NZ Herald 21 August 2021

AOoooh, a treasure hunt! Let’s don our pirate costumes and see what we can unearth.

After all, if you didn’t ever withdraw the money, the bank might owe you heaps of interest.

My first inquiry with Westpac got this response:

“Given the passage of time since this term deposit matured it is unlikely we would hold this money.

“The Waikato Savings Bank would have had instructions from the customer about what to do with the funds at the time of maturity. As standard practice, it would either have paid the funds into another bank account nominated by the customer, paid them by bank cheque or automatically renewed the term deposit on the customer’s behalf at the current interest rate.

“While it could be possible that the term deposit was repeatedly renewed, after 25 years if there had been no customer contact, the funds would have become subject to the Unclaimed Money Act 1971 and transferred to the IRD. The customer is able to find out more, including how money can be claimed back, by visiting ird.govt.nz/unclaimedmoney.”

The bank added, though, that if you would sign a privacy waiver and send them a copy of the term deposit certificate, they would look into it further. That all happened, and then came this email from the bank:

“This customer placed a term deposit of $200 with Waikato Savings Bank in 1977 and another of the same amount in 1978. It appears from our records that both deposits automatically renewed for many years upon maturity.

“It looks like the deposits passed from Trust Bank to Westpac in 1998 and the customer withdrew the money in May and June the following year. It seems interest earned over this period was paid into a separate account because only the principal amounts transferred from Trust Bank and were available for withdrawal in 1999.”

Oh well. Nice try, me hearties! A couple of footnotes:

• It seems extraordinary that you could earn 10.25 per cent on a bank deposit. But note that inflation was 15.3 per cent at the time. So savers were going backwards fast, in terms of what their money could buy.
• In the unclaimed money page on Inland Revenue’s website, it says, “We provide a service for the owners of unclaimed money. This is money left untouched for 5 years with holders such as banks or with a person such as a solicitor. The holder of the money has tried to find the owners but has not been successful. At this point they have to pass any amounts of more than $100 to us.”

In looking at the site, I found somebody I know who has $330-odd coming to them. It might be worth a drink to tell them! Readers might want to go on their own treasure hunt there.

AI suppose my suggestions do tend to be a bit conservative. When you’re writing for people with a wide range of tolerances for volatility and risk, it seems better to err on the side of not scaring the nervous ones too much.

But I also frequently try to encourage people — especially women who tend to invest more conservatively — to place their longer-term money in a wide range of shares or a share fund. If they stick with those investments through downturns, they are likely to come out with more.

So I would give your investments a big tick — as long as you don’t expect to spend the money within the next ten years or so, and won’t move it around in the meantime. I especially applaud your wide diversification. Holding 100 different shares is impressive.

A couple of things worry me, though:

• I hope you don’t expect to continue to make 25 per cent returns.

  I wrote a while back about the Financial Markets Authority warning us not to take much notice of exceptional returns for the 12 months ending 31 March 2021. A year before that the share market indexes were close to the bottom of the Covid share plunge. So returns for the following year include none of the Covid downturn but all of the recovery. Talk about selection bias!

  In that particular 12 months, the NZX50 index — of the biggest 50 companies — rose 28 per cent. And the NZX All index — which includes all the companies listed on the stock exchange- rose 30 per cent. Internationally, the MSCI world share index rose 49 per cent. (All those returns include dividends). Wow!

  While the 12 months you’re writing about might not exactly match that period, it’s still highly likely that the Covid recovery has distorted your returns.

  Sorry, but there’s no chance a widely diversified share portfolio will continue to grow at anything like 25 per cent a year. An average return of maybe 6 to 8 per cent, after fees and tax, is much more likely.

• I’m not sure you realise that sometimes pretty much all shares lose value at the same time, in share market crashes.

  It’s true that the businesses don’t all suddenly deteriorate. But panic sets in. People want to sell before the prices of their shares fall, or fall further. And their panic selling sends prices further downwards, leading to more panic selling. And so on. It’s a rare share that doesn’t join the slide.

  Eventually, most prices will recover, but it can take months and sometimes years. That’s why shares are best used as long-term investments.

AThanks. But as I said last week, only a certain sector of the population saves too much and spends too little. Let’s not have people coming back in 20 years to say they read that column, got carried away with their spending, and are now in poverty!

Still, the over-savers might want to heed Rhonda’s call.

AIt does. Says business editor Duncan Bridgeman, “The Business Herald is a big supporter of women in business. Unfortunately, there are some days when our coverage is tilted due to the mix of stories where a particular industry may be lacking in diversity. We are working hard to balance the ledger and are certainly mindful of who we interview.

“I would also note that the majority of editorial content in the business section of the Weekend Herald edition you refer to was written by a female journalist. When it comes to featuring women in business, we can be more consistent and set a better example. Thanks for your feedback.”

Adding my tuppence worth, journalists can do only so much. The more businesses do to promote women, the more opportunities there will be for reporters to write about them.

But I do appreciate your kind comment.

ANot so fast! No small number of people who lost money in finance companies were put there by so-called financial advisers.

Still, expert knowledge can, of course, be worth paying for. It depends on the circumstances. Read on.

ASelling without an agent is certainly an option. And you can get lots of help with this online. One good unbiased website is settled.govt.nz.

Agents say, of course, that you won’t get as much money. And an experienced agent must know some tactics many of the rest of us don’t know. But still, if you don’t pay an agent’s commission you can afford to sell for less.

Then there’s the negotiations. I once sold a house without an agent, and found negotiating with would-be buyers was the hardest part. But you can line up a lawyer or other negotiator in advance. Their fee should be considerably less than an agent’s commission.

If you’re not in a hurry to sell, and prepared to put some time into it, selling privately might be worth a try. If it doesn’t work out, you can always bring an agent in later.