Weekend reading (24 & 25 June 2017)

26 June 2017

In the 24 June 2017 edition of The Press:

  • Janine Starks exhorts us: “Don’t get MAD, get a firm grip on the reins“. MAD is an acronym for Money Anxiety Disorder. Starks prescribes ten MAD cures, including having an emergency fund, having a “custard plan” (where you plan for worst-case financial scenarios), putting “retirement on autopilot” while focussing on the short-term, and making sure your career is in order. It’s a solid list. 
  • Susan Edmunds has an article titled “Over 50 and broke“. She speaks with Retirement Commissioner Diane Maxwell, who points out that while “Many New Zealanders reach their 50s in good shape financially, particularly if they are homeowners and have managed to pay down all or most of their mortgage”, that is not the picture for all people. People who might otherwise have been in a good position might be in a precarious position as a result of a “job loss or ill health, a period of unemployment where they may have burned through their savings”. Edmunds quotes a 65-year-old woman who explains: “Everything was fine until my job was disestablished. I had a high mortgage which was a millstone around my neck and certainly would not have been paid off before I was 65”. The Commission for Financial Capability’s research indicates that 18% of people over 55 struggle financially. 
  • Edmunds also has an article titled “Sorry, you didn’t suffer the right trauma“. The article discusses the common misconception that “a traumatic experience does not necessarily mean a trauma insurance payout”. Trauma insurance only pays out when conditions set out in the policy are met, and each policy has different conditions. 

In the 25 June 2017 edition of The Sunday Star Times

  • Martin Hawes cautions us to play it safe when it comes to investing in tech. He points out to the unique risks associated with investing in technology investments, while also noting that the five most valuable companies in the world are technology businesses (in order, they are Apple, Alphabet (Google), Microsoft, Amazon, and Facebook). It’s interesting, but from a practical perspective, I’m a fan of diversifying rather than trying to pick stocks or sectors that are likely to outperform other stocks or sectors. 

In the New Zealand Herald:

  • Mary Holm asks “How much fun is too much fun?” Holm responds to a reader who provides a counterpoint to Holm’s frequent suggestions that people nearing retirement spend some of their savings having fun. She points out that “while some people certainly need a reminder to save, there are others who get the balance about right, and a third group who need a reminder to spend more on good times”. “I think it’s almost as sad that some people live unnecessarily frugally – and die with many thousands of dollars – as it is that others retire with too little to come and go on.”

Holm also hit a nerve with her column from the week before, where she talked about health insurance and self-insuring. One reader wrote in to talk about a $63,000 operation their health insurer recently repaid. A couple of others talked about saving the premiums they would have paid and now being much better off for it. Holm makes a very good point: “The difference between [self-insuring] and simply not being insured is partly financial – you set aside money for health expenses if needed – and partly psychological – you don’t get annoyed about paying your own health expenses.”



About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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