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2024 Annual Review Letter for Membership Fee Clients

This is the cover letter that you will receive with your Annual Review letter in 2024

Investment Markets

2023 saw the second year of the bear market in all asset classes – Fixed Interest, Equities and Commercial Property – an unusual phenomenon that hasn’t been seen since about the 1990’s.  We updated you with a detailed newsletter about what is happening in November 2023, here is the link if you want to read it again.

November Special Update Newsletter :

With interest rates looking like they have peaked internationally (maybe a little longer in New Zealand), and inflation coming down, things are looking better for investments going forward, but there will still be bumps up and down.

The last two months of the year saw a major increase in values of assets – with good returns on equities, property and fixed interest investments. However, it could be that the markets have got overexcited and we may see a slower start to 2024.

Change of New Zealand Government 2023

The coalition Government campaigned on three things that will directly impact our clients:

1.    New Tax Rates (increasing the thresholds for each tax rate to kick in)

2.    Changes to KiwiSaver (various ideas)

3.    Changes to Property Investment Bright Line to 2 years

It has been confirmed that the Property Investment Bright Line will be changed to 2 years for any properties sold from 1st July 2024 (ie no capital gains tax will be payable on the increase in value if the property has been owned for more than 2 years at the date of sale.). In addition, full interest rate deductibility for landlords will be restored some time in 2024.

Changes to tax rates, thresholds and any credit systems (ie Working for Families) will be announced in the May 2024 budget and there has been no update on proposed changes to KiwiSaver (but we will update you if we hear anything).

However, in the mini-Budget of 20th December 2023, it was announced that the main benefits will be linked to the change in cpi (inflation) going forward, instead of the current calculation which is linked to a ratio related to wages.  This does not apply to NZ Superannuation.  While on the face of it, this seems like a good or neutral move, the reality is that linking to cpi is a cheaper option, meaning that beneficiary families will be paid $676 million from April 2024.[1]

The other change in the mini budget was the change back to only funding early childhood care for 20 hours a week from age 3 (instead of age 2 which was a change in the 2023 Labour Government Budget.)

Changes to Mindful Money ‘nasties’ categories

Mindful Money has streamlined their categories, to join together similar nasties.  As a consequence, we will do a quick update with you about how you feel about these categories.  We have averaged your previous scores – so we just need to check that you are comfortable with these new settings.

Project 2024

Continuing with our series of education on how your fund managers make their investment decisions, this year we are telling you about Stewart Investors, who have the opposite approach (in the active management stable) to Pathfinder, who we profiled in 2023.  Pathfinder are a textbook, Top Down, Desk Based, Data Driven fund manager.  Stewart on the other hand are the most Bottom Up, hands on, relationship driven fund manager that we work with.

We have also used one of the two pages from our Ethical Financial Adviser of the Year entry to tell you more about what our Ethical Investment Approach is.  Your annual review document has an insert inside the back cover (and there is a photo in the projects session if you don’t get a hard copy), that shows you the five pillars of our approach.

We are going to explain in more depth what we do with our Quarterly Stock Intersections Analysis and our Fund Manager Project.

Our Team

Grace, our Administration Manager was offered a phenomenal full-time role at the end of 2023, which she couldn’t turn down, so we are back to our team of Carey, Peter, Paul and our robot Millie.  Over the two years that Grace worked with us, we were able to streamline our systems and processes and to automate more processes and it was great having her as part of the team.  But there are some things that have to be done by humans, so we appreciate your patience going forward that your adviser may not be quite as efficient as Grace at helping you with the forms to change things, but we will get there!

We are taking on new clients and would love referrals from you

We look forward to seeing you at our annual review meeting this year.  Please don’t hesitate to contact us if you have any queries before our meeting.

[1] Bernard Hickey, The Kaka, 21st December 2023

Yours sincerely

Moneyworks NZ Ltd

Carey, Peter, Paul  & Millie .


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