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Creating passive income toward Retirement

  The current Super Annuation payment is nothing flash and does not give the majority of us the lifestyle choices that we would like and are used to. Many more retirees are now ‘choosing’ to work longer and take on extra jobs because of financial pressures. Those in their 60’s are getting used to the idea of working up till 70 to be able to get themselves into a stronger financial position. If your vision for your retirement is to sit at home wondering if you can afford to take out the car for a drive or go shopping then this article is not for you. If, however, you feel that you have worked all your life and would like to have the freedom to choose what you do, during what is sometimes called “the golden age”, then it is time to make a positive start in that direction Is property for everyone? No, of course not, some use the stock market, option trading, currency trading to name a few. There is lots of talk about negative gearing but that is not advisable if you are looking to create extra income. Any costs such as interest, rates, insurance and repairs will be offset  by the rental income but at this stage of life you really need to know that the property will generate additional income. Property can take a bit longer to gain in value, depending on when you enter the property cycle. There are times when property appreciates faster than others and there are times when values sit or even decline. However, if you look at historical charts...

7 Ways to tame you mortgage

With interest rates falling this is a great opportunity to reduce your loans. If you have a revolving credit facility this will mean that more funds become available as your balance reduces which means that this could add up to another deposit to purchase another property since the limit stays the same (unless its a reducing facility) 1. If you are used to paying what you currently pay and negotiate a lower rate then the difference will reduce your loan via the revolving credit facility 2. If the loans are all on fixed rates then most banks will let you take a slice off that amount and convert it to a revolving credit so that you can make the reductions 3. Alternatively if you are on a floating table mortgage you can ask for a reduction in the rate but keep the payments the same as before. This will reduce the principal portion of your mortgage 4. Do you have spare cash sitting in a bank account? You may only be earning a small amount of interest yet paying tax on that interest portion. Why not ‘park’ that money in your revolving credit so that it’s still there for your future use but in the meantime it will reduce the amount of interest you pay on that part of your loan thereby reducing your principal (providing you keep paying in the same amount as usual) 5. Had a pay increase? Adjust your mortgage payments by the same % as your income increased. 6. Make lump sum payments to reduce the main loan. Even on fixed rates most banks will...

four reasons NZ will not become the Athens of the Pacific

Article written by Damien Grant- NZ Herald June 3 We live in the best of times – interest-free student loans, pensions for all, free health care, free education for our children and free ferry rides for our grandparents. Interest rates are low, our dairy remains in demand, our banking system is untainted by the winds buffeting global finance and our civil service is the envy of the developed world. We are going to catch Australia within a generation. Yet, we also live in the worst of times – of unsustainable government deficits, a declining relative standard of living and ballooning government debt. Our best and brightest are abandoning Aotearoa, leaving behind only beneficiaries and unpaid student debt. We have generations of people living in perpetual dependency and a culture of entitlement and petty envy. We are spiralling into a Grecian quagmire. The hope of catching Australia has been dropped from this government’s agenda, and despite the hyperbole by some, there are four reasons we will not become the Athens of the South Pacific. Tax Collection: A large part of the Greek problem is that tax laws are not enforced. More than 40 per cent of their taxes are not being collected. This does not happen here. Fiscal Transparency: To keep borrowing well past what was fiscally prudent, Greece fudged its accounts. Our civil service, and especially the Treasury, has a strong culture of integrity and independence. Political Resolve: It is deeply frustrating to see a deficit equal to 4 per cent of GDP when the economy is growing but our political class is aware of the importance of maintaining...

Headlines

Building consents at lowest level in 46 years, stats NZ figures show It’s generally been known that once the building industry picks up that the NZ economy starts to move since more employment filters through the various supply companies involved with construction.  We’re certainly not out of the recession but compared to what I am hearing from friends overseas, we’re not doing to bad in general.   Read more here finance, mortgages What will the changes be once The Reserve Bank Governor Alan Bollard leaves? No significant changes are expected to the Government’s monetary policy Finance Minister Bill English says. Read more on this issue here fi finance, mortgages Crystal Ball gazing re the interest rates  The majority of borrowers are currently on floating rates which is quite the opposite from a few years ago. When the rates went up at that time, most were not affected, being protected by the fixed rates. The rates of today are lower than we have had for many years but how long will it last? Read on….Some very good information as always from Bernard...

financial planning the Kiwi way

  From an email received from an unknown but obviously Kiwi writer who must have adapted it from an US written article Just imagine…If you had purchased $1,000 of shares in Air New Zealand one year ago, you would have $49.00 today. If you had purchased $1,000 of shares in the AA one year ago, you would have $33.00  today. If you had purchased $1,000 of shares in Canterbury Finance one year ago,you would have $0.00 today. But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminium cans for recycling refund, you would have received $214.00.. Based on the above, the best current investment plan is to drink heavily & recycle. It is called the KiwiSaver-Keg. A recent study found that the average Kiwi walks about 900 miles a year. Another study found that Kiwi’s drink, on average, 22 gallons of alcohol a year. That means that, on average, Kiwi’s get about 41 miles to the...

Kiwisaver update

NZ Herald – 20/05/2011 Mary Holm: Silver rather than gold-plated, but still hard to beat Main points from this article and some responses below The gainers from the proposed KiwiSaver changes in the Budget are those who don’t belong to the scheme. That’s because the Government contributions are a transfer of wealth from all taxpayers to KiwiSaver members – and they are to almost halve. Those who will lose most from the changes are self-employed and non-employee members, whose tax credits will be halved. Employees’ tax credits will also be slashed, and they will have to contribute more if they are currently putting in 2 per cent. But employer contributions will rise from 2 to 3 per cent. Things get complicated, though, when we consider how employers might fund their higher contributions. If they reduce pay rises, that will in most cases affect both KiwiSaver and non-KiwiSaver employees. Toss all the numbers in the air, and what lands first is lower costs for the Government. And, inthe current environment, that’s the way it has to be. Some Kiwisaver responses below Greg, Auckland City wrote: Its already been pointed out that this will drive down wages so effectively lowering production and stalling the economy. We already have a compulsory retirement payment. Muldoon just transfered the 6% payments from wages into the consoldated fund. I dont trust the government not to tinker more with this con.  It’l only take a couple off successive market crashes to wipe these funds out. Good luck everybody on htis big gamble that it’l survive 25 years. Remember our parliament is a tyranny not a democracy...