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New Zealand; a land of opportunity but not without risk.

01
No matter what background we have or what country we or our forebears come from, there is no doubt New Zealand offers opportunities to those prepared to work for them. This pioneering spirit in a modern world has become more often referred to as our entrepreneurial spirit…where grit and determination meets execution! We can spend time working for ‘the man', building our know-how and experience or we are already experienced business people from other places, and one day we think, ‘I could do this myself. Take my dream, start a business, (or start again), employ some help. I don't want an empire, I just want to work for myself and get a lifestyle out of it for me and my family.'

This attitude is so common that small to medium sized enterprises (SMEs) in New Zealand employing five or fewer people now number over 430,000, employing more than 560,000 people representing immeasurable worth to the national economy (GDP). But there's a threat lurking beneath these impressive statistics: research tells us that New Zealanders are underinsured compared with other countries, with only about a third of the investment other OECD nations put into protecting the livelihoods of the people producing this GDP. At GFS there is too often evidence that business owners, many of whom are the key person in the business, frequently lack some or all of the cover they need.

This is in part because many see insurance as expenditure rather than protecting their dream. One role of GFS is to show people than insurance is not a cost, but on the contrary a vital element of financial wellbeing. A second role is to provide products and services that facilitate that wellbeing.


The diagram shows all the parties at risk in ‘The Circle of Life'. The business is underpinned by its key people, who are subject to general life risks - accident or illness that could leave them temporarily or permanently unable to contribute to the business.

That financial impact flows on to the owner/s of the business (often also a key person), who is responsible for the debt, both visible and invisible. Some owners think they don't need business or key person cover because they don't see any outstanding debt - they wholly own the business and the business assets such as vehicles and so on.

However, that's just the visible debt. The cost of exiting is invisible - if you suddenly had to close the business, what would it cost you to pay all current utility bills, rates, holiday pay and other entitlements? What about your lease commitments too? Too often these issues can be overlooked.

Then there are the families; the people supported by the business. What does the owner's lifestyle cost? What about their staff's lifestyles? Who and what is dependent on the business, and what happens if that revenue stream drops or stops? But of course, ‘the circle of life' only completes because the business also is dependent on the very people needed to drive revenue.


The advice GFS offer their clients looks to deal with this value chain. Certainly, it is the responsibility of business owners and key people to seek advice to get the cover they need. But GFS bear equal responsibility, in that they must help to simplify this process and support their clients transfer of any financial liability they are uncomfortable with should a life risk event strike. Getting the insurance you need should not be complicated or expensive relative to the risks you face – Talk to GFS today about how they can help you.

Call 09 2555500 email insurance@globalfinance.co.nz

 

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Auckland Property & Mortgage Market update

Written by Saurabh Gupta on November 20th, 2015.      0 comments

According to today's NZ Herald article on the Auckland Property market update, there are "reports of some auction clearance rates being lower than 35 per cent as well as fewer attendees at auctions, and sales volumes are down by about 20 per cent for October on what they were in September."

We think we will have to see if the trend continues for 3 months in a row or not? Even this year, as per REINZ statistics, sales volumes in Auckland fell (compared to preceding month) in Jan, April, June and August; while median price fell twice before - in January and July 2015. So one month of decline may not indicate a trend for the long run.

Meanwhile in another article on home loan interest rates, NZ Herald mentioned, "Fixed home loan rates are unlikely to fall much further regardless of what happens to the official cash rate".

Overall, interest rates have nearly halved compared to the first half of 2008 when, as per Reserve Bank data, the average 2 year fixed rate was 9.6%.

We feel that not just existing home buyers but also existing home owners should seriously consider restructuring their home loans. It could help them significantly save interest cost on top of whatever they save due to low interest rates.

For e.g. if a home loan of $500,000 is restructured to bring down the repayment term to 21 years without significantly increasing the loan installment, savings o more than $100,000 in interest cost is possible, but of course, depending on your individual and unique circumstances.

Hence, rather than thinking too much about a 0.2% drop in current interest rate, considering options for restructuring your loan may be help you save money.

To know more, call Global Financial Services on 092555500 or visit www.globalfinance.co.nz

 

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