NZIJ 126 - November 2007
Fear of the future
As the topic of SOE privatisation hit the news again recently with reference to the National Partyâs manifesto intentions, images of the TranzRail fiasco amongst others came to the fore. Our lead article by Mark Weldon, CEO, NZ Exchange Limited, attempts to show that fear of a repeat of past actions should not stop us from learning from what went before and proposing a newer and better model for SOEs.
The diminishing number of large, well-performing companies on the New Zealand Exchange and the possibility that more of them may soon capitulate to takeovers or to moving offshore is increasing worries of a takeover of the NZ Exchange itself by overseas interests. Seen in this light, a move to allow the public to invest in a new model of SOE while retaining government control is worth consideration.
Fear is one of the emotions that can cause havoc in the markets - mainly because it is contagious! There needs to exist no real cause for fear but once it is out there then it can be self-sustaining.
The cool wind that is blowing through the finance companies at the moment is an example. While undoubtedly there was good reason for the first few collapses, other companies that were previously comparatively well-rated are now facing the problem of investors withdrawing funds as they mature and not reinvesting. The best companies will always take such a scenario into account and will plan wisely by matching the duration of their lending with that of their borrowing, and by also having a solid call facility with their banks.
Fear can overcome rational thinking when it comes to planning investment. The introduction of the FDR regime certainly showed this. There are a number of different questions that arise for individuals and for family trusts. Fritz de Boer is well-qualified to help you with these and also to advise you on any matters associated with the PIE regime.
The only way to combat fear is to take positive measures to prevent foreseeable problems - this applies as much to our personal lives as to those on the level of the countryâs economy.
KiwiSaver and retirement planning are two positive initiatives that individuals can take to secure their own future. It has to be said that the effectiveness of these schemes is reliant on there being reasonable returns from investment. However the very fact that there is more capital available to go into investment will provide a boost to the markets and companies who are the beneficiaries of this extra source of capital.
For help with KiwiSaver or any financial planning matters please contact Fritz de Boer at NZIJ Financial Services on 0800 90 60 90 or email fritz@nzij.co.nz
Articles
- Download NZIJ126 - November 2007
Click here to download a pdf of NZ Investment Journal issue 126 - November 2007
- SOE's - taking the fear out of the future - Mark Weldon, CEO, NZ Exchange Ltd
The SOE model has, for the most part, served this country well. There is no appetite for 80âs style privatisations to be put back on the agenda, nor should there be.
- PIE, FDR - tax implications for trusts - Fritz J de Boer, CFP, NZIJ Financial Services Limited
The recent changes to the tax regime are not so straight-forward for family trusts.
- Watt efficiency - Michael Lockhart, Ecosphere Ltd
This is the second in a series of four articles exploring environmental sustainability.
- Kids can join KiwiSaver too
Kids can join KiwiSaver tooWith no minimum age to join, the savings incentives attached to KiwiSaver make it a great way to put aside money for your kidsβ future. The funds will be locked in...
- KiwiSaver for the self employed â why wouldnât you? - Fritz J de Boer, CFP, NZIJ Financial Services Limited
For self employed people who are not paid through the PAYE system, KiwiSaver is a great option.
- Insuring the future - David Pine, NZIJ Risk Management Ltd
Most of us are happy when our college days are over, so that we can get on with the business of life. We tend not to give our college much thought after we have left.
- My shelter, my problem - Caglan Bagci, NZIJ Mortgages
I recently bought a âfixer â upperâ on the parade in Lyall Bay (Wellingtonâs South Coast). I bought privately from a friend I have known for 10 years.
- A matched book and why your finance company needs one - Neville Giles, General Manager, Distribution, Hanover Group Limited
A recent article in the Economist* highlighted the fundamental mismatch the financial system is built on. Savers want access to their money instantly but borrowers need to repay over a longer period. The banking system helps overcome this imbalance but in doing so they must borrow short and lend long which results in a mismatch of funding. As a result, banks are forever reliant on depositor confidence. If any event causes confidence to dissipate, then banks will not have sufficient funds to repay all investors wanting to withdraw their funds and a bank run results.
- Preparing for change: 55-65 - serialised from the book Financial Passages from ING
âKnowledge comes, but wisdom lingers.â ALFRED TENNYSON (1809-1892)
Part 6 of our serialisation of Financial Passages from ING
Welcome to the second wind in life! You might have swapped the office for the home, but thereâs so much to do â maybe youâre trying something completely different. Itâs not easy learning Russian in your late 50s, or surfing for the first time, but youâre having fun trying! The children have settled down and youâre getting used to being called Grandma and Grandpa. Lifeâs busy and youâre enjoying every minute of it. Perhaps retirementâs not far off, and youâre making the most of your final working years to ensure youâre going to be OK.
- The property crash of â87 and aftershock - Editor
A searingly honest insiderâs account of the buildup - what happened during the boom that preceded the crash, how it came about and why - and the letdown.
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