Latest News & Updates
Saving for their education.
Friday, May 3, 2024
As parents, we all want the best possible future for our children, and a key component of that is providing them with access to quality education.
Saving for your children's education is a smart investment in their future. By starting early, setting aside small amounts of money regularly, and taking advantage of tax-advantaged savings options, you can give your savings more time to grow and accumulate into a substantial fund.
Additionally, involving your child in the process and teaching them about financial responsibility and the value of education can instil good money habits from a young age and motivate them to take an active role in their academic future.
Mortgage Cashback?
Friday, March 22, 2024
What is a Mortgage Cashback?
After a mortgage is secured and drawn down, a bank will pay an agreed amount into the borrower's bank account. This sum is known as the 'cashback' and will usually be a percentage of the initial mortgage. Depending on a bank's criteria, cashback offers usually range from 0.10% to 1.00%, or a fixed dollar amount, known as a 'cash incentive', i.e. $3,000 - $7,500, or more, depending on the mortgage size. Having discussed cashback with mortgage brokers working with all major lenders, we understand the 'average' cashback rate offered is around 0.70%.
After the cashback is paid, the homeowner can do whatever they want with it, including making an overpayment on the mortgage (if permitted). However, in most cases, homeowners will use the money to bolster an emergency fund, spend it on property-related expenses, or invest it.
Start Retirement Planning NOW!
Monday, March 11, 2024
Retirement Planning.
Retirement planning is a crucial aspect of financial management that often requires careful consideration and strategic decision-making. As individuals approach retirement age, it becomes imperative to lay down a solid plan that ensures financial security and a comfortable lifestyle during the golden years.
The Guide to Investment Tax.
Monday, February 19, 2024
It's important to understand the difference between investment tax rates and personal tax rates when saving for retirement or if you have already retired. In New Zealand, individual income tax rates range from 10.5% to 39%. We assume that you are aware of your personal tax rate. As an investor, you have the option to pay more or less tax, depending on the type of investment you make and the vehicle you hold your investment in. This guide explains how three (4th to follow) of the most commonly used investments are taxed and outlines legal steps you can take to reduce your tax rate and maximize your returns.
Part 1. Cash, term deposits and bonds
In New Zealand, bank accounts offer low-interest rates on cash deposits. However, by investing in term deposits, you can earn higher rates of interest. Term deposits require you to lock up your money for a period of time, ranging from 3 months to 5 years.
If you hold cash, term deposits, or bonds in your own name or in a joint account, the interest you earn is taxed at your marginal tax rate. If you hold them in a family trust, the trustee tax rate is 33% but will increase to 39% from 1 April 2024.
To pay less tax on the interest earned, holding cash, term deposits, or bonds through a Portfolio Investment Entity (PIE) is recommended. In a PIE, your maximum tax rate is only 28%, which is 11% less than the maximum tax rate for individuals or trusts.
Tomorrow is good, today is better - start investing sooner!
Monday, January 15, 2024
Investing early can make a huge difference in your savings for retirement.
For instance, if you started investing just $50 per week from the age of 25, you could have a total of approximately $621,735.64 by the time you retire. However, if you were to start at age 35, you would only have a total of approximately $271,879.71. Therefore, it's important to start investing as soon as possible.
Home Loan case study.
Friday, December 15, 2023
Here is an outline of a mortgage proposal we created for Jennifer (name changed).
Jennifer came to us after a divorce, looking to buy a home for herself and her two teenage children. After much searching, she found a 4-bedroom house perfect for her family's needs. Everyone had a bedroom each, and she could take in a boarder if necessary.