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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

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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

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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

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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;

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