New Zealanders are not keen on diversifying. NZX makes up 0.01% of the world’s share market capitalisation, but most New Zealand investor portfolios are overly weighted to the home market. In other words, a New Zealand investor with a strong home bias would have just a 7% allocation to technology, compared to approximately 16% in the global portfolios.
Returns are Random
The chart shows the variability of asset class performance on a year-by-year basis from 2010 through 2019. The best-performing asset class for each calendar year is at the top of each column. Please remember, past performance does not guarantee future results.
What Lies Beneath?
Record low-interest rates in Australia and New Zealand are tempting yield-seeking investors into products where the risks can be obscured. New products often are marketed as solid, cash-like instruments that offer regular, predictable returns. But we’ve seen this movie before.
Don’t bother trying to pick stocks
If markets do a good job of pricing securities, you should expect managers who focus on finding pricing “mistakes” to struggle. A study by Dimensional Fund Advisors confirms this principle, showing that most fund managers underperform their benchmarks. The results suggest that investors are best served by relying on market prices.
The year that wasn’t
A routine task for financial journalists at this time of year is to write a summary of the year in markets and to survey economists on their expectations for the coming year. But the truth is the market already knows all of that. The headlines, and the views of all the economists and analysts and journalists, are already reflected in today’s prices. They can make educated guesses about the outlook, but they’re still guesses.
The Decade Ahead
It’s that time of year. When everyone starts talking about what will happen next year. Banks. Brokers. Economists. Lunatic gold newsletter salesmen on YouTube. They’ve all got an opinion. The media goes on holidays while those left manning the fort get extra lazy. We’re all subjected to unfiltered astrology calls on financial markets.
Make a bold entry into 2020
This Christmas, we’ve got something for you and your loved ones (that is if you like to share!) to help promote positivity and confidence heading into 2020. We’ve created a bunch of phone wallpapers for you to download and represent some bold, cool messages in 2020.
Canny View: Super 65 (or 67?)
It may only be over 100 years ago, but life in the 1900s would be considered brutal by today’s standards. Lights in your home might be candle or gas. Fridge, freezer well they didn’t exist. Indoor plumbing? If you were lucky. Things have changed since then. In simple terms every 10 years our life expectancy has increased by 2 years.
Defining Adviser Alpha
Alpha. In an investment sense it means how much better your returns were against a specific benchmark. For example, if you were holding an NZX 50 fund and it returned 12% while the S&P/NZX 50 portfolio index returned 10%, your alpha is 2%. This can also work in reverse. Your fund returns 8% while the index returned 10%, well you’ve got negative alpha of 2%.
Women can do better
The other day I read a report which says, of all the assets controlled by women, 71% is in cash – aka not invested! Upon more talking and reading I understood, most women don’t think they know enough about investing and growing their savings; therefore, women wait to start investing until they feel more comfortable with investing and taking matters into their hands.
Lifestyle comparisons pointless in debtland
Competitiveness can be good. It can drive us further. Lead us to do better things. Challenge ourselves in ways we didn’t think of. You don’t even need to compete with others. Compete against yourself. Health. Fitness. Creative skills. Projects. Financial. Anything. New goals.
Millennials need a financial plan
When young people and young families reach out to me or other financial advisers, it’s typically centered around particular financial questions, goals, or issues they need help with at that point in time. Other times, it’s a combination of all these things, as their situation has become too complex to manage by themselves.
Got any financial freedom plans?
If you start thinking something like “This is all of our life saving, we can’t afford to lose any of it, or we can’t afford to take any risk in the stock market.” I would ask, can you really afford not to invest? Are you sure about that?
Ladies, don’t put your financial security at risk
Numerous studies suggest that women often defer to their spouses or partners when it comes to making long-term financial decisions, a choice that can put them at a distinct disadvantage in the event of divorce or death of a spouse and significantly interrupt a woman’s financial path.
Simply Super
Finding $20 in your pocket is always great but imagine finding thousands of dollars in super that you had lost track of? According to the Australian Taxation Office (ATO), as at 17 May 2019, there were AUD$ 17.5 billion funds in lost and unclaimed super money, and we know that a large proportion of these funds belongs to Kiwis.
In one's best interest
Trust comes naturally to some professions. The top three trustworthy professions in New Zealand are doctors/nurses, engineers and teachers. It makes sense, at their core we must trust these professions with our health, safety and children.
Lightening the mental load
It’s no great secret that as we age our bodies begin to go into some form of decline, it can’t be disputed because the evidence is visible. Mental decline isn’t visible, no one knows what’s happening in anyone else’s head. This means it might be more open to dispute, delaying any response.
Closing the gap
Women need to educate themselves about how to mitigate things like illness and the loss of a partner and talk to an expert about things like estate planning, life and health insurance, investing and retirement planning. The more informed and prepared women are for these things, the better they will feel, and the more protected they will be.
The 100-year Life
100th article and two years for our ‘Canny View’ column. We've come a long way, to say the least. For the 100th article, I thought I would write about the 100-year life because we are living longer than ever and there is now an increased possibility that one might live to 100.
Transitioning to a Goals Based Future
Any successful career will at one point see a peak and then a decline. There comes a point in time when past successes become questions asking, ‘can I do it again?’ The dilemma of the past is one that often confronts investors who visit an adviser for the first time.
