| Welcome to the June issue of the Select Wealth Management Dashboard Newsletter. Only a few more days until the Winter Solstice, and then we're over the hump and the days start getting longer.
I saw an article in the news recently titled "The Worst Decision by a New Zealand Politician, Ever". I'm sure we all have our own opinion on the matter, but the author (Sam Stubbs) believed it was Robert Muldoon's decision to cancel the New Zealand Superannuation Scheme of the time - or the equivalent of KiwiSaver today. It's worth noting that Sam Stubbs is the CEO of a KiwiSaver provider, so his view is slightly biased and far from impartial. But he makes some good points and it's worth a read if you have 5 minutes to fill - link here. KiwiSaver will be having its 14th birthday on the 2nd of July this year. After a sluggish start, it has grown into a juggernaut with over 3 million members now. There is no doubt in my mind that it has been one of New Zealand's most impactful policy developments in the past 20 years. Hundreds of thousands of people who may otherwise never have been savers or investors have a KiwiSaver account and are engaged. Even my teenage kids are contributing 10% of their incomes to KiwiSaver, and this will form a significant portion of their home deposits one day. A quick refresher on KiwiSaver. It's a voluntary workplace superannuation scheme administered by the IRD. All employees are automatically enrolled into KiwiSaver when they start a new job, but can opt out within 3 months if they choose to. You can either choose your own KiwiSaver provider (of which there are dozens), or if you do not make an active choice of provider, you will be allocated one of the "Default KiwiSaver" providers and become a "Default Member". Either way, you can change your KiwiSaver provider at any time. The Government recently did a review of the "Default" KiwiSaver providers. There are 2 major changes to come from this review:
If you are currently a "default member" - i.e. you have never made an active choice of provider or fund - these changes will affect you. If you are a default member, your KiwiSaver savings will be moved from your current Conservative Fund to the Balanced Fund (after 1 December) of your default provider. You do not need to do anything. If you want to stay in a Conservative Fund for any reason, contact your provider. If you are a default member and are not with one of the new providers, you will automatically be transferred to a new default provider after 1 December and placed in the new provider's Balanced Fund. Inland Revenue will send you an info pack once you have been moved. You do not need to do anything. If you don't want to be moved for any reason, contact your provider. If you have chosen your own KiwiSaver provider (i.e. you are not a "Default Member"), the changes do not affect you. These are significant changes. As an example, a default member could potentially be in a Conservative Fund with Fisher Funds or ANZ (active managers) on the 30th of November, and a day later find themselves in a Balanced Fund through Simplicity or Smartshares (passive managers). These are very different investments that could result in very different outcomes, and many people aren't even aware this may happen to their KiwiSaver. I strongly encourage that you take a moment to review your own KiwiSaver to see if these changes might affect you. Whether you agree with the changes or not (and there is a lot of debate about the matter in the industry), this is a great opportunity to take an active interest in your KiwiSaver and ensure you know what you are investing in and are happy with it. Feel free to give us a call if you want a steer in the right direction - we are here to help. In terms of the markets, the past month has been very kind. Most major markets were up, and the NZ$ weakened against most trading partners - the perfect outcome for a New Zealand investor. The Australian and Japanese markets were the best performers at 4.67% and 3.08% respectively, while the American market was the laggard, but still up 0.28%. Mortgage and deposit rates remain largely unchanged, although the 3 year mortgage rate is starting to creep up now. This suggests that the banks foresee interest rate increases in the medium term, and are positioning their longer term interest rates accordingly. Here are the numbers for the past 30 days: |
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In terms of your Select Wealth Management portfolio, we recently met with researchers JMI Wealth for the quarterly review. The review resulted in some changes to the model portfolios, and also several new investment options being included on the menu. In particular, I am very pleased to see the Nikko AM Corporate Bond Fund and several new direct bonds available to invest in. There are also several new socially responsible investment funds available, along with a newly constructed Socially Responsible model portfolio. Feel free to contact me if you have any questions about any of these changes. Finally, a quick update on our Giving Back program. We are just about at the end of our campaign for Volunteer Hutt, and I am pleased to confirm that we will be making a donation of $2,359 to their fantastic cause. Hopefully our small contribution can make a difference in their fantastic organisation. You can learn more at https://mifinancialplanning.co.nz/giving-back.html As always, thank you for your continued support, and the referrals of family and friends - I really appreciate it. Warm regards Dave and the team at Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice.