From your KiwiSaver to bolder investing, you’ll be used to seeing fluctuations in the market and witnessing your money go up and down. But should you be concerned?
How do you know when this little piggy should stay at the market or when this little piggy should go home?
The Financial Markets Authority (FMA) put out a quiz during Money Week at the start of September which stumped quite a number of respondents.
Question number six asked, “Choosing a low-risk fund means you can stop worrying about market ups and downs - true or false?".
25% of quiz answers answered true. They were wrong! The answer is false.
The second most inaccurately answered question was “Funds with lots of shares and property have more ups and downs than funds investing mostly in cash and bonds - true or false?”
This true or false answer may surprise you too... The answer is true!
But John and Jane Doe won't always refer to an organisation like the FMA for information. Given the amount of influence the media has, sometimes headlines can be a cause for misleading information and interrupting the market. For example, a simple misguided Tweet can cause sensationalist stories and result in sudden market volatility.
Remember back in August when Tesla’s Elon Musk put out a now infamous Tweet “Am considering taking Tesla private at $US420. Funding secured.” And their share price dropped by 7%? It wasn’t the first time their share price has been hit by a storm in 2018.
Earlier still in April, the company saw its biggest loss this year because a fatal crash of their ‘Model X’ car had garnered scrutiny in the press – plus they had a poorly timed delay in the release of their ‘Model 3’ car, leaving public confidence in the company reflected in their share price at their lowest point this year to date.
However, from what was considered a disastrously low share price of $252.48 in April, Tesla rose from the ashes to hit their highest point of 2018 at $379.57 a few months later. Ironically, the momentary high was also as a result of that Tweet.
So you see, you shouldn’t let fear be your motivator – reactive isn’t always good. This year’s Money Week theme of Weathering the Storm has cemented that even if the market seems like it’s suffering a downturn, that little piggy might well be better off at market.
There will always be peaks and troughs. If you were to, for example, move from a high-risk KiwiSaver fund into a lower risk KiwiSaver fund after making a loss, it’s likely you may just ‘lock’ in your loss with little chance of making it back up again. It’s also worth noting that even low-risk funds don’t have guaranteed stability.
The takeaway is not to panic and to get informed. And if you have any questions or concerns, talk to your Adviser. That’s what they’re there for!
Growing the digital economy and maximising opportunities for SMEs in NZ.
There’s a new joint research project on the trans-Tasman use of digital technology and the benefits for SMEs in both Australia and New Zealand.
Given the continual development in digital offerings and the economic relationship between Australia and New Zealand, both countries' PMs decided that they would commission an enquiry into the opportunities ‘arising from digital transformation’. The emphasis in the terms of reference is on ‘opportunities for small to medium sized enterprises (SMES) to make full use of the trans-Tasman economic integration’.
But what kind of returns can NZ SMEs expect to see on the investment into technology and making better use of the digital economy?
According to Ministry of Business, Innovation and Employment (MBIE), New Zealand stands to have a $34b estimated productivity impact if all NZ businesses made better use of the internet. Let's not forget that SMEs make up 97% of all business in New Zealand!
MBIE was also keen to highlight the change technology has had on Kiwis' lives. 82% of Kiwis' owned a smart device in 2017 (compared to 13% back in 2011) and spent around 47 hours on average each week using a device, in 2016. That’s an astonishing amount of time.
As part of a paper released on 'building a digital nation' MBIE also said, 'international research shows SMEs that are highly digitally engaged have 20% higher revenues, faster growth and stronger job growth than firms that are less digitally engaged'.
SMEs can also expect a step-change when it comes to creating a skilled workforce that responds to changing needs’ and inevitably with any progress, compliance, rules and regulations will be ‘updated to support technological innovation.'
Between now and 2025 the NZ Government want to lead by example with how digital channels can potentially improve communication, productivity, provision of services, competitive advantage and create additional employment, nationally.
The Productivity Commissions of Australia and New Zealand started to research this month and full report findings and recommendations are due to be published in February 2019.
What is a pre-existing condition or PEC?
The Insurance and Financial Services Ombudsman states:
“Many health and travel insurance policies contain an exclusion for “pre-existing conditions”. The definition of a PEC depends very much on the wording of the particular policy; loosely, a PEC refers to a medical or physical issue which exists before the policy begins. It can include a symptom or a sign of an illness which you do not know you have.”
But what can that mean for you when you’re taking out health insurance or travel insurance? And how can it affect you if you need to claim?
From something that might seem incidental to the outright obvious, it’s recommended that you’re completely transparent about your health when taking out a policy.
The NZ Herald recently reported on a business owner who injured his hand. Upon claiming for the injury, he was declined by his health insurance providers as while he had no previous hand related conditions – his medical records showed he had suffered mental health issues and alcohol dependency, but, had not disclosed them at the time the policy was taken out. This called into question the validity of his policy. The man complained to the Ombudsman. Independent enquiries were undertaken however, and investigators concluded that the disclosure of his full medical records would have resulted in a different policy being offered from the outset, meaning he might not have found himself in the position of having his claim declined.
The Ombudsman says that non-disclosure is one of its biggest areas of complaints. Of 320 complaints 98 related to health, life and disability insurance for 2018.
The significance of a previous illness, injury or symptoms might not seem relevant when you’re booking that holiday or starting a new job, but any new insurance you take out requires complete disclosure because it could affect your life in ways you can’t yet imagine.
The Insurance and Financial Services Ombudsman is clear that you should always be vigilant of the policy wording and what constitutes a pre-existing condition.
“How PECs can affect your claim… will depend on the policy wording. For example, some policies may exclude cover for claims arising from a condition which has been diagnosed by a doctor, where others will be broader and include symptoms. This could mean that if you have suffered from a symptom, any later related condition will be excluded, even if you did not know you had the condition. Read your policy wording and be aware of what may be excluded for you.”
If you have any questions or concerns about PECs and policies, talk with your Adviser.
Good health is something we all strive for, and we all know it can benefit you to get off the sofa and be physically active. Physically active is defined by the Ministry of Health as ‘doing at least 30 minutes of brisk walking or moderate-intensity physical activity’.
But did you know that it could benefit your financial health to exercise 30 minutes a day?
There are a variety of ways you can reduce what you pay for insurance. Taking simple steps to improve your health through diet, exercise, minimising your alcohol consumption and quitting smoking can reduce your insurance premiums. For example, Southern Cross have a ‘healthy lifestyle reward’ discount of 10% if you meet their healthy lifestyle criteria for your first two years of membership from the date of joining.
A change of lifestyle isn’t just beneficial to newcomers starting policies but can also be beneficial to those who have existing policies, and it’s not just limited to health.
You might be eligible for a discount if you’ve got ‘no claims’ over a set period, you could be entitled to a reduction in your premiums through a work benefits enrollment scheme and you could even get a discount if you switch to a direct debit payment – all dependent on your policy type and terms and conditions.
Some insurance companies will even make allowances for children. Again, Southern Cross has a ‘free child discount’ which states “if you have more than two children on your policy under 21 years of age you’ll only pay for the first two children – any additional children on the policy are free.”
Consider any of the following lifestyle changes as a reason to review your policy with your Financial Adviser, to make sure you’ve got the appropriate cover and are paying the right premiums:
Since you took out your policy, have you;
So, ask yourself, are you getting the most out of the premiums you pay? Better yet, ask your Adviser!
Have you ever wondered what the difference was between a well-diversified portfolio and a bank term deposit?
And what’s best for you?
There’s no one-size-fits all. It all depends on your personal circumstances, which is why it’s always a good idea to talk with an Adviser about the best options for you. You’ll need to take into consideration the amount you’re investing, what kind of investor you are and your risk profile. You should also consider fees, tax and interest, notice periods, plus the returns you’re likely to get back and how that fits in with your short or long-term aspirations.
“I’ve had a couple of clients who at first glance thought advertised interest rates of bank term deposits met their needs. On reflection, they acknowledged they didn’t understand that to meet their financial goals, a well-diversified portfolio over the long run should and could provide more attractive returns. Also, there is tax to consider and a lack of liquidity given the 30-day timeframe you have to notify to ‘break the term deposit’ (and which may have hidden costs associated with breaking the term).
Here at AdviceFirst, we provide transparency about our forecasted returns after fees and tax, and there are no hidden costs. In a well-diversified portfolio, your funds will be invested across different sectors and geographic locations which is what reduces overall investment risk and helps provide security.” – Janet Britz, Wealth Management Adviser, Auckland
Sorted.org.nz have a handy little quiz that you can take to help you find the conversation starters or areas of focus you might want to ask your Adviser about. The quiz can help you assess what kind of investor you might be and encourage you to get a feel for what you might be looking for in your investment mix - based on a few simple questions.
AMP have some simple messages that help achieve big results in a new series called ‘Get more from your money’. Click here for a one-minute think piece from the Head of AMP New Zealand about planning for your retirement.
You’ve long been convinced of the many benefits of offering flexible working arrangements to your people, but you’ve been holding back. You’ve even been able to identify why. But just how can you overcome your fears in order to truly realise the proven benefits of flexible working?
Flexible working Part one - read HERE
Flexible working Part two - read HERE
From 1 April 2019, Inland Revenue requires all businesses paying over $50,000 in PAYE and Employer Superannuation Withholding Tax to file their employment information every payday. This payday filing system will replace the current Employer Monthly Schedule (EMS) that’s usually done via my-IR or post.
As part of this change of process, Inland Revenue will require additional submissions of employee start and leave information; including employee opt-in and opt-out information for KiwiSaver and social policy deductions – all submitted electronically within two working days of being paid.
You can find a full list of Employer Responsibilities for the new system here. April 2019 might seem far away but it’s only 5 months and counting… time to get organised!
Published on 20 September 2018 the Tax Working Group’s interim report has touched on improvements they want to make to KiwiSaver to encourage retirement saving among the low-middle income earners.
For KiwiSaver, the Group recommends that the Government:
• Remove Employee Superannuation Contribution Tax (ESCT) on the employer’s matching contribution of 3% of salary to KiwiSaver for members earning up to $48,000 per year.
• Reduce the lower PIE rates for KiwiSaver funds by five percentage points each.
• Consider ways to simplify the determination of the PIE rates (which would apply to KiwiSaver).
The Group will give further consideration to the taxation of savings in the final report, in light of its broader conclusions on the tax system. The report also touches on a few other key areas including the taxation of business.
You can read the full report here. The final report is due February 2019.
A step by step guide to ensure your workplace survey drives culture change.
This practical 14-page Guide from our expert HR Advisers at POD will help you to get a read on employee engagement/workplace satisfaction in your business.
It includes our best practice tips and pitfalls when conducting your workplace survey, how to analyse the results and most importantly, what to do with the data to drive culture change in your business.
AMP have some simple messages that can help achieve big results for your staff in a new series called ‘Get more from your money’. Click here for 3 easy steps that have been proven to help people achieve their goals.
It’s been widely reported on and you might have seen some scary and questionable posts about it in your social media feeds... But what is Sepsis, how common is it and how do you try to identify it? We delve into the truth about Sepsis for Sepsis Awareness Month.
Sepsis is a life-threatening condition that occurs when your body's response to an infection damages its own tissues and organs. If not treated quickly, Sepsis can quickly lead to multiple organ failure and death – Health Navigator NZ
Up to 15,000 Australians and New Zealanders are admitted to hospital with Sepsis each year and it is the leading cause of death in hospitalised patients in the developed world, according to the Health, Quality and Safety Commission New Zealand. Around half of all patients admitted to intensive care because of Sepsis die as a result of the condition.
There are several methods of identifying Sepsis but an easy one to remember is courtesy of Sepsis.org.
Sepsis is TIME sensitive:
T – Temperature – higher or lower than normal.
I – Infection – may have signs or symptoms of an infection.
M – Mental decline – confused, sleepy and difficult to rouse.
E – Extremely ill – extreme discomfort, “I feel like I might die” pain and sickness.
Health Navigator have broken down the groups most vulnerable to Sepsis in this handy list...
Sepsis can occur at any age, but you are at increased risk if you have a serious infection or a weakened immune system, for example, if you:
Sepsis is a particular risk for people already in hospital because of another serious illness.
Don’t take a chance. If you recognise the symptoms, seek the appropriate medical assistance. TIME is of the essence.
AMP have some simple messages that help achieve big results in a new series called ‘Get more from your money’. Click here for a one-minute think piece about protecting your most valuable asset.
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