What Happens If I Don’t Select A KiwiSaver Provider?

There are many KiwiSaver providers in the market and you have the ability to change your provider at any time. But what happens if you don’t select a KiwiSaver provider?

If you have been automatically enrolled into KiwiSaver through your employer, you have been allocated to a default fund through your employers chosen provider. Default funds are designed to be low risk and generally hold high levels of cash and fixed interest investments e.g. bonds and term deposits. This type of investment may not be suitable for those investors with a long investment time-frame and are looking for higher returns.

How do the default fund returns compare?

What to consider when selecting your fund?

There are two key factors to consider when selecting the right KiwiSaver fund for you – the associated risk and return and the fees.

The risk level of a fund is determined by the mix of assets it holds. Typically, the higher the level of growth assets, such as shares and property, the higher the level of risk and potential returns, but also the higher the chance of value fluctuations.

Check what type of fund may be suitable for you by taking our risk profile quiz. [inf_infusionsoft_inline optin_id=”optin_2″]

KiwiSaver fund fees are charged in order to pay for the investment, management and administration costs of the fund. Generally, you can expect higher fees to be charged on an actively managed fund, but no matter the fund, the provider needs to be transparent about the fees they charge. You can find out more information about a provider’s fees in their product disclosure statement.

If you would like us to check if your KiwiSaver investment is suitable for you please do not hesitate to contact us.

What is Income Protection & Do I Need It?

Your ability to earn an income is generally your greatest asset – have you protected it? Imagine you suffered a illness that required an extended amount of time away from work. Would your family survive without your income? Could you continue paying the bills? How long would your emergency savings last? In times like these, Income Protection is invaluable.

Remember, ACC only pays if you require time off work due to an accident.

With Income Protection you can insure a percentage of your income so that if you become ill and cannot continue to work, your insurer would make monthly payments to you until you could either return to work or until the end of your payment term, whichever is first.

Learn more about Income Protection in the video below.

If you would like help with deciding what Income Protection Cover might be right for you, please feel free to contact us.

KIWISAVER – WILL YOU BE GETTING $521 THIS YEAR?

Last year over half of the adults who had KiwiSaver did not contribute or did not contribute enough to their savings to receive the $521.43 government tax credit – this means over $300 million is being left on the table every year.

Help Us Expand the Sam Kodi Family & be in to Win a $5,000 Travel Voucher

Refer us to your family or friends and you could be in the draw to win a holiday on us!

We are a passionate team working hard to serve our valued clients. But as we are a fairly new business, we need your help. We all know word of mouth is one of the most powerful tools of a business (it is also a really great compliment!), so if you know of a family member or friend that could use our help, we welcome the chance to be of service to them.

Perhaps you know of someone who is:

  • Looking to buy a new house or rental property
  • Wanting to put together a retirement plan
  • Looking at their investment options
  • Wanting to speak to someone about their personal or business insurance options
  • Not quite sure who is looking after their KiwiSaver savings

If you know someone who would like to worry less and enjoy more, just click here and we will take it from there.

For every person you refer to us and who we successfully complete business with, you will gain one entry into our competition for a $5,000 House of Travel voucher.

Terms and Conditions:

  1. By entering the competition or promotion each entrant will be deemed to have accepted these terms and conditions and to have agreed to be bound by them.
  2. By entering the competition winners agree to their names being published and to be photographed and/or interviewed by Sam Kodi or a related third party or promoter and that the promoter may use their names and such photographs and/or interviews for publicity purposes.
  3. The prizes are not transferable or exchangeable, and cannot be redeemed for cash.
  4. All prizes are subject to standard terms and conditions of the company supplying the prizes.
  5. Only entries received by the 31st December 2017 will be accepted.
  6. Winners will be drawn on the 28th February 2018.
  7. Winners will be notified by the 10th March 2018.
  8. The decision of the promoter in relation to any aspect of the competition is final and no correspondence will be entered into.
  9. Please note that referrals for those under 18 years of age do not qualify as an entry into the draw.

KiwiSaver – Make Sure You Get Your $521

Last year over half of the adults who had KiwiSaver did not contribute or did not contribute enough to their savings to receive the $521.43 government tax credit – this means over $300 million is being left on the table every year.

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Who can get the tax credit?

If you are 18 years or over and have made contributions of at least $1,043 to your KiwiSaver fund, you will be eligible for a member tax credit up to $521.43. The exact amount you get will depend on the amount of time you have been enrolled in the scheme and also your contribution level as the government only contributes $0.50 for every dollar you contribute up to the maximum of $521.43 (employer contributions are excluded in this calculation).

Note that your eligibility for the tax credit ceases when you reach the age of 65 and have been a member for five years.

 

How do I make contributions to my KiwiSaver fund?

If you are enrolled in a KiwiSaver scheme and employed, your employer will automatically deduct either 3%, 4% or 8% of your pay (you can elect what percentage you wish to contribute). If your annual gross pay is more than $34,766 your employee contributions will be sufficient to receive the full member tax credit. If you earn less than $34,766 you may want to think about making additional voluntary contributions to ensure you are eligible for the full tax credit. You can talk to us if you would like more information about making voluntary contributions or would like us to check if you are contributing enough.

Our experience shows that typically those that miss out on receiving the full tax credit are:

  • Self-employed
  • Contractors
  • Non-workers e.g. Homemakers
  • Part time or low income employees
  • Students
  • Beneficiaries

If you fall into one of the above categories and you are not quite sure if you have contributed enough to receive your $521.43, we are happy to contact your provider on your behalf and check (and if you are unsure of who is looking after your KiwiSaver, that’s ok as we can find that out too). To request our help on finding out, just fill in the form below.

 

When are the tax credits paid?

You should receive your member tax credit in your KiwiSaver account around July or August every year. This means that you need to make sure you have contributed your $1,043 by the end of June if you are wanting to qualify for the full member tax credit for that year.

To learn more about KiwiSaver or to download our KiwiSaver ebook, click here.

Refixing – Are You Being Kept In The Loop When It Comes To Your Mortgage?

When your mortgage fixed rates are coming up for renewal you want to make sure you lock in the best possible rate at the time to avoid paying unnecessarily high fees. From our experience, quite a few of our clients find renegotiating and fixing mortgage rates both stressful and confusing, particularly in the current property bubble where interest rates are changing frequently. With interest rates on the move upwards, you may also want to consider fixing your floating mortgage to avoid higher rates in the future.

So how can we make it easier for you?

It’s simple, before locking in a rate talk to an independent financial advisor. They can give you the latest market news, expected trends and provide sound advice on which options are best for you. You can then make an informed decision about which interest rate to lock in, and for how long, whilst avoiding all the unnecessary stress that can come with it.

If your mortgage rate is coming up for renewal or you want to discuss fixing a floating mortgage, request a call and we’ll walk you through your options.

Note to ASB customers: If you are with ASB you’ll likely get a notification via your ASB mobile app or email that your mortgage rates are up for renewal. You may be eligible to select your new rate and refix it online via their FastNet Classic service or the mobile app. It’s a great system that makes refixing your home loan simple and easy to do, however it doesn’t necessarily mean you’re getting the best rate in the market as the ability to negotiate rates and get advice has been removed from the equation. So before you commit to a new rate, make sure you seek advice on all your options first.

What Are The Real Benefits Of Health Cover?

One of the primary reasons people choose to take out health cover is to skip past the public waiting lists and jump to the front of the queue for treatment.  The benefit of this when facing chronic illness or injury is worth its weight in gold, however there is so much more to health cover than just queue jumping.

In return for investing in health cover, you can receive free or subsidised specialist consultations, testing and diagnostics, surgery and treatments as well as improved access to medications. Naturally, the terms of availability differ between providers and contracts signed, as do the financial caps but overall the benefits are significant.

A substantial reduction in financial stress, both in terms of paying medical bills and time off work, is another key benefit of having health insurance. Whilst the public system should be commended for funding free public surgeries, waiting list periods for non-urgent surgeries can last for months if not years. For those in chronic pain and in need of surgeries like knee and ankle replacements (which are considered to be non-urgent), the wait can be torturous. As mentioned above, a key benefit of health insurance is the ability to jump the queue, however the financial benefit is just as significant. If an individual were to pay for an elective surgery for a total knee replacement, they would be looking at a bill of approximately $23,000, however with many health insurance schemes, their personal bill would likely be one tenth of that, if not their standard excess alone and nothing more.

Other key benefits of taking out health cover include; a wider range of choice in treatments and medical care providers; as well as medical pre-screening on a regular basis for diseases such as breast cancer, melanoma and prostate cancer.

The benefits of health cover vary from provider to provider, but for most schemes the benefits far out weight the costs. Take a look at our recent blog post on What to keep in mind when buying health insurance, for more need to know information on the topic. Alternatively get in touch with us via our website to discuss what healthcare package would work well for you and your family. 

New Financial Year – New You?

As the new financial year is off to a roaring start, now is the ideal time to get your finances in order, whether that’s building an investment portfolio, paying off your debts or setting up a savings scheme. Regardless of your stage in life there are practical, realistic resolutions you can make to better your financial position. We’ve pooled together our top Financial Resolutions together with some tips to help you achieve them below:

1. Set up a budget and stick to it

Now is the ideal time to sit down and set up a budget, so that you know you’re getting the most from you hard earned cash.

Do you really know where all your money goes each month? Take a look through your last three bank statements and calculate how much you’ve spent on ‘need to haves’ vs ‘nice to haves’ and how much you could have been putting towards savings. An exercise like this is a great wake-up call and a good tool to use when forming a budget.

Budget templates are freely available online, all you need to do is plug in the numbers and figure out where you can cut back, how much you can save and if there are any areas you need to address. Once your budget is defined, you’ll need to stick to it to see the positive results really take effect.

2. Pay off your debts

When setting up your budget, set money aside each month to pay off your debts. Set a date that you want to have your debts paid off by and then work towards wiping the slate clean. The key to becoming debt free is discipline – Be strict about making debt repayments each month and you won’t regret it. Once you debts have been paid off, continue to set money aside each month to build up your personal savings.

3. Save for that rainy day

At the start of the financial year, set up a target for how much you want to have saved by the end of the year. Then squirrel away a set amount each month in your budget and you’ll achieve your goal before you know it. Our top tip: Set up an automatic payment that comes out of you pay check, the day you get it. This way you save the money before you’ve had the chance to spend it.

4. Begin to invest

If you have a small nest egg tucked away, consider investing it, so that your money can start earning money of its own. Investing may sound scary but your financial advisor can walk you through what is available and the risks involved.

5. Talk to a financial advisor

Get advice from an expert in the field, they can help you achieve your financial goals, whilst minimising your risk exposure. Financial advisors can help with everything from taking out a mortgage, to investing you money, from income protection to saving for your retirement. Whatever your financial needs, they can help you get the results you are looking for.

For more information on any of the above resolutions talk to us today on 021 283 5065 or get in touch via our website.

Money Savvy: Food Waste

Food Waste is $$$ Waste

The impact of food waste directly on our pockets comes from so many angles – the rising cost of food production, rates increases to cover the cost of rubbish collection and disposal (nearly all household rubbish is either food, or food packaging), not to mention the huge impact on the environment!

Yet all too often we neglect to calculate the true cost of our food spending because food is a necessity. We are roughly aware of our grocery bill – and we try to keep our spending under our budgeted amount – but we fail to factor in the quick trips to the dairy, the nights we grab a bottle of wine on the way home, or the cost of convenience foods when we’ve forgotten to pack lunch.

But what about the money wasted on food that goes in the bin?

The true cost of food wastage in this country would shock most consumers.

While we may feel pretty food savvy, it is estimated that the average household food waste amounts to nearly $600 annually. That translates to just over $870 million nationwide every year. Keep in mind that these figures are based on a rubbish bin audit – it doesn’t cover any food that may have been composted, sent down the waste disposer or fed to animals.

Reducing food wastage is not only good for your budget, it’s better for the environment, and it frees up more of your hard earned money so you can invest it in items that won’t go bad after a week.

If you’re feeling inspired to start trimming back on your food waste, here are a few ways to adjust your current shopping and food habits to help you curb the wastage:

Shop to a list

Check out what is already in your pantry/fridge/freezer before you head to the supermarket, make a meal plan for the week, and only purchase what you need. Planning meals ahead of time is and having the ingredients on hand to make them is an easy way to not only save on your grocery bill and wastage, but also an easy way to cull the need for weeknight takeaways. Double savings!

Shop online

While you will have to pay for a delivery fee, it’s a great way to only buy what you need. There’s no chance you will distracted or tempted by things that aren’t on your list because you won’t see them. It’s much easier to stick to your list when you can’t smell fresh bread or instore soup demonstrations, so shop online if you’re easily swayed.

Store your food properlyFood storage
Most of us store milk and eggs in the door of the refrigerator. Yet milk should be stored at the back and near the bottom where the temperature is colder, and eggs should be stored near the middle where the temperature is more consistent. Extending the shelf life of stored goods is key to reducing waste. There are great online guides about the best ways and places to store fresh and pantry goods to ensure you get the most out of your food.

Know the difference between ‘Best Before’ and ‘Use By’

There is a big difference between Best Before and Use By. A Use By date should be kept to – for example fish, chicken, some dairy products etc. A Use By is a safety guide and protects both the consumer and the retailer. However, a Best Before date is just a general guide to when the product is at its best but many products can be consumed safely for weeks or months after their Best Before date. Even eggs and milk can still be safely consumed up to two weeks after their Best Before date!

Find alternative uses for perishables

Did you know that bread makes up 10% of household food waste? Get savvy with your scraps. Turn those unwanted crusts into stuffing for your Sunday roast, or breadcrumbs for schnitzel. Use vegetable trimmings and meat offcuts to make healthy homemade stocks and broths. Repurposing perishables is a great way of getting creative and creating new meal ideas while minimising food waste.

All it takes is a little bit of forward thinking, a conscious effort to only buy what you need, and finding the tastiest and most economical ways to get the most out of your food.

Being aware of just how much you can potentially save on food every year should provide any money savvy household with enough motivation to make positive changes.

Equity or Income? Which is more important when seeking a loan?

Have equity.WILL TRAVEL

In a fluctuating market it can be difficult to decide whether to cash in on your equity (maybe upgrade your home or take that long dreamed for holiday) or leave it well alone! This is a decision made even more difficult by the fact that lenders no longer value equity as highly as they did back in the 80’s and 90’s.

While the equity in your home will likely have increased over the years, consider that your living costs will have increased over this time too, while statistics show that income has not increased at nearly the same rate.

“Careful” lending

Millennials will know that the Responsible Lending Code (RLC) didn’t used to be a ‘thing’ – it was just the basic guideline that lenders generally followed. Now the premise is clear: lenders must exercise care, diligence and responsible lending skill when advertising, before making an agreement to provide finance, and in all subsequent dealings with borrowers and/or guarantors.

In the instance of providing finance, lenders are legally obliged to consider more than just your equity. You still need to be able to prove your ability to service any increased loans – which means your income must be given generous consideration too.

Increasing debt levels

The Reserve Bank’s November 2015 report on the financial stability of New Zealand found that around 40% of residential home loans were issued at more than five times the gross income of the borrower(s). This is a staggering debt-to-income-ratio increase over the last 20-odd years, prior to which lenders were approving loans of no more than around two times gross income. The dramatic increase is a culmination of a number of significant factors – increased housing demand, higher property values leading to increased demand on lending, and fierce competition between lenders.

This provides a little more understanding around why equity no longer holds such high value for lenders. Equity is dependent on the value of your home, and in an ever-changing market, is not a value that can be ‘banked on’ so to speak. Equity still has some importance – obviously the more of your home you own, the better – but the true value lies in your ability to repay any borrowings.

How is your income looking?

Depending on the time it has taken to increase your equity, you would likely have seen an increase in your income. This is something lenders look at closely. Your ability to increase your income and any potential to increase your income are highly valuable bargaining tools. Stable income that has growth potential has a far greater value proposition than equity alone based on the sole fact that income is tangible cash and equity is a figure based on a value that has potential to change (even go down).

The RLC clearly stipulates that is the responsibility of the lender to ensure that undue hardship will not be caused by entering into an agreement with a borrower/guarantor. This means it is their responsibility to fully investigate your finances, lifestyle, debt level, and ability to service these financial obligations before agreeing to establish or extend any loan.

It’s always best to consider your financial position before you look into borrowing of any kind. If you are able to fulfil all of your existing monetary commitments and still have spare funds at the end of the week/month, you will be considered a more viable candidate to increase your borrowing – especially if you intend to reinvest it into existing or new property. However if your income in already a little stretched and you find yourself having to reprioritise essentials too often, now may not be the time to extend your finances further, even if you have markedly increased equity.

Basically, it’s all about affordability. Equity aside, show that your budget allows for your debt level to be increased with little risk to your lender, and you will be more likely to be approved.