Um, free financial advice? Yes please! We asked our Capsule Community on Instagram for their pressing finance questions – the things they wanted to know to help them get through this cost of living crisis and sort out their own personal financial situations. We then sent then to our pals at AMP, where financial adviser Fiona Hunton sat down and answered all of our burning questions. Here are her answers below!
How do we calculate how much money we need to retire on (our mortgage is paid off)?
There are simple online tools you can use to work out how much you’ll need to retire on. A great place to start is with our KiwiSaver Retirement calculator. It looks at your current KiwiSaver savings, makes a projection on what those savings will be at retirement, then compares your projected annual retirement income against what you’ll need to live your desired lifestyle in retirement: basic, luxurious or somewhere in between.
Once you have your baseline, you can tweak variables such as retirement age, lifespan, KiwiSaver contribution rate, KiwiSaver fund choice and the inclusion of NZ Super to understand how you might reach your goal.
This calculator uses the New Zealand Retirement expenditure guidelines to estimate the amount of money required to support a basic and comfortable retirement lifestyle based on various factors. The New Zealand Retirement Expenditure Guidelines provide valuable insights into retirement expenses, considering geographic location, household size, and budget type.
How much does it cost to work with a financial adviser?
There is a common misconception that financial advice is just for the savvy investor with large investments. That’s simply not true. Financial advisers should be seen as a partner on any financial journey, someone to walk that path with you to help you achieve financial security. Having a well-thought-out financial plan based on expert advice can provide financial stability, peace of mind and reduce stress. At AMP our in-house financial advisers provide 1:1 personal financial advice free of charge.
Should I be putting my money into bonds?
Diversifying your investments can help manage risk. Individual circumstances vary, and there’s no one-size-fits-all answer. Maintaining a balanced investment portfolio depends on your specific financial situation, risk appetite, and investment objectives.
Should you have a savings account, or should you pay more to your mortgage?
Ultimately, the choice between investing and paying off debt depends on your unique circumstances. Some things you may consider when making your decision based on your particular circumstances:
- Interest rates: Compare the interest rates on your debts with the potential returns on your investments. If the interest rates on your debts are high, it may be more beneficial to prioritise debt repayment.
- Timeframes: Evaluate your financial goals and the time you have available to achieve them. Investing is more suitable for long-term goals, while paying off high-interest debt may offer immediate benefits.
- Risk tolerance: Assess your risk tolerance and comfort level with market fluctuations. Investing carries risks, while paying off debt provides a sense of financial security.
- Balance: Striking a balance between investing and paying off debt is possible. Consider allocating a portion of your available funds to both, allowing you to make progress on debt repayment while also benefiting from long-term investment growth.
Whether to invest or pay off debt is a complex decision that requires careful consideration. While investing may offer growth potential and long-term financial security, paying off debt provides immediate relief and reduces financial vulnerability. Finding the right balance is crucial, and it’s wise to seek guidance from financial professionals who can provide advice based on your specific circumstances. Remember, financial decisions should align with your goals, risk tolerance, and the path to a secure financial future.
Can financial advisers help with everyday budgeting?
There are lots of online tools available to kiwis who want to take control of their money. Ask yourself a few simple questions to get a clearer picture of your financial health. AMP’s Financial Fitness check is great place to start.
Should I use all my KiwiSaver as a deposit for my first house, or keep some in there?
KiwiSaver is for retirement, but you have options. While KiwiSaver is meant for your golden years, you can access some funds to buy your first home. However, deciding how much to withdraw is a big decision. Here’s what to weigh:
- Eligibility: Check if you meet the KiwiSaver first-home withdrawal criteria
- Kainga Ora Grant: Explore the KiwiSaver HomeStart Grant from Kāinga Ora, which can boost your deposit without dipping too deep into your KiwiSaver.
- Future needs: Don’t forget your long-term financial goals! Consider how much you’ll need for retirement after using some savings for your house.
Talk to your provider: Discuss your situation with your KiwiSaver provider. They can help you understand your options and make an informed decision.
If I want to do compound interest, what is the best account type?
Compound interest or compound returns is like a snowball effect for your money. When you invest or save money, you earn interest not only on your initial investment but also on the interest you’ve already earned. So, over time, your money grows faster because you’re earning interest on top of interest. The longer you leave your money to compound, the more it grows.
Whether you harness the power of compounding interest through a savings account or an investment account such as KiwiSaver or managed funds will depend on your personal situation and circumstances. Talk to an expert to help you decide which is right for you.
AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme, AMP Managed Funds, AMP Investment Trust and New Zealand Retirement Trust. Each schemes Product Disclosure Statement is available at amp.co.nz/forms. Insurance (excluding travel) is underwritten by Vero Insurance New Zealand Limited. For more information see AMP’s website.
This story has been produced with the support of AMP. Every click, like, share and comment supports Capsule’s work and our commitment to keeping our content free. Thank you for supporting independent, female-owned media! 💛
