October’s Market Turbulence: What Does it Mean?

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By Amanda Chadwick (Authorised Financial Adviser of Forsyth Barr Wellington)


The share market took a tumble (or was it more of a stumble?) last week. Headlines

warned that KiwiSaver accounts could halve in value. Was it just media hype?

What are the experts saying? To answer these questions, we approached Amanda

Chadwick of Forsyth Barr to comment on the wobbly market and how we should

respond.


Between October 5th and 11th 2018, global sharemarkets hit turbulence, with

the MSCI World index (in New Zealand dollar terms) falling 6.2%, the Standard &

Poor’s 500 index falling 6.7% and the NZX 50 index declining 5.4%. While the fall

occurred sharply, given the same three indices were up 19.6%, 27.0% and 15.0%

over the preceding 12 month period, Forsyth Barr did not consider the pullback

to be unexpected. By the time things had settled a week later, the same three

markets had rebounded by 1.0% to 2.0% of their initial fall. In some cases,

market volatility can provide an opportunity to invest in quality companies at

more favourable prices.


Market behaviour (as with everyday life) is a combination of reality mixed with

emotion. It is not unusual to see an initial dramatic reaction to market news or

events, often presuming the worst, rather than taking the time to understand the

cause or context of the situation. Human nature has a knack for focusing on

negative news and amplifying its impact through isolation, which is why it’s

valuable to have an Authorised Financial Adviser providing much needed

perspective and strategy. One of the first questions to answer in response to any

sudden market movement is “what’s the cause?”


When reflecting on last week’s correction, the main contributors to the sell-off

were largely a mixture of:

  •  the United States Federal Reserve signalling potential interest rate rises;

and

  •  continuing trade tensions between the United States and China.


Investors with their own investment portfolios, should seek advice from an

Authorised Financial Adviser they can have regular contact with, who provides

proactive updates and communication and is readily available to ‘chew the fat’ in

response to market events. An Authorised Financial Adviser’s real value is not

just managing a portfolio to generate returns, but in navigating the client’s

investment experience. It’s important to consider everything from personal life

goals and objectives, portfolio expectations, the economic landscape, and how to

position the portfolio at any given time, given both the client’s needs and risk

appetite (or lack of it), as well as the stage of the market cycle.

Amanda Chadwick, Authorised Financial Adviser, Forsyth Barr Wellington.

Amanda Chadwick is an Authorised Financial Adviser with Forsyth Barr Limited in

Wellington. For further information on any aspect of this article or to arrange a

meeting to discuss your investment objectives in confidence, call 0800 367 227 or

email amanda.chadwick@forsythbarr.co.nz. This column is general in nature and is

not personalised investment advice. Disclosure Statements for Forsyth Barr

Authorised Financial Advisers are available on request and free of charge.

A Tale of Three Cities

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By Graham Goodisson

I’m currently wading through the murky waters of trying to sell and buy in three

separate cities. It’s in no way as impressive as it sounds. Each requires a different

strategy and each can play havoc on the emotions. Engaging all three cities at once

creates something of a perfect storm.

We’re currently living in Wellington, but right now I’m attempting to sell and buy in Tauranga,

Lower Hutt and Christchurch. This has led me to observe again how different

cities are form each other, not just in their geographies or demographics, but also

how the real estate markets differ from city to city.

Tauranga seems to have auctions and you engage an agent who has the ability to

work across all real estate companies. There are lots of houses on the

market—and lots of really badly built ones at that. I think the real decision in

Tauranga is, not how many avocados to buy, but how to not be caught with a

leaky home. Prices are similar to Wellington.

Selling in Lower Hutt is a little more reserved it seems. It will be sold on a BEO or

listed price basis and will be with the company that seemingly “owns” that

particular suburb. Succeeding here is about a realistic price expectation and also

the thought that it might take a little while. The question in the Hutt Valley is

this: “Will it occur before Christmas?” Immaculate presentation is the key. Stock

levels are still low so that is helpful.

Christchurch is another story again. There are always many questions around

earthquake repairs. Initially, we’ll aim to sell via auction to get some interest and

then we will see. Our agent is the top agent in the city and it’s interesting to be

part of his process. Only one company is involved. It’s a conservative market

with lots of houses to buy.

I’ve learnt that what I know in Wellington is only transferable in terms of doing

your checks, spending time learning the value of properties and that local

knowledge trumps all. Also, you should never be emotionally involved, and that

is just about impossible for an emotional being.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Hope for First-Home Buyers?

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By Stevie Waring

As the newest member of Velocity Financial (I started with the company in April), I

quickly realised that I was the only person in the office who isn’t a homeowner. I

soon became determined to change that.

My partner and I had talked about home ownership a lot over the past year but

viewed it as something that could only occur in the future—maybe one or two

years away at the earliest.

We watched as the news reported rapid increases in house prices in New

Zealand and Wellington. We were faced with an epidemic. Who were we but

mere mortals? We couldn’t fight an epidemic. So we made peace with the ever

lengthening time between now and home ownership.

Coincidently, I had organised to come along to Lance’s Home Buyers Club that he

runs fortnightly at the office to see what it involved and, just mere days before

this, my partner and I found out that we were getting kicked out of our rental

property and we needed to move again this year.

At the Home Buyers Club it quickly became clear that things weren’t as grim as

we had once thought. There were still houses on the market, in our price range,

and the overdraft we ran into during our first years of university wouldn’t put us

on the bank’s black list after all. What a revelation!

What was to follow in the next four months was like your first relationship: an

emotional rollercoaster filled with checking your emails and TradeMe

obsessively—hoping that cute little three bedroom with insulation likes you as

much as you like it.

I hope our story can bring hope to those with seemingly far off home ownership

dreams. As time continues to go by and your friends and family are telling you

that the next one will be the one, it can be really easy to put pressure on yourself.

However, here are three tips that helped us stay sane and optimistic along the

way:

1. Take a Break

You will not miss out on a once-in-a-lifetime opportunity because you spent one

restful Sunday eating brunch and lying in the sun, I promise.

2. Don’t Shop for a Bargain

They don’t really exist. And hunting for these unicorns just takes up your energy

and time.

3. Make it a Team Sport

Build an amazing team of professionals around you who will reduce your stress

and encourage you to persevere during this process.

Debra’s VERY Real Experience of Health Insurance

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By Debra Halton

As I sat recovering from my operation at Southern Cross Hospital, I was very

appreciative of Velocity’s work health insurance scheme, ultimately making my

elected surgery possible.

I was also struck by the fact that I sell health insurance and had never visited one

of the hospitals properly before — my eyes were opened to a whole new world.

And I now understood why clients’ favourite insurance is health

insurance — something most of them at some stage get to touch and use. In fact,

apparently, one-in-five New Zealanders have health insurance, so it’s more

common than I realised.

Years earlier, I had been told that in the future I may elect to have a surgery

done. I investigated the options. If I wanted to use one of the leading surgeons in

New Zealand, I would have to go private and, without medical insurance, this

would cost me personally tens of thousands. Going through the public hospital

was an option and much cheaper (i.e. free) but I would have to have an older

method of surgery and would not have the same flexibility with dates and times.

Plus, my recovery would be much longer.

So, because of all this, for years, I did nothing and grew increasingly

uncomfortable until finally Velocity came to the rescues and put the health

scheme in place. The beauty of a group health scheme is that it covers all past

health conditions, whereas a new individual scheme taken out by just me would not.

I had never been to a private hospital before and could not believe what a lovely

experience it was. From having my own private room to not being interrupted all

night (unless it was for a five course meal, which unfortunately I felt much too

sick to enjoy eating), I really appreciated the high quality of care. I felt very well

looked after. I also had the option to stay an extra night when I was not feeling

well and did not feel I was being rushed out to make room for a bed.

So, thanks again Velocity for making it possible for me to get the surgery I

needed with a top surgeon and in a beautiful hospital. I am well on the way to

recovery. I feel very fortunate to have been able to do this.

If you have a business with five staff or more you could also look to put a group

health scheme in place. It used to be that you required a large number of staff to

be able to access these schemes but that has changed.

If you would like to know more about health insurance, please speak to your

Velocity Financial Adviser.

Debra Halton is a Registered Financial Adviser with Velocity Financial. No

investment decision should be taken based on the information in this blog alone. A

disclosure statement is available free of charge upon request.

Fixed Vs. Floating

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By Brendon Ojala

And the winner is … drum roll please … fixing! Fixing for one year to be precise. But, yes, as always, it does depend on your situation.

The good news keeps coming for those with home loans. Not great news if you have money in the bank savings accounts though.

Interest rates continue to nudge down through the month and there have been significant decreases in the three- to five-year fixed rates in particular. However, there are a number of reasons why most banks and economists are still seeing the “sweet spot” at a one-year fixed rate.

Most of our clients are fixing the majority of their loans for one year and many are leaving a small amount in some sort of floating rate (revolving credit or offset accounts) to provide for flexibility/debt reduction. In making these statements, the disclaimer of course is that every situation is different and unique, so a conversation with your adviser is key before settling on an interest rate strategy.

Anyway, here’s why fixing for one year is so popular right now:

The one-year rate is the lowest on the market and, for an owner-occupied property with 20 per cent equity, we are seeing rates of 4.1-4.2 per cent (the 3.99 specials have gone for the mean time).

The Reserve Bank governor has indicated any change in the Official Cash Rate (OCR) is likely to be mid 2020.

Again the Reserve Bank has indicated the next move for the OCR is as likely to be down as it is up.

Although noting there are other things that affect home loan interest rates rather than just the OCR, it does have a major impact.

Given the above (and of course, who knows what unpredictable market shocks will occur?) fixing at the lowest rate and having a really good chance of being able to fix at low rates in a year’s time seems like a sensible strategy for most.

Do let your adviser know before you re-fix your home loan for another period. We can get some rates from the bank for you to consider and talk through your best strategy.

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Hard Knocks rugby star on Well-being

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By Lance Shearman

Joe Harawira MBA, stars alongside Sir John Kirwan in Duke TV’s “School of Hard Knocks”. He’s also the RugbySmart Manager (NZRU), founder of Flo clothing, and client of Velocity Financial. I caught up with him to talk well-being.

Believe it or not, Joe and I played rugby together. We were both wingers, putting to rest the age old question, what would have happened if 80s All Black sensation Terry Wright came up against 90s bulldozer Jonah Lomu? (Note: I was the Terry Wright equivalent. Ask me some time about the result!)

Joe is a fit guy, highly motivated, and he tells me he has “flex-appeal” (he may or may not have used this term). If anyone could bring some thinking around well-being, he would be the person! So I picked his brain.

Well-being for Joe means having the right conditions to flourish in all aspects of life: physical, psychological, emotional, and spiritual. Consistency in these areas is fundamental to long term health and well-being.

I asked him about well-being in the work place. He said that well-being has come a long way, but more needs to be done. For instance, it’s great to see workplaces embracing the notion of a “well-being week” or the like. However, outside of these initiatives staff are working longer hours and the digital age means many of us take work home or do it in the weekends.

Recent surveys show that stress related illnesses and heart attacks are at an all-time high, particularly among males over the age of 40. This is an issue that must be addressed, says Joe.

Joe has been very successful in his studies and his career, so what would motivate him to start a social enterprise targeting lifestyle fashion? His response in short: “To create a brand that stands for more than just fashion.”

Flo (short for flourish) Clothing brings together his love of health and fitness and lifestyle fashion and his passion for giving back. Joe’s vision is to helps kids around the world: “Flo is a community where we don’t just aspire towards our own hopes and dreams, but we want to help others and we want to give back because that’s when we create real value.”

In New Zealand, one in four kids go without the basics that many of us take for granted, and that’s where Flo comes in. Flo is the New Zealand lifestyle brand with a mission to “level the playing field” so all kids flourish in school and in life.

Every purchase provides a meal in school for a child in need. It also helps sponsor kids to access sport and recreational activities outside of school. Joe says, “This is made possible through a partnership model with amazing charities and initiatives.”

Joe is about to start a crowd funding campaign through Pledge Me to expand into the yoga market and deliver more impact for kids in need.

Joe is passionate about making a difference and actively promoting well-being at a personal and professional level.

If you’re at Wellington airport over September be sure to call into the Flo pop up store to see Joe and the team. Otherwise check him out below:

Instagram @flo_clothing

Website www.flo.kiwi

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Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

What does Wellness look like?

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Our team share their wellness practices. But, before we get to the inspirational bits, we can’t miss the chance to share possibly the worst/most brilliant dad joke in history.

What two words were used when the Loch Ness Monster was finally discovered?

“Well, Ness.”

The following is a ‘Monster’ Wellness Survey of the Velocity Crew.

Wellness is the new buzzword (not to be confused with “Melness”, which is a small crofting township in the Scottish highlands). We have surveyed the Velocity crew to see what their wellness strategies are and here are the (I’d like to say “surprising” but that would be an overstatement) results:

Graham:

Likes to journal and do yoga—probably not at the same time. Is hard at training for his first triathlon. Some of us have suggested he wear an emergency locator beacon during his swim.

His wellness has reached new heights since giving up drinking (fantastic effort, by the way!).

Brendon:

Apart from his daily 12:05pm trip to the sandwich shop, Brendon enjoys long-distance running and all the “fun” dietary requirements that come with this.

A client recently saw Brendon running in the morning and then again running at night, and was concerned that he’d been running all day. It has yet to be confirmed that this actually wasn’t the case.

Lance:

Is an avid fan of the nostalgic art of skipping and can be found a couple times a week at the gym skipping along to that old ditty “Jam, jelly, apple tart … Tell me the name of your sweetheart …”.

He also enjoys the odd game of “soccer” football, and serenading his neighbours with Lars Ulrich-esk drum solos.

Kylie:

Kylie tells us that she enjoys yoga (however, none of us have ever seen her carrying a yoga mat or wearing Lulu Lemon “essential” yoga gear). She also does something called F45, which may mean she enjoys shooting up a storm with the baby sister of the F90 assault rifle, or is secretly rebuilding a 1930s Fairchild Model 45 aircraft in her garage. It could also have something to do with a gym workout.

Stevie:

The newest member of the Velocity crew enjoys long walks on the beach and spending evenings cooking dinner with her partner. She has been voted “Most Romantic” staff member six weeks running. Her recently reduced coffee intake and numerous gym visits have no doubt assisted in her award-winning romantic ways.

Alex:

Enjoys rugby training (at a level most of us can only achieve via a Playstation) and walking his dog (making sure to leave his phone at home). Alex also gets great enjoyment from cooking for others. He is available for birthdays and Christmas functions for a limited time!

Debra:

Loves to relax with a gentle jog around Wellington’s “glory” run of Oriental Bay. As a living inspiration herself, it will come as no surprise that her on-going wellness journey also includes numerous inspirational podcasts. Her reduced sugar intake means the Velocity treat box lasts just that little bit longer these days.

Rebecca:

Another running fan, Rebecca also does something called Metafit, which sounds like it’s the not-so-long-lost cousin of Kylie’s favoured F45. I’m reliably informed that if there were to be an Office Olympics, Rebecca would be our weightlifting representative.

Simon:

Another in the office who enjoys long walks on the beach. He’s also a great “giver-backer” to the community and relaxes in the peaceful atmosphere of the world of kids’ soccer coaching.

Willie:

His time for the pursuit of wellness has in the past year been severely curtailed by the birth of his beautiful baby daughter. However, he still finds time to indulge in his favourite pastime of chopping and stacking firewood. His ultimate wellness goal is to have a firewood moat around his house, documenting the drying process on a monthly basis. He also enjoys the occasional jog up one of Wellington’s many hills to sit and enjoy the view.

Karl:

Working 3 jobs and studying full time, Karl maintains his full work to life ratio by enjoying the little things. An avid yogi, you will find him sitting on his matt at Hot Yoga Wellington most evenings, if not there, he’ll be behind his desk or spending time with his loving partner as they watch the latest Marvel movie cuddled up with popcorn in bed, “whoo-sa”

5 Quick Financial Wins

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By Simon O’Neill

1: Do an honest expense report for yourself. Where are you spending too much? Seeing it on paper can be a trigger to change a habit.

2: Automate your savings. This is a trick many financially savvy people know about. Before you spend a single cent, put away at least 10 per cent of your income into a savings account. Name it something cool like “Dream Home” or “Bucket List Concert” to remind you why you are stashing cash away each month.

3: Limit the entertainment overdose. Eating and drinking out are the reason this old catch phrase was coined: “To have too much month left at the end of the money.” Only commit to things you can afford and don’t say yes to things just because you are invited.

4: The “no spending” day. Pick a day. Don’t spend a thing. Repeat each week.

5: Remember, less is more. Do you need all those subscriptions? Netflix, Lightbox, Spotify, YouTube? What can you cull? Need that gym membership if you only go once a week … or once a month?

And one bonus…

6: Give!

Paradoxically, being generous makes us feel abundant and, like having a savings strategy, forces us to adopt a more disciplined approach to money. Plus, the universe rewards us by giving us more!

If you are drawing a line in the sand today and saying, “Right, I need to make a change”, that is great! It’s a huge first step.

We can help you take the next step by helping you analyse what’s going on and where positive changes can take place. For more info talk to us in the office, online or over the phones.

Simon O’Neill is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

5 Tips to Mastering your Money

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By Graham Goodisson

Many Kiwis have the means to gain financial well-being, but just need a strategy to get there. We share our top five tips for putting together a successful money strategy.

I’ve never wanted to be rich, just comfortable enough that when the bills come in, they get paid without needing to look around the room to see what could be put on TradeMe.

So, what does financial security mean to you? Take a moment and write down what it means to you. Perhaps completing the sentence below could help?

I will know I am financially secure when _________________.

What would your life look like or feel like if you were winning financially? How will you know when you reach your definition of financial security?

This table demonstrates how financial well-being can be understood as both about the present and the future and is at the same time about feeling secure and free.

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Many Kiwis believe they’re just not cut out to enjoy this sort of financial well-being; that being in control of their finances and having financial freedom is simply out of reach. Instead, they get paid, they pay the bills (or those that they can) and spend the rest (if there is any left).

For many people, surplus is just not a word in their vocabulary.

How good would it feel to have money leftover to allocate to a holiday fund, a savings account, top up the bills account, put some money down for the kids’ Christmas presents? It feels pretty good, let me tell you.

For me, it certainly wasn’t always that way, but I wanted, needed even, to make a change as it was doing my head in to be “skint”. And I don’t like canned spaghetti that much!

Google “financial well-being” and you’ll never be short of things to read. Often, the search results will use lingo and some techniques that can sound like a foreign language. Many people start with these Googled tips and then give up or don’t try to get things sorted because it’s too hard or they don’t want to look silly.

I want to let you in on a secret: You can experience financial well-being regardless of your income.

Sitting down with a financial adviser and talking about your situation can be hugely empowering, because there is always something we can do to get things heading in the right direction. We’ll break down your personal situation and identify the things you’re doing right (well done you!) and where there’s room for improvement.

So, turning into the wind and facing this head on, what we don’t want to do is bombard you with technical lingo only to have you think, “Nope. Too hard!” Instead, what follows are my top five easy-to-initiate tips to get you on the road to financial freedom and five quick wins that you can implement today.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

#Goals: A great initiative for young people aged 10+

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Got kids who would love a chance to dream big and be inspired to achieve those goals? Get them along to this Lower Hutt event.

 

Kylie has recently been volunteering her time to assist with a youth and teen “goals” community event which is coming up in on Sunday 26 August.

 

The idea behind #Goals is that youth (aged 10+) come along with a parent, grandparent or mentor so you both can plan and support each other with your goals. So it’s super beneficial for younger and older alike.

 

You’ll hear from three inspiring speakers (including Billy Graham, 2011 NZ of the Year Kiwibank Local Hero) and there will be giveaways!

 

Feel free to check out the event. Plus, it’s FREE!

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https://www.eventfinda.co.nz/2018/goals-inspiring-speaker-series-for-youth-parents/lower-hutt

10 Wacky, yet true, Winter survival tips

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By Lance Shearman

 

Lance shares his secrets for coming through winter unscathed: snuggle in a sauna wearing mittens and second-hand clothing while watching Mike McRoberts and Seinfeld.

 

1. Mittens. These are all about first impressions. Shaking people’s hands in winter can leave a lasting impression you can do without. Warm welcomes are always in fashion. It also shows confidence and elegance when you say, “I do not need my fingers individually wrapped.”

 

2. Hunker down for winter! The one thing we can learn from nature, is the amount of animals that hibernate for the cold season. My research team confirm there are at least two animals that do this through winter, those two know how life should be done. So, when the street lights go on, come inside and get some rest.

 

3. Seinfeld! Every winter we all need to relive the entire nine seasons of the most brilliant comedy show of all time! The “show about nothing” will make you feel you have actually watched something, when in truth you haven’t. Michael Richards as Kramer is amazing. If you have seen him in his more recent stand-up work, you may struggle to get back on this wagon.

 

4. Shut the front door. If you have children, they will be spending more time inside. You may have notice a lot more noise in the home lately, so, here’s a tip: initiate the “two door policy”. Make sure there are at least two doors closed between “us” and “them” at any given time. The more doors you have closed between you, the better. If you only have one door, ask a tradie, or handyman to add another (there is currently a six-year wait period for tradies). 

 

5. Snuggle more. This is the perfect time of year to re-introduce yourself to your loved one and so benefit off each other’s radiated heat. They may have some questions about where you have been for the last nine months, but you will smooth this over in your usual way I am sure.

 

6. Get out of here! Go on holiday … somewhere warm ... nothing more to add.

 

7. Move your desk. If you have watched a movie where a boat has sunk or a plane has crashed in the mountains, the people will always huddle together. This is also a great idea in the winter work place! Move all your desks to one spot in the office and stay tight. Just remember that unlike the movies, no one will come to rescue you. So you may need to come up with your own words to yell if you are concerned for your safety.

 

8. Got a sauna in your living room? Why not? Ever wanted to go find a warmer part of the house, but still wanted to keep up to date with the latest current events and news on TV1? For this you will need, a living room, a sauna, and 1x towel. The sauna and living room are self-explanatory, the towel is to wipe the sweat and mist off glasses so you can keep your eyes on Mike McRoberts.

 

9. Pre-warmed clothing. They say that your bed mattress doubles in weight after eight years of use. Imagine how much extra warmth could be found down at your local second-hand clothing store after someone has worn that jacket for eight years. As our skin gets thinner with age, the combination of pre-loved wool and skin cells could be the new feather down!?

 

10. Warm someone else up. Winter can be a tough time for all of us. It is dark, we get stuck inside, the wind beats us up, and our umbrellas turn inside out. Research shows that when we give, we not only brighten the other person’s day, we actually feel warmer ourselves. Send someone a card, make someone soup, do something to warm someone’s day!

 

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request

How do tiny houses stack up?

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By Stevie Waring

 

Is the tiny house the answer for the struggling first-home buyer? Definitely “yes” for some; definitely “no” for others.

 

In recent years, it has become more and more difficult to be a first-home buyer in New Zealand and renting has become more expensive in many parts of the country.

 

Naturally, many people have come up with alternative solutions. Some students have chosen the “go big” alternative where you live with 10 or more people in the hope of splitting costs. Or you may want a waterfront property without the price tag? Enter the houseboat life. Or you may be a young person, family or couple that wants a home but have no idea how to fund it.

 

This is exactly where the tiny home revolution has taken off. The idea being that you can live a minimalist lifestyle in a carefully designed bespoke small space that is both efficient in space and cost.

 

Apart from the creativity and innovation of it, the biggest bonus of a tiny house is the price. You essentially pay for a standard base plan, and then you pay per room after that. It is totally customisable. It allows you to be creative and unique with your space while giving you the financial freedom to spend your money on higher quality items that may have been unavailable to you with a regular home, such as full insulation, solar panels or beautiful hardwood floors, for example.

 

So how do you pay for it?

 

In Wellington, the average house price is $639,112 (as of June 2018, QV.co.nz) but basic tiny houses are less than $100,000. That’s a no-brainer, right?

 

The short answer is that you can do it, but a bank won’t necessarily give you a mortgage for it.

 

If you see a tiny home in your future, here are a few things to consider:

·         Where will you put it?

o   If you’re planning to buy land, you may be able to use your KiwiSaver.

o   If you have friends or family with some land, it’s probably easiest to put it there.

·         Do you or family have an existing mortgage?

o   If you or your family have existing equity in your property, you may be able to refinance it to access that cash to put towards your new tiny home.

 

Long story short: If you are looking to lead a simpler, more efficient lifestyle that is cheaper in the long-term, then this may well be the solution for you.

 

If you are looking for an alternative to buying a first home because you may not have the funds for a deposit yet, this may not be the solution for you.

 

As with everyone situation, there is often more than one answer, so give us a ring and we can talk through your options—big or small.

Fixed vs. Floating – What gives you better Interest Rates?

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By Graham Goodisson

 

Very little has changed with interest rates in the past six months, but can it last? Graham discusses.

 

In early February 2018, we pointed out that rates were as follows:

·         Floating rate – 5.3%

·         1-year fixed – 4.30%

·         2-year fixed – under 4.5%

·         3-year fixed – under 5.0%

 

Today, in August, it’s pretty much exactly the same. Sometimes the rates shift slightly, but mostly they are as they have been.

 

So, what’s in the forecast? More of the same?

 

Yes, probably more of the same for the coming quarter. We aren’t seeing any major changes in international markets. US markets are slowly increasing but New Zealand, as it has been for some time, is nicely positioned to cope.

 

Right then, what should I do if my mortgage has become floating. Well, if you’re not going to clear it the next 12 months then at least fix for that … longer than that depends on your personal situation and please contact your broker for the appropriate advice.

 

What’s going to happen longer term? Brexit and Trump, along with trade wars, will all obviously have an impact on the global economy and the All Blacks will on the New Zealand economy.  However, it doesn’t seem as though big changes are on the short-term horizon.

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Should I Refinance my Home Loan?

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By Kylie Cassidy and Brendon Ojala

 

With the banks competing for new customers and offering cash incentives, the temptation to switch banks can be rife. Brendon and Kylie ask if the switch is really worth it.

 

The first thing to note if you’re considering refinancing is that you should consider much more than just interest rates. The actual costs can vary depending on whether you have existing loans that are still fixed. There are also the non-monetary factors like finding a bank that better suits your needs or has a superior service level. These are all things to consider.

 

Turning to your mortgage broker for advice should be your first step as they can help you work out the pros and cons, in the meantime, here are four factors to get you thinking:

 

1. Does the bank suit my needs?

 

Consider the bank’s products and whether they will suit your current needs. Do you want to be able to make lump sum payments without penalty? Do you want a large revolving credit account? Or perhaps an offset product where you can use the funds across savings accounts to offset the interest on your mortgage?

 

2. Don’t get hung up on lower interest rates

 

Lower interest rates aren’t the be-all-and-end all, and often some smart budgeting coupled with the right mortgage structure can give you more than then a 0.2 per cent decrease in interest rates. We will of course, work hard to get a competitive rate from the bank, but it’s in this finer detail where your mortgage broker can add real value.

 

3. Making the switch can be messy

 

If you’re offered a cash incentive to move banks, chances are you’ll need to move your banking across to them. This means changing your APs, direct debits, salary and so on. Some banks do offer a “switching service” to make the process easier, but you may need to keep your existing account open with some cash in it, to cover any repayments or direct debits you may have forgotten about.

 

4. Costs of switching

 

Below are some costs to consider:

 

·         Potential break costs at your current bank (anywhere from zero to tens of thousands!)

·         Lawyers fees (approx. $1000-$1500)

·         Cash contribution claw backs (if your current bank offered you a cash contribution, if you move banks within a certain time frame—between two and four years—they reserve the right to ask for this cash back.

·         Discharge fees ($100-$150)

 

The new bank may offer you some cash to offset the above costs, however, it’s important to consider all of the above. The “best bank” offering the lowest rates changes all the time, so it’s important to consider your needs long term. 

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Kylie Cassidy and Brendon Ojala are Registered Financial Advisers with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.