The double whammy of low interest rates and mega property price increases puts hundreds and thousands of New Zealander into riskier territory.
Gone are the days of a ‘career for life’ or the relatively ‘set and forget’ financial plans that were the hallmark of the early days of our profession. Change is the watchword, and clients are reviewing their objectives and their plans.
Unexpected events may impact your investment strategy, your financial and tax arrangements, and in many cases require working with a lawyer, accountant, banker or mortgage broker to come up with the best outcome.
Here are two examples of issues that made a surprisingly widespread impact
- Earlier this year cheque books were invalidated by banks thus landing tens of thousands of senior New Zealanders (at least 170,000 New Zealanders are aged 80+) into a world where transactions are overwhelmingly conducted by phone or by computer. Good luck if you've got arthritis, or are not computer literate, or if you find using a keyboard or ATM or difficult due to conditions such as Parkinson’s. A mistyped number might send precious funds to a stranger’s account. For people experiencing difficulty with online use, there needs to be careful thought as to how they will pay their bills.
- The double whammy of low interest rates and mega property price increases puts hundreds and thousands of New Zealander into riskier territory. New home buyers in particular are running a red light and could easily be caught out by increasing mortgage rates. Our advice is to plan for this scenario, reduce lifestyle expenses and consider mortgage protection insurance in case you lose your job.
The solutions or strategies to deal with changes to circumstances or risks require scoping out and planning ahead. It is worthwhile seeking advice from your adviser who can provide a bird’s eye view of your situation and give you some guidance. A brainstorming session often yields some options that have not been considered.
Every financial plan we create is unique, but a lot of the circumstances people face are common. In this newsletter we have touched on two issues – the evolving bank-scape, and the impact of interest rate rises – and in future newsletters, we’ll cover some of the other issues.