One good fi­nan­cial de­ci­sion leads to an­other

Southern Real Estate Guide - - FRONT PAGE -

busi­ness may not pro­duce the same re­sults in the fu­ture as would be ex­pected now – things change. If a Ki­wiSaver con­tri­bu­tion can’t be af­forded now, when you are work­ing, how will your money look when you re­tire, if you re­tire?

The con­ver­sa­tion to have with your mort­gage or sav­ings ad­viser, is what would my fi­nan­cial out­comes be do­ing what­ever sce­nario you pro­pose. That is, what do you need for re­tire­ment, based on to­day’s dol­lar values. NZ Su­per on its own won’t be enough to have a few beers, play a bit of golf, take a trip, or shout the fam­ily to din­ner. Your con­ver­sa­tion might be some­thing like, ‘I would like to live on 70 per cent of what I live on now. What do I need to do to achieve that?’ Don’t make re­tire­ment plan­ning an af­ter­thought, and don’t just blindly put 4 per cent into Ki­wiSaver, think­ing it will take care of ev­ery­thing. Ask your ad­vi­sor about com­par­a­tive funds and what sort of fund is best for you – you might be sur­prised.

3. You’ve been a good pixie and set up your ‘Kill the Mort­gage’ plan, along with an ob­jec­tive based su­per­an­nu­a­tion plan. What hap­pens if the prover­bial hits the fan, you have a long term ill­ness, accident, or you die but leave a fam­ily? That is the in­sur­ance con­ver­sa­tion. Trou­ble is you and I both think the same - it costs money for pos­si­bly no re­turn. Mort­gage re­duc­tion and sav­ings growth, I can see. In­sur­ance is just that di­rect debit from my ac­count each month. Prob­lem is, ‘what if’. You work hard, you scrimp and save, but would you want to be crip­pled by dis­ease or accident and see all you’ve worked for dis­ap­pear be­fore your eyes? Would you like to think your de­pen­dents would be not much bet­ter off than ben­e­fi­cia­ries, if your string is cut short?

A good ad­vi­sor will be able to of­fer you com­par­isons be­tween dif­fer­ent in­sur­ance com­pa­nies, re­veal­ing their pric­ing and their prod­uct rat­ings. Some ad­vi­sors will have ‘spe­cial of­fers’ - for ex­am­ple, we pro­vide health in­sur­ance at near cost, sav­ing hun­dreds if not thou­sands of dol­lars over a pol­icy term. The catch is other ser­vices must be bought from us. Sim­i­larly, other fi­nan­cial or­gan­i­sa­tions may do some­thing sim­i­lar.

Your fi­nan­cial des­tiny is not an ad-hoc af­fair, but a co-or­di­nated strat­egy. This may change over time, but sure as rats will eat eggs, if you start with a cho­sen path, you will start down the path to achiev­ing fi­nan­cial success.

Get­ting amort­gage, plan­ning for your re­tire­ment and get­ting your in­sur­ances in or­der are all linked. Do­ing some with­out the oth­ers can lead to hard­ship. It’s bet­ter to act now than wait un­til it’s too late.

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