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Don’t just hoard your money-put it to work

Written by R. A. Stewart

Saving money is a good habit to get into; it will put you in a better position to thwart some of the unforeseen setbacks which life has in store for us. It will also mean that you are able to pay for those major items in life which will crop up such as, a car, wedding, kids,or  retirement. This all requires vision. Planning for those things which are unseen but will likely occur in the future.

A person with no vision will spend their money without any thought for the future; they live for today as though tomorrow does not exist.

Saving money is one thing but investing is another thing altogether. Investing your money can multiply your wealth and help you to achieve your goals faster.

Investing needs to be strategic. Most importantly you need to know whether what you are saving for is short-term, medium-term, or long-term.

Your rainy day fund is considered short-term because you could need the money anytime, whether that be for car repairs, insurance, dental or medical bills.

Saving for a car can be considered short or medium term depending on how long you have given yourself before you are buying a car. 

Your retirement fund and saving for a house deposit are considered to be long-term savings goals.

Here is a breakdown of Short-term, medium-term, and long-term goals.

Short term is under one year

Medium-term is one-five years

Long-term is more than five years.

This determines your risk profile but you can fall into more than one category depending on what your savings goals are.

Your rainy day account is money which should be invested conservatively such in an ordinary savings account or a conservative fund in say sharesies or robinhood.

You’re saving for an overseas trip or car within five years in the medium term so you could consider having that money in a conservative or balanced fund.

Your retirement fund is considered long-term so that money could be in a growth fund if you can stomach the volatility of the markets.

As an investor you can fall into all three categories.

There is another category which I will include here and that is discretionary money, but if you are planning to save for something special then you can simply redirect your discretionary spending money into whatever you are saving for.

What you spend your money on is what takes priority in your life. It should not be at the expense of your future plans. If you are spending all of your discretionary money on your hobbies but have nothing to show for all of the money you have received from whatever source your income comes from then there is a problem. 

It all boils down to choice and how you manage your money. It is not how much money you make which determines your financial outcome but what you do with what you make.

With the right financial strategy in place you can weather some financial storms which may come along. As for investing, if you choose the correct investments for your risk profile then what the markets are doing will not be an issue. Don’t let the possibility of loss scare you off investing. You need to be an investor if you want to grow your wealth.

About this article

The opinions expressed in this article are of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your blog/website, or ebook.

Read my other articles on www.robertastewart.com.

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Don’t follow the crowd

 

Written by R. A. Stewart

Prior to the 1987 sharemarket crash, which was named “Black Monday,” investors were rushing to buy shares and as the price rose and the value of their portfolio increased, people borrowed money to purchase shares using the value of their holdings as capital. When Black Monday arrived, the value of their portfolio dived, the result being that investors who borrowed money found themselves in the position of owing more money than their shares are worth.

The problem with using borrowed money is that the crunch comes when you have to pay it all back plus interest.

Jumping on a bandwagon can be very costly. In the case of the 1987 sharemarket crash, the price of shares did not reflect their true value but rather the amount of money which went into the market.

It reminds me of the old saying, “Something is only worth what others are prepared to pay for it.”

We have seen similar examples of companies on the share market which have seen their price rise then come crashing down quickly. Many who jumped on the bandwagon got their fingers burnt.

If you are going to try your luck at making a killing, then this needs to be done with your discretionary spending money and not with your retirement funds or your deposit for a house fund.

The reason being that investing for a killing is a short term speculative investment.

Once in a while you will hear stories of someone who made a killing by investing in such and such but you never hear about those who tried the same thing and lost. It is likely that such people ended up losing their profits.

Here is another saying worth keeping in mind, “Whenever there is an opportunity for a capital gain there is an opportunity for a capital loss,” that is the nature of the markets.

But with the right investing strategy you can achieve your goals whatever the markets are doing. If you have invested according to your risk profile then the state of Wall Street should not be a concern to you.

A windfall is only as good as how it is being used. It is not much good if it is being frittered away. Use it to your best advantage according to YOUR OWN GOALS and not what others think you should do with your life.

Following the crowd can destroy one’s chances of financial prosperity; Just take a look at how much money smokers are paying for their addiction. And where did it all start?

As a teenager when someone was offered a cigarette by their peers and because they were people-pleasers they accepted.

It is rather mind-boggling the amount of money smokers are burning through per annum. That money could have been put to better use. Not to mention the health aspect of smoking.

Set goals that align with your values and not ones which others have tried to impose on you. If someone has limitations then they will impose their limitations on you. Take heed of wise advice but use your common sense to discern whether the advice is good or bad. If you are unsure then ask a number of adults for their opinion. Don’t be afraid to ask and never be so puffed up with pride that you never take advice from anyone. “Pride always comes before a fall.”

About this article

The content of this article is the writer’;s own opinion and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website, or ebook.

Read my other articles on www.robertastewart.com

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Don’t make money your first goal

Don’t make money your first goal

Written by R. A. Stewart

To live a purposeful life one has to do something meaningful and that usually involves some kind of activity which does not involve getting paid or which costs you money.

Of course your first responsibility is your commitments. Take care of those but also spend some time doing whatever you enjoy doing, then you will have something to look forward to when you get home from work.

This is particularly so if you are in a job you hate.

It is soul-destroying when all you have to look forward to is your paycheck every week or month, and once that is gone you go through the same process over and over again.

There are some ways of getting out of a rut and one of these is to up skill but even that does not work for some people. I have known people to take courses in various subjects in order to improve their chances of getting a higher paying job and they still never seem to rise above working in a job which pays the minimum wage.

Paying for higher education with a student loan can pay off but if you are going to take this route then you had better make sure it is something you want to do otherwise it will be a waste of time and money. The key thing is to know how you are going to use this education. It will be a good idea to make a list of the jobs which you are available with the qualifications you are seeking to acquire.

It is important to do things for the right reasons and not try to fit in with what others are doing.

I have known people who have gone into study simply because others are doing or to impress others because they appear smart. Usually there is no thought of what they are going to do with their newly acquired skills, that is, if they have passed their exams.

Getting a higher paying job may not be all that it is cracked up to be if you weigh up all of the pros and cons. There are some things to consider.

  1. Will the increased income move you up to a higher tax bracket?
  2. Will you be spending less time with your family?
  3. Will you have more responsibility?
  4. Will you have to do more travelling as part of the job?

The bottom line is the extra stress which goes with the position may not be worth it and you may not be all that much better off financially anyway.

Life has to be lived in a balanced way in order for it to be meaningful. The bills have to be paid, but if you are able to turn a hobby into an income stream then you are living the dream. An ambition has to involve more than just earning money to buy stuff. Experiences with others cannot be purchased with money. Our family’s tradition was our Sunday afternoon game of cricket and it all began with just a cricket bat. We used boxes for wickets to start with then we cut up some saplings to use for wickets.

It just goes to show that you don’t need much money to create lifelong memories.

About this article

This article is of the opinion and experience of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. 

Read my other articles on www.robertastewart.com

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Investing with a Vision

Investing with a Vision

Written by R. A. Stewart

“He who lacks vision will perish.”-Proverbs 29:18

Financial planning requires vision. What does vision mean? It is the art of preparing for the unseen. People will go through life stages. They buy a car, get married, have kids, and retire. A person with vision will make provisions for these life stages. A person with no vision will spend all of their discretionary spending money without giving any thought to the future.

This is irresponsible and selfish because there are consequences to spending now and burying your head in the sand mentality and that is often poverty. 

If you enter into a relationship with someone then you will take your financial situation into that relationship. If you have a bad credit rating then you and your partner may have difficulty obtaining a mortgage.

Someone who is a good money manager will make provisions for the future which will help them to withstand financial shocks which may not have been predicted such as a job lay off or health issues.

Financial planning does not end with saving money, but rather it is the beginning. Investing that money so that it is working for you can increase your savings and certainly your financial literacy. Your risk profile is the factor which determines where you should invest your money.

Your risk profile is the amount of risk you can take on in relation to the term of the investment. 

If you are in your twenties or thirties then investing in growth funds may be right for you because you have more time to recover from a market meltdown. Someone in their sixties may need their retirement funds within five years or less and the last thing you need is for the markets to take a dive just when you need the money.

If you are putting money aside for a mortgage deposit, car, your child’s education, then you may want to take a more balanced approach with your investing.

It is worth pointing out that you could fit into more than one risk profile category.

If you are young then financial advisors suggest that investing in growth funds is the way to go for your retirement fund because you may have more than forty years before you retire.

However, you may also be putting away money for a mortgage deposit and need that money within 5-10 years so taking a more conservative approach to your house deposit funds may be best. Again, if the markets took a dive just when you needed the money then your house deposit funds will be short of where you intended it to be.

Having the right kind of attitude to your money will pay dividends in the long term. Some people scoff at those who are prudent with their money, calling them selfish and money hunger yet go out and purchase lottery tickets in the hope of winning a quick million. If that is not a contradiction in their philosophy then I don’t know what is. Gold Diggers are notorious for this. A man is their only financial plan; they have no interest in gaining any kind of financial knowledge. There is an abundance of it out there. You just need to pay a visit to your local library to find such books. Even your local charity stores will have some of these books in stock. 

My favourite authors are Frances Cook, Mary Holm, and Martin Hawes. These financial advisors are from New Zealand. Their advice is just as applicable to other countries, well, most of it. It is just a matter of acting on what they say. That is, if it is applicable to your personal circumstances. 

Having some kind of vision for your life will make it meaningful and fulfilling and that requires a degree of vision. Just Go For It and take no notice of your detractors.

About this article

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your ebook, website, or blog.

Read my other articles on www.robertastewart.com

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How to Fight High Energy Prices: A Guide to Saving Money and Staying Comfortable

How to Fight High Energy Prices: A Guide to Saving Money and Staying Comfortable

Rising energy costs have become a significant concern for households around the world. With prices fluctuating due to global economic factors, geopolitical tensions, and supply chain disruptions, many people are looking for practical ways to reduce their energy expenses. Here’s a guide to help you fight high energy prices while maintaining comfort and sustainability.

1. Conduct a Home Energy Audit

A home energy audit is the first step to identifying areas where energy is being wasted. You can hire a professional auditor or do a DIY assessment. Look for drafts around windows and doors, inspect insulation in your attic, and check for inefficient appliances. Small issues like poorly sealed windows can lead to significant energy loss, driving up costs.

2. Upgrade to Energy-Efficient Appliances

Older appliances consume significantly more energy than their modern counterparts. When it’s time to replace a refrigerator, washing machine, or HVAC system, choose models with the Energy Star label or similar certifications. Though the upfront cost might be higher, energy-efficient appliances can save hundreds of dollars annually on electricity bills.

3. Optimize Heating and Cooling Systems

Heating and cooling account for a substantial portion of household energy consumption. To lower costs:

  • Install a programmable thermostat: Set temperatures lower when you’re away or asleep.
  • Service your HVAC system regularly: Dirty filters and clogged vents make systems work harder.
  • Seal ducts and vents: Ensure heated or cooled air isn’t escaping.
  • Use fans strategically: Ceiling fans can help circulate air and reduce reliance on HVAC systems.

4. Switch to LED Lighting

Lighting is one of the simplest areas to cut energy costs. Replacing incandescent bulbs with LED lights can reduce energy use by up to 75%. LEDs also last significantly longer, saving money on replacements.

5. Embrace Renewable Energy

Investing in renewable energy sources like solar panels can yield long-term savings. While the initial cost can be high, government incentives, tax credits, and the ability to sell excess power back to the grid make it an appealing option. For smaller budgets, consider portable solar chargers for devices or solar water heaters.

6. Reduce Standby Power Consumption

Many electronics consume energy even when not in use, known as “phantom power.” To combat this:

  • Unplug devices like phone chargers, TVs, and gaming consoles when not in use.
  • Use smart power strips that automatically shut off power to devices not actively in use.

7. Insulate and Weatherproof Your Home

Proper insulation keeps your home warmer in winter and cooler in summer, reducing the need for heating and cooling. Key areas to insulate include:

  • Attics and walls.
  • Windows: Consider double-glazed or storm windows.
  • Doors: Use weather stripping and draft stoppers.

8. Cultivate Energy-Saving Habits

Behavioral changes can lead to significant savings:

  • Turn off lights and appliances when leaving a room.
  • Wash clothes in cold water and hang-dry them instead of using a dryer.
  • Limit the use of high-energy appliances during peak hours.

9. Explore Alternative Heating and Cooling Methods

In addition to your main HVAC system, consider these cost-saving alternatives:

  • Use space heaters for small areas instead of heating the entire house.
  • Install blackout curtains to reduce heat gain in summer and retain warmth in winter.
  • Utilize fireplaces or pellet stoves in colder months.

10. Monitor and Adjust Energy Usage

Smart meters and energy monitoring apps help track real-time energy consumption. These tools provide insights into which appliances consume the most energy, allowing you to make informed adjustments.

11. Advocate for Better Energy Policies

Join community initiatives or advocacy groups pushing for renewable energy investments and fair energy pricing. Supporting green energy policies can lead to lower costs for everyone in the long run.

12. Shop Around for Better Energy Plans

If your area allows for competition among energy providers, compare rates to find a more affordable plan. Some providers offer fixed-rate plans or discounts for off-peak usage.

Conclusion

Fighting high energy prices doesn’t have to mean sacrificing comfort. By making small changes to your home, investing in energy-efficient solutions, and adopting mindful habits, you can significantly reduce your energy bills. Not only will these strategies save you money, but they’ll also contribute to a more sustainable future. Start implementing these tips today and watch your energy costs drop.

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Who do you take Money advice from?

Who do you take Money advice from?

Written by R. A. Stewart

Everyone has some form of advice on what you should do with your money. From co-workers and family members to bloggers and those who are qualified to provide financial advice. A lot of people will have some form of opinion on what you should do with your money. So much so that it pays to not speak about your financial affairs with anyone; not that it is any of their business.

There are some red flags to note from any of these so-called financial experts. These red flags are just as applicable to the man in the street as they are to a qualified financial advisor.

Red Flag number one: The advisor has no money

I knew someone who turned a couple of hundred dollars into $6,000, then $10,000, then $20,000, and more. In the early stages when he had $6,000, his colleagues suggested to him that he should get a deposit for a new car with that money. I said “That is the stupidest advice you could ever get because not only will you end up with nothing but you will have a debt.” 

He ignored his colleague’s advice.

I told him that he should at least deposit at least $1040 in his Kiwisaver in order to get the $520 government money in July. I don’t know if he followed that advice.

Red Flag number two: They do not know anything your your personal circumstances

If you receive financial advice from someone who does not know a thing about your financial situation then treat that advice with some kind of scepticism. The advice and acting on it must be based on your personal circumstances and your goals for the future. Your age and health are other factors which have to be taken into account. It is your responsibility to make it known to a financial advisor what your future plans are but that does not mean that you should just reveal all to a random cold caller. Use your discretion and common sense when discussing anything with others. 

Red Flag number three: They advise you to invest your life savings in one company

This is a major red flag! Diversification spreads your risk but plunging all of your money in the one company can lead to financial ruin and affect your lifestyle big time. It may be true that there are some people who made a killing by plunging but it is equally true that a lot of people lost everything they invested. The only reason why a paid financial advisor would tell you to invest all of your money in the one company is that they are more interested in their commission rather than your financial well-being.

Red Flag number four: You are advised to invest in cryptocurrency

This is a major red flag. No one should ever advise you to invest in any kind of cryptocurrency. This is a high risk speculation rather than an investment. Only discretionary spending money should be used for purchasing Bitcoin. If you are young and have no commitments then buying Bitcoin will provide you with a bit of excitement, but it is certainly no substitute for your retirement fund.

Red Flag number five: The advice is unsolicited

If you receive a cold call from someone claiming to be a financial advisor then hang up or delete the email. Tell them that you already have an advisor. Whatever you do, don’t engage with them. If you have responded to anything they have said, then say, “Let me talk to my financial advisor first.”

A typical scammer does not want you to talk to anyone else about their so-called opportunity.

Learn to spot the terminology these scammers use in their correspondence and it will help you to avoid becoming their next victim.

About this article

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog, website, or ebook. Read my other articles on www.robertastewart.com

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How to respond to financial setbacks

 

Written by R.A.Stewart

In 2008 during the Global Financial Crisis, a company I had money invested in went bust. I had close to 7 grand invested in it but my initial investment was 5k. The interest rate the company offered investors was higher than what you would receive if investing for a fixed term with the banks. 

I had smaller amounts invested in other companies which went bust.

The company had assets in property and I thought that at least they had assets which could cover the loan if they ever went bust. Problem was, their assets were worth less than their liabilities.

It reminds me of the 1987 sharemarket crash, also known as “Black Monday” when investors borrowed money using the value of their shares as collateral and as the value of shares increased investors were able to borrow even more. 

That is until the crash when the value of their portfolio was worth less than the money owing on them.

A guy I worked with told me that he had mortgaged his house to purchase shares and was left with a debt which at that time will take years to pay off.

There are several ways in which people respond to financial setbacks such as those that have been described. Here are three:

  1. Stop investing in the markets

Some people who got their fingers burnt during Black Monday, stopped investing at all and just left their money in an ordinary savings account. These people may have avoided future share market shocks but they have also missed out on the market rises. Savings which are just left in a personal bank account will lose money if it is left there for any length of time when you consider the effect of inflation and taxation.

  1. Blame Others

During the Global Financial Crisis (GFC), a lot of investors lost money that they had invested in finance companies. A few had their entire life savings invested in some of these companies. Many blamed those in charge of the company for it going under. Not one of those who were interviewed by the TV reporter who covered their meetings took responsibility for their situation or even admitted that they made an error in placing all of their eggs in the one basket. Why did they not diversify their portfolio in order to minimize the risk of losing everything in one hit. Placing all of your eggs in the one basket is just like going to the races and putting all of your money on the one horse. It is easy to be upbeat when things are going well, but try getting along with someone who has taken a heavy loss.

When choosing where to invest, the question one has to ask is, “How will the loss of this money affect my lifestyle?”

Greed gets the better of some people, so much so, that they ignore all of the telltale warning signs. 

Financial experts warned investors about the risks of investing in financial companies which offer high interest rates, saying, “The high interest rates do not reflect the risk investors are taking with their money.”

  1. Learn from the experience

Then you can take it on the chin and accept that you made an error of judgement. Experience is an expensive teacher but you have to invest in order to gain experience and become financially literate. It is important to get over the fear of loss when investing for the long term. If you are investing for the short term such as for next summer’s vacation or for a car then you may want to invest conservatively.

The question that needs to be asked is, “How will the loss of this money affect my lifestyle?”

When I say loss, I mean if the share market drops by 5% or more. You lose only if you sell your shares. A 5% drop in the market is not a problem for those investing for the long or medium term. 

The only way to get experience is to invest. Experience is your best teacher; this applies to any job or activity which you undertake. You will make mistakes; don’t beat yourself up or blame others; learn the lesson and take that into your future decisions.

About this article

This article may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. 

Read my other articles on www.robertastewart.com

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Share market investing tips

Which Company shall I avoid?

Written by R. A. Stewart

That is a question many investors ask themselves as they read the financial section of their newspaper or on a financial website., It is a fair question.

I am not going to and would never tell people to invest in this or that, but will tell you which sectors I usually give a wide berth to and why. You may think differently and I may be proved wrong. That is the beauty of the world; it is full of opinions and only one opinion turns out to be right.

Micro investing platforms such as sharesies in New Zealand and Robinhood in the USA had made share market investing accessible for the man in the street. Investors are able to purchase shares in individual companies. 

As for choosing which industry to invest in, here are the ones I avoid and for good reason

  1. Airlines/travel

It was around the year 2000 when I bought shares in Air New Zealand. It seemed a good choice because this was a company which has been around for decades. Then the company struck turbulence. The share price slid to as low as 14 cents a share. The government bailed them out, otherwise they would have been insolvent. It was not the only time the government has bailed them out since. The pandemic has shown how vulnerable airlines are. 

  1. Hospitality

Anything to do with hospitality is something I do not get involved in. The industry has been doing it tough since covid. The industry heavily relies on the discretionary dollar and people have become more selective in what they are spending their money on these days.

  1. Satellite TV

This industry is vulnerable to changing trends. People are getting more and more of their information online these days. 

  1. Retail

The retail industry has its challenges with internet shopping being the norm. Adapt or die seems to be the rule. Retail outlets who are in a good location or are in an industry which is considered recession proof are likely to do best. PGG Wrightsons are a company which services the farming industry. They have been around for decades and are likely to, barring unseen circumstances. Farming is considered a recession proof industry, though it is vulnerable to mother nature.

  1. Insurance

This is another industry vulnerable to Mother Nature. We have seen from the Christchurch earthquakes of 2022 and Cyclone Gabrielle which hit the North Island of New Zealand in February 2023 that insurance companies end up paying millions in one event. 

  1. Newspapers and magazines

This is another industry with its own challenges. Declining newspaper sales is likely to continue which makes them a poor investment.

  1. Fossil Fuels

Anything to do with fossil fuels is risky as many governments transition away from industries which are seen to be major polluters. This does not mean that industries which are green are good investments. It is a case of treating each investment on its own merits and not becoming emotionally involved in it.

Important rules to follow

The basic rules of investment need to be followed, they are:

(a) Do not place all of your eggs in one basket; in other words, DIVERSIFY

(b) Establish your own RISK PROFILE for your money. This will be the determining factor in choosing where to invest.

(c) Do not react to dips in the market by selling your shares or changing from growth or balanced funds to conservative funds.

If you have invested according to your risk profile then what the markets are doing should not be a worry to you. When you are deciding where to invest your money, ask the question, “If the markets dropped by 5%, 10%, or 15% how will this affect my lifestyle?”

If you have discretionary money to spare you can use this for speculative investments such as bitcoin. Investing some of your spending money in these types of investments instead of buying stuff, or alcohol, or lottery tickets can pay off. If you lost the money in cryptocurrency which you would have frittered away anyway then it will not affect your lifestyle.

About this article

The content of this article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. Read my other articles on www.robertastewart.com

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Your Money Your Responsibility 

Your Money Your Responsibility 

Written by R. A. Stewart

Your money is your responsibility. It is your choice what you do with it once it becomes yours, but you have the responsibility of how you manage your money. Being a good steward of money means being responsible for how you use it. This requires maturity.

Here are the main factors which will help you become a good steward of money.

  1. Gaining a financial education

It is your responsibility to become financially literate. In this day and age where there is so much information available on making the most of your money, it is inexcusable to be financially literate. 

All it may take for you to find books on personal finance is to just visit your local library. If you are prepared to spend a bit of money then you may find some good books at your local bookstore.

Frances Cook, Mary Holm, and Martin Hawes are excellent New Zealand authors of Financial books.

  1. Make your own decisions

Some people will get others to make decisions on their behalf, so that whenever something goes wrong they always have someone to blame. “You told me to invest in such and such company and now I have lost my money.” It is your money so that it is your responsibility to make the most of it. 

  1. Accept your own mistakes

Investing is a learning process. In order to become a good investor you need to invest and gain experience doing so. Mistakes will be made. The important thing is to learn from them and move on. 

  1. Living within your means.

It is your responsibility to live within your means. This means that if you choose to get married, have kids, or buy a car, then it is your responsibility to ensure that you are in a suitable financial position to do these things. 

  1. Pay all of your bills

Everyone has fixed costs such as utilities, phones, and whatever. It is the responsibility and the mature thing to pay all of these on time. A bad credit rating can hurt your chances of obtaining a mortgage in the future.

  1. Save a portion of your income

It is your responsibility to save a portion of your income to provide some kind of cushion for a future financial setback. Establishing a rainy day fund is always suggested by financial experts.

  1. Listen to wise advice

The markets went up and down and they were all down after President Trump announced tariffs on overseas imports to the US. The experts in New Zealand were advising investors to remain calm during this time and not to react to the market slide by changing funds. “This is the nature of the markets,” they said. Many did change funds and when the markets recovered the losses, these people missed out on the gains. As a result, their kiwisaver balances took a hit. 

Your financial plan has to take into consideration the market volatility. The question is, “If the market dropped 5% or whatever, how will this affect my lifestyle?”

If you have ten or so years remaining till you retire then the answer is that it won’t in the short or medium term. 

It is your responsibility to heed advice when it is given but at the same time have the common sense to know whether the advice is good or bad.

Once you have gained enough experience at investing you will have the know how to discern whether advice is good or bad and what the motive is behind the person giving the advice.

About this article: The opinions expressed are those of the writer and may not be applicable to your personal circumstances therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Read my other articles at www.robertastewart.com

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Value of New Zealand’s retirement scheme cannot be understated

 

Written by R.. A. Stewart

The Kiwisaver announcements made in New Zealand’s budget on 22 May, 2025 should not affect the retirement plans of the average kiwi.

Prior to the budget, a TV presenter said, “Kiwisaver will be means tested,” without actually giving any details; how are viewers supposed to interpret that statement?

All was revealed on budget day when it was announced that those who have an income of over 180k are no longer entitled to the government incentive. That is fair enough. They hardly need the money!

The second announcement was that the $520 annual kiwisaver incentive was reduced to $260. To receive this amount $1,040 must be deposited into your kiwisaver each year.

Doing the mathematics, this means that you will receive 25% of what you deposit into your kiwisaver for that year. The key is to deposit a minimum of $1,040 into your kiwisaver every year.

The employer contribution  to your Kiwisaver will be raised to 4% of your gross wages.

Some folk might be asking whether it is worthwhile depositing money into kiwisaver due to the reduction in the government incentives.

If the sole reason why you are in kiwisaver is for the government freebies then you are in kiwisaver for the wrong reason. The right reason for joining and contributing to kiwisaver is to save up for your retirement. This will make life easier once you stop working.

It is just a matter of asking yourself, “Will my future self thank me for doing this?”

There will be no one who reaches the age of 65 and then regrets that they contributed to kiwisaver all of their life. The same thing applies to you if you are from a country other than New Zealand. Your retirement scheme will have its own rules, so familiarise yourself with them.

Another Kiwisaver change is that 16 and 17 year olds will be eligible for the $260 Kiwisaver incentive. Previously, the minimum age was 18. The media misreported this saying, “16 and 17 year olds are now eligible for Kiwisaver.”

The truth is that they have always been eligible for Kiwisaver, but previously were not eligible for the government money which is now $260. Those under 16 can still join Kiwisaver. 

To summarise, joining a retirement savings scheme is a mature and responsible thing to do. It is sowing seeds for your future provision which will make life less stressful as far as your future finances are concerned.

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