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A few years ago I went to a work barbeque that my lovely wife’s outfit was having.
Now, standing around talking shop with a whole lot of other …………………….. (Fill in the gap with what ever you do) has never been something I’ve been keen on. Most of its just plain old-fashioned bullshit, but the modern trendy human resources folks call it team building. Doing this with people in your own industry is tedious but understandable, but mind numbingly boring for wives and partners if they aren’t in the same game. Trucker’s, take note - if you want to stand around and talk trucks all night, leave your partner at home. She may not thank you in the morning, depending on how drunk you got the night before, but you will stop her planning how to do you in without getting caught.
Now this particular anaesthetizing social event was fast getting to the stage were I was planning how to drown myself in the pool to end the pain, when an old school mate walked in with his lovely wife. We hadn’t seen each other since our teens even though we had been real good mates once upon a time and we spent the next couple of hours catching up on each other’s lives. At school he had been just like me, a bloke who couldn’t wait to escape the state system, get out and make some serious money. So I naturally asked him what he was up to now. He said that he was the Australasian agent for a large Japanese car company’s retirement plan. Apparently since WW2 this outfit’s workforce (about 35,000 staff) had been putting US$1.50 a week into a savings fund and this money was then invested into all sorts of businesses around the world.
This money, in the beginning only US$52,500 dollars a week had been earning profits over the years to add to this weekly sum and now they had acquired billions of dollars that needed investing.
His job required him to find investments in Australia and New Zealand that met the retirement plans criteria (make profits). He said that it was an enormously well paid job with all the great perks, but extremely stressful and he didn’t think he would be able to last much longer.
“Why” I asked, “ It sounds like a job made in heaven and I know heaps of people who would give their right arm for it”
It turned out that he needed to find “top-draw” investments at the rate of US$10, 000 per hour, 24 hours a day, and seven days a week. He had a staff of 35 researchers finding the right investments and his job was to negotiate the deals. But imagine how hard it would be say, if you bought a four million dollar dairy farm or high rise building, in 400 hours it would be freehold and starting to make a profit as well. By then of course you would need to have already found the next thing to invest in. And he was not alone; this same company had people just like him all over the world, all of them had their own budget of US$10, 000 per hour to spend and this was from only one company. There are thousands of company retirement funds around the world.
So I think that Kiwisaver is a no brainer from the countries point of view, we have to start saving our own money, so that we can compete with these cash rich overseas investment funds before they finish up buying all our land and buildings, our best business shares and even our infrastructure.
From the bosses point of view I can understand them being a bit grumpy, more compliance costs etc. But the 4% of your income they have to contribute by 2011 will no doubt come at the expense of a future pay rise to you. So it wont actually cost them that much when you consider the benefits to the country and you. In fact they should seriously consider having their own Kiwisaver account.
So lets look at what’s in it for you, it’s voluntary so no one is forcing you to do this, but a $1000 is paid into your account by the Government upon opening your account to get you started. Then the Government will match your contribution up to $1000 per year plus pay $40 a year administration costs by way of tax credits.
So if you were putting in $2000 per year plus the $1000 tax credits, plus the $2000 by your boss in 2011 that’s five grand a year. If you are now thirty-five, that equals $150,000 over 30 years, and to be honest that doesn’t really sound that much. But you need to take into account the effects of compounding interest over the same 30 years.
That could be huge. If for some reason after the first year you need to stop paying in for a while that’s possible, so is using half your contribution to help pay off your house mortgage. If you want to buy a house the Government will contribute $5000 towards the deposit.
But there are some down sides, it’s not Government guaranteed, but very little in life is. You are going to have to think about what type of investment plan you want to be involved in, high interest/high risk, low interest/low risk or something in between, that’s your choice and you can always change your mind if you want. There will be winners and losers, just as in life. You are going to have to consider who is managing your money very carefully, cause lets be honest again folks, there are some very big very ruthless sharks out there.
What is going to happen over time is that we are all going to become a hell of a lot more astute about our money management and how we can make it work for us, than we are now.
And that has to be a no brainer.
But then, that is “just an old trucker’s point of view.”
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