Tag Archives | Manage your Money

Money Week

Manage Your Money Better

Money issues are top of mind for most people, usually in the sense of worrying about money. Just like those piles of work papers that aren’t yet dealt with or the list of things that need doing around the house, money issues can drain your energy if they are not sorted. That’s why every now and then it’s a good idea to really focus on money, address the issues and learn ways of managing it better.

The Commission for Financial Literacy and Retirement Income has launched the first annual Money Week, a week-long series of financial events and activities around the country, the aim of which is ‘to raise awareness of how people can better manage their money and get help as they do that’. Organisations throughout NZ are being challenged to get involved in Money Week by running an event or activity that engages with people and empowers them to take action to better manage their everyday money. Financial institutions, schools and tertiary institutions, community groups and employers can all become involved by running money-themed events. A list of registered events can be found on the Money Week website. Members of the public will be able to get free financial advice during Money Week by calling the Institute of Financial Advisers (IFA) to register for an appointment. More information is available on the IFA website. Other planned events include investment seminars, budgeting workshops, radio broadcasts on financial literacy, guided tours of the Reserve Bank Museum and lunchtime seminars at workplaces.

This is a great initiative for bringing attention to financial literacy and is deserving of support from every individual and organization in the country through either running or attending an event. So when is Money Week? Sunday 2 September to Saturday 8th September. Mark your calendar now!

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How to Manage your Money in Retirement

Investing in Retirement

One of the biggest challenges in retirement is how to invest your money to provide an income while still protecting yourself against the eroding effects of inflation and income tax. Investing in fixed interest gives certainty of income but returns will be low and unable to keep up with inflation. The alternative, investing in growth assets such as shares and property, will give a better return over the long term but with increased uncertainty in the short term. For that reason, many retirees are afraid of investing in shares. However, there is a way of structuring your portfolio so you can use both income assets and growth assets to advantage. Here is how you do it.

Divide your portfolio into three amounts. The first amount is a lump sum of cash that is the equivalent of 6-12 months worth of income. For example, if you need $1,000 per month to top up your income, set aside $6-12,000 in cash. This amount should be placed in a high interest on-call account.

The second amount of money should be the equivalent of 1-3 years income, so in our example you would set aside $12-$36,000. This should be invested in fixed interest investments which are of good quality.

The third amount to be invested is whatever is remaining after setting aside the first two amounts. These funds should be invested mostly in growth assets with a small amount of fixed interest.

The way this strategy works is that over a three or more year time period the gain from your growth portfolio can be cashed up and put into your income portfolio to keep both portfolios constant. The interest from your income portfolio can be put into your on-call account to keep it topped up, along with proceeds from investment maturities as required.

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