Saving &
Investing in New Zealand
Many of the "experts" say New Zealand has a low savings rate. State
welfare has traditionally been blamed for undermining private
savings rates.
Similarly the ability to borrow to invest in residential property
and the subsequent tax effectiveness that can be generated from
this have made the traditional savings pathways of bank deposits
& super schemes look very second rate.
Workplace Superannuation Schemes
Recent Governments have added incentives not to save such as workplace superannuation and the Cullen Fund. The message the latter send is a very loud "don't worry we'll look after you" - so rational but ill-informed households dont worry and their savings rate plunges.KIWISAVER
The savings landscape has been changed by the introduction of Kiwisaver and the inducements the Government is offering to people who join up.To get my special report about Kiwisaver and my suggested strategy CLICK HERE.
There are two fundamental things you should understand about any Kiwisaver scheme you select.
- You cannot get your money out until you are 65. (There are a few very tightly defined conditions where you can get your money out.)
- NO ONE (not even the government) WILL GUARANTEE THE FINAL VALUE OF YOUR SAVINGS. You must manage your own risk.
Saving Effectively
Over the years we have seen a rapacious attitude from some of the large savings and investment advisory establishments. The prime objective of these organisations is to maximise their own profits by imposing an inventive dictionary of fees and expenses on your savings.In the past incompetent fund management and a saver-vicious tax regime further destroyed the savings of the ordinary Kiwi. The end result has been returns that barely match the rate of inflation and in most cases do not exceed the 90-day bank bill rate.
The Portfolio Investment Entity (PIE) legislation coming into effect in October 2007 changes the way savings funds are taxed and makes them more saver friendly. The government had to do this so Kiwisaver would work!
What has not changed is the attitude towards clients savings and the poor level of funds management of these organizations. Quit their superannuation plans and avoid their Kiwisaver schemes!
The Best Savings Plan
I believe it is important that you save on a regular basis, and the ideal savings vehicle has the following features:- Can be set to happen automatically, no "budgeting" required.
- Is low risk, but pays a top rate of return and compounds regularly.
- Is not affected by the ups and downs of the share market.
- Is easy to get your funds out - no "lock-in" requirement.
CLICK HERE if you would like me to send you the information.
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