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December Newsletter Update

“I have enough money to last me the rest of my life, unless I buy something” Jackie Mason.

In this Newsletter update:

You can also view our newsletter in PDF format by clicking here (includes extra articles on Why Women are less likely than Males to do Financial Planning and an Update on the Chinese economy).

Don't forget to click here to like our Facebook page - we have regular updates, tips and competitions.

Kind Regards,

Sheryl Sutherland JJP, B.A (Otago), Dip.F.A.C (Otago), DipPFinPlan (Waikato)

Authorised Financial Adviser (AFA) & Managing Director of The Financial Strategies Group (FSP 28246)

Are New Zealand Retirees in serious trouble?

There are a lot of retirees in serious trouble as they bailed entirely in late 2008 or early 2009 because they couldn’t get comfortable with the volatility of a traditional portfolio, and invested in finance companies instead, or simply left their hard earned money in the bank slowly losing value as tax and inflation takes their toll.

Even though it usually pays to do nothing at all when the stock market dives, it is hard to blame retirees who cannot withstand that sort of gut-wrenching volatility.

My approach is essentially the opposite of the traditional advice, which suggests keeping a steady mix of stock and bond funds throughout retirement or slowly lowering the percentage for share market exposure.

A recent study endorses that. The study looked at how different mixes of stocks and bonds would affect how long a retiree’s money would last if that person initially withdrew 4 percent of total assets each year (and adjusted that amount each year thereafter for inflation).

So, for a person with $500,000 in retirement assets, that would translate to a $20,000 withdrawal the first year; for someone with $250,000 in savings, the withdrawal would be $10,000, and so forth.

The different stock and bond allocations were tested. The hardest part of this strategy however may be sticking with it.

It does provide a seemingly promising alternative for people who are trying to retire with less anxiety. But behavioural challenges obviously remain — they may just be pushed down the road. Read more in Money, Money, Money Ain't it Funny.

Alternatively, some retirees draw down on capital. This can be a great option if leaving money to beneficiaries or dependents is not a priority.

Review your retirement investment structure or commence retirement savings by calling (03) 379-7035 or email sheryl@strategies.co.nz.


From our Crystal Ball Department - What's in store for 2014?

In June last year, fears grew of a sovereign debt default in Europe, falls in commodity prices accelerated and the Chinese economy weakened with fears of a sub 7 per cent GDP growth pace gaining credence. The US economy was yet to gain traction with a recovery from the deep recession. Read More....

Why Worry? It's good for you.

The late Amos Tversky, a Stanford psychologist and a founding father of behavioural economics, used to say, “My colleagues, they study artificial intelligence; me, I study natural stupidity.”

In recent decades, behavioural economics has been the economics profession’s runaway growth area.

Click here to

Insurance & The Age of Reason

40 is the age of reason and it's when we start to realise we are not bullet proof and need to ring fence our assets and income. The average age at claim tells us insurances are being cancelled leaving policy owners at risk. Review your insurances and discuss with your financial planner or broker before cancelling.

10 Reasons You're Not Rich Yet

Do any of these statements apply to you? You spend money money like you're already rich. You don't have a plan. You don't have an emergency fund. You started late. You'd rather complain than commit?
And from our what were they thinking file:

In a Spanish judge’s ruling, he cited official data from Spain’s Directive of Traffic that proved "every single year, men displayed better dexterity and better open road skills” than women in their driving tests.
Click here for more...

For more than 150 informative articles, visit our upgraded Money Maven Blog. Read new and archived articles covering both serious and amusing topics.
Contact us: 0800 64MONEY, sheryl@strategies.co.nz

Our Services: Financial Planning Advice, Investment & Retirement Advice, Developing a Portfolio, Risk Management, Mortgages, Options for over 60's, UK Pension Transfers, KiwiSaver, Professional Speaking.