When can I withdraw my kiwisaver

December 15, 2022

Investing-Making a start

Here is an article I found on one of my old USB sticks. Thought I would repost it if you have not seen it yet.

Investing-Making a start

You do not have to be rich to invest but you need to invest to be rich.

The key to developing a financial plan is to make a start irrespective of your financial position. So many people just want to bury their head in the sand and carry on as they have been doing for years, living from one payday to the next. Their only hope of getting ahead financially is to win the lottery. You can only start from the present irrespective of your financial situation. A savings plan starts with just the first dollar which you save. If you have absolutely nothing from your pay day each week and save one dollar this week then you are financially better off this week. Saving money becomes a habit and it is a habit well worth developing because in the long run it will make things easier for you. Think of your money as a seed, you have to sow it before you can grow it. People tend to come up with all kinds of excuses for not saving for their future. There is always something which has more priority, a new television, a holiday, debts etc.

In short such people are professional procrastinators when it comes to saving money, it is always something they intend to do in the future but never get around to it. Saving money or spending money becomes a habit and they are habits which will result in consequences decades from today. It is all very well saying “You can’t take it all with you” (when you die) but leaving your family in financial trouble when you die is irresponsible and selfish. You will reap what you sow therefore in order to reap a financial harvest when you retire, you need to sow into your retirement fund.

Developing the savings habit when you have been a spender all your life is going to mean developing new habits such as doing without rather than borrowing for items you do not need and buying from thrift shops. It will take will power on your part, many people just do not have will power and will spend whatever is in their bank account and when the power, phone, or rates bill arrives in the mail, they don’t have the money to cover it.

Setting up a retirement fund is a great idea for building up a future nest egg for your retirement years. The money is left to accumulate where you have no access to it which removes the temptation to spend it.

Money gives you options

Even if you had just one thousand dollars saved up you have more options than the person who has no savings at all, the person who has ten thousand dollars saved up has more options than the person who has just a thousand dollars saved. Options in terms of where to invest the money, where to holiday, and whether they can afford to move to another town for a job.

Advantages of joining kiwisaver

If you are wondering what advantages there are in joining kiwisaver then here are the main ones.

1–There are the $520 per annum tax credits. In order to gain the full amount of tax credits you must contribute at least $1,040 per annum to your kiwisaver account.

2-The employer contributions, this is at least 3% of your gross wages.

Other advantages are;

3-Having your funds locked away until your retirement removes the temptation to spend your savings.

4-Income received from your kiwisaver account will not be assessed as income by WINZ if you lose your job and are going on a benefit.

5-Having your money locked away prevents family members or so called friends from taking advantage of you.

Employees have the choice of whether to contribute 2%, 4%, or 8% of their gross wages into kiwisaver.

What happens to your kiwisaver fund if you die before you reach 65?

Your money is allocated to your estate in accordance with your last will but the government’s contributions will return to the crown. It is important for you to make out a will otherwise any money belonging to your estate could be reduced by legal fees and leave your heirs financially worse off especially if there is not enough money in the kitty to pay for your funeral. It is all about being responsible about your finances.

The question should be “How will I fund my later years if I am unable to work?”

Kiwisaver could be your answer. Making provisions for you in later years is the responsible thing to do and kiwisaver is an excellent tool for achieving your financial goals.

www.robertastewart.com

January 16, 2022

How to prioritize your spending

INTRODUCTION

It is important to prioritize your spending in order to get the best outcome for your finances. This will often mean delaying those items that you want in preference for something which is really needed. For example, car repair expenses should have priority over that new smartphone you saw advertised on TV. There is a system you can use to decide on how to prioritize your discretionary spending and this is explained.

How to prioritize your spending

We all spend money. That is the purpose of getting a job or being in business. All of the expenses involved in living need to be paid for somehow. Once the necessities are taken care of, what is left over is called discretionary spending money. It is up to us to make a choice with whatever discretionary spending money we have. We can save it or we can spend it, it is up to our individual choices.

Some folk fritter away their spending money because they have no plan to make the most of what they have.

Two people can have the same level of income and the same outgoings but one has a financial plan and the other does not. I can tell you that the difference in financial positions between the two in the long term will be massive.

The truth is that both have a plan, one a plan for a favourable financial outcome and the other a plan for financial failure; the core difference between the person with a financial plan and the one who does not is priorities. They each have different priorities on how to use their money.

How do you establish priorities?

Here is a simple system.

Make a list of your top five goals on what you are saving for.

This could be to save for a smartphone, savings, new car, holiday, pay off debt, buy a new tv, or whatever.

Once you have written out your five items for your list, place a number besides them, one to five in no particular order of preference.

Now put them in groups of two.

One and two, one and three, one and four, one and five, two and three, two and four, two and five, three and four, three and five, and four and five.

You will have ten groups of two.

Next place a circle around your preferred option in each group of two.

Here is an example.

Sam lists his top five goals (not in order)

Paying off Debt
Buying a cellphone
Buying a motor vehicle
Saving
Going for an overseas holiday

The first group is Paying off debt V Buying a cellphone which if I was Sam I would circle paying off debt.

The next group is Paying off debt V Buying a motor vehicle. Once again I would circle the paying off debt option if I was Sam.

The third group is paying off debt V Saving and once again I would circle paying off debt because by paying off debt you do not have to pay interest on the money which has been borrowed.

Go through all of the other combinations and the option which has been circled the most is your priority.

This all clarifies your thinking.

ABOUT THIS ARTICLE

Feel free to share this article or even use it as content for your ebook or website. Other articles can be found on www.robertastewart.com

October 3, 2021

SHARE MARKET FALLS

INTRODUCTION

The sharemarket has enjoyed a great run since the Global Financial Crisis. Will it continue or will a major fall in the markets put an end to it all? No one knows therefore, it is important to set proper financial goals and use strategies to factor in scenarios which may or may not occur.

What to do if the sharemarket crashes

The 1987 sharemarket crash known as “Black Monday” wiped out fortunes as many investors lost their life savings. Those of a generation who were around back then will be well aware of what can happen when you place all your eggs in one basket as many investors did. I mean there were stories of investors borrowing money to purchase shares using the value of their shares as collateral. When the markets went down, the value of their shares were a fraction of the money owed on the borrowed money.

The 1987 crash was the worst crash since the 1929 Wall Street crash. There were almost 60 years between 1929 and 1987 so investors need to reassure themselves that another crash may not fall within their lifetime.

So what should investors do when the markets are falling?

Here are my 5 tips:

1 KEEP CALM

Do not fret, markets go up and down like a rollercoaster. Treat the markets as a long term investment. If you are young then you have time on your side. There is time for you to recover from financial setbacks. Even if you are say 50 you still have another 15 or so years before you reach the age of retirement so you do not really need to be too conservative, however, someone who cannot stomach the thought of rapidly falling markets would disagree. It all depends on your temperament.

A financial advisor is likely to steer you to more conservative investments if you are approaching what is termed “The retirement age.”

2 STICK TO YOUR FINANCIAL PLAN

It is important to stick with your original plan despite all if the negativity in the newspapers which will no doubt arise after a crash. When planning your financial strategy your plan needs to factor in the possibility of a sharemarket tumble. Shares can take investors on a rollercoaster ride which rewards persistence.

3 DON’T TRY TO TIME THE MARKET

It is time not timing which rewards sharemarket investors. Few investors have the knowledge to predict the movement of a share price and those who do and take advantage of it are breaking the law because it is known as insider trading. Investors should do their homework first and trust their own judgement when deciding on which shares to buy.

4 KEEP SAVING AND INVESTING

The market rewards consistency. Investing into the markets when there is so much negativity which will follow a crash will pay off. As they say “Fortune favours the brave.” The advantage of investing when there is not much negativity and uncertainty in the markets is that you will be able to snap shares up at bargain prices and as the market recovers, investors will gradually jump on the bandwagon and in doing so will give it a shot in the arm.

5 LISTEN TO THE RIGHT PEOPLE

A sharemarket crash will dominate the news for weeks and all of a sudden there will be financial experts coming out of the woodwork with advice on what you should do with your money. A smart investor will be able to discern between good, bad, or downright stupid advice.

www.robertastewart.com

ABOUT THIS ARTICLE

Feel free to print this article for easy reading. You may use this article for content for your website or ebook. Visit my site www.robertastewart.com for other articles.

January 9, 2020January 24, 2020

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

(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.