July 2010

Dunedin Wed 28th July to Fri 30th July.

Due to the Don's exit from Moneyscience; and our interest to maintain a close relationship with all our clients, Peter Seers & Alan MacDougall will travel to Dunedin to meet with anyone who would like a personal meeting or a review of your facilities. We will be in Dunedin for 3 days being Wednesday 28th July, Thursday 29th & Friday 30th. We will be available for meetings most of the time (we have several scheduled already) and we are keen to have a group discussion evening if there is interest in this. Please register your interest for a meeting or to attend a group discussion by emailing me peter@moneyscience.co.nz with your preferred times.

We have reviewed many accounts which are coming due soon and have been able to reduce interest rates on several loans where the MoneyScience 0.1% discount had expired (This must be reviewed every 2 years or it expires); and in some cases we have been able to break higher interest rates to lower ones without cost.

It is important for you that we review your accounts and personal situation on a regular basis as there could be areas where we can help you understand your facilities or recommend modifications to better protect your future.

We expect to be staying at the Mercure Dunedin which is central.

Education

Rules regarding regulation keep changing; however we are committed to achieving the highest applicable qualification which is to become Authorised Financial Advisers (AFA).

Interest Rates

This from last month which is still accurate...I am aware that many lenders have many clients in severe trouble and the repossessions and defaults still happen at the same pace as they have for the past year. I expect this to continue for a year or two yet. I believe that the property market is NOT very buoyant at present and increasing interest rates & increased inflation will not help that. Therefore I believe that increases in interest rates will be slow, with our mortgage floating rate at the end of this year at about 6.5%.

During the past month we saw minimal changes in interest rates – some of the floating rates crept up, and longer term rates crept down. I take this an indication that the lenders see that this will be a slow recovery with slow rate increases. I expect the longer term rates to drop slightly further in coming months and short term rates to increase slowly.

I do not believe there will be much difference in floating or fixing over the next say 2 years.

Annual Reviews

We are modifying the structure of our comprehensive reviews to include the following information:

Current assets & liabilities;
Current income & expenses (effectively a monthly budget);
Credit checks;
Full loan details;
General insurances;
Life & other personal insurances;
Kiwisaver;
Investments;
Wills details;
Trust/s & company structures;
Our recommendations.

Should you wish that we complete this with you, please email peter@moneyscience.co.nz to arrange an appointment? There will be a charge of $250 for these reviews initially, which will increase to $495 from next year. This will provide you with a comprehensive written document outlining your current position and plans; and will be an important document for your future reference.

We are still working on the report structure which is why we have reduced the cost (we seek some Guinea Pigs).

Kiwisaver

It has been bought to our attention that some much respected businesses have been acting illegally in the KIWISAVER market.

In some cases clients have had their provider changed without realising it has happened. In other cases clients have been told they need to change providers to be able to view details on their bank statements. This behaviour appears driven by untrained staff probably acting outside their employer policy. That is no excuse all the same and needs tidying up sooner than later. The authorities are reviewing reports from affected providers.

New Zealanders should belong to Kiwi Saver, whether you are self employed or on PAYE where else are you going to get a 100% return on your first $1042 invested each year? Returns and capital are not guaranteed, however you are able to change provider as you like which provides some comfort.

Our chosen provider is Huljich, Please contact us for more information.

Insurance

The application of recent tax changes will mean increasing insurance premiums for all Life Insurance clients.

All insurance is not equal. Risk Insurers have similar costs; some reduce cover to reduce premiums. Others are more stringent at the time of acceptance so they do not need to pay out on unwarranted claims (these are effectively fraudulent claims). Risk insurance (Life, Health, Trauma, Income Protection, etc) is all about underwriting, the more comprehensive the underwriting up front, the better quality the insurance cover. When you are making the claim is NOT the time to be answering their questions and providing proof!!

If you take a cheap cover it is possible that the insurer has reduced the premiums to "buy business". I am sure that many will remember too well the Finance companies that did the same thing recently – the ones who were financially uncomfortable made their offerings better than their competition. With insurance, it is imperative that the company be there WHEN you need to claim.

Anyone can quote a cheaper cover, but chances are at claim time you are less likely to receive the money, it's that simple. It's the old story - you get what you pay for.

When shopping for Insurance of any kind it is important to NOT pay the least. That is like shopping for the cheapest parachute.

Work Place Insurance:

Quality work place insurance is available for small businesses. Benefits include Life Cover / Trauma Cover / Income Protection up to $2,000 per month /and discounted premiums.

How work place insurance can help your business.

Be a preferred employer, help to retain skilled employees. Create a caring work place culture. Generate staff satisfaction and sustain morale. Provide your employee with security knowing their business leaders care for them and their Families.

Reap the rewards of Productivity and Loyalty from employees who feel valued Be eligible for discounted insurance packages for your employees.

Employees:

Feel valued knowing you work for a caring employer. Have Confidence knowing your family will benefit financially in a time of need.

Financial protection

Continue your cover even if you leave your employment. If you are an employee or business owner and would like to discuss these options, please give us a call.

Protect yourself with a sensible structure

We discuss loans with clients daily. With the predicted slow but increasing interest rates likely over the next few years, we recommend that you modify your repayments to reflect what the interest rates are likely to be in say 2 years. This would mean that instead of paying interest at a floating rate today of say 6%, that you set your repayments at say an interest rate of 7.5% (where we feel the rates will be in 2 years). This will have many

benefits:

1. It will prove that you can meet the expected higher payments and set your budget on a more accurate long term footing;
2. It will reduce your principal over the time where the interest rate is below 7.5% which will act as an additional buffer for you (and reduce your mortgage faster).
3. It will mean that in 2 years time there will not be a large increase in your mortgage repayments.
4. The additional principal repaid into your mortgage can be used at a later time if required to cover unforeseen events (e.g. mortgage holiday)
5. If interest rates are 7.5% in 2 years, your repayments are likely to be a little less as your principal will be lower. The impact of higher rates will not be great though. Please contact us should you like to modify your mortgage or your payments so we can help you understand the options available to you.

Contact update

My wife, Deryn, is now working in the office with me to streamline the workload and update our database. She will make her way through our database to ensure that we have the correct contact details for you and will also ask about your house & contents, vehicle insurances, etc.

McEwan & Investors Forum update

Much work has been done to bring justice to those affected. We are nearing the time when we will know what the future holds. We expect a direction within the next couple of months. This has been frustratingly slow however we continue to work with the authorities. Please email me if you did not receive the investment or security that you were told you would receive. We seek individual situations where we can prove misrepresentation.

Thanks for reading...