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The Six Stages of Ethical Investment Awareness

At Moneyworks, we are undertaking our international certification and education to become 'ethical/responsible/sustainable' advisers.  Part of this is understanding the different 'claims' to ethical investing (which I will use as a catch all for all the terminologies). Fund Managers start off doing nothing about ethical investing, then migrate to 'ESG integration', where they start understanding what 'non-ethical/responsible/sustainable' investments they hold in their portfolios.  This...

The purpose of New Zealand's retirement income system

New Zealand Superannuation is a cornerstone to the retirement income system in New Zealand, and as we often say in our seminars, it is one of the most generous public pension schemes in the western world.  Everyone who is entitled to the income receives the same amount before tax, regardless of how much you have earned, how much you do earn and how many assets you have. In the 1990's there was a high 'superannuation surcharge' where your New Zealand Superannuation income was abated bas...

What is the ideal age to retire?

Obviously the ideal age to retire is when you are ready, and retirement doesn’t need to mean sitting around all day doing nothing.  Your retirement might involve spending more time with your family, grandchildren, or travelling, volunteering, getting involved in physical activities like hiking, cycling or taking up a new hobby that you have always wanted to pursue. As healthcare gets better we can stay fitter and healthier for longer (unlike Nathan Rothschild – who was the wealthiest ma...

What is a typical lifespan in New Zealand today?

Answer: Much longer than it used to be!  What does this mean for your retirement planning?  The current life expectancy in New Zealand is 82.21 years And interestingly, while the lifespan in New Zealand is increasing, the lifespan in the USA is decreasing (currently 78.7 years).  If this is something you are interested in finding out more about – check out the book ‘Tightrope’ by Nicholas Kristof – it is a fascinating insight into what has happened in the USA in the last 4...

3 Psychological tricks to help you save money

We have heard from people that with Covid lockdowns (and the lack of travel opportunities overseas) that they have more money in the bank.  Of course, we don’t want to have another lockdown. A client shared the video below with us, and we thought it would be useful to share. It is only 5.47 minutes. Although this is an American video, the concepts still work – the 3 psychological tricks are: 1.    Pre-commitment. (one app to help you with this is ‘stickk’) 2. &nb...

Stolen or hacked credit cards – a hassle, but what is the real story about how much it costs?

Over the last four months quite a few of our clients have had their credit cards stolen or hacked.  While there are some protections provided for your funds through your bank when your credit card is used fraudulently, it is a hassle to sort out. You have to work out everywhere that the credit card was used, and contact that company or supplier and update your new credit card (not to mention not having a credit card for a period while the new one arrives).  This is one reason that we r...

How do New Zealanders see their retirement future?

This survey of 15,519 adult New Zealanders was carried out from 2018 -2019 by the CCFC (Commission for Financial Capability - which was the Retirement Commissioner).  The Key Findings are: 1. Most people do not plan financially for retirement2. People expect NZ Super and KiwiSaver to be the basis of their retirement income3. KiwiSaver enrolment is high for the employed but many have limited knowledge about KiwiSaver4. Only 29% of respondents could access 3 months work of cash in an emergenc...

The value of working with an adviser - new New Zealand research

The value of financial advice - Money & You researchThe Financial Services Council 2020 research project looked at how New Zealanders think about money and how it affects their decisions and well-being.  2000 New Zealanders were researched in March 2020 (yes, just as Covid and lockdown was hitting us).  The first part of the research has previously been released - which was called 'Money and You - its not about the money, its about you and these were the key findings: You can...

Ethical Investing – how do we know what our fund managers are doing?

There are a number of factors that we take into account in our process, which will be built on over time. 1.    Are the Fund Managers Signatories to UN PRI and or/RIAA 2.    What published information do the fund managers have on their approach to Ethical Investing 3.    Direct questioning of the fund managers that we recommend The team at Moneyworks are known in the industry for asking difficult questions of our fund managers, and not taking their an...

Ethical Investing – the different terminologies

Ethical Investing is the short hand for many different types of approaches to understanding what and how the companies that you are investing in are carrying out their business. Since the Industrial Revolution companies have carried out their activities with the sole aim of generating profit to pay dividends to their shareholders. You may recall the photos during the 1800’s and the 1900’s of the pollution created by ‘industry’.  There is a great article here that shows what the USA ...

Ethical Investing – Moneyworks approach

Since 2017 Moneyworks have been analysing the ‘ethical investing’ approach that the fund managers that we recommend take.  Having investments that don’t ‘do bad’ is important to us at Moneyworks and also to many of our clients. Over the years the field of ‘ethical investing’ has evolved and has become quite complex.  We believe that ‘ethical investing’ as a factor in making investment decisions is still in its early days. Moneyworks are members of the Responsible Inve...

Lost’ Australian Super – first steps to change legislation so that this can be transferred to a New Zealand KiwiSaver (thanks to Chapman Tripp)

Australian ‘unclaimed super’ money gap to be plugged (10th June 2020 – Brief Counsel) The Taxation (Annual Rates for 2020/21, Feasibility Expenditure, and Remedial Matters) Bill, introduced to Parliament on 4 June 2020, includes amendments which would enable the direct transfer of New Zealanders’ unclaimed Australian superannuation money (USM) from the Australian Tax Office (ATO) to a KiwiSaver scheme. A significant change to close a long unresolved issue The proposed changes, to the Inc...

Changes to KiwiSaver this year

There have been a number of changes to KiwiSaver this year.  Some of these changes took effect on 1 April 2020: · All members aged 65 years or over can make a retirement withdrawal ·  KiwiSaver providers will be notified of prescribed investor rate (PIR) changes from Inland Revenue (IR).  The KiwiSaver provider is required to update your PIR with the information provided to them from IRD.  You can provide your provider with a different PIR if you believe that it is incorrec...

Things you may not know about KiwiSaver

1.    Get regular withdrawals from your KiwiSaver to fund your retirement spending When you reach the age of eligibility for New Zealand Superannuation (currently 65), you can access your KiwiSaver. You can withdraw a lump sum, but many of Moneyworks clients find it useful to set up a regular withdrawal to be paid to them (fortnightly, monthly, quarterly), to top up their New Zealand Superannuation income.  It helps smooth out your income and cashflow. 2.    AN...

What does the ‘KiwiSaver Retirement Projection’ on your KiwiSaver Statement mean?

If you are aged between 18 & 64, from this year, you will receive some more information on your annual KiwiSaver Statement.  This ‘Retirement Projection’ information is a legislative requirement, and is prescribed by the regulators. It is important to note that this is only for your KiwiSaver. To get a proper analysis of how much money you will have available in retirement, and how you could draw that down and more importantly – how long your money will last, contact us at Moneyworks ...

It really isn’t possible to ‘time’ the markets – investors with $1.4 billion in KiwiSaver funds learned this in March

When we meet with our Membership Fee clients on an annual basis, we consider the risk profile that their investments are invested in.  As your life changes, this may change.  We encourage our non Membership Fee clients to engage with us to discuss your risk profile and whether it is appropriate for you, at any time, just email us on advice@moneyworks.co.nz. We work with our clients to help them understand the value of staying where they are when there are major changes to investment ma...

Coronavirus world, economic outlook and investments

This is a newsletter that was sent out on Monday May 11th 2020, to Moneyworks Financial Planning and Investment Clients that we work with on an ongoing basis.  It has quite a lot of interesting information, so we thought we would share it with you this month.The fancy free days of attending the Melbourne Tennis Open at the end of January and our annual Portfolio Construction Summit and Finology Conference in Sydney at the end of February seem like a dream right now.  It is amazing how ...

FIF/FDR Tax Regime on Overseas Investments

If you are liable to this tax regime (Your adviser will have told you, and your tax report will have a section with calculations on it as shown below), it is IMPORTANT that you read this guidance. How does FIF/FDR and the exemption work? If you have less than $50,000 per person cost price of overseas investments (for Moneyworks clients this is generally Australian Dollar denominated investments, like Magellan, Platinum etc), then you have an exemption from the FIF/FDR tax regime and you pay tax ...

PIE Tax

Your KiwiSaver and some other investments may be liable to PIE Tax. A PIE is a Portfolio Investment Entity. PIE Tax calculations are quite complicated – the important thing that you need to know is that PIE tax is FULL AND FINAL. Your PIE tax rate is your PIR (Prescribed Investor Rate).  This is different to your Marginal Tax Rate – which is based on your earned income.  For more information on how to calculate your PIR (the rules are not straight forward) can be found here. https:...

Tax Adjustments/Package available for indviduals and businesses under the Covid-19 Crisis Environment

The NZ Government has been using the tax system to provide assistance to people and businesses to deal with the Covid-19 Lockdown.  We have outlined the benefits announced to date below. There is a full summary of the initiatives in the file below as of 23/04/2020. To get updated information, check out https://www.ird.govt.nz/roles/tax-agents/covid-19. 27th March 2020 Legislation ▪ The COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill was passed on 27th March 2020, a...

Questions about your KiwiSaver and Insurance under the Covid-19 environment?

Insurance policiesAll of the insurers that we work with and that our clients have insurance in place with (Life, Trauma, Income Protection/Mortgage Repayment and Health/Medical insurance) have confirmed to us that there are NO EXCLUSIONS for existing policies if you become unwell from Covid-19. This is a different situation to the travel insurance, where most of the policies DO exclude any claims relating to pandemics. If you are in a situation where you have severely reduced income, some of the...

It is time in the market - NOT timing the market - the role of Finology in investing

It is tempting to stop making regular investments into markets when there is volatility and you hear the media pronouncing that the markets have 'crashed', 'plummeted', 'plunged', or even when they breathlessly talk about the markets falling - the biggest fall in 10 years. As financial planners, we do many things that are valuable to our clients, develop a retirement savings analysis so that our clients can see how long their money will last in retirement, make sure that they have well diversifi...

Investment Markets and Recent Fluctuations

You will have heard comments in the media recently that the stock-markets have ‘had their worst day since the Global Financial Crisis in 2008’.  You may have noticed that your KiwiSaver and other market linked investments have fallen in value as a result of these market falls. We thought it would be useful for you to have some context around these comments to help put this into perspective for you. For the last 12 years, the stock-markets have had the longest ‘bull run’ in recent hi...

Which insurance company was that again?

I have been involved in this industry in New Zealand since 1986 and have seen so many changes of names of suppliers. Stockbrokers names have changed, then changed again, and now some are changing back to their original names.  Fund Managers brands have changed, organisations have merged/folded.  And insurance companies have changed names and swallowed up other players. With life insurance products, because the products are for the life of the client, the contracts can only be cancelled...

Warning to DIY investors investing in foreign investments

New Zealand is a nation of Do It Yourselfers.  From the queues at Mitre 10 and Bunnings, to people managing their own investments because they can do it better than a professional. Although we DIY our gardening and some minor garden building projects, we do tend to disagree on the ability of most people to build a well diversified and well performing investment portfolio without professional help. A recent NZ Herald article highlighted the risks of DIY investing, when an investor had a $2,0...