MONEY MATTERS by Britannia April 2018 – Download the PDF Download Pdf

Investing in a moving market Share this article:

Investing in a moving market

What happened to the markets in February 2018, and how did it affect New Zealand investors?

February 2018 provided the first breathless financial headlines for the year – on 5th February US share markets fell, and caused a ripple effect through the world. Headlines noted the 1,175 point fall in the Dow Jones index (Dow) was the largest one day point fall ever (but in percentage terms the fall was much lower because the markets were already near record highs). 
From a New Zealand perspective, the fall happened on Waitangi Day so there was very little investors could do about it except speculate on what the likely impact on New Zealand markets would be the following day. And that is precisely what happened – the term “bloodbath” was thrown around with alarming frequency, and someone casually glancing at the headlines would have been forgiven for thinking the second great depression had started.

A more detailed review would suggest something less alarming had occurred. The Dow started at 25,338, rose to 25,521 but ended the day down at 24,346. The following day the index rose back to 24,913. Over the two day period, the index had fallen 425 points, or about 1.6%. While a fall like this is not appreciated by investors, it is not earth shattering, and is just part and parcel of investing in shares. Sometimes markets need to correct themselves due to new information.

As a Britannia client your adviser would have already talked to you about the fact that markets will always go up and down – and this means that so will your retirement savings with Britannia (and any other investments you may have). Given the February fall in the US share markets, we asked Britannia Authorised Financial Adviser Wayne Becker to share his top 5 tips for investors in times such as these.
  1. Having a well diversified portfolio pays off in situations like this as you will not be overexposed to any one particular economy, industry company or asset class. At Britannia we simply refuse to invest our clients’ money in speculative opportunities and what we refer to as ‘flavour of the month’.  If it sounds too good to be true – then it absolutely is – there are no maybes.
  2. Most investors have a 20+ year investment time horizon, so there’s no need to be fixated with the daily value of an investment. It’s OK to feel nervous and worried by all the ‘noise’, it’s a human trait and to be expected. This doesn’t mean that you have to react – past evidence shows that those who make a ‘knee jerk’ reaction generally are worse off financially over the longer term.
  3. Just because your investment may have gone down in value that does not mean you are invested in the wrong fund, the investment is broken or that you have made the wrong decision. It’s all part of being an investor.
  4. In February the major global equities benchmark (called the MSCI World Index) was up by almost 60% between early 2016 and the end of January 2018. In February it fell by around 4.6% returning the index to mid-January 2018 levels. So in that context a market correction could be considered as being due or even overdue.
  5. Many commentators expect more volatility in the markets this year and more unexpected things (both good and bad) to happen – so you can reasonably expect the value of your investment to fluctuate more than you will have been used to recently.
As we all know the media love to sensationalise, so don’t believe everything you read and make sure you talk to your adviser if you are worried about something you’ve seen or heard in the news.

Please give your adviser a call if you wish to discuss your investment. However, be prepared to be told that, if your situation, your goals and your objectives have not changed, then the best strategy is simply to do nothing and get on with planning for your retirement. 

This article contains information of a general nature only. It does not take into account your particular financial situation or goals. Investors should, before making any investment decision, consider their own objectives, financial situation, and consult their financial adviser. Past performance is not an indicator of future performance.


Bridging the gap Share this article:

Bridging the gap

Research published by Massey University in 2017* showed that a gap exists between what people want or, in many cases, simply need, in retirement and how much of that is funded by New Zealand Superannuation. See the graph below for a quick glimpse of some of the results.

The report also highlighted that because women have a longer life expectancy than men they will generally need more money in their retirement. Longevity aside it’s also worth remembering that because women still earn less overall, they will need to save more from less. 

Regardless of gender, the sooner New Zealander’s recognise that they are likely to be facing a gap in their retirement income, the greater the chance of being able to do something about it. It starts by thinking about how much you’ll need to cover the basic necessities, plus how much extra you’ll need to achieve the lifestyle you desire in your retirement. This will allow you to identify if there’s a gap, and if so, how much of a top-up you’ll need. 

The Massey research paper provides guidelines that may be of assistance to anyone looking for “ball park” figures to help with calculations. Click here for the full report. 
Knowing that you have a retirement savings scheme with Britannia should provide you with some peace of mind, but it’s definitely worth talking to your adviser if you are concerned about your retirement and think you may need more savings to bridge the gap. Also, get in touch with your adviser if your circumstances have changed in past 12 months to make sure your financial plan is still suitable.

*New Zealand Retirement Expenditure Guidelines 2016, Massey University.


Tracey’s South Island travels Share this article:

Tracey’s South Island travels

In this issue of Money Matters we’re delighted to introduce you to our Operations Manager extraordinaire Tracey Harper-Verwoerd. Tracey has a wealth of knowledge and quite frankly we don’t know where we’d be without her!

Recently returned from a South Island holiday (Britannia is based in Auckland) we thought you might enjoy hearing about her travels and maybe pick up some tips if you’re considering a journey south. 

How long have you worked for Britannia?

Coming up 13 years.

What's your favourite part of the job?

Working with a great team to bring a personal service to our Scheme members. 

What took you to the South Island?

Our son was starting at a school offering a great outdoor pursuits programme - and someone had to carry the mountain bike, pack, wet suit, hiking boots... guess I will be working for a few more years!

Have you travelled to the South Island before? 

In the last 10 years we have - with our children - done three road trips in winter travelling from Christchurch around various bits, but never to Golden and Tasman Bays.

What was your rough itinerary? 

We travelled from Jackson Bay at the bottom of the West Coast highway to Karamea at the top of the West Coast, which is also the start/end of the Heaphy track. We then went around to Golden and Tasman Bays, then along the newly re-opened State Highway 1 down to Temuka, Naseby and finally Queenstown (spending some of our tourist dollars in Kaikoura to help the earthquake recovery).

What was on your 'must do' list?

There were too many to list all of them. But the trip to Farewell Spit and lighthouse at the top of the South Island was outstanding and definitely a highlight. So were the Nelson Lakes, Waikoropupu Springs and limestones caves and arches. Walking in the Abel Tasman National Park (we did lots of walking!) and visiting a few towns off the beaten track was also fun. The whole trip exceeded our expectations which were pretty high already.

What would you recommend to anyone who's thinking of holidaying in the South Island?

Plan your trip. Stay at the smaller towns. There is so much to see and large distances to cover. Be practical with how much time you spend in the car or you will miss a lot. Allow for slow travel times due to traffic, road works, stopping to look at the scenery... 

What’s your top tip?

If you hire a rental car, memorise the number plate promptly. You will see many identical ones! And expect to make another visit to see the bits you missed.

(Stats tell us that the majority of Brits who move to New Zealand end up living in Auckland or elsewhere in the North Island, so we thought this would be a relevant topic for many of our clients. If you’re already based in the South Island we’d love to hear your top tips for holidaymakers and we’ll share them in our next newsletter.)


Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. No part of this publication may be reproduced without prior written permission from our company.