Latest news with #KernelWealth
RNZ News
5 days ago
- Business
- RNZ News
Why haven't KiwiSaver warnings proved true?
It was predicted the share market would be in turmoil after the United States attacked Iran's nuclear sites. (File photo) Photo: 123RF Warnings of share market turmoil hitting KiwiSaver balances have so far proved too pessimistic. When the United States attacked Iran's nuclear sites at the weekend, it prompted predictions oil prices could soar and financial markets could be shaken. But so far, the response from both has been muted. Dean Anderson, founder of Kernel Wealth, said the S&P World Index was now flat year-to-date and had recovered from the April lows. He said this index served as a good benchmark for the investments held in many balanced through to high growth KiwiSaver funds. "However, 2025 has been a bumpy ride, with markets tested by a number of significant events. Despite the volatility, markets are back to putting more weight on actual results and economic fundamentals, rather than knee-jerk reactions to every headline. "The post-US election 'Trump Bump' quickly gave way to a downturn following sweeping tariff announcements, but a rebound has since taken hold, with more measured responses - including recent major geopolitical events in the Middle East. "Overall, markets seem to be factoring in the fortunate, arguably good luck, in the off-ramps we've seen from major risks, such as Trump's pullback on tariffs and signs that Middle East conflicts may be peaking without escalating into a very serious broader engagement." Anderson said businesses were zeroing in on what they could control and sectors like technology continued to post solid results. "There's no denying that the world feels more on edge, with risks that could materialise overnight through a single tweet or unexpected event," Anderson said. Harry Smith, international equities portfolio manager at Fisher Funds, said it was not uncommon to see a limited response to geopolitical issues. "Looking at Israel and Iran, Israel is only 0.3 percent of global equity markets in terms of their market capitalisation and Iran doesn't even really feature. So in terms of global markets the region is quite small. "The US share market, which is around 60 to 70 percent of global share markets in terms of market capitalisation, was up really strongly because the Federal Reserve came out and suggested the central bank might lower interest rates earlier than the market was expecting. He said a stronger driver of share market performance recently had been the growth of artificial intelligence. "What's happening in Israel and Iran, as sad as it is, doesn't really impact the earnings of these massive tech companies." He said the Ukraine conflict was more of a concern to markets because Ukraine had a key role as a supplier of agriculture to the world and Russia as a source of natural gas. "Higher natural gas prices meant high energy prices for Europe and European companies which impacted the consumer spending or earnings of those companies." If there was more movement in oil prices, such as the closure of the Strait of Hormuz, that would have more of an impact because oil was a significant factor driving things like discretionary spending and costs for business. "What happened next would depend on how the situation developed," Smith said. "A lot has happened in the past 24 hours or past 48 hours and a lot can happen in the next 24." Smith said KiwiSaver members were calmer about market changes than they might have been in the past. "I quite often wonder whether with Covid and the reaction of global share markets during 2020, whether KiwiSaver holders learned a lot during that period, given there was such a sharp decrease in asset prices then such a rapid increase on the other side. "The fall and then back up to the peak wasn't much more than 30 to 40 days. I think a lot of people did switch during that time and crystallised their losses." Anderson said diversified portfolios and long-term strategies had proved to be vital shields against volatility over the long term. "Protecting retirement savings. Investors should concentrate on controllable factors, maintain a big-picture outlook, and a bit of cautious optimism always helps keep the emotions in check." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Otago Daily Times
19-05-2025
- Business
- Otago Daily Times
Will giving up that coffee get you a home?
By Susan Edmunds of RNZ If you've been trying to save for a house deposit, or otherwise trying to get your financial life in order, you might have heard the advice: Give up the takeaway coffee, cut back on the avocado on toast and stop brunching. But is that really all it takes to get to your goals? RNZ has crunched the numbers and it turns out that if you give up a daily takeaway coffee, you might save enough money for a house deposit. But it could take 30 years. These numbers aren't intended to be anything but a demonstration of general principles because they aren't taking into account inflation (the price of a cup of coffee will increase over the years and inflation will reduce the buying power of your saved amount). But if you currently buy a coffee a day for $5.50 and decide to save the money instead, you could save $2007.50 a year. If you could do that every year, with a 5% return each year, you'd have $26,000 after 10 years, $69,000 after 20 years and $138,000 after 30 years. At the moment, a typical first-home deposit is about $140,000 (or roughly 25,450 coffees if you paid $5.50 each). If you were having breakfast at a café once a week and saving $20, giving that up could save $1040 a year or $70,777 after 30 years. Liz Koh, founder of Enrich Retirement, said the problem for many people trying to save a house deposit over a long period of time was that house prices increased faster than their savings. "By the time you have spent a few years accumulating the deposit, houses would have tripled in price. However, it is a still a good idea to save and it's an even better idea to cut down your outgoings so you can borrow more." She said while small savings would make a difference, most people needed to do something much more significant to be able to buy a house. If you were earning $75,000 a year at 25, with $5000 already in KiwiSaver, and put 10% of your salary into a balanced KiwiSaver, you could save $137,926 in 10 years, according to Sorted's calculator. "A better approach is to buy something small and run down and add value to it, then sell and do the same thing over again," Koh said. "Part of the problem is that first-home buyers seem to want to buy their forever home from the outset, and it's not always practical or affordable to do that. "Investing in property is a great way to make money, and a good lesson to teach is the lesson of leverage and how you can make that work for you over time to build wealth. It just requires some smart thinking about how to buy the first property." Dean Anderson, founder of Kernel Wealth, said while house prices had historically gone up faster than savings for many people, he was not as sure it would continue into the future. "The metrics supporting house prices are at their limits." He said someone who was on a lower income and in debt could pay that off more quickly by cutting down on small luxuries like a cup of coffee. If you have a loan of $20,000 on a 12% interest rate that you're paying off at $306 a fortnight, you could have 156 weeks left to run on the loan. If you topped up that payment by $20 a week, you could clear the debt 20 weeks early. "However, when past that it is about choice and trade-off of value. A daily cup of coffee to me is worth it, that's because I know I can derive greater value by focusing on my work, building a business, building my salary, which will be far more impactful than the cost of the coffee," he said. "Thinking aloud, and even based on chats we've had internally in the last week, if I was starting out today I wouldn't be worried about the coffee. I'd be doing everything I can to figure out how to protect my future and income prospects from being disrupted by AI."
RNZ News
17-05-2025
- Business
- RNZ News
Can I get a home loan with bad credit?
Photo: RNZ Send your questions to I am in my early 70s and have no debt, some savings in the bank and a freehold house in Whanganui. I am currently renting in Karori, Wellington where I have returned with a plan to work. Where do I gain the best interest and keep what money I have safe? It is currently in two serious saver accounts with some going into a term deposit but the interest is only a bit over 4 percent. My question is - where can I maximise the rate of interest paid without being scammed? Falling interest rates are good news for people with home loans, but I know they can be tough on people like you, supplementing your income with money in the bank. I checked in with Dean Anderson, founder of Kernel Wealth, about your options. He said they would broadly range from on-call savings accounts through to managed funds. On-call bank savings accounts have lower interest rates but there are few restrictions about how you access your money. These rates could drop if the official cash rate falls further, as it is expected to. In some cases, you might be able to get a bit extra in interest from the bank if you meet certain criteria, such as not making withdrawals or meeting contribution requirements. Term deposits will usually give you a better rate - at the moment you can get more than 4 percent if you lock in for two years or more. The drawback is that your capital is locked away for that period of time. You could look at a cash fund from a bank or other fund managers. These can offer higher yields without the requirement to be locked in. "They can hold short term debt instruments, so the yield can fluctuate slightly. As it isn't a set interest rate, it can be slightly confusing for investors to get their head around," Anderson said. Beyond that, you could talk to a fund manager about putting your money into a slighlty riskier fund. Anderson said bond funds and conservative funds would be more stable than those invested in equities, but you'd still need to keep in mind that they could fall in value. "A good example of that was during Covid, when some conservative funds actually fell in value by 10 percent or 12 percent." That's a fairly extreme situation and generally conservative and bond funds should move less than riskier ones. We've seen that with the market volatility recently. If you're worried about avoiding scams, your best bet is to stick with financial services providers who are registered in New Zealand. (You can check the Financial Service Providers Register.) There should be ways you can get more interest or better returns generally within the banks and other financial institutions you already deal with, which could give you more comfort. Make sure you know who you're dealing with and don't respond to investment offers from people who cold call you or approach you out of the blue. I want to apply for a home loan but I have bad credit. Am I going to be out of luck? Not necessarily. While it's helpful to have good credit when you're applying for a home loan, bad credit doesn't always mean you've got no chance. Jeremy Andrews, a mortgage adviser with Key Mortgages, said it would make a big difference if you could explain how the bad credit happened. "I often recommend clients who think or advise they might not have good credit history, to check their own profile via - the service is free, requires a passport or drivers licence to create an account, and users can do 'soft checks' to see how their credit score is tracking at any time without impacting their credit score in the way full official credit checks can. "If there's strong equity, such as at least 20 percent for an owner occupied property, then an indicative score of 500 to 600-plus may well be worth approaching a main bank. If lower than this, then getting a good explanation of what's happened previously and why it won't happen again, plus at least three months of clean bank account conduct - no unarranged overdrafts, missed or bounced payments, and ideally savings or equity increasing too - [will help]." He said if your score is very low you could consider a non-bank lender. Some people choose to take a loan this way and then move to a main bank when their credit improves. Non-bank lending is usually more expensive and there might also be some other upfront costs, instead of the cashback incentive you might get from a bank. "We often see cases where a small bill such as for utilities was not paid amongst moving house, but once the client found out and paid it promptly, then this explanation is also looked at favourably by lenders. "Finance related bad debts are viewed very seriously and clients putting their head in the sand and hoping outstanding bills would go away, would have a harder time getting approved and need to look at higher cost options." Glen Mcleod, head of Link Advisory, said a default with another financail institution would usually mean a borrower had to go to a second-tier lender. Something smaller could be acceptable to a bank if the rest of the application was strong. "In the current lending environment, defaults or any signs of poor credit conduct can be a significant barrier. "To access creditworthiness lenders typically consider credit history and any defaults, repayment conduct on current liabilities, income stability and total debt exposure." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
11-05-2025
- Business
- Scoop
What Should I Do With My Payrise?
Article – RNZ RNZ's money correspondent answers your questions. Susan Edmunds, Money Correspondent Send your questions to If I have a payrise and want to save that amount, should I up my KiwiSaver or do I invest in other funds, other ways? I think it depends a lot on your individual circumstances. If you're already focused on saving for a first home in KiwiSaver, for example, it can make sense to increase your contribution. But otherwise, you could be better to set up another investment that will run alongside KiwiSaver, without all the rules. Dean Anderson, who founded Kernel Wealth, points out that you should also consider whether your employer will match a higher KiwiSaver contribution rate. Some employers will match four percent, or more, and if that's available, it makes sense to make the most of it. If you don't, you're basically leaving that money on the table. Anderson said otherwise there aren't a lot of benefits to KiwiSaver compared to having your money in a different savings or investment plan. 'However, if you are someone who isn't disciplined at maintaining a separate and automated investment/savings plan, then increasing your contributions to KiwiSaver can be a good option to build up a retirement nest egg.' Whatever you choose to do, it is good idea to increase your savings as soon as you get a pay rise, and before you get used to it and would miss the extra money. Using it to pay off debt can also be a good idea. I'm thinking about starting up a side hustle on top of my normal job. What do I need to do about tax? Lots of people have 'side hustles' – businesses or streams of income that they earn alongside their main job. It's a good idea to get across the tax implications early, so you know what to expect. Inland Revenue (IR) does allow some leeway for 'hobbies' that occasionally provide income, but if you intend to make a profit from your side hustle, you need to be prepared to pay tax. That applies no matter how much profit you make. (Your profit is what you bring in, minus your expenses. If you have a lot of set up costs you might not actually make a profit for a while.) You will need to keep records and file income tax returns. You'll also need to pay ACC levies. You could keep a portion of what you earn aside in a different bank account to cover this. You might start out saving quite a bit, and then reduce it as you get a good understanding of what you're likely to need to pay. If you're likely to make more than $60,000 a year, you may also need to register for GST. When you're charging GST, you can also claim it back on purchases you make for your business. There are platforms that can help you work out your tax obligations, such as Hnry, but I'd recommend a meeting with an accountant at least initially to ensure that you have set everything up correctly and there is nothing that could catch you out in future.
Scoop
11-05-2025
- Business
- Scoop
What Should I Do With My Payrise?
Send your questions to If I have a payrise and want to save that amount, should I up my KiwiSaver or do I invest in other funds, other ways? I think it depends a lot on your individual circumstances. If you're already focused on saving for a first home in KiwiSaver, for example, it can make sense to increase your contribution. But otherwise, you could be better to set up another investment that will run alongside KiwiSaver, without all the rules. Dean Anderson, who founded Kernel Wealth, points out that you should also consider whether your employer will match a higher KiwiSaver contribution rate. Some employers will match four percent, or more, and if that's available, it makes sense to make the most of it. If you don't, you're basically leaving that money on the table. Anderson said otherwise there aren't a lot of benefits to KiwiSaver compared to having your money in a different savings or investment plan. "However, if you are someone who isn't disciplined at maintaining a separate and automated investment/savings plan, then increasing your contributions to KiwiSaver can be a good option to build up a retirement nest egg." Whatever you choose to do, it is good idea to increase your savings as soon as you get a pay rise, and before you get used to it and would miss the extra money. Using it to pay off debt can also be a good idea. I'm thinking about starting up a side hustle on top of my normal job. What do I need to do about tax? Lots of people have "side hustles" - businesses or streams of income that they earn alongside their main job. It's a good idea to get across the tax implications early, so you know what to expect. Inland Revenue (IR) does allow some leeway for "hobbies" that occasionally provide income, but if you intend to make a profit from your side hustle, you need to be prepared to pay tax. That applies no matter how much profit you make. (Your profit is what you bring in, minus your expenses. If you have a lot of set up costs you might not actually make a profit for a while.) You will need to keep records and file income tax returns. You'll also need to pay ACC levies. You could keep a portion of what you earn aside in a different bank account to cover this. You might start out saving quite a bit, and then reduce it as you get a good understanding of what you're likely to need to pay. If you're likely to make more than $60,000 a year, you may also need to register for GST. When you're charging GST, you can also claim it back on purchases you make for your business. There are platforms that can help you work out your tax obligations, such as Hnry, but I'd recommend a meeting with an accountant at least initially to ensure that you have set everything up correctly and there is nothing that could catch you out in future.
