseas holiday, lecturing us all on their view of climate change.
Who does that person think they are? How dare they tell anyone else how to live their life, whether they’re allowed to have some small enjoyment after what may have been an extended period of tight belts? And you fell over yourself tugging your virtual forelock. It’s not for anyone, not you, me or your correspondent to criticize that choice.
This last week, you published an item from “an unhappy boomer”. I’m with them. You’ve made assertions that if some government programmes are under financial pressure, the obvious thing to do is wind back National Super. Why? If someone has spent 45 years paying taxes, why is removing their income more important than, say, someone who has been unemployed drawing taxpayer money for 2, 3, 5 some even 10 years? You might not want a battle over this, but you’re taking sides.
Then the self-employed contractor. I was astonished at your response to his $5,000 on $38,000 return over 7 years. That’s just 13 per cent gross but you said “but you would probably have found similar results in another diversified share investment, such as an index fund. The markets have been rocky.”
Twenty four seconds later I can see the total world ETF returning over 46 per cent in the last five years, and the US 500 ETF 95 per cent. Now we don’t know what fund he was in but just saying “stick with it” is not advice I would expect to receive on that revelation. Your usual “check you’re in the right risk class for your age, and consult Sorted for information,” is what you usually say. Why not this time?
AOf the three charges against me, your honour, I plead guilty to just one.
On the first one, about climate change and travel, everyone on Earth is affected by the increasing numbers of ferocious storms and many other consequences of rising temperatures. If it takes blunt talk to raise awareness about how we can mitigate this, so be it.
On the second charge, I didn’t say anything about reducing NZ Super. I just argued against giving people over 65 government contributions to KiwiSaver. That’s very different.
And by the way, other readers have written about fairness between generations, but I don’t want to go further into this. It always gets us nowhere, except angry.
Your third charge is different. You’re right that the self-employed person’s 13 per cent return compares really badly with some international indexes. I should have been more careful with that. On not giving my usual suggestions, the fact that they are usual is why I didn’t go into it all again. I don’t want to bore readers with the same old stuff every time.
Self-employed KiwiSaver success
QI wanted to comment on the recent discussion about self-employed individuals. I’ve been self-employed for most of my life and started contributing the minimum amount ($1,042) to KiwiSaver from the beginning, back in 2007. At that time, you could still get the $1,000 kickstart.
My funds were in the growth/high growth strategy initially with Gareth Morgan KiwiSaver, which later became Kiwi Wealth. Five years ago, I switched to SuperLife.
Despite contributing the minimal amount, I’ve managed to accumulate $52,613 to date. By my simple calculations, this amounts to an 11 per cent rate of return, though you might be able to verify this more accurately.
So I say to all those self employed people — keep on contributing for it becomes a reasonable amount at the end!
AExcellent point. And if you continue to deposit $1,042 a year for another 17 years, you might have about $177,000, according to the KiwiSaver calculator on sorted.org.nz. Such is the power of compounding.
On how well you’ve done so far, an online investment calculator says the return on your contributions — if we include the government’s input as part of the return — has been about 10.2 per cent a year. If we look just at the funds’ performances, it’s more like 7.2 per cent. But still, that’s pretty good.
One last point: $1,042 is not the minimum contribution to KiwiSaver. You can contribute $1 — if your provider will accept it. But $1,042 — or $20 a week or $87 a month — is the lowest amount that will give you the maximum government contribution of $521.
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Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.