This article was published on 22 January 2011. Some information may be out of date.

Q&As

  • Tax cutting scheme likely to bring much more wealth to the company than to a reader
  • How recipients of below-market share offers can get their own back
  • A reader shows her bank just what she thinks of it
  • How is our gold price forecaster doing?
  • Some help with finding a good financial adviser

QI received a telephone call this week from a company asking me if I was interested in reducing the amount of income tax my household pays. Normally I say no thanks, but this time I decided to listen to the spiel.

Apparently there are several different “strategies” that can be put in place to reduce our income tax by up to $8,000 per annum. Because we met specific criteria then apparently these strategies are guaranteed (I even received a congratulations for that!). To learn these strategies, they make an appointment for someone to come in to our home and outline the plans. I am assuming this would be a financial planner? Is it a scam? Is it legal? Is it a good idea to hear what they have to say?

AThere’s a strong whiff of rodent in the air — or at the very least, somebody is trying to con you into something that will make them much more money than it makes you.

It would have been interesting to see the caller’s list of criteria before you told him or her anything about your circumstances. Something tells me everyone receives the congratulations.

One of the great merits of the New Zealand tax system is that, for most people, taxes are straightforward. In many other countries, everyone spends hours over annual tax returns.

While many New Zealanders pay a bit too much tax — and others pay a bit too little — I doubt if anyone who doesn’t have a business, rental property or similar would be overpaying anything like $8000. And those who do have businesses are far better advised to hire an accountant than to spend time with someone who happens to ring them.

If there were easy ways for most people to cut tax, I would tell you about them. There aren’t!

QJust after Christmas, I received an unethical offer in the mail for my Nuplex shares. It was one of these unsolicited offers from a company who obtained shareholder information and sent out an offer to buy them at way less than their value.

The ‘First come, First Served” and “Act now if you wish to accept. Short notice offer — closes 6.00pm 7 January 2011” are pressure tactics.

I get really angry at this sort of immoral behaviour. When I think of the thousands of New Zealanders who have lost their savings in the finance companies going under, at least a lot of that was just bad business and poor decision making or greed.

I’ve Googled and found an excellent suggestion to an article written about a similar offer.

The suggestion was: “When you receive one of these ridiculous offers for shares in struggling companies, just return the empty envelope to them without a stamp. Hopefully they will have to pay postage”. I think that is a great idea!

Maybe people could enclose notes (incognito) describing in plain English what they think of people who undertake this type of immoral conduct — or even send back the forms with the details wrong and a wrong signature so it wastes their time?

AVariations on this idea were aired in the Herald over late December and new year, but many readers may have missed them.

I wouldn’t like to see a ban on anyone making an offer for anything, at whatever price they like to name. That’s the free market. But I do like the idea the Securities Commission is looking into, of making people who make these offers include the current market price.

In the meantime, when an offer is clearly predatory, why not make life difficult for the company making the offer? I wouldn’t suggest including wrong details or forged signatures. That might be fraud. But apart from angry words, I’m sure many readers could think of sticky or stinky or otherwise horrid contents for the envelopes they send back. A handful of sand might do the trick.

If enough people do that, the offering companies may just decide it’s all too hard.

QI have just finished reading a letter to your column about bank fees. About 18 months ago I noticed a Bank X advertisement in Remuera for a certain percentage on term investments. As I had a term investment with another bank due for renewal, I went to my local branch and asked if they would match Bank X.

The manager was not available so next in charge said she would have to phone someone about it. After waiting perhaps 20/30 minutes, she came back and said “No”.

I then said I would take it down the road to Bank X. There would be a charge on a cheque to do this, so I said, “I’ll have it in cash”. She looked rather askance, and I was trembling with the fear that someone behind me might see this all happening and follow me. I cautiously looked behind me, hurried to my car, and hoped that I wouldn’t have a car accident on the way to Bank X just up the road!

When I arrived I said to the lady that I would like to open a term investment, and when I told her of my experience and the amount of cash (over $30,000) I was carrying, she laughed out loud.

“Good on you”, was the response from everyone I told. We do just accept being bullied around by banks, and I have now reached the age and stage in life where I can do ridiculous things occasionally.

AEver noticed how, when someone does something brave but foolhardy, we applaud when it works out, but call the person stupid if it doesn’t?

While I admire your pluck, I’m not going to suggest other readers also carry huge amounts in cash. But I do like your attempt to get your bank to match another offer, and your withdrawal when it didn’t. If more people did that, interest rates would probably rise.

I’ve edited out the names of the banks. Towards the end of last year we had a series of letters complaining about various banks — perhaps too many. Most of us do pretty regular business with our banks, and things are bound to go wrong sometimes. Your bank — or ex-bank — was entitled to turn down your request, so I don’t think it deserves to be singled out for blame.

However, Next in Charge should not have kept you waiting 20-plus minutes. And I hope that she reports back that the bank lost a substantial term deposit.

A quick tip: Having lived on the south side of Chicago for eight years, I learnt that moves like looking nervously behind you and scuttling to your car are not wise. Never look like a victim.

Q(Letter sent in early December). Of interest lately in your column has been the guy talking about commodity prices, and I think that you may be about to receive another onslaught from him as I notice today that gold has cracked the $1400 mark and silver raced through $30 — all in US dollars of course.

He seems to be a real character but may have his eggs all in the one basket. I’ll be interested to see if he happens to remind you again of his statement of the prices of metals going through the roof and you actually publish it.

AFunnily enough, I haven’t heard from him. Or perhaps it’s not all that strange.

To put other readers in the picture, a correspondent wrote to me, early last October, that “Gold has now gone sailing past $1300. The next target is $1369. I am pretty sure we will see $1600 by year’s end.

“Silver is now on the verge of a major breakout. I target $30 on this. We will then see silver head towards $45 to $50 an ounce. Over the coming two years or so I see $100 an ounce.”

He added, “A major currency crisis is happening…. The kiwi will go to 80 against the greenback and on to par (equality with the US dollar).”

I responded that “any investment that rises fast must be pretty risky. And we don’t need to go back far to see gold prices falling fast.

“Tell you what: let’s get back to this, in this column, at yearend and two years from now, to see how your predictions have gone.”

I forewarned him, though, that “even if gold does top $US 1600 an ounce by the end of 2010, or silver tops $US 100 an ounce by October 9 2012, I won’t be suggesting that readers climb aboard. I will, though, be happy to congratulate you on your good luck.”

The reader didn’t give a time period for the kiwi dollar forecast, so I made that a year. “Will our dollar equal the greenback on October 9 2011? Watch this space.”

Okay, we’ve past the first day of reckoning: the gold price at the end of 2010, when this column was on holiday. The closing price on new year’s eve was $US 1421.60. That’s a tidy increase on $US1300 in three months — no doubt about it. But it’s not quite $US1600.

More this coming October.

INFO ON ADVISERS

I’m often asked to recommend a financial adviser, but I’m not in a position to do that.

However, over the break, I’ve updated the table on the Info on Advisers page. The page includes two Q&As from this column about how to choose a financial adviser, and the ramifications of the ways different advisers charge for their services. It also includes a table of advisers who charge fees — which I think is the best way to operate.

That doesn’t necessarily mean, though, that they are good. I don’t know enough about them to judge.

Regardless of whether you approach one of the advisers in the table or somebody else, I suggest you ask if they would be willing to sign the following statement — and follow up on it when they have done their work: “I truly believe I have given you the best advice I can, having considered a wide range of products, and that I have told you about all real or potential conflicts of interest.”

Why not take a piece of paper with this written on it to your first meeting? If that feels awkward, say Mary told you to do it!

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding 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.