Client Stories

jenny and tim

The couple have existing KiwiSaver Accounts but as they were living overseas they had been taking contribution holidays. However as they planned to return to New Zealand in 5 - 10 years they requested advice on how to maximise their KiwiSaver investments and how the funds might be deployed for the purpose of buying their first home (including the extent to which they might be able to qualify for the Home Start grant and Welcome Home Loan schemes). In addition they have significant levels of non KiwiSaver funds that were earning nil returns in bank accounts in New Zealand, USA and England. I provided advice on where to deploy these funds. A major issue identified was the need to ensure the final decisions were tax efficient from an english viewpoint as they are tax residents of that country. I provided them with research on this matter.

Given their long term goal was to enjoy a comfortable retirement I undertook modelling on their likely level of retirement savings, how long and how much they could expect to draw on these savings in retirement and some what-if calculations around the outcomes based on reasonable assumptions about their income, costs, timeframes and housing investment. 

jim

Jim sold his business for circa $1.5 million. The bulk of these funds would be used to clear substantive business and personal debt leaving estimated cash equity of $500,000. Jim requested advice on how to deploy these funds in a manner that would enable him to retire at age 65. He intends to work parttime following settlement and had the potential to earn modest sums from part-time work. I recommended he invest in a mix of KiwiSaver and non KiwiSaver Managed PIE Funds that were consistent with his investment timeframe and risk profile. The proposed solutions were not complex, and were appropriate to someone with a limited interest in financial matters.

 

oliver and louise

Oliver and Louise requested advice on KiwiSaver alternatives and how to deploy the US$5,000 bank account owned by Louise. They had relatively unformulated ideas about investing in an upgraded free standing family home and had identified Glenfield/Albany as a likely area for investigation. They were interested in bare land on which a home could be built. The house could be built by Oliver (a registered Master Builder), whilst drawing a salary from his business. It was their first preference to retain their existing Takapuna apartment as an investment property. They wanted advice to help them determine the feasibility of this proposal in terms of their future incomes which prospectively would double for Oliver and halve for Louise.

It was useful that they had an area in mind for this purchase, as this enabled me to gain realistic estimates of cost based on recent sales data and current building costs estimates. I was able to model the cost of the proposal, and their future incomes, and to identify their borrowing requirement and debt capacity. My recommendation was that they would be exposed to mortgage stress if they borrowed to fund both properties and therefore they should either sell their Takapuna property (or scale back their development).

In accordance with the agreed Scope of Engagement I also modelled the expected level of KiwiSaver balances they would have on retirement assuming they saved 3% of their salaries going forwarded. I performed various what-if calculations around the base case and advised on the level of withdrawals they could comfortably make following retirement using their expected life spans. 

We had an interesting discussion about getting the right balance between current expenditure and future expenditure and I congratulated them on their excellent savings record to date. 

Eric and Hannah

This young married couple requested a Financial Plan showing their estimated financial position at age 60 at which point they wanted an option to retire. Eric and Hannah also requested a review of KiwiSaver providers and to make recommendations as appropriate including in relation to non-KiwiSaver alternatives. In addition they requested I model their prospective retirement drawings and apply “What If” analysis around a range of reasonable assumptions and to compare this output to independent studies of retirement needs in New Zealand.

They provided excellent guidance about their other short, medium and long term goals that needed to be factored into their Financial Plan. These goals were translated into the SMART criteria,

  • Specific,

  • Measurable,

  • Achievable,

  • Relevant and

  • Time-bound.

Working together we made reasonable assumptions relating to achievement of the Goals including for example salary increases, business earnings, mortgage funding costs, family planning and living expenses.

I prepared a financial model based on the Goals and related assumptions to derive a Base Case Financial Position at age 60. The model included separate budgets for:

  • Investment savings

  • Debt Repayments

  • Financial Assets and

  • An overall forecast of their Financial and Property portfolio at age 60.

This model was extended as the basis for the “What If” analysis.

I prepared an analysis of KiwiSaver Growth Funds and recommended a mix of active and passive management styles for their consideration.

The outcome was a sensible framework for planning ahead with priority given to the acquisition of property and business assets and the repayment of debt following acquisition. The plan allowed for acquisition of financial assets derived from surplus cash flow after repaying bank debt in a manner consistent with their budgets.

Eric and Hannah were pleased with the output as it gave them a good roadmap for their future.