Moving On

Professional Development

Moving On Slide 1

Welcome

• Introductions

• Health and Safety

• Housekeeping

• Icebreaker

Moving On Slide 2

Albert Einstein

When someone asked Einstein they probably expected an answer to do with physics

“What is the most powerful force in the universe?”

“Compound Interest”

Moving On Slide 3

Aim

To help budget advisers consider longer term planning of financial goals and responsibilities when working with clients, or reviewing their own personal options as they start moving on towards better times and/or expected or unexpected changes in circumstances.

Moving On Slide 4

Objectives1. Provide reasons to plan for the longer term2. Match goals and values to the individual3. Identify barriers to saving4. Identify options to protect assets (keep what you

have)5. Understand saving and accumulating wealth 6. Know limitations of giving financial advice as a

budget adviser 7. Seek further financial advice and information

when required

Moving On Slide 5

Principles of good budgeting

• Live within your income

• Account for everything

• Plan ahead

Moving On Slide 6

Moving On

Source: Fig1. Last updated December 2014 on RBNZ website www.rbnz.govt.nz

Slide 7

Benjamin Disraeli

A nineteenth century British politician once said

“There are three kinds of lies: lies, damned lies, and statistics”

Moving On Slide 8

Reading statistics and data

• What factual information does the statistical data give?

• What issues does this information raise for us as a society?

Moving On Slide 9

Moving On

Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013)

Slide 10

Moving On Slide 11

Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013)

Financial Capability

• Financial knowledge and understanding

• Financial skills and competence

• Financial responsibility

Moving On Slide 12

Financial plan• A budget

• Knowledge of your net worth

• Financial goals

• Understanding about the management of debt

• Understanding about the management of savings

Moving On Slide 13

Moving On Slide 14

Source: The ANZ Retirement Commission Financial Knowledge and Behaviour Survey (2013)

Saving Through• Debt repayment• Superannuation • Investment– short term deposits– property– bonds– shares– specialist investments

Moving On Slide 15

Moving On Slide 16

Source: ANZ retirement commission Financial Knowledge and Behaviour Survey(2013)

KiwiSaver• Automatic membership on starting a new job with an opt-out period within 2-8

weeks

• Employer compulsory contribution is 3% for staff over 18 years of age

• Deductions will be at a minimum rate of 3% of annual earnings (higher rates are 4% and 8%)

• Money can be accessed before superannuation in the following circumstances:

– Death (but this may not be immediately) – Proven financial hardship– 12 months after emigration to anywhere apart from Australia– Towards a first home deposit (conditions apply)

Moving On Slide 17

Compound Interest

$20 a week saved from age 25

• These figures come from a calculator on the ‘sorted’ website. • They are based on a net real rate of return of 2.5% after tax, fees and inflation

are taken into account.• They use ‘today’s dollars’ meaning that the lump sum you get in the future will

have the same buying power as this many dollars today.

Age Capital Investment

Interest Total

35 $10,400 $1390 $11,793

45 $20,800 $6090 $26,890

55 $31,200 $15,016 $46,216

65 $46,600 $29,354 $70,954

Moving On Slide 18

Moving On Slide 19

Source: ANZ retirement commission Financial Knowledge and Behaviour Survey (2013)

Recap1. Provide reasons to plan for the longer term (statistics and data / household debt)

2. Match goals and values to the individual (Financial capability/ Financial planning / SMART

goals)

3. Identify barriers to saving (Societal pressures and attitudes) 4. Identify options to protect assets (keep what you have) (Insurance/Wills and Power of attorney)

Moving On Slide 20

Closure5. Understand saving and accumulating wealth (Debt repayment/Superannuation/KiwiSaver/Compound Interest)

6. Know limitations of giving financial advice as a budget adviser

(budgeting advice versus financial advice)

7. Seek further financial advice and information when required (How and where to gain the right information)

Evaluations

Moving On Slide 21