Month: April 2018

Ditch those excuses

People come up with all kinds of excuses why they are not part of a retirement savings plan even though they can afford it. You can understand someone who is struggling to feed a tribe of kids on a modest income not being able to afford to join a retirement scheme but you do hear of people from time to time saying that they are not enrolled in one. New Zealand’s scheme is called “Kiwisaver” and I have heard a lot of different kinds of excuses as to why people are not enrolled. Here is sample.

“I am not earning enough money.”

The person who made this excuse has money to spend on a lot of other things such as Sky TV subscriptions and all of the other consumer able items that are not essential to survive.

“I have bills to pay.”

This one is similar to the previous excuse. People are quite prepared to purchase stuff with borrowed money but apparently think “Financial advice” is a dirty word.

“I might die before I retire.”

The person who made this statement does have a kiwisaver account but is an irregular contributor and is not making the most of it. He is missing out on the government tax credits. Yet is spending money on collectable items which he has stored up in the attic. That could be his retirement fund. He may not take his retirement fund with him but will not take his collectables with him either.

The “You can’t take it with you” excuse is one of the most common excuse given for not saving for one’s retirement. It is basically a selfish attitude to have since you are going to lumber your family with a big bill when you die.

“The Government might sell kiwisaver.”

This is the most stupidest reason for not going into kiwisaver because kiwisaver is the name given for New Zealand’s retirement scheme. It is not owned by the government. Each person who has kiwisaver is the owner of their own account.  I tried to explain this but the person who made this comment instead of listening then confided in his colleagues who were just as financially illiterate and  they came out with more stupid comments. That just goes to show that people tend to hang out with those who are like minded. If you want to get ahead then associate with those whose lives are heading in the same direction as you want to go.

 

Funeral Insurance. Do you really need it?

The opinions expressed in this post are my own and may not be applicable to your circumstances therefore it is suggested that you talk things over with your own family if you are unable to make your own decisions.

You must have seen the TV adverts selling funeral insurance so that you are covered if something unexpectedly happened to you. I do not have this kind of insurance but I do know others who do. Yet these people are not with kiwisaver, New Zealand’s retirement scheme. Now, I do not know how much they are paying to these insurance companies every week but I suggest that if they cut out the insurance and instead invested that same amount of money into their kiwisaver account then they would in the long run be better off financially providing of course that they do not die in the forseeable future.

Now let us suppose for the sake of explaining things that they are paying $10 per week or $520 per annum in funeral insurance. If this money was invested in kiwisaver instead and along with the government’s contribution of 50% of their contribution would mean that there would be $780 in this person’s kiwisaver account. If this was repeated every year then there would soon be sufficient money in the kitty to pay for insurance.

Do you see where I am coming from?

It is something to think about but as I stated at the beginning of this post, this is my own opinion and may not be applicable to your circumstances.

www.robertastewart.com

Saver or Investor which one are you?

Most people are able to save money. It is just a matter of spending less than you earn but few people are investors. If you have say a grand or two in an ordinary on call savings account then you are not making the most of your savings. An ordinary savings account will only pay around 1-2% interest which is not much more than the inflation rate. On top of that, you have taxation to pay on the interest. In the end, it is no way to grow your savings. The bank is really using you and your money to get rich. They charge their borrowers a much higher interest rate than they are paying for the use of your money and to rub salt in the wounds, the bank’s best customers, those who borrow money for their businesses recoup the money they paid for the use of your money by charging you a higher price for the goods and services they provide.

There are plenty of options for investing your money and no excuse for burying your head in the sand. The banks do have fixed term options at higher rates for those who have a lot of savings. The minimum investment for these is usually around 5k upwards.

Managed Funds are a good option for those who want to grow their savings at a faster rate. It is a good way of investing indirectly into the sharemarket. your investment is combined with all the other investors who have joined the scheme and the fund invests in the markets. You do have the option of which fund to invest your money such as conservative, balanced, or growth.

It pays to do your homework irrespective of where you invest your money. I think the factor which determines the risk level you are prepared to accept is how soon is it that you need your money. If you are saving for a house deposit then you certainly would not be investing your money in high risk investmennts because when it comes to using your money, the markets may have taken a dip, otherwise known as a “Bear Market.”

It is all a matter of increasing your knowledge. I have an ebook “The Golden Rules of Wealth.” which can help change the way you think about wealth. It is only $5. Check it out now.

www.robertastewart.com

How to Gain 50% on Your Investment

Did you know that investor’s in New Zealand’s retirement savings scheme Kiwisaver earn 50% on their investment for the first $1040 they deposit into their Kiwisaver account every year?

Now you may be thinking, “Its too good to be true so it must be a scam.”

Read on.

The government will deposit a maximum of $520 into your Kiwisaver account per annum. To receive this full amount you must deposit $1040. In other words whatever you deposit into your Kiwisaver account the government will invest 50% of it into your account. This is in real terms 50% of on your investment.

The news gets even better. It is all tax free.

If you only worked part of the year or are on a low wage and are unable to contribute the full $1040 on your wages then you are able to make voluntary contributions into your Kiwisaver account.

It is worth noting that the Kiwisaver year begins on July 1st and ends on June 30th. The government money will go into your Kiwisaver account in late July. So the strategy is to always make sure that you have deposited $1040 into your Kiwisaver account by June 30th to get the full amount of government money in July. If you do banking over the internet then it will be just a case of making a transfer to your KIwisaver account in much the same way as you would when transferring money between accounts.

This is all applicable to New Zealand’s retirement scheme only. Your own country will have its own scheme with it’ own incentives.

www.robertastewart.com

 

New Zealand Kiwisaver Scheme is a second to none retirement savings tool.

New Zealand’s own retirement saving’s scheme, “Kiwisaver” is a second to none savings tool for putting money away for your retirement. It has only been available since 2007. Prior to this New Zealand had no government retirement scheme.

There are several features and benefits of kiwisaver and before I discuss this, I want to emphsis the difference between a feature and a benefit. A feature tells you something about the product while a benefit tells you what is in it for you. For example, a feature of kiwisaver is that your money is locked up (with exceptions) until you reach the retirement age of 65. The benefit of this is that you will have a nice nest egg when you retire.

The main feature is the $520 tax credit per annum which you are eligible for but you must deposit twice this amount ($1040) per annum to get the full tax credit. The rule is whatever you put into kiwisaver, the government will deposit half of that amount to a maximum of $520 per annum. This money goes into you kiwisaver account around mid to late July. By the way, the kiwisaver year begins 1 July and ends in June so that even if you waited until June to put $1040 into your kiwisaver account, you will still get the government money in July. You are able to deposit money into your kiwisaver account to ensure you get the full tax credit if you only worked a portion of the year.

Another feature is that your employer will contribute to your kiwisaver account. It all ads up in the end.

You are able to use a portion of your kiwisaver funds to help purchase your first home. There are rules surrounding this. I believe that you have to have been enrolled in kiwisaver for at least 5 years. If both husband and wife are both in kiwisaver, this can be a big help toward getting your first home.

Another advantage of having your retirement funds in kiwisaver compared to other types of investments is that if you need to go on income support then money earned by your kiwisaver account will not affect your benefit whereas any income derived from investments such as dividends from shares and fixed term interests will affect your benefit. It must be stressed that it is not the amount of savings in these investments that is of concern but the income from them.

When one enrols with kiwisaver, they are given the choice between conservative funds, balanced funds, and growth funds. Conservative Funds are low risk but profits are low. Growth funds are high risk but have the potential to grown your savings. Balanced funds are a combination of conservative and growth funds. Most financial advisors believe that when you are young, it is better to put your money in growth fund because you have more time to recover from a sharemarket crash if indeed that does occur. Those nearing retirement are better to scale back and lean on the conservative funds the experts believe. At the end of the day, it is your money and its your responsibility to decide what you are going to do with it.

If you do not choose which fund you are going on, one will be chosen for you and these tend to lean on the conservative side which will limit the earning potential of your savings.

When you start a job you have the choice of choosing whether you want 2%, 4%, or 8% of your gross income will go into kiwisaver. To give you an idea of how much would go into kiwisaver. Someone on $16 an hour working a 40 hour-week would have $12.80 deducted per week on 2%, $25.60 deducted per week on 4%, and $51.20 per week on 8%. It all depends on how much you can afford. I think that 2% or 4% is recommended because you can always make lump sum contributions to kiwisaver if you are in a position to do so.

www.robertastewart.com