UPWARD CURVE Women, money and education
SPEND GREEN Without breaking the bank
608002
NZ$11.95 INC. GST
9 772744
ISSN 2744-6085
A FINE BALANCE How much risk is too much risk?
Kiwi crypto exchange • Could KiwiSaver calm recession? • The question of capital gains
Join host Darcy Ungaro AND GUESTS EACH WEEK Re-framing how we invest for tomorrow
Past guests include Jim Rickards, James Shaw, Robin Oliver, Tony Alexander, Michael Every, Oliver Hartwich, Sam Stubbs, Jarrod Kerr, Jenee Tibshraeny, David Seymour, Paul Goldsmith, Jerome Faury, Christian Keroles, Willy Woo, Paul Salisbury, Andrew Nicol, Mike Taylor, Janine Grainger, Ed McKnight, Sharon Zollner, David Tripe, Sarn Elliot, Jarrod Kerr, Ruth Henderson, Frances Cook, Simon Collins, Tom Botica, Ashley Church, Jeremy Couchman, Rich Elliott, Martin Hawes, Warren Couillault, Cole Hauptfuhrer, Greg Fleming, Colin Magee, Kevin Carter, Aditya Das, Reuben Steff, Naomi Ballantyne, Tim Edwards, Chris Howard, Tom Hartmann, Andrew Malcolm, Blandon Leung, Michael Reddell, Scott McLiver, Konrad Hurren, Will Remor, David Boyle, Craig McColl, Tim Warren, Ryan Bessemer, Robert Sloan, Richard Klipin, Natalie Ferguson, Kristin Lunman, Anthony Edmonds, Rupert Carlyon, Dean Anderson, Claire Matthews, Dean Anderson, Liz Koh, Ralph Stewart, Mark Pascall, Catherine Emerson, Rupert Gough, Roger Kerr, Ananish Chaudhuri, Geoff Caradus, Hamesh Sharma, Julian McCormack, Chris Tenant-Brown, Vitaliy Katsanelson, Andrew Duncan, Shaun Drylie, Clive Fernandez, Di Papadopoulos, Adrienne Church, Andy Pickering, Rob Henin, Campbell Pentney, Dave Corbet, Andy Higgs, Sam Blackmore, Leanna Kohn-Hardie, Stephen Hart, Simeon Burnett, Daniel Kieser, Lance Wiggs, Paul Manning, Tim Preston, Zainab Radhi, John Bolton, James Fuller, Robbie Paul, Brooke Roberts, and more!
Find out more: ungaro.co.nz/nzeverydayinvestor
I N F O R M E D I NVESTO R
Contents IN THIS ISSUE
12. What We Like Flexible vehicle options from SIXT, tasty winter gin ideas, DIY wealth-building course.
14. Essentials Our picks for getting cosy indoors this winter.
16. The Curve Victoria Harris looks at the investment edge women have.
18. Going Up, Going Down Economist Cameron Bagrie reviews NZ Inc and where we’re at.
22. The Right Amount of Risk Martin Hawes discusses finding your right level of risk.
26. Is it Safe Out There? Amy Hamilton Chadwick with everything you need to know about risk and reward.
34. Risk Management Identifying, mitigating and managing risk is vital when it comes to investing. Mike Taylor explains five key principles for guiding investment choices.
36. Spending Greener Buying less, shopping local and being smart about energy use are just some of the ways you can help.
38. Is Risk-Aversion Costing You? Ben Tutty looks at Kiwis’ historically conservative investment approach.
44. The Crypto Wave The rally in cryptocurrencies still faces downside risks, writes Tina Teng.
48. The Question of Capital Gains Tax Unpacking both sides of the CGT debate.
52. Mitigating Risk in Climate Change Investment in resilient systems is essential for minimising risk in Pacific Islands.
54. Crypto the Kiwi Way Joanna Mathers speaks to Easy Crypto about their alternative to the clunky crypto exchange.
56. Pitfalls of Cash as King Emotionally cash might feel right, just now, strategically it’s not, writes Ralph Stewart.
WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 4
58. Changing Attitudes to Insurance Clarissa Hirst on how recent events have opened our eyes to the need for insurance.
62. Banking Woes Andrew Kenningham takes a closer look at the recent US and Swiss bank failures.
66. Snapshot What’s impacting the global economy right now?
69. Insurance Industry Spotlight Sacha Cowlrick explains how the insurance industry works.
70. KiwiSaver’s Extra Benefits Simplicity’s Sam Stubbs explains the positive GDP impact of our growing KiwiSavers.
72. Are You Taking Enough Risk? Ed McKnight looks at leverage and calculated risk.
74. The Intention-Action Gap Money Mentalist Lynda Moore on committing to change.
76. KiwiSaver for the Self-Employed Sole traders, freelancers, contractors – don’t let KiwiSaver be an afterthought.
78. Managing that Home-Country Bias It’s great to support local when investing, but not exclusively.
We’re more than a tourist in New Zealand. Trade on the platform trusted by 1 million traders for over 30 years.
With derivative products you could lose more than your deposits. You do not own or have any interest in the underlying assets. Investing in derivative products carries significant risks. Seek independent advice and consider our PDS and the relevant Terms and Conditions of Trading at cmcmarkets.co.nz when deciding whether to invest in CMC Markets products. CMC Markets NZ Limited (CN 1705324).
I N F O R M E D I NVESTO R
88
Contents 81.
Naked Letting is Here The Rental Bureau explain their entirely virtual service for hands-on landlords.
82.
Property Market Review Kelvin Davidson on previous market downturns and how our recovery could look.
92
84.
Time to Think in Commercial World Investors will benefit from a frank chat with prospective or existing tenants in the coming months, writes Andrew Logie.
88.
Short-Term Rental Demand A big jump in nightly rates suggests a shortage of short-term lets, writes Stefan Nikolic.
90. How Much to Pay for Risk Insurance Bill McGavock has a 3-step guide to balancing cover level and cost.
92.
The Problems with New-Builds Andrew Nicol is all for new-build investments but cautions to be aware of the snags.
100
94.
Fashion Update Get wrapped up in style for the cooler months.
96. Beating Burnout Resilience Retreats on Lake Karapiro talk easing stress and re-establishing balance.
98.
Wairarapa Wandering Joanna Mathers explores Greytown and Featherston in comfort and style.
100. Porsche’s Taycan EV Liz Dobson finds it is possible to produce a sportscar in our electric world.
103 WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 6
103. Restaurant Review Cordis Auckland Hotel’s Eight restaurant scores a 10 with us.
Predictable, that’s us. Earn 9-10%pa
It might sound a bit dull but with interest paid monthly (less RWT), you can embrace the life you want to live. No costs or fees deducted. Secured by First Mortgages over property. Terms 12 to 24 months.
Visit alphafirst.co.nz or call 0800 555 621 Minimum investment of $100,000. Only available to Eligible and Wholesale investors under the Financial Markets Conduct Act 2013.
EDITOR’S LET TER
Exploring the World of Risk
Published by: Opes Media Informed Investor 33 Federal Street, Auckland Central, Auckland. www.informedinvestor.co.nz
Finding the ideal balance between inertia and recklessness when it comes to money is a fine art, but is worth pursuing, so let’s take a close look this winter. Risk is a condition of living. It’s all around us, every day. A risk-free life would be a hermetically-sealed bubble, a life spent in bed, under the covers. The other end of the risk spectrum is exhilarating. Leaping from planes, climbing cliffs, trekking through jungles – it gives life colour, texture, and lurches of joy … that is until you get eaten by a tiger or bitten by a snake. Our winter issue is all about risk. Our lead story, by Amy Hamilton Chadwick, explores the balance between inertia and recklessness when it comes to money; that sweet spot where money works for you, but doesn’t send you bankrupt. Amy sums it up eloquently: “Whatever you do with your money, you’re taking risks. At one end of the risk spectrum there are high-risk investments that can provide huge returns but leave you at risk of losing everything you put in … at the other end of the spectrum, there are strategies like putting all your money in a savings account, leaving you at risk of saving too little to achieve your financial goals. Everyone needs to find the right balance between those two extremes.” Our appetite for risk, Amy discovers, is shaped by many things. Genetics, life experiences, parental attitudes. And it can change over time: what may seem a great idea at 25, may seem foolhardy at the age of 50.
poured $1.5 trillion into housing because it’s seen as a safe haven. But could this cost us? Volatile investments, over time, can pay off with much higher rewards than the slow and steady approach. It’s all about getting the right advice. Ben Tutty investigates whether we should be more courageous with our money, and the dangers inherent in not taking risk. We also welcome back Victoria Harris to the Informed Investor fold. In her capacity as founder of The Curve, a service dedicated to educating women around money, she will be sharing her insights. The Curve is doing some great work around women and wealth, and hopefully she will inspire some our female readers to improve and sharpen their financial skills. Women, traditionally, haven’t had a large role as investors, and it’s time for that to change. Readers may not be aware that Informed Investor has a great website, informedinvestor.co.nz. As an adjunct to this, we have launched a new fortnightly newsletter, Stay Informed, with exclusive content not available anywhere else. We’d love you to read it; just provide your email address at the bottom of the Informed Investor website homepage. We hope you enjoy reading the winter issue of Informed Investor – curl up by the fire and dig in. All the best.
As a nation we tend to be conservative when it comes to finance. Only a quarter of women and a third of men describe themselves as aggressive or growth investors, according to Financial Services Council surveys. We’ve also
Joanna Mathers Editor
Editor Joanna Mathers
Resident economist Ed McKnight
Art Director Mark Glover
Printer Webstar
Account Manager Stephanie Bryant – 021 165 8018
Retail Distributor Are Direct
This magazine is subject to NZ Media Council procedures. A complaint must first be directed in writing, within one month of publication, to the email address, stephanie@informedinvestor.co.nz. If not satisfied with the response, the complaint may be referred to the Media Council PO Box 10-879, The Terrace, Wellington 6143; info@mediacouncil.org.nz. Or use the online complaint form at www.mediacouncil.org.nz. Please include copies of the article and all correspondence with the publication. WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 8
Informed Investor is an investment magazine published quarterly by Opes Media. You need Informed Investor’s written permission to reproduce any part of the magazine. Advertising statements and editorial opinions in Informed Investor reflect the views of the advertisers and editorial contributors, not Informed Investor and its staff. Informed Investor’s content comes from sources that Informed Investor considers accurate, but we don’t guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk: Informed Investor magazine is not liable to anybody in any way at all. Informed Investor does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. Informed Investor magazine does not give any representation regarding the quality, accuracy, completeness or merchantability of the information in this publication or that it is fit for any purpose. To advertise in Informed Investor, you must accept Informed Investor magazine’s advertising terms and conditions. Please contact Stephanie@informedinvestor.co.nz about advertising. Informed Investor is printed on environmentally responsible paper. The paper is produced using elemental chlorine-free pulp, sourced from sustainable and legally harvested farmed trees. The magazine is recyclable. PRINT ISSN 2744-6085 DIGITAL ISSN 2744-6093
UP FRONT
Meet Some of Our Contributors CAMERON BAGRIE
KELVIN DAVIDSON
Cameron is the managing director of Bagrie Economics, a boutique research firm. He was previously chief economist at ANZ, a position he held for over 11 years.
Kelvin joined CoreLogic in March 2018 as senior research analyst, before moving into his current role of chief economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.
MARTIN HAWES
ANDREW KENNINGHAM
Martin is the chairman of the Summer KiwiSaver Investment Committee. He’s an authorised financial adviser and offers his services throughout New Zealand.
Andrew is the chief Europe economist for Capital Economics. He was previously an economic adviser for the United Kingdom Foreign Exchange.
ANDREW NICOL
CHRIS SMITH
Andrew is an authorised financial adviser and the managing partner of Opes Partners. He has more than 15 years’ experience in banking, finance, and property.
Chris is the general manager at CMC Markets. He has more than 15 years’ investing experience in financial markets, global equity, commodity, and forex markets.
WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 0
C ONTRIBUTORS
CLARISSA HIRST
VICTORIA HARRIS
Clarissa is the FSC’s head of content, communications and marketing. She also runs point on the FSC’s research, diversity and inclusion initiatives, media and government relations, and consumer projects.
Former portfolio manager at Devon Funds, Victoria is co-founder of The Curve, a digital platform aimed at educating women around money.
ED MCKNIGHT
LYNDA MOORE
Ed McKnight is Informed Investor’s economist. After working for the Auckland Philharmonia and Hatch, he now crunches data for Opes Partners.
Lynda Moore spent 20 years in her own accounting practice before co-founding Money Mentalist. She blends psychology and neuroscience with money coaching.
MIKE TAYLOR
BEN TUTTY
Mike is the founder and CEO of Pie Funds. He’s also portfolio manager of Pie Funds’ Chairman’s, Global Growth 2 and Conservative funds.
Ben is an Auckland-based but not Auckland-bound property investor and freelance writer. He’s travelled and worked across Asia, Europe, and Australasia, writing for some of the biggest names in property and finance.
WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 1
U P GFU RL OA NR TS RE
What We Like
Showcase of the cool stuff that’s caught our eye recently.
New cars on the block SIXT is a premium and very flexible car rental and subscription business that’s launched in New Zealand. The first company of its kind bringing Kiwis ultra-flexible car usage options for premium, specialist and electric vehicles, SIXT provides solutions for holidays, weekends or even your daily commute. Their services range from short-term rentals (for weekend roadies or out of town holidays) to monthly or yearly all-inclusive “subscription” packages. SIXT gives you ultimate flexibility to drive what you want when you want. Part of the Giltrap Group in New Zealand, SIXT has an extensive range of vehicles on offer including Audi, Mercedes, Aston Martin, Polestar and McLaren, so you can drive the car of your dreams without needing to buy it. With locations in Auckland, Christchurch, Wellington, Dunedin and Queenstown, and allinclusive packages available, SIXT adjusts to your needs, making car rental easier and better. Our editor Joanna recently cruised around Wellington in style in a sleek Mercedes GLE thanks to SIXT. Check out more of her getaway in the Travel section. WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 2
W H AT W E L I K E
Winter warmer Who said gin is just for summer? One of New Zealand’s most beloved craft gins, Lighthouse, is shaking things up this winter and inspiring all of us to make a comforting mulled gin that packs a punch. New Zealand’s first female head distiller, Rachel Hall, has been perfecting the Original 42% gin since 2014, using spring water filtered by the Remutaka Ranges and yen ben lemons to create that hallmark London dry style with a Kiwi twist. Over these cooler months Rachel is drinking it with cinnamon, honey, apple juice, oranges and chamomile teabags to create the most mouth-watering winter cocktail.
New Wealth Foundations Ungaro has developed a new course called New Wealth Foundations, a self-directed personal finance course designed specifically for DIY wealth-builders. Under the guidance of two qualified financial advisers, you delve into the critical aspects of personal finance, including: Conditioning your cash flow: Learning how to effectively manage your income and expenses, paving the way for a stronger financial foundation and increased savings. • Goal setting: Defining clear, attainable financial goals that align with your unique aspirations, ensuring you stay focused and motivated on your path to financial success. • Managed funds: Gaining insights into the world of managed funds to help grow your wealth. • Alternative investments: Broadening your investment horizons by uncovering the potential of alternative assets, such as property, commodities and crypto, providing you with diversified opportunities to maximise returns. New Wealth Foundations is a great resource for those committed to a bright financial future, whether you’re just starting your journey or seeking to expand your financial knowledge. You can sign up at www.ungaro.co.nz/ugro
WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 3
ESSENTIALS
Time to Settle In
Winter is a wonderful season to make the most of the indoors.
1
2
8 5
3
6
7
4
1. Diptyque l'eau papier edt – www.meccabeauty.co.nz, 2. Hubsch string magazine holder – kayustudio.co.nz, 3. Pansy linen duvet cover – www.cittadesign.com, 4. Kobe fluted glass sideboard – www.humbleandgrand.co.nz, 5. Lukeke x Karen Walker mini bubble bud vase – www.karenwalker.com, 6. Maison Margiela by the fireplace candle – www.meccabeauty.co.nz, 7. Simon James seam table light by Serax – simonjames.co.nz, 8. Boston four-seater sofa in cement – www.achomestore.co.nz WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 4
9
11
Make it Pop
10
Resene Urbane
12
17
Resene Botticelli
13
Resene Xanadu
14
16
Resene Heatwave
15
Bright accents and cooling whites for hip home highlights.
9. Floral dreaming PET place mat – earlysettler.co.nz, 10. Median table lamp – www.achomestore.co.nz, 11. Mother made pm mushroom powder – www.superette.co.nz, 12. Leather sling chair – kayustudio.co.nz, 13. Aesop reverence aromatique hand balm – www.aesop.com, 14. Simon James echasse vase by Menu – simonjames.co.nz, 15. Molteni&C d.151.4 armchair – www.dawsonandco.nz, 16. The flora stump – kayustudio.co.nz, 17. Tie knot baguette bag – www.achomestore.co.nz
resene.co.nz/colorshops
THE CURVE
The Strength of Financial Know-How Women are just as capable of finding growing investing trends and themes and can spot overlooked ones, writes Victoria Harris, of The Curve. Investing isn’t just about money ... it’s much broader. It’s about investing in yourself, investing in your future and investing in your financial wellbeing. Financial wellbeing is crucial to a woman’s confidence; if she has financial confidence, she feels empowered. I learned about investing when I was in primary school. I was very fortunate to have parents who had bought me a small number of shares and I used to receive a small dividend cheque a few times a year in the mail. I thought investing was just sitting back and getting money in the letterbox. Technically, I wasn’t wrong, but I wasn’t entirely right either; I didn’t fully understand investing to generate wealth or its real-life relevance until much later. Fast-forward to today and I have been in the finance industry for over a decade. For the same amount of time I have seen women around me struggle with confidence when it comes to talking about their finances and building their wealth. Why? Daunting task For generations women have been left behind when it comes to discussions around money and investing. This stems back to when men were historically the breadwinners and therefore the main contributors to the household income. Today, women are much more independent and equally present in the workforce but still behind when it comes to financial literacy. Starting your investing journey can seem quite daunting. Common questions we get asked by women are “Where do I start?”,
“Have I missed the boat?” and “What should I invest in?” The main piece of advice we give is: open your eyes, look around you. Investing opportunities (surprisingly) can be right in front of you. It might sound obvious, and it should be. “Invest in what you know” is a quote from one of the first investment books I read by guru Peter Lynch. He was quoted saying this nearly 40 years ago, and I think it is still relevant in today’s world. It means invest in what you understand and invest in what you use. Have you started using a new product, or noticed a lot of your friends using a new app? If we look at some of the highest returning companies over the last few decades, many have products or services we use most days (Amazon, Netflix, Microsoft) to name a few examples. By using these products/services you are researching investing ideas without realising it. Investing edge Women are just as capable at spotting growing investing trends and themes as men. We might even spot ones they have overlooked. For example, we might spot a new technology that could benefit the next generation of women, or we might see a specific womenswear retail chain full of customers and rapidly expanding its store footprint. As women, this is our difference. This is our investing edge. One example I often refer to is lululemon. The share price of this athleisure company has risen from $US40 to $US400 over 10 years. In other words, you could have turned $10,000 into $100,000 if you had noticed
lululemon becoming more popular at the gym, the pilates studio (and in cafes) 10 years ago. So, what are you noticing now? What will be the next lululemon? No matter your gender, race, ethnicity or age, you can identify different investing trends and therefore have the tools and knowledge to grow your wealth. So, to all those women who may think they have missed the boat, you already have more investing knowledge than you realise. Jargon and graphs The world of finance can be full of jargon and complicated graphs. But it isn’t as intimidating as you may think. You are probably already “researching” investment ideas every day. If there was ever a time to feel optimistic about the future, it’s now. I see a future where investing is more openly talked about by women and men, and children are educated in schools about spending, saving and investing. The benefit of this would flow down from generation to generation, changing the shape of society. Understanding how to grow our money can be so empowering. Not only does it improve your confidence, it leads to financial independence, flexibility and choice. It gives women more control over their lives and it gives them freedom. Women especially need to be strong advocates for themselves in looking after their financial futures. So let’s educate together. Let’s create a generation of women where simple information flows, smart conversations are had and financial independence is gained. WI NTE R 2 0 2 3 | I N F O R M E D I NVESTO R 1 7