Professional Investment Services

The mortgage or KiwiSaver?

It All Depends I read the following article earlier in the week and in some context I agree with it but I also believe that they actually over simplify the message. I would answer the question in a much different way, in a way that a real Financial Planner should answer the question and that is “It all depends”. You see an investment should not just be taken on it’s merits standing out on it’s own. An investment should be taken in to consideration while weighing up the goals, time horizon and risk profile of the client asking the question. You see for some people it could make more sense to pay the money off the mortgage, I don’t know that for sure because the calculations used to compare between the two would depend on the mortgage the questionnaire had. So basically I agree but with the caveat thrown in that it all depends. Kiwi Saver or The Mortgage The Reserve Bank is expected to increase the official cash rate again tomorrow (They did) putting more pressure on mortgage holders budgets. But should you cut your KiwiSaver contributions and divert the money into paying for higher loan costs? Absolutely not, if you can afford it, says Nigel Tate, a Waikato based financial adviser and president of the New Zealand’s Institute of Financial Advisers. “For employees it’s a no brainer to keep going with KiwiSaver,” he says. That’s because of the employer’s minimum 3 per cent contribution which means you are getting close to a 100 per cent return on your 3 per cent contribution before the money is even...

Prices Slow???

What bollocks!!! Every time I read stories like this I am reminded of the quote “Lies, damn lies and statistics” Ask anyone who is attending auctions in Auckland if prices have slowed? I’m not entirely sure what stats the Reserve Bank is looking at but when you sit in an ivory tower and crunch numbers it is easy to see the Emperors new clothes article here. Mortgage-lending rules introduced last October appear to have helped slow the speed of rising house prices, the Reserve Bank said yesterday. The Reserve Bank introduced a policy last year restricting the amount of lending banks can extend to buyers with deposits of less than 20 per cent. In September last year, before the restrictions came into play, high loan-to-value ratio (LVR) lending made up 25 per cent of all mortgage lending, the bank said. But during the first six months the rules were in force, high-LVR loans made up only 5.6 per cent of lending on average. High-LVR loans are those where someone borrows more than 80 per cent of the value of the property being mortgaged. “Our initial assessment is that restrictions on high-LVR lending helped reduce house price inflation,” said the Reserve Bank’s deputy governor, Grant Spencer. “A more in-depth assessment of the policy and its impact on the housing market will be included in next month’s Financial Stability Report.” via NZ Herald...

The Best Advice From A Single Guy

This is probably not something you see everyday on a Financial Services website but it struck a chord with me, especially after all the years that I have spent with couples and sometimes walked away thinking to myself that I was a relationship counselor and in fact it is often said that a Financial Planner will spend half his time as a relationship counselor. Article starts here. Nate Bagley says he was sick of hearing love stories that fell into one of two categories — scandal and divorce, and unrealistic fairytale. So he started a Kickstarter and used his life savings to tour the country and interview couples in happy, long-term relationships. He then took to Reddit’s /r/IAmA to share what he learned (just in time for Valentine’s Day), and to post podcasts of the couples’ journeys and advice. via Here’s The Best Advice From A Single Guy Who Spent A Year Interviewing Couples | Business...

Coping with growth a big challenge for city

“If you want to run with the big dogs you have to pee in the tall grass” That’s a saying a mentor of mine used to say, I never understood it fully but I guess it means that if you want to succeed you have to do the things that other successful people do. Auckland is once again in the news and rightfully so, it’s our nations largest city and as such offers our nations investors the most opportunities…that is if you are ready to run with the big dogs. Economists, developers, real estate companies and the Reserve Bank are all telling us one thing, albeit in slightly different ways, Auckland is where it is at. Ensuring Auckland copes with growth and has enough offices, apartments and shops is one of the biggest challenges the city faces, according to Auckland Council’s chief economist Geoff Cooper. The city centre commanded a significant productivity premium over the rest of New Zealand and so ensuring the growth of this area was an important issue for the entire country, Cooper said. He was commenting after Colliers International released a study showing Auckland needed the equivalent of 54 buildings of the scale of the PwC Tower, Metropolis block and the Downtown mall in a little under two decades to cope with another 500,000 people. Coping with growth a big challenge for city | Rich...

How State And Local Governments Are Still Dragging On GDP And Jobs

Two of the key U.S. economic trends I expected this year were 1) a recovery in residential investment, and 2) that most of the drag from state and local governments would be over by mid-year 2012. Just eliminating the drag from state and local governments would help GDP and employment growth. I’ve written extensively about the housing recovery, and it is time to take another look at state and local government spending. In early August, the Rockefeller Institute of Government put out a report on state and local government revenue through Q1. From the press release: Overall state tax revenues are now above pre-recession levels, as well as above peak levels that came several months into the Great Recession. In the first quarter of 2012, total state tax revenues were 4.8 percent higher than during the same quarter of 2008. Starting at the end of 2008 and extending through 2009, states suffered five straight quarters of decline in tax revenues. They now have enjoyed nine consecutive periods of growth, and the second quarter of 2012 will likely extend the string to 10. Overall collections in 45 early-reporting states showed growth of 5.8 percent in the months of April and May of 2012 compared to the same months of 2011. After adjusting for inflation, however, state tax revenues are still 1.6 percent lower compared to the same quarter four years ago, in 2008. That is a little encouraging, but the news isn’t as positive for local governments: While state tax revenues have been recovering, many localities face significant fiscal challenges, according to the report’s author, Senior Policy Analyst Lucy Dadayan....

One Chance in a Quintillion

By now you’ll know we’re not a fan of government and central bank meddling. In our view, the free market is the best way to ensure orderly markets. The simple reason is, in free markets individuals can quickly adapt to changed conditions. And make decisions accordingly. But when the state meddles, all heck breaks loose. A perfect example is the behaviour of one of our “Early Warning Signals” – the Swiss Franc (CHF). [Ed note: more on another early warning signal later]. In recent weeks we pointed out investors fleeing to the Swiss franc was a warning sign. It was a signal of fear. And it proved that contrary to jingoistic commentary by the Australian mainstream, the Aussie dollar wasn’t a new safe asset. It was and is what it has always been, a risky asset. The rush to safety This was the chart we showed you: It shows the Aussie dollar taking a bath against the Swiss franc as investors shunned risky assets and poured into safer assets. But since last week, the trend has reversed. Here’s a chart of the Aussie dollar-Swiss franc exchange-rate today: The Aussie has pummelled the Swiss, gaining over 10% in just a few days. The reason? You guessed it – intervention by the Swiss National Bank (SNB) – the Swiss version of the Reserve Bank of Australia (RBA). With investors buying up the “safe” Swiss franc, the value soared against most other currencies. For many Swiss that was great news. But it wasn’t good for Swiss exporters. They would take a big hit to the bottom line as exports became more expensive...