News & Articles: Investments

Your 20s are a crucial time for setting the stage for a financially secure future. While it may seem overwhelming to navigate the world of saving and investing, fear not! This article will guide you through the essentials.

The term “cash is king” is often used when times get tough and there is uncertainty in markets.

Cash provides investors with security and liquidity but often falls short when it comes to generating long-term wealth. While rates in New Zealand are good now with an Official Cash Rate of 5.5%, generally, cash returns historically fall behind fixed interest, property and share markets. But, investing solely or too heavily in cash likely misses opportunities elsewhere. Over short to medium-term periods, cash can from time to time outperform bonds, property and shares. Over longer periods, cash tends to be a drag on investment growth.

If you haven’t seen this in the news yet, there has been the failure of two banks in the US in the past week.

Whilst this is not positive news for the global economy, the words ‘bank’ and ‘failure’ can incite a level of fear in people that is often disproportionate to the actual failure itself.

A recent survey highlighted that ethical investing is a growing area of interest for many Kiwi investors.

The survey, by RIAA and Mindful Money, revealed that over 75% of KiwiSaver investors expect their KiwiSaver funds to be managed responsibly and ethically¹. And, more and more New Zealanders are considering becoming ethical investors so they know exactly where their money is being invested².

But what exactly does ethical investing mean? And is it something you can do with your KiwiSaver savings?

It was the early 1950s. A young PhD student at the University of Chicago was working on ideas for his PhD. He was waiting patiently in a lounge for a chance to talk to his dissertation adviser. Little did he know that he was about to have a conversation which 40 years later would see him awarded the Nobel Prize in Economics.

The Fixed Interest investments (or bonds) in portfolios typically perform well during market stress, as investors favour low-risk assets that generate income. Last year was no exception.

Global markets performed very strongly during November. The first catalyst markets liked was the result of the US election. Although we haven’t seen the ‘blue wave’ result the polls were suggesting, it is looking like the US presidency and Senate will be divided.

New Zealand shares were up over October with electricity generators bouncing back after the Government suggested more support around the Tiwai Aluminium Smelter, which consumes 30% of electricity in NZ.

Wondering why the interest rate on your term deposits is so low? There are a few reasons for that.

Global share markets rose nearly 5% in August as investors continue to digest news about ongoing vaccine developments and look for returns in a low interest rate environment.

Global share markets continued to rise following the volatility we saw during March, up a further 3% in July.

Although remaining choppy, global share markets have continued to bounce back from the March COVID-19 sell-off.  Investors have continued to focus on the re-opening of economies and the amount of stimulus that governments and central banks have been providing.

A few curious professors decided to run an experiment. The fact that two of them later became Nobel Prize winners… well, that probably has a bit to do with the outcome. 

Share markets across the world continued to recover solidly during May, looking ahead to a gradual loosening of restrictions, and have now recovered much of the March sell-off.

When to invest is a big question facing many budding and experienced investors. The answer seems difficult and has caused a fair few headaches, but here is an example of when to invest that gives a clear answer.

March saw the Coronavirus have a more tangible effect at home, with the move to lockdown in New Zealand taking it from a global event to something with a very clear impact on our day-to-day lives. Meanwhile, share markets around the world continued to be volatile, with the US S&P 500 index staging a dramatic partial 18% recovery in three days towards the end of the month.

As we navigate a rather turbulent time in the market, many of us are wondering what impact this will have on our KiwiSaver come retirement, and what, if anything, we should do. Lifetime Adviser Michael Heriot explains.

Lifetime Adviser Sam Walter shares his top tips when we find ourselves in the midst of a significant market event and we start to question things...

Over the few past weeks newspapers and prime time television have been filled with information on the outbreak of the coronavirus in Wuhan, China.

The first month of 2020 saw volatility return to global markets, first with the attack by the US on Iran, followed by the recent health scare of the coronavirus. While global markets predominantly ended where they started in local terms, a falling NZ dollar, increased the value of unhedged overseas assets for NZ investors.

The month of November saw positive results from global share markets, as the United States and China look set to make progress on resolving some of their trade disputes after the last 18 months. Additionally, business confidence improved in both countries, suggesting improvement in the global economy.

December is upon us and with Christmas approaching, many are thinking about Christmas celebrations, catching up with friends and family, and holidays to the beach. Another reason to cheer is that if we look back over 2019 global economies have continued to expand, businesses have continued to grow, and global share markets have risen over 20%, well above the average historical yearly return of around 10%.

October provided only modest changes in value for most diversified portfolios. While portfolios gained from allocations to global shares, lower returns on local shares and fixed interest investments kept performance relatively static after solid gains in the year so far.

September was a positive month for most share markets across the world, bouncing back from some softness in August.

After good gains so far this year, diversified portfolios produced a relatively flat return for August, but looking below the surface there was a bit more going on.

Portfolio returns were solid again in July, led by global share markets rising 3%.

Investors have been debating for decades the merits of active or passive (index) investing, and no doubt this will continue into future decades as both sides have some good points. Rather than take an extreme view one way or the other, we have used the best of both approaches to complement each other within client portfolios. We call this a hybrid approach.

Global share markets had a strong positive performance in June, rebounding from May’s weakness, but in a somewhat volatile fashion.

It is an age-old question: What are interest rates going to do? The answer to this question influences decisions for investors and borrowers alike. The chart below shows NZ and US official cash rates (OCR) as set by their respective central banks. After staying the same for two and a half years, the NZ OCR has now fallen to a new record low of 1.5%, as the Reserve Bank has responded to weakening global economic growth prospects and inflation pressures appearing to have eased off for now.

Most portfolios gave back a small portion of this year’s strong gains during May

The best time to plant a tree was 20 years ago. The second-best time is now.

April saw global share markets continue the strong performance that we have seen so far this year.

Albert Einstein famously said, “compound interest is the eighth wonder of the world, those who understand this, earn it… those that don’t, pay it.”  The simple truth of compounding returns is the most important thing that matters for the long-term investor. Yet in today’s world we are consistently bombarded with distractions, become pre-occupied with other things, and we forget this simple truth.

Global share markets had another positive month and have had one of the fastest starts to the year since the 1990’s

Lifetime is truly up and running post its 2018 merger and now rolling out new and improved advice and investment training program for our advisers and administration staff. 

Global share markets continued to rebound in February and have now recovered almost all of the decline we saw in the last three months of 2018.

There are several drivers of returns from investing in companies. The main two are from a company growing their earnings over time and from paying dividends to shareholders. But recently in New Zealand we have seen instances of another driver of returns - takeovers. 

The support of an expert financial adviser can make a real difference to your financial health. Lifetime’s Emily Wheatley advises on the four most important questions you should ask your adviser.

Happy New Year to all and I hope that you all had a wonderful and peaceful holiday season. As I noted in my recent quarterly performance report, we remain optimistic about the markets over the long-term but have a cautious short-term outlook as we expect volatility to remain with us for the foreseeable future.

Global share markets rose slightly in November (up 1%), although returns for NZ investors were offset by a 5% rise in the New Zealand Dollar.

Those who have been following share markets will know that returns during 2018 have been more variable (both up and down) than in the few years prior, which were unusually smooth.

In the past, we have written how volatility can be a friend to the long-term investor, by providing the opportunity to add to investments when prices are lower. October has provided an interesting test to this point, with global share markets finishing October down 6.5% on average (albeit only partly offsetting a 16% rise over the previous 12 months).

Share markets continued their 2017 ascension during October, with a moderate 3% gain boosted further by the New Zealand Dollar falling 5%.

Over 10,000 of our Lifetime clients have AMP policies and investments. Lifetime Group’s Managing Director Peter Cave explores the impact AMP’s New Zealand disinvestment is likely to have on you.

Investment portfolios had a rather subdued month in September, capping off a very strong quarter driven by solid returns during the months of July and August. In fact, the US share market produced its best local currency quarterly return since 2013, with the S&P 500 up 7.2% for the September quarter.

It is a changing world, one that is moving very quickly. Moore’s Law is a quoted observation that states computing power double every 2 years or so. With this rapid increase is computing power, ‘Big Business’ is putting this new technology to work (and making a profit).

Share markets rose further in September, shrugging off the unresolved NZ election and war of words between the United States and North Korea.

Humans are irrational by nature – we’re afraid of mice, we play the lottery, and we perceive things to be superior if they have a higher price. For years both economic and finance theory ignored this fact and instead assumed everyone acted rationally when making financial decisions. But recently there has been a new train of thought – human emotion can have an impact on financial markets as much as any other aspect of life.

One of the benefits of being a long-term investor is that time is on your side! Long-term investors can skip over the short-term noise and just focus on achieving their long-term goals, (i.e. retirement savings). Short-term volatility is usually just a distraction.

August was a relatively quiet month for share markets, but with currency movements boosting fund returns.

If you’re keen to get the best out of your KiwiSaver Investment take heed of these expert tips from financial adviser Ian Stewart.

It is the Custodian’s job to safeguard your assets and hold them in bare trust for your benefit. This means that if there are any financial problems with the Fund Manager, your investments are ring-fenced in a separate legal entity.

Share markets again rose moderately for the month, which saw investment fund returns resume their gradual upward path.

The first seven months of 2017 have seen global markets continue to go up at a surprisingly consistent rate. However, most investors, particularly those in growth or high growth investments, will be aware that equity markets rarely experience such blissful performance without some form of volatility.

Since we started in 1998, Booster has always considered itself “Responsible” when looking after other people’s money. However over the past 20 years, more ways to do this have emerged.

One of the fundamentals of investing is the time value of money. If you make an investment with your capital, you need to be compensated for the use of your money. Generally speaking, the longer the investment term the higher the return.

OPINION: Whether it’s a bach at the beach, house in the suburbs or small apartment in the city, the prospect of owning an investment property has long been part of the Kiwi dream.

According to Statistics New Zealand, residential property now accounts for 32 per cent of all Kiwis’ investments (as at March 2017) – making it the highest share of investment New Zealand has seen in 45 years. This comes despite concerns about primary residential home ownership levels. 

June was a fairly quiet month for world share markets, with most investment funds relatively flat – although this capped off a solid overall first half of the year.

For most investors, lower interest rates have been a key feature of the past 10 years, thanks to the extraordinary policies adopted by the world’s central banks. This has particularly reduced income returns on fixed interest investments, raising the question of how best to deliver the “income” part of Farming portfolio returns in the years ahead.

Global share markets added another 1% in May, amidst a background of solid economic growth spiced up with news of political instability in Italy.

We mentioned a couple of updates ago that more ‘normal’ volatility has returned to markets so far in 2018. This can be unsettling to investors as they can start to worry about the value of their portfolios.

Share markets regained ground as February progressed, recovering most of the declines from the start of the month.

Booster has always considered itself ‘responsible’ when looking after other people’s money! We also follow the six Principles of Responsible Investing (PRI) set in motion in 2005 by Kofi Annan of the UN. However, investors are increasingly looking for responsible investment to be clearer across the investment world.

History can help answer these questions and show us the way, but only for those who are willing to look.

Make it your year to get your finances in order and use your money goals to guide through the next twelve months. Lifetime financial adviser Allan McNaughton reveals the most beneficial resolutions to make.

The end of the year is the perfect time to take stock of your financial situation and plan for greater success in the year to come. Each year I set aside time to review my current financial portfolio and map out my next steps in becoming more financially fit. Whether you want to tackle your debt or start building a wealth portfolio, it’s never too late to start improving your financial bottom line.

As has been widely reported in the news, global share markets have fallen over the past few days, giving back 6% of recent gains. While this has been quicker than the usual decline, the size of the pullback is actually within the “normal” bounds of market behaviour, even when share markets are generally rising.

By international standards, both National and Labour-led Governments appear relatively centralist, without large policy differences. While a Labour-led Government, may tend to be more fiscally liberal (willing to spend more) than a National-led Government, relative to global alternatives, the New Zealand economy is still likely to be considered relatively low risk, regardless of which party is in power.

A common question that comes up when setting up a new investment account for clients is which form of ownership should they adopt, (‘client type’ on some application forms). Should they use ‘tenants in common’ or ‘joint tenancy’?

In today’s busy and complicated world, there are not too many free lunches available but if you look carefully, you may be able to find one!

As a trader, I was proud of my ability to handle ‘complexity’. To be a successful financial adviser, I realised I would have to simplify investing for my clients.

Well, 10 years on and KiwiSaver is still here! Not only is it here, but it is in a strong position. KiwiSaver now has over $40 billion funds under management with over 2.5 million investors. $40,000,000,000 looks and sounds impressive, right?

Bitcoin is the latest ‘hot’ trend but is it worth investing in? With any investment opportunity, it is important to make the distinction between investing and speculating.