Posted on

KIWISAVER RETIREMENT SCHEME

HOW TO MAKE 50% ON YOUR MONEY TAX FREE

Do you want to make 50% return on your money tax free?.

Sounds too good to be true?

Some people will now be thinking that I must have fallen for one of these internet scams. The truth is thousands of New Zealanders are doing this every year which has helped to build up their wealth and it is really no secret; in fact people are encouraged to participate in this scheme by the government.

Over a million Kiwis are making 50% of their money in this scheme every week and if you have not guessed what it is, it’s KIWI SAVER.

The government will contribute $520 to your kiwisaver account per annum but you must contribute at least $1040 to get the $520. If your annual contribution is less than $1040 then your tax credit will be 50% of whatever your contribution is.

Let’s look at an example.

If 4% of your gross income is deposited into your kiwisaver account and you earn on average 50k per annum then your contribution to kiwisaver per annum is 2k. 

There are countless thousands of New Zealanders who are living from payday to pay day who may struggle to contribute even $1040 annually to their kiwisaver account. If you can find a way to contribute money to your kiwisaver then it will be worthwhile in the end. What you spend your money on is what takes priority in your life so if you want a way you will find a way to reach the $1040 target.

Your employer will contribute 3%  of your gross income to your kiwisaver account; it all contributes to your retirement savings.

When signing up for Kiwi Saver, you are given several options of which funds to invest your money, the degree of risk each of these funds carry depends on where your money is being invested.

The funds offering the highest return are also offering the greatest risk of loss, the thing to bear in mind us that if there is a chance of a capital gain then there is also a chance of a capital loss and there is no guarantee that a share market crash such as the 1987 black Monday one will not occur again and it is the higher risk funds which will be affected mostly.

Your tolerance to risk is another factor to consider, there is no point in investing in higher risk funds if  the possibility of loss is going to cause you to lose sleep. Your age is another factor to consider; if you are young then you have the luxury of time on your side.You have more time to recover from financial setbacks.

These are just some things to think about but it’s best to speak to a financial advisor before making any decision.

www.robertastewart.com

Posted on

HOW TO GET RICH OR LOSE YOUR SHIRT TRYING

The views expressed in this article are of the writer’s own opinion and do not represent financial advice. If you do require financial advice then see your bank manager or financial advisor.
How to get rich or lose your shirt trying
By R. A. Stewart
“Just how can I get rich on the stock exchange.” That is the $64,000 question, one that has no definitive answer. The question should really be, “How long will it take for me to get rich on the stock exchange?” Investors who have kept up to date with the financial stuff in the newspapers and TV will know that the sharemarket is a long term game. It is time rather than timing which is the key, however, having said that, it is unrealistic for someone aged 60 to have a 30 year plan to make money on the markets.
A younger person, on the other hand is able to take more risks, because they have more years left to recover from financial setbacks.
Share prices do not always represent true value just as at the race track where the horse’s odds do not represent their true chances of winning the race. The share price is a reflection of the opinions of investors, this opinion can be based on fears, hope, or just plain greed. The share price will move in either direction on the back of news about the company.
The mum and dad investors who buys and sells shares is competing with some very astute investors. Many of whom are the best financial brains in the country, however if you have invested in managed funds as everyone enrolled in kiwisaver has you will have the benefit of these brains who are emplyed as fund managers working on behalf of you. There are other types of investments where you are able to dripfeed money into the sharemarket. Sharesies is one of these; you have the option of investing in managed funds or individual companies. This will give you experience and knowledge of how the market works. Another string to your financial bow you might say.
Someone’s loss can be your gain; when others are selling their shares you buy. There can be some good bargains in the sharemarket when investors are pessimistic and you can take advantage of this. We have seen with the coronavirus pandemic that the markets are struggling with the worst affected companies being airlines and other companies connected to tourism. They can bounce back once this is all over.
Many companies have professional directors whose task is to boost the image of the company. They do little else except be paid for the use of their name.
It cannot be stressed enough that if the possibility of loss is going to cause you sleepless nights then stay out of the sharemarket. Life is too short for it not to be enjoyed.
You should however still be signed up for the kiwisaver retirement scheme, because if you are not you are missing out on the $520 per annum government contribution and the 3% employer contribution. To receive the $520, you must contribute at least $1040
www.robertastewart.com
If you would like to sign up to free updates and receive the free E-book “Financial Steps,” then sign up below;

 

https://forms.aweber.com/form/72/892285272.html

Posted on

COOL HEAD NEEDED DURING THE MARKET SLIDE

Important not to panic during sharemarket downs

The markets will be on a rollercoaster ride for the duration of coronavirus, it is important to keep a cool head and not rush into a decision which could undermine future returns on your investment.

It is all down to your risk tolerance. Those who have invested in more conservative funds may be less affected by the falls in the markets but in the long term lack of exposure to risk will prove costly.

Companies connected to tourism will be most affected by the coronavirus outbreak and these include hotels, airlines, and airports. 

Of these I think airport stocks when they bottom out will be a good buy with Auckland Airport being worth a punt. The airport is not going anywhere anytime.

Some of the markets were down by 3% this week; this sounds a lot but it all depends on how much you have in your retirement fund, (Kiwisaver in NZ). 

Here is a table;

INVESTMENT 3%+ 3%-

$1000 $1030 $970

$5000 $5150 $4850

$10,000 $10,300 $9,700

$20,000 $20,600 $19,400

$30,000 $30,900 $29,100

$40,000 $41,200 $38,800

$50,000 $51,500 $48,500 

The ups and downs of the sharemarket become more noticeable as your retirement fund balance grows. In New Zealand, the government’s contribution of $520 per annum to your kiwisaver will help offset losses as will your employer’s contributions which are 3% of your gross income.

When your balance drops by say 3% then your balance needs to grow by more than 3% to regain those losses.

On the news this week, financial expert Sam Stubbs made the point that in 1918, I think it was, the sharemarket dropped by 11% yet was up by 13% a year later, and it was the same with Sars and 9/11.

If you are investing in individual companies in the market then it will pay to invest in companies least likely to be affected by Coronavirus such as power companies such as Genesis, Mighty River Power, and Meridian Energy. Everyone uses power so they are worth investing in.

Companies to avoid are those connected with the tourist industry but I think Auckland Airport when they bottom out are worth a punt.

Most people do not have the means to invest in individual companies but there is an option for doing just that and it is with sharesies where you are able to dripfeed money into the sharemarket. You can start with just $20 and invest $10 at a time. With Sharesies you can invest in managed funds or individual companies. 

Sharesies is an excellent way for youngsters and the not so young to get some practical knowledge of the markets. There is no substitute for hands on experience when investing.

You can join Sharesies here; https://sharesies.nz/r/377DFM

And my God shall supply all your needs according to his riches in Christ Jesus. Philippians 4:19

This article is the sole opinion of the writer and is not intended as financial advice.

www.robertastewart.com

Posted on

SAVING FOR WHATEVER

Saving for whatever…

Written by R. A. Stewart

Establish your savings goal. Are you saving for your retirement, a new car, a deposit for a home or whatever. This will be the determining factor when choosing where to invest your money. It is important to note that you can have several different savings/financial goals at the same time with a different type of investment with each goal. 

For example, you may have a short term goal to pay off your TV set, a medium term goal to save for your car, and a long term goal to put away money for your retirement.

Your financial goals should be split up into three categories; short term, medium term, and long term.

The category will determine where it is best to place your money.

  1. SHORT TERM

Oncall-6 months

This is money on standby and used for general household bills such as power, car running expenses rent, and so forth. 

Where to keep this money; Ordinary savings account or bonus bonds

  1. MEDIUM TERM

6 months-3 years

This is money being saved for a car, appliance, overseas trip.

Where to keep your money; Bonus Bonds is a good option but mutual funds is an option but invest conservatively. 

There are a number of managed funds which are cropping up and you do not have to have much to get started with them. A good one for the beginner is sharesies (in NZ). If you are from another country there will be companies similar to Sharesies you are able to invest with.

  1. LONG TERM

3 years+

Saving for a house deposit and building a nest egg for your retirement are examples of long term goals.

Where to keep your money; kiwisaver is an ideal investment to drive you to your savings destination because the incentives will help your savings grow.

Some tips.

Pay off debt first because if you are able to pay off a debt where you’re paying say 10% interest on the debt then the interest saved from the paid off debt is just as if you had been paid the 10%; as the saying goes, “A dollar saved is a dollar made.”

Stuff happens in life where circumstances change therefore you need to be prepared to be flexible.

Take a long term view of your investments. It is time and not timing which is the key to investing. As you gain more experience with investing, your risk profile will improve.

Read all you can about finance and the sharemarket. Knowledge will help you overcome your fears when investing.

PLEASE NOTE; The information in this article is the writer’s opinion based on his experience. If you require financial advice see your bank.

www.robertastewart.com

Posted on

BENEFITS OF JOINING KIWISAVER

The advantages of joining kiwisaver

Kiwisaver is New Zealand’s retirement scheme. As a savings tool, it is a no brainer for ordinary New Zealanders who want a more prosperous future. There are numerous advantages in joining kiwisaver. If you are not from New Zealand, your country’s own retirement scheme will have its incentives, so it would pay to do your research and check them out. If you are a resident in New Zealand, here are the main reasons for joining kiwisaver.

1. The annual tax credit of a maximum of $520 will help boost your savings. This is paid out in July and to receive this full amount you must invest at least $1040 in the previous 12 months. For example to receive the $520 in July 2020, you must deposit $1040 into kiwisaver between 1st July 2019 and 30th June 2020. If you deposit less than $1040 during this period your tax credit will be 50% of your contributions.

The government contribution is tax free!

If I told you it is possible to make 50% profit on your investment, what would you be thinking? Perhaps you would be sceptical and wondering if its too good to be true. Yet it is true that the government’s contribution to your kiwisaver account is tax free.

2. The employer contributions of 3%. 

Again this is money available but only if you have joined kiwisaver.

3. 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.

4. 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.

5. Your savings with kiwisaver are locked in until you reach the retirement age of 65; this means that there is no temptation to dip into your savings, however, there are some circumstances where you may be able to access your funds prior to your 65th birthday. They are;

(a) To use the money for a deposit on your first home (conditions apply)

(b) Undue hardship

(c) Terminal illness

(d) A condition which makes it unlikely that you will live beyond 65. 

6. If you die an untimely death your kiwisaver funds can pay for your funeral. It is important though to make sure you have a will otherwise lawyers fees will take up a good percentage of your estates finances.

www.robertastewart.com

Posted on

UNDERSTANDING INFLATION

How to beat inflation guide for ordinary people

Inflation is no respecter of people; it affects all of us, rich, poor, or in between; you do not have to have a lot of money to feel the effects of inflation, in fact, it is those who are least able to afford the rising prices who are affected by inflation.

So what is inflation?

Inflation is the name given to the rises in prices. This is all tallied up and averaged out with the measure of inflation indicated by a percentage point. If inflation is say 1.5% then it means prices on average have risen by 1.5% in the 12 months the survey was taken.

There are many different strategies for beating inflation, most involve investing for a return greater than the inflation rate. If you just stored the money under your mattress, the value of your money would decrease every year by the value of the inflation rate. If the inflation rate was 1.5%, then your money would decrease by 1.5% per annum.

1-CUT UP THE CREDIT CARDS

When you purchase stuff using borrowed money, you are paying inflated prices for everything and this all adds up during your lifetime. “If you have not got the money then don’t buy it,” is a good rule to live by.

2-CUT BACK ON YOUR SPENDING 

This is the best way of getting ahead financially in life and will protect you from some of the effects of inflation. Think of everything you spend on an annual basis. Some folks think nothing of spending $20 on coffees per week, but that adds up to  $1000 per year.

3-BUY SECOND HAND WHENEVER PRACTICAL

There is a huge difference between the price of something in a high street store and that same item in the second hand/charity shop; the amount you will save will quickly add up during your lifetime.

4-DON’T JUST SAVE YOUR MONEY…

Invest it; there are plenty of options for you to invest your money, even if you do not have a lot to invest. “You do not have to be rich to invest but you need to invest to become rich.”

5-MANAGED FUNDS

This is my favoured method for a long term inflation beating investment. Your retirement fund with all of it’s incentives is a no brainer, but there are lots of other managed funds you can join, many are ideal for the small saver who do not earn all that much. Managed Funds or Index Funds as they are also called have stood the test of time as the best way of beating inflation.

There are a lot more options for investors looking for managed funds to invest in and some of them can be started on a shoestring, it is all about managing your money and how to beat inflation.

www.robertastewart.com

Posted on

FRIENDS WILL SHAPE YOUR FINANCIAL DESTINY

Your friends may be detrimental to your wealth

Written by R.A.Stewart

The people you associate with could well be having a detrimental effect on your financial future and though you may not notice it at the beginning, but eventually their influence could pull you down to mediocrity. Let’s look at an example from the animal kingdom.

If you locked a sheep on its own in a paddock, it will try to find a way of escaping to find greener pastures but if it has company it is quite content to remain in the same paddock with its friend.

People are like that; some will conform to the standards of others and as far as financial matters are concerned will take on board what others are saying, and eventually will adopt the same kind of mentality towards finances.

There are different kinds of lifestyle habits which are incompatible to a financially successful lifestyle; drinking, smoking, and eating takeaways regularly are habits which will shorten your life and drain you of your finances.

Your choice of friends will influence your attitude towards money; if you associate with gold digger’s who believe people with lots of money are selfish, then you will be encouraged to spend your money rather than save and invest it.

This is what I am saying in a nutshell:

“The people you choose as your friends will set the standards for your life.” It is important that you keep good company because if you spend too much time with people with bad attitudes, some of their money attitudes will rub off on you. It has been said that you are the average of the five people you spend most of your time with. So who are you spending most of your time with? 

I have known a lot of people with terrible money attitudes. One is “You cannot take it all with you” as if you are going to pass away within the next week or so. What they are doing is to cling on to every excuse they can hold on to for their lack of financial literacy. They will try to make others who are in a better financial shape feel guilty by making them feel stingy or selfish.  This makes them feel less guilty about their own financial situation.

It is better to spend time with Financially literate individuals and in this way you will pick up some of their financial knowhow. You sure will not learn anything from those who friends are the type of people who go out on Saturdays or have no problem with breaking the law then they will encourage you to follow suit and a lot of people do in order to fit in and abandon the values taught by their parents.

The bottom line is, “If you keep company with financially ignorant people then you will become like them.

“He who walks with wise men shall become wise but a companion of fools will be ruined.” Proverbs 13:20

www.robertastewart.com

https://forms.aweber.com/form/72/892285272.htm

Posted on

GOALS AND YOUR INVESTMENT STRATEGY

Your goals and investment strategy

The type of investment you place your savings in all depends on your goals and the timeframe for achieving your goals. Investing in low interest accounts is not the best strategy for long term goals while investing in growth funds in the sharemarket is not necessarily the best option for achieving your short term goals. Your investment platform has to be tailored to suit your goals. This table will give you better idea of what I am going on about.

SHORT TERM GOALS

A short term goal is any goal which can be achieved within a year. This may be for a holiday to the West Coast (if you are from another district) or saving up for a car (if it is cheap enough).

MEDIUM TERM GOALS

A medium term goal takes between a year to 5 years to achieve and can be saving for a house deposit or an overseas trip.

LONG TERM GOALS

A long term goal may be saving for your retirement or paying off your home mortgage.

Lets look at some investment options.

SHORT TERM GOALS.

If you already have the money saved up but won’t be needing the money for 3-6 months then investing in fixed term accounts with one of the high street banks is a good option but if you are actually saving up the money then opening up a special account for this is one but not ther only option. I understand that one is able to drip feed money into bonus bonds and it is easily accessible. Investing in Sharesies may be another option worth taking a look at

MEDIUM TERM GOALS

Investing in Sharesies is a good option I believe because your savings has potential for growth while you are saving but another option is to use an everyday savings account to save and once you have saved a certain amount invest in a 90-day investment with a high street bank. 

It should be pointed out that if you are saving for your first house deposit then joining kiwisaver is a must because you are able to withdraw part of your kiwisaver for a first home deposit providing you have been in the kiwisaver scheme for at least three years.

LONG TERM GOALS

Investing in kiwisaver is your best option here irrespective of the date of your birthday because even if the  retirement age of 65 is just around the corner, you can scale back the type of funds you are in from growth/balanced to more conservative however people may have 20 years or more left after they retire so this may not necessarily suit some people. Once one reaches 65, those in kiwisaver are able to withdraw their retirement savings in one hit or whenever they need it. 

There are so many investment options available to you and you do not have to be rich to get involved but you do need to invest to get rich, one investment I am in favour of is Sharesies;

If you would like email updates from me, you can sign up here;

https://forms.aweber.com/form/72/892285272.htm

www.robertastewart.com