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Archives 2024

Investments

“If in Doubt, Zoom Out” – Navigating KiwiSaver Fluctuations with Confidence

Clark 0 Comment
If in doubt, zoom out

Navigating KiwiSaver Fluctuations with Confidence

Ever opened your KiwiSaver account to see a dip in your balance and become stressed if you are in the right fund? It’s totally natural. But here’s a phrase to keep in mind for next time: “If in doubt, zoom out.”

Keep the Bigger Picture in Mind

Markets will go up and down—it’s just part of the process. The trick is to not lose sleep over the daily or even monthly swings. When you “zoom out” and look at the bigger picture, you’ll notice that those ups and downs tend to balance out over time. Sure, short-term dips can feel unsettling, but they’re typically just a small bump on the overall upward trend. Instead of focusing on short-term, try stepping back and looking at the bigger picture. Over the long term, your KiwiSaver will likely show a steady trend of growth, even if the road gets a little bumpy along the way.

Understanding Timeframes and Risk

Choosing the right KiwiSaver fund type is important, as you will need to ensure it aligns with your investment timeframe and the potential fluctuations you are willing to see. Every fund, from conservative to aggressive, will have a suggested timeframe of investment, that reflects its level of risk. If you’re planning to leave your funds invested for a longer period, a higher-risk, growth-focused fund might make sense. Yes, you’ll experience bigger fluctuations, but the potential rewards over time could be worth it. On the other hand, if you’re closer to needing your funds, a lower-risk fund will offer more stability and may be suited to protect against any unwanted fluctuations. Ensuring your fund matches your timeframe is key to staying confident in your KiwiSaver strategy and making the most of your investment.

Don’t Fall for the Doom and Gloom

There’s always someone predicting the next market crash. While these warnings can sound convincing, trying to “time the market” and jump in and out at the right moments is a risky game. The truth is, staying invested for the long term—time in the market—beats trying to perfectly time your moves. It’s the power of compound growth that works in your favour when you give your investments time to grow.

Final Thought

The market will always experience ups and downs, so it’s important that your KiwiSaver fund is aligned with your financial goals and timeframe. This ensures that the next time you log in and see a drop, you can confidently remember “if in doubt, zoom out”—knowing your fund is well-suited to your long-term strategy. Take a moment to reflect: does your current fund match your goals and timeframes? Whether you’re riding out fluctuations or considering adjustments, being in the right fund will make all the difference.

Mortgages

Market shift: Why now is the time for first home buyers!

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Market shift: Why now is the time for first home buyers!

We’re no strangers to media appearances, but recently one of our founders had an exciting first—being invited to speak live on TV! The topic was something close to our hearts: the latest property market trends and the headline-grabbing statistic that 27% of all property sales in August were to first-home buyers—the highest of any buyer group. 
 
For the first time in decades, first-home buyers have overtaken movers (those selling and buying), and we dove deep into the reasons why this shift is happening, how long it could last, and what it means for interest rates, house prices, and market dynamics.
 
Here’s a rundown of the key takeaways:

Watch the full video here

1. Bank Test Rates Are Dropping

Lower test rates signal that borrowing costs are set to decrease, making mortgages more affordable for buyers and increasing their borrow capacity. This is great news for first-home buyers eager to get into the market with more favourable lending conditions. 

2. LVR Changes and More Money in the Market

Changes in Loan-to-Value Ratio (LVR) policies has put more money into the hands of borrowers. For instance, investors only need 30%. Plus, first-home buyers with less than a 20% deposit can now use boarder income—an extra boost that wasn’t available before! 

3. Market Sentiment is Shifting

Confidence is gradually returning to the market. Lower interest rates are injecting optimism, but buyers are taking their time because they have more options. With plenty of properties on the market, buyers feel less urgency, and sellers are still adjusting to the “new normal” of property prices. 

4. What’s Happening with Investors?

Investors are re-emerging after a slew of regulatory changes—from the Healthy Homes Standards to the removal of interest deductibility. While these measures slowed the market, recent interest rates reductions and more on the horizon have sparked renewed interest among investors. With the numbers improving, they’re watching closely, waiting for the right moment to re-enter. 

5. Movers Are Slower to Act

Unlike first-home buyers, movers are less active right now. Sellers and buyers are often out of sync on property values, leading to slower transactions. Until sellers adjust their expectations, we’re seeing properties sit on the market longer – but this does change quickly as the market gets more confidence. 

6. Interest Rates: A Turning Point

August marked a turning point with the Reserve Bank’s decision to cut the Official Cash Rate (OCR), signalling the beginning of a downward trend in rates. Over the next few months, we expect further cuts, potentially reducing the OCR further down 1.25 basis points by February. Inflation figures are announced on the 17th October which could likely confirm we’ve got inflation back under control, and the OCR could move toward a more neutral position of around 3.75%. 

7. House Prices: A Flat Market… for Now

The latest CoreLogic data shows house prices are 17% below their peak, but there’s been a slight 0.7% uptick in the past year. The market may be flat right now, but we anticipate a steady rise in prices over the next 12 months, with growth in the 5%-10% range. 

8. The Big Picture: What’s Next?

As interest rates drop, confidence grows. ANZ’s most recent business confidence survey showed the largest jump in confidence in a decade, with a spike in residential and commercial construction and positive employment outlooks. These are the behind-the-scenes changes that signal the market is gearing up to shift into the next cycle. 
 
On average, households currently spend 49% of their income on mortgage repayments. As rates fall, people will have more disposable income, creating a ripple effect throughout the economy. 

Our Advice to First-Home Buyers?

Now’s your moment! Take advantage of reduced competition in the market and falling bank test rates. These conditions may only last another six months, so if you’re a first-home buyer, don’t be shy. 
Investments

Turning $521 into $40,000 – The goldmine Kiwi’s are sitting on

Clark 0 Comment
Piggy bank

Turning $521 into $40,000 - The goldmine Kiwi's are sitting on​

What’s the deal with KiwiSaver Contributions?

Ever wondered how every dollar you pop into your KiwiSaver translates into a bigger nest egg down the line? It’s not just about the dollars—it’s about the time they’re given to grow. Each contribution you make is like planting a seed in your financial garden. The longer you let it grow, the more fruit it’ll bear when you finally reach retirement.

Free money.

If you’re a Kiwi between 18 and 65 living in New Zealand, there’s $521.43 up for grabs from the government each year. To get the full amount, all you need to do is make sure you’ve contributed at least $1,042.86 ($21 per week) to your KiwiSaver between July 1st and June 30th. It’s as simple as that! $521 may not sound like a lot – but…

It’s an immediate 50% return on the $1,042 you invest.

You get to keep the money that is made off of that $521.

IT’S FREE MONEY.

Why should you care?​

Now, you might be thinking, “Why should I care about all this?” Well, here’s the thing: we’re all living longer, healthier lives. That’s awesome, right? But it also means we need more money to enjoy those extra years.

Superannuation is great, but it’s not always enough to live comfortably, especially if you want to maintain a certain lifestyle. That’s where your KiwiSaver comes in. It’s not just a savings account; it’s your ticket to a more relaxed, choices-packed retirement.

Ingredients to success.

Imagine your KiwiSaver account as a hearty stew. Sure, you need good ingredients (like your regular contributions), but the real flavour comes out when you let it simmer (or in this case, grow over time). Time is your best mate when it comes to building up your KiwiSaver. The more time you give your money to grow, the more compound interest works in your favour. That’s the magic of time—it takes those small contributions and turns them into something much bigger over the years.
We’ll let the numbers tell the story…
If a 35-year-old is…
  • in an aggressive fund returning 5.5% (p.a)…
  • adding $521 to their KiwiSaver every year…
  • Repeats this for 30 years ($15,630 contributed in total)…
They’d have an extra $40K for their retirement.
 
Now, the equation isn’t restricted to just Government contributions – you can use these figures to add multiples to your retirement savings over time. PLUS, if you want a calculation done for a different time frame, we can do that too.

The secret sauce: Action

First, make sure you’re contributing enough to your KiwiSaver to take full advantage of the government’s contributions. If you’re unsure, check in with your provider or with the IRD to make sure you’re on track.

And if you’re not sure if your current fund is the best fit, don’t stress. Just touch base with us, and we’ll help you figure it all out. After all, the sooner you start, the more time your money has to grow—and the better off you’ll be when it’s time to kick back and enjoy the fruits of your labour.

So, what are you waiting for? Time’s ticking!