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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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Auckland Property market – is this the end of the bubble?

Written by Saurabh Gupta on August 14th, 2015.      0 comments

Housing Bubble 29408544 s-160Some media articles are saying that it might be the end of the Auckland property market bubble, while others are saying that it’s not. So where does the truth lie?

For your benefit, I am quoting some facts from the REINZ Auckland Region Analysis for July 2015.

Within the Auckland Region house prices fell in July 2015 only in Auckland City by 9.8% and North Shore City by 0.2% compared to June 2015. Within the region prices did not fall in Waitakere, Manukau, Rodney and Outer Auckland.

This implies that we cannot generalize and say that the whole regions is witnessing a fall in prices.
Another point to note is that sales volumes have increased. Even in Auckland City, sales volume increased in July 2015 by 15.2% compared to June 2015. For the whole of Auckland Region, this figure was 12.5%.

Based on volumes, we cannot argue that the market is going down.

Third is the velocity - the number of days to sell was steady from June to July at 29 days. Compare this to the past 10 year average being 34 days.

Now to summarize with a quote from REINZ Chief Executive, Colleen Milne, "…  Investors are very active ahead of the new LVR restrictions coming in October and the long standing inventory problems are only worsening."

I think we need to wait before we can comment whether the bubble is bursting or is it shifts in demand - region to region, type of property, reshuffling of portfolios due to the new 70% LVR rule (for home loans to residential investors) and so on. The long term solution probably lies in balancing the market demand and supply.

Note & Disclaimer: The views expressed in this article are of the author and in no way reflect the views of Global Financial Services Ltd., the organisation, or its employees. This article should not be used as a source of any financial or property advice by the readers.



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