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

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.

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Make every dollar count. Make your nest egg debt free faster!

Written by David Chaston on April 21st, 2016.      0 comments

Make your nest egg debt-free fasterOwning your own home is a great achievement. Not everyone can do it, but if you can, there are many great rewards.

But unlike renting, home ownership comes with some definite work, stuff you can't really put off or escape from.
The rewards and advantages last and are substantial.
And so does the work. But at least with some good advice, you can prevent it becoming oppressive worry.
Some people like to say taking on a mortgage is the largest financial commitment you will ever make. But these days, that is not true. (Savings for a comfortable retirement is a bigger project, but property ownership can be part of that project too.)

Home loans these days are large. Without proper structuring that size can be stressful. But it doesn't have to be at extreme levels - which is where 'good advice' comes in. Unless you are one the rare types that don't need a mortgage, buying a house can't be done without a large loan.

Worry management
It will be stressful, especially at the beginning. But to manage that you need a plan - and you need to stick to it.
The core of any plan is your household budget, something you will be forced to face when you apply for a loan. Fudging your application with 'enhanced income' and 'unrealistic expenses' is never a good idea. Ever. But tight budgets focus the mind.

Three key things to understand
And there are a number of powerful ways you can get on top of the loan payments.
Firstly, you should look past the 'loan payment' amount.
Remember, you can get your payments down by extending out your loan. But over the length of your loan you will pay far, far more in interest. This is why you should target paying your loan off faster to get the best overall benefits.
Secondly, you should be prepared for bumps in the road. Illness and job loss could be something that might force you to lose your home. Fortunately you can insure for these risks.
And thirdly, remember a table mortgage pays down the loan principal very slowly at first, and very fast at the end. You will be energised to stick with your budget if you can get your head around how a table mortgage works. It’s not hard, but it is also not intuitive.

Change the way you live
Once you have a home with a loan, keep your budget plan ‘live’. Make staying on top of it a key part of how you live. You won’t need to be completely focused for the whole life of your loan, but you should until at least a third of it is paid down – and that is much longer than a third of the time you committed to repay the loan.
This is the first in a series, so we will explore some ideas and concepts in future articles.

But let’s end this one with some math behind a well-known budget trick:
A daily cup of $4 coffee can be used to pay down your mortgage faster and the impact of this small restraint can be more powerful that you might realise.
If you have that coffee only once a week rather than once a day, you could save over $22,800 over a 30 year loan. That is serious money, well worth the sacrifice I say. You will have ‘little ideas’ that can be equally powerful – if you can stay disciplined. And almost all the savings will be future interest.
Use the skills of a savvy adviser

But you can’t know all the tricks. This is where good advice pays for itself.

Mortgages are long term commitments. A savvy mortgage adviser can help with so much more than getting you that competitive initial interest rate. Make sure you get access to all that assistance and expertise.
David Chaston is the Publisher at This article was written exclusively for Global Finance (GFS).

Since 1999, Global Finance has focused on saving interest on mortgages without increasing fixed loan instalments. Their 3,500+ customers have been able to save more than $100 million in interest costs. 



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