Invest in your Home
Now is also the time to take advantage of the subsidies available for insulating your home. Insulation has the advantages of making your home more comfortable and easier to sell with the added benefit of reducing your power bills. More information on home insulation subsidies is available here.
There are some words of caution, however, if you are thinking of embarking on a renovation project. Strictly speaking, your home is not an investment; it is what financial planners refer to as a 'lifestyle asset'. If you have spare funds, you can usually get a better return on your money by investing in assets which give you income as well as capital gain. If you need to borrow to do your renovations, don't borrow so much that you are living from payday to payday to keep up with the mortgage payments. Finally, do your sums and check local property values to see if your resale value will improve by more than the cost of your project.
Save the Nation
In the area of retirement saving, the SWG has recommended that all employees over the age of 18 be automatically enrolled in KiwiSaver with the ability to opt out. At present, automatic enrolment applies only for new employees. Also recommended is that the enrolment age be lowered to 16 and that the default employee contribution be set at 4% with the option to drop it to 2%. Of course, one of the most obvious solutions to our savings problem is to increase the retirement age. Despite this being a good economic solution it is still politically unacceptable, at least until after the next election.
The proposal for the Government to help make annuities available to retirees is an excellent one. Many retirees prefer to have a regular monthly payment to supplement income rather than a lump sum to invest. It has been suggested that payouts from KiwiSaver could be part lump sum and part annuity.
While much progress has been made to introduce financial literacy into the school curriculum, the SWG has gone one step further and suggested that financial education be compulsory in schools. This is to be applauded. Increasing the level of knowledge of financial matters is critical for changing attitudes towards saving and thereby securing the financial future of our nation.
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KC News: the Internet Newspaper for the Kapiti Coast