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So - what is this Bear Market Thing?

This is an abbreviated article, based on information sent to Moneyworks investment and membership clients on 16th June 2022. Listening to the news in the last few weeks can be unsettling if you haven’t been through a market downturn before.  And many of our clients haven’t, as the last major downturn was from 2007-2009 (Not including the brief Covid Crisis in March 2020 where markets bounced back far more rapidly than most people expected). It can be unsettling even if you have been thr...

Ethical Investing is not a formula

Ethical Investing is trendy. (Or ESG, Sustainable, Responsible - call it what you like). Billions of dollars have flowed into ethical branded investments over the last three years and projections are that billions more will in the forthcoming years. Multi billion dollar industries have been created around the trend, with organisations flouting their ESG, Ethical, Responsible, Sustainable characteristics. Hundreds of indices have been created, investment research products and measures have been d...

Making your donations work harder for you

We Kiwis are a generous lot, we donate money to help people and animals who are having a difficult time for any number of reasons.   Donating is financially viable for many people because of the tax rebate that they receive - the rebates are not limited as long as the donations are reasonable.  IRD shows that in 2019 the average person claimed back $746.90 in donation rebates - of course that is probably skewed by some pretty big donors, but it shows that we are generous. But now,...

Whats the deal with Genetic Modification being a 'nasty' in New Zealand?

The MIndful Money consumer surveys which identify 'nasties' - consistently shows that Kiwi's are resistant to investing in GMO's, or Genetically Modified and Genetically Edited organisms.  But why?  There has been quite a bit of commentary recently about how old the New Zealand genetic modification regulations are - (A 1996 Hazardous Substances and New Organisms Act, and a quick google brings up a 2004 Ministry for the Environment Paper in the first entries).   This is in res...

Barriers to Ethical Investing

Greenwashing involves labelling a product (whether it is something you eat or use around your home, or an investment of KiwiSaver fund) to be 'green', 'ethical', sustainable or responsible, when it really isn't when you look under the hood.To work out whether your KiwiSaver or investment actually is true to label would require looking at the actual investments held and undertaking a thorough analysis of the policies and processes that each fund manager uses. The independent information available...

What do New Zealanders want to avoid in their investing?

Since the last survey, the survey authors have refined the categories of 'nasties', breaking them down into more detail.Instead of a catch all of 'Human Right Violations or Environmental Damage', we can now see that people don't want a range of Human Rights related violations as follows:Human Rights Violations (90%)Labour Rights Abuses (89%)Violations of the rights of indigenous peoples (87%)Social media companies that breach privacy standards (83%)Animal testing for non-medical purposes is not ...

What do Kiwis think about Ethical Investing?

RIAA (Responsible Investment Association of Australasia) and Mindful Money (New Zealand ethical investing charity that we contract to provide our core ethical analysis research) regularly undertake a survey of Kiwi's to see how they feel about Ethical Investing.  This survey was delayed because of Covid, and there are significant changes from 18 months ago when the last report was done. Key findings of this years report released at the end of April are: 73% of Kiwis expect their investments...

Our upgraded and updated website - the back story

Moneyworks has had three different websites since the early 21st Century.  Moving from a website where every change had to be done by the website manager, to one on Word Press where we could make quite a few changes but structural things still required changes from other people.We moved to Rocketspark, which is a Cambridge based website system that is 'drag and drop' around five years ago, and were very happy with the website (which is very deep with lots of information on it.  But tim...

Inflation - what is happening?

Inflation in New Zealand was recorded at 6.90% pa for the year ending 31st March 2022.  This is the highest record of price increases in decades.  You may have noticed it when you buy things - like petrol, groceries or imported goods.When inflation is high, it affects our standard of living and our investments and mortgage rates.  People feel worse off. The Reserve Bank of New Zealand has a mandate to keep inflation between 1% and 3%, which they have successfully been doing for de...

Inflation - how does this affect your investments

We have had low inflation since the 1990’s and it is easy to forget how inflation can eat away at your investment assets.  Real rates of returnThe key concept is the ‘real return’.  When inflation rates are 1.00 – 3.00% - you don’t need to get particularly high investment returns to get a positive after tax, fees and inflation return.In our retirement savings analysis modelling for clients, we model how long money will last in retirement based on after tax, fees and inflation...

The Kaka - Bernard Hickey - Valuable Information

At Moneyworks, we read, listen to and watch a wide range of information and news sources, ranging from the mainstream media (NZ Herald, Stuff, New York Times, Fox News) to more specific media and newsletters  (Newsroom, Business Desk, Fortune, Time Magazine, Good Returns, Investment News).It is increasingly becoming a defined skill to break through the noise, hype, rhetoric and bias of commentators and news outlets.  One of our core 'go to' sources of information is the relatively new ...

New Zealand Super increase in rates and impact on your tax rate

New Zealand Superannuation income is adjusted on the 1st April each year based on a formula that is linked to inflation (through the average wage mechanism).  With inflation at high levels this year, the jump in NZ Super is quite big.The important thing is - if you are earning income from other sources (working, investments, taxable annuities), remember to check your overall gross taxable income.  This increase in New Zealand Super may push you into the next tax bracket, which will cha...

Investment Market Uncertainty and War

This article is part of a longer article sent to Moneyworks Membership Fee client in mid March.  We are sharing this again as a reminder, and also for the information of Non Membership Fee clients that receive this newsletter each month. The one thing that we can say for certain is that currently the outlook is more uncertain than normal.  While much of the world is getting back to business after Covid, China and Hong Kong are being locked down and/or are suffering from significant wav...

Residency requirements for New Zealand Superannuation changed

In our August newsletter (which you can find here), we outlined the proposed changes to eligibility for New Zealand Superannuation. Legislation was passed in late 2021 to implement these changes. In summary: The residence test to qualify for New Zealand Superannuation increases from 10 years to 20 years, but with a staggered approach, with annual increases in the residence requirement. Those who turn 65 on or before June 30th 2023 will still face the 10 year eligibility rule.Only those who ...

This is why NOT investing in Fossil Fuels is tricky

Ethical investing is tricky.  While something might seem simple on the surface, there are so many layers and factors involved in making a decision to continue investing or stop investing in a particular area.  We will cover many of the areas that make this tricky in future newsletters, but we are starting off with one of the most tricky – Fossil Fuels.We all know that Fossil Fuels (using, producing) are bad for the environment and are a big contributor to climate change.  There ...

Nestle and Child Labour

Nestle is an attractive company to invest in from the financial and traditional profitability perspective and as a consequence, is in many of our clients portfolios. However, there is an ethical issue, in the form of child labour.A study by the University of Chicago estimates that 45% of children living in agricultural areas on cocoa growing areas were engaged in child labour and 43% were engaged in hazardous child labour in cocoa production in aggregate.  Particular areas of concern are in...

Why bother with company visits when you are investing?

In 1987 I was fortunate enough to have the opportunity of working for a huge American Fund Manager, Fidelity Securities in their Australian Office.  It has set the ground for my understanding of investing, financial planning and what a good professional fund manager does.  Of course, times continually change, new types of investments and themes develop, new styles of investing are created, but there are fundamentals that are as relevant now (35 years later) as they were in 1987. I lear...

Spending one bitcoin = 330,000 credit card transactions

Bitcoin (based on Blockchain) and other crypto-currencies have the potential to change the world, but at present are still most useful as a speculative investment tool.  However, to created a Bitcoin requires a vast amount of energy, which challenges the value of Bitcoin as a tool for the future from an ethical perspective. This is a commentary from the Robeco "Stunning Statistics of Sustainable Investing" What has happened?The digital currency consumes 511 kilowatt hours of electricit...

Money Mules and Money Laundering

As a financial adviser, we have responsibilities under the Anti-Money Laundering/Countering of Financing Terrorism legislation.  You will see this when we require proof of ID, residential address and source of wealth and source of funds from you. As part of our obligations we are required to maintain processes and risk assessments and undertake ongoing training of all our team to ensure that we are aware of how money can be laundered. A large part of this training involved le...

Our new look

The Moneyworks logo has been in lower case since 2005, and was green and orange from 2005 - 2015.  From 2015 we changed the logo up, adding the circular logo and swapping green for brown. With the new focus on the ethical components of investing, life and our business, we have returned to the green - and over the next year we will be introducing all our clients to the ethical approach to investing. At the same time we will be making some formal changes within our business to track and offse...

Some comments on those 'wholesale investor only' property syndicates advertised in NZ.

It has been difficult to get investment returns from 'income' investments, with term deposit rates being so low (and virtually no returns on ordinary bank accounts.  Although interest rates are increasing, this means that people holding bond or fixed interest funds will see capital losses (as the investors won't pay as much for the investments held because there are new investments available at better rates). A lot of people are nervous about investing in equities (a flash word for shares) ...

Corporate Controversies that Defined 2021

ISS ESG is the acronym (or brand) for Institutional Shareholder Services and its ESG (Environmental, Social and Governance) arm. ISS a large international company that provides services to institutional investors (fund managers) including proxy voting services and platforms (so that they can place their vote on company issues at annual meetings) as well as extensive research. We are fortunate to be able to receive their white papers and commentaries (as a result of Carey's role judging the ...

More changes for landlords - under the Privacy Act

Owning a residential investment property is a common way to growing your wealth in New Zealand.  However, over the last few years the obligations on landlords have increased significantly, with requirements to ensure that the homes are healthy and warm, and changes to the residential tenancies act, which give more power to the tenants. Another change has been announced recently, from the Privacy Commissioner who has outlined what landlords can and cannot ask potential tenants when they...

Do you really need $809,000 to retire on?

Every two years Massey University carries out an analysis of how much people need to have invested/saved to be able to retire.  The guidelines are based on various assumptions, and as usual, it is vital that you understand what these assumptions are before you start to relate this information to your personal situation. A key part of our role at Moneyworks is to do a detailed analysis for each of our clients based on their actual situation, and work out how much they need to have invested t...

Climate Laggards and Leaders - the poor performance of listed companies

In our big Ethical Investment Analysis project we have found that it is difficult to get information on Carbon emissions from our fund managers that are in a consistent format.  This is a good example of how the field of ethical investing is difficult, there are a number of different formats for reporting, there is disagreement about whether reporting should be on a 'per revenue', 'per profit' or absolute basis. Further, reporting is difficult as there is no mandated consistent measure of r...