QDon’t know if this is of interest to you, but a small transaction I made infuriates me.

There is a bakery I purchase pies from in my small town. I recently bought a pie and sausage roll which came to $10. I was aware they charged a fee for using a credit card but I paid with a debit card. I must have used paywave and was charged $10.27. If the pie and roll amounted to less or more than $10 I would have missed it.

I wonder how many retailers skim their customers like this. It could run into millions of dollars countrywide. Some of the top bank frauds have been taking a cent at a time. Who notices?

The bakery has offered to pay my 27 cents back. Wonder how much I have lost over the years.

AOh dear. It’s enough to make you gag over your sausage roll! Perhaps the prime minister, with his penchant for said delicacies, should make this an election issue.

But seriously, while a one-off 27 cents is not going to send you into bankruptcy, if businesses overcharge regularly it can add up — both for them and for us over the years.

While your bakery was within its rights to charge you extra, it seems they overdid it.

“Where there is an extra cost to the seller for providing a payment method, there might be an extra cost to you for using that method,” says the Commerce Commission on its website.

“This is the additional fee you may come across when using a higher cost payment method such as your credit card or contactless debit card to make a payment.”

It adds that some methods of paying “should not incur any surcharges, such as when inserting or swiping your debit or Eftpos card. This is because there is no additional cost to the seller for using these payment methods.” The same applies to cash payments. And businesses are expected to provide at least one surcharge-free payment method.

The Commission also notes that some businesses, such as large supermarket chains, don’t charge for contactless payment, even though they could.

So those are the rules. But it seems your bakery didn’t play fully by them:

  • Says the Commission, “You must be informed of any surcharge before you pay and be made aware of cheaper ways to pay where available.”
  • It also says that while the fee that businesses have to pay varies, many payment service providers “offer rates of 0.7 per cent for contactless debit card transactions and 1.5 per cent to 2 per cent for domestic credit card transactions.”

Your 27 cents on a $10 purchase is 2.7 per cent. Suspiciously high!

The Commission again: “Appropriate surcharges should be no more than (the business’s) additional cost for accepting that particular payment method.”

If you want to take this further, you can complain to the Commerce Commission here. For more info see here.

QI contribute the $1,042 to KiwiSaver by mid-June each year to get the maximum $521 government contribution paid out in July.

I will turn 65 in August. If I pay $1,042 between now and turning 65 will I be entitled to the full government contribution paid out next July?

ASorry, but no. The maximum you receive in the year you turn 65 is proportionate to how much of the July-to-June year you are under 65.

So if your birthday is at the end of August, you will be under 65 for two of the twelve months. The most you can get is two twelfths of $521, which is about $87.

Given that the government contribution is $1 for every $2 you contribute — up to the maximum — you will need to contribute at least twice $87, which is $174. You can make that contribution any time. It doesn’t have to be before your birthday.

It wouldn’t really matter, though, if you put in extra. Once you’re 65, you can take the money straight back out — although KiwiSaver can work well as an investment during retirement.

QIn last week’s letters you assured two siblings that their $500,000 would last considerably longer than 10 years — if they spent $50,000 a year — because of interest gained. I would say this is an optimistic view.

Some years ago I followed your advice to the letter. My money in term deposits was earning considerably less than inflation, so I needed to safeguard my retirement as I was nearly 60. I read your book, I interviewed three financial advisers (fees only) that were listed on the Moneyhub website and I chose one to advise me. She suggested I split my $500,000 and place the money in two managed funds — the Harbour Income Fund and Milford Diversified Income Fund.

Obviously the timeframe for the past three years has not been kind to me, and one of my accounts has remained static, the other has gained 1.36 per cent. I wouldn’t count on growing that money, siblings.

Now when I do my calculations on how much money I will have for retirement, I don’t depend on having any more money than I have now.

At this stage I’m too scared to take any money out of these funds because you told us not to do that, but I know that if I had kept the money in the bank I would be much better off. My adviser is no longer working independently, but I don’t blame her. Planning for retirement is confusing and worrying, as a woman alone.

AIt’s horrid when someone moves into riskier investments and has beginners’ bad luck at the start. But well done on sticking with your investments.

Your two funds are dominated by bonds. In the Harbour fund they make up 62 per cent of investments, with shares at 22 per cent. In the Milford fund bonds are 49 per cent and shares are 23 per cent. Both also hold some property and cash.

You can see this on the Smart Investor tool on sorted.org.nz. To make it easier, the Milford fund is here, and the Harbour fund is here.

Scroll down, and you’ll see that both funds reported small losses in the years ending March 2020 — the Covid outbreak year — and March 2023 — the year interest rates soared, pushing down the value of already issued bonds with their lower interest rates.

The last year or so was bad for shares too. Your funds were hit by a double whammy.

But Smart Investor shows that both funds have also reported gains as high as 15 per cent in recent years. You don’t get that in bank term deposits! And note that fund returns are after tax. If you pay 33 per cent tax on a 6 per cent term deposit, you get only 4 per cent.

Growth of $100 invested in NZ deposits, NZ bonds and NZ shares (before tax)

Graph: Growth of $100 invested in NZ deposits, NZ bonds and NZ shares (before tax)

Our graph shows that usually, over the long term, shares perform best, followed by bonds and then term deposits. But over shorter periods shares are the most volatile, followed by bonds. And every now and then you get a year when funds like yours will report losses.

Where does this leave you? When you get within three years of spending some of your money, I suggest you move that into a low-risk cash fund or bank term deposits. But for the longer-term spending money, hang in there.

By the way, you’ll also see that both your funds’ fees are well below average for conservative funds. That’s great.

QYou have had recent correspondence about parents’ helping children into their first home.

We did it slightly differently. We bought the house outright, in our names, and our daughter paid all the outgoings — interest as well. We agreed with her that, when she wanted to move, she would pocket any increase in value as her deposit on her next purchase. And that’s what happened.

We bought well, taking some calculated risks that paid off, and sold well.

That arrangement gave us complete control, meant that she faced all the costs of ownership, including interest on our equity, and avoided all the complications of relationship property etc. She was, effectively, 100 per cent geared from day one but, with a couple of flat mates whom she managed, she could afford it.

She now owns her own home, with her partner.

AI can hear other readers yelling, “That’s all very well for you. I can’t possibly afford to do that!” But for those who can do it, it could work well.

I like the idea of your daughter bringing in flatmates. It can be a great way to make home ownership work.

For a more affordable variation on your theme, read on.

QI’m not a legal or finance expert, but if I was going to advance funds to any of my children to purchase a property I would just secure that by having the ownership recorded on the title.

If I contributed $100,000 to a million dollar purchase I would own a one tenth share (how it would appear on the land title). That would be part of my estate should I die, and would be worth 10 percent of the current property value. It would be untouchable in a relationship property division of the other owners. They would have to purchase the share if they wanted full ownership.

Obviously there will be other things to consider, but this way the advance is an investment rather than a loan. As all registered property transactions must be supported by written agreements, all parties should be aware of all terms and conditions.

AA creative idea. I asked a lawyer friend for comment. He says, “You, the one-tenth owner, should be a signatory to the sale and purchase agreement, and the title registration should show you as a tenant in common, as to 10 of 100 shares.

“You should also make provision in your will as to where the 10 shares are to go when you die.”

Okay, that’s enough letters for now on parents helping their offspring into their first homes. Thanks for all the input.

QRecent letters suggest that it is somehow morally wrong to treat children unequally, and you said it’s “really important” to treat them equally to avoid “bitterness”.

I disagree, and I have long informed my children that there will be times that some will get bigger gifts and opportunities and times when they won’t. Their needs vary. One daughter needed four years private school due to dyslexia, another won a large academic scholarship to university reducing her student loan. My son had his career severely disrupted by Covid.

Life isn’t fair. The idea that children must be equally provided for, rather than reflecting their needs and our own human relationships, is woke socialist twaddle.

AHmmm. Perhaps you read only the first half of my sentence on this topic last week. It read, “In most family circumstances, it’s really important to treat all your children equally”. I’m guessing that so outraged you that you didn’t make it to the second half, which said “or, if one child has greater needs, (it’s really important) to explain what’s happening to their siblings.”

Anyway, it doesn’t hurt to emphasise your point. The needs of offspring can certainly vary.

I hope I still qualify as a woke socialist twaddler. It sounds rather fun!

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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.