Wednesday, November 16, 2016

The US Elections and Your Investments

We’ve all now come to grips with the result of the U.S. election. Given the polls just before election day, the outcome was a surprise, to say the least.  The result has been compared to Brexit, which was one that was similarly surprising.

Perhaps we are less sceptical. Living in the world of financial markets, we know that probability is only ever as the name suggests.  It represents something that is likely or probable to occur, and so is very different to the word certainty.

Markets quickly adjusted yesterday as reality set in. Overnight, S&P 500 futures markets were down. It has rebounded today though, and is up 1.4% at the time of writing.  All that means is that, ironically, investors don’t know what this means.  Will the American business community reign Trump in, or will he be allowed to follow through on his election campaign promises?  Trump won’t be able to pass law, but he will be able to put a block on securing trade deals (such as the TPPA), for example.  Many New Zealanders that are anti-TPPA would also be very anti-Trump, and yet he’s very likely to kill the deal that they didn’t like.  It shows how complicated this election really is.

From the perspective of your portfolio, it’s intriguing to look at the relationship between the US president and investment returns. Historically, markets have done better when a democrat is president rather than a republican (9.7% growth as compared to 6.7%). However, the same data shows the markets do best when the republicans control both the House of Representatives and the Senate.

S&P 500 under Democrat and Republican Presidents.

After this election, the republicans hold the House, the Senate and the presidency.

But there is more to the data. When the US president has a negative approval rating the markets have done 4% better than when the country gives the president positive ratings.

In reality, the data indicates that the relationship between investment markets and the presidency is a fairly weak one. What drives markets are businesses that innovate, solve problems and continually provide better goods and services at lower prices. Businesses have been doing this for hundreds of years and will continue to do so for many more.

Someone almost universally regarded as being one of America’s worst presidents was Warren Harding, the 29th US president (1921 – 1923). Amongst his many blunders, he appointed a number of corrupt officials.  One of his cabinet secretaries went to prison for corruption. [1]

How did he get elected? Author Malcolm Gladwell suggested in his book Blink that people believed Warren Harding would be a good president because he appeared stately and presidential.  It was a “blink” decision. [2]

Why do we bring this up? Only because between 1921 and 1923, the Dow Jones returned around 32%. [3]

“Conventional wisdom says a president’s economic policies matter greatly to Wall Street. But… investors since the Great Depression have managed to make money in war and peace and under successful and failed administrations.” [4]

Many of our clients are invested in portfolios built to last 20 to 30 years. Over that time frame, both good times and bad times are a given. That is the nature of capitalism which funds, what we can see in retrospect, are both worthwhile and worthless economic ventures. We believe history shows us that a globally diversified, low cost portfolio is a ship that can and will survive the storms of politics, because it is founded on the success of business. Presidents come and go, but business in aggregate has never gone out of business, and won’t in the future, whatever president-elect Trump does.

So we encourage you to relax, to tune in to the news as an interest, but know that your long term plans are based on something much more solid and stable than politics. 


Sunday, October 16, 2016

Spratt Financial Newsletter - October 2016

Check out our newest Spratt Financial Newsletter, including special events clauses in your insurance which may make changes to your insurance far easier and how to be debt free quicker.

Monday, August 8, 2016

Special Events Clauses - Making Insurance Changes Easier

If you have current insurance, there may be clauses in your policy (life, critical illness, permanent disablement, medical insurance, income protection etc.) that allow you to make changes quickly and easily, without any additional medical tests or screenings. These clauses can be triggered if you have experienced certain special events in the last 12 months. These events include:

  • Getting married or finalizing a divorce.
  • Having a child (by birth or legal adoption).
  • Taking out a new home loan or increasing an existing one.
  • A significant salary increase of 10% or more.
  • A spouse or partner passes away.
  • Other significant financial of personal events.

If you want to take advantage of these clauses or see if you have one that you can take advantage of, you can drop us a line free here.

Tuesday, June 28, 2016

The effect of Brexit on your investments.

In the wake of the historic referendum that resulted in Britain's decision to leave the European Union, there has been much financial and economic concern about what this may mean for investments and finances worldwide. Since the result was announced, the British Pound has fallen to 30 year lows, including a 7% fall against the New Zealand dollar.

Here in New Zealand, Kiwi investors are being urged not to panic. John Berry of Pathfinder said NZ investors shouldn't expect a great impact from the result largely because New Zealand's market is largely insulated against the fall that could continue in the United Kingdom and Europe. He went on to say though, that any global downturn that occurs could have an impact on confidence and equities that could permeate our marketplace.

Other advisers have said that if you are long term investor, this will eventually be seen as merely a momentary blip. Short term investors could suffer a degree of loss, but most experts expect that markets will rebuild. Nick Tuffley, ASB chief economist stated that though there is little danger of a significant long term loss, "people need to think about what they are doing and why - whether their objective has been changed by what has happened."

If you are concerned with the impact that Brexit could have on your investment or your finances, our professional investment team offer you free, no obligation advice or reviews at any time through our contact form here. 

Monday, June 20, 2016

Health and Fitness News Updates

Good health and fitness isn't just a great idea for your life and for your future, its also a great idea for your finances. Especially in the insurance world that Spratt Financial works in everyday, better health can mean more cover, lower premiums and more money in your pocket at the end of the day. If your insurer knows you're in good health and that you work to maintain that, they are inclined to reward you with lower costs and higher levels of cover with far less hassles or hoops to jump through. Less risk to them means more reward for you. Hence, Spratt Financial is proud to present the latest news from the world of health and fitness to help keep you in peak condition.

1. New Zealand's use of antibiotics rises, heightening concerns about growing bacterial resistance. -

Our antibiotic consumption is among the highest in the developed world, but is this putting us at unnecessary risk as bacterial resistance grows?

2. Why artificial sweeteners could be worse for you than sugar. -

Many sweeteners used in place of sugar are much sweeter than sugar, diluting the effect of sweetness and overstimulating appetite.

3. Is your health suffering due to a poor relationship? -

In a multi-year study, angry spouses were at a higher risk of chest pain, high blood pressure and heart problems. In contrast, people in happy relationships/marriages have longer lifespans on average.

4. Healthy smoothie recipe to combat inflammation and detox the body. -

Over time, a build up of inflammation in the body can lead to heart problems, arthritis and more. This recipe could help mediate these issues and a healthy way.

5. Surprisingly, scientists tell you why making your bed could be bad for your health. -

Find out why making your bed could be aiding the production and health of dust-mites contributing to an unsanitary sleeping environment.

6. Five unusual ways coconut oil can improve your health. -

Unexpected benefits of coconut oil, including an aid for weight loss, mental functioning and more.

7. Do fitness apps really work? Apps put to the test? -

Several fitness apps described and put to the test, including Charity Miles, Yoga Glo and Zombies, Run!

Tuesday, June 14, 2016

Free Government Top Up for your Kiwisaver

Top Up Your Kiwisaver Now!

$$$ Government Gift of $521.43
(Subject to Kiwisaver contribution)

Just a reminder that if you have a personal Kiwisaver scheme, the cutoff for annual contributions is fast approaching. If you have been contributing to your Kiwisaver this year, you could qualify for a free government gift of $521.43

You need to have contributed a minimum of $1042.86 within the 12 months ending 30th June 2016 to qualify for the free Government top-up of $521.43 (member tax credits).

If you have over $50,000 in your Kiwisaver and are not getting professional advice then feel free to contact our professional investment adviser Jonathan Parsons for a no cost financial checkup. The coffee is on us.

Thursday, April 21, 2016

Southern Cross to launch new health insurance for young people.

Some good news, following on the heels of our recent article on the benefits of getting insured while you're young: Southern Cross has announced the release of a new health insurance product for young people. Named the 'Wellbeing Starter' plan, it is an entry level plan based on extensive market research of 1,500 young adults and what they described their needs of a health insurance plan to be.

One of the main needs described was affordability, and Wellbeing Starter achieves this by excluding all coverage for orthopaedics, urology and gynaecology (unless these aspects are required for the treatment of cancers). Southern Cross state directly that this may not be the best plan once clients reach middle age, but its a great option while they're young and covers what young people deemed to be most important to them.

The Wellbeing Starter plan's benefits include $500,000 surgical cover, $100,000 cardiac cover, $60,000 cover for cancer treatments, including an additional $10,000 for non-Pharmac drugs. It also includes a  $40,000 prophylactic treatment allowance, $3000 for skin surgery. The plan will also cover 75% of GP and physio visits (up to $150), in response to the research which discovered that an everyday benefit was important for young people to have.

As more insurers become serious about reaching out to young people, the benefits of getting insured young will only increase. This is definitely a positive development in that regard, If you'd like to enquire about getting your health insured, you can request a free, no obligation quote at anytime. We may be able to secure you an even better deal on your premiums than you would find yourself.

Tuesday, April 5, 2016

Insurance: Why you should get in while you're young.

Among the concerns of life, insurance tends to only come onto our radar when we enter the middle stages of our life. In our middle age, our career is bedded down, perhaps a few health issues are beginning to crop up and getting married and having children redirects our priorities to people in our lives we should financially provide for. But is this too late? Whilst it seems natural in a sense to put off paying for insurance during our younger, formative years, there are actually many good reasons to look at getting insured early.

1. It's vital to get in early with Medical Insurance.

 From personal experience, I could have been in a world of trouble if I didn't have medical insurance by the age of 20. Just after my 21st birthday, I was diagnosed with Crohn's Disease, and since then my medical insurance has saved me close to $20,000 in medical costs that I may have had to pay out of my own pocket. Better yet, since I secured my medical insurance while I was healthy, I had no exemptions and paid normal cheaper rates. If there's one form of insurance you get while you're young, it should definitely be medical insurance. If you leave it too late, you may be unable to get pre-existing conditions covered, or you could pay much more than you need to for both medical treatment and premiums.

You never know what could happen with your health - secure medical insurance early in life.

2. Your health status determines how much you pay.

A great reason to think about life insurance and trauma insurance cover earlier in life is that your insurance policy will be determined by your current state of health. The premiums that you pay reflect your level of risk to the insurer, so if you are young and in good health, you will pay far less than you will if you're older and more infirm. If your health deteriorates too much, you may not be able to get insurance at all. It could be a good idea for you to protect your future dependants now, and not take the chance of your health deteriorating.

Having to pay insurance costs is unappealing when you're young - but it could save you more than you can imagine. Be sure to weigh the costs and benefits to your situation carefully.

3. You'll be covered for any conditions that develop - no exemptions.

If you have any existing serious medical conditions when you secure insurance, there's a good chance you'll either pay a hefty fee to have them covered or the insurer won't cover them at all. If you get in while you're young and in peak health, you can rest assured that anything that develops will be covered AND you won't be paying any extra for it. If I had only got medical insurance after being diagnosed with Crohn's, I could be paying double or triple what I'm paying for premiums or I may have been unable to get cover and had to foot the bill myself. That's not what you want. 

If your medical history is spotless - your policy exemptions will be too.

If you have the ability, Spratt Financial highly recommends the benefits of thinking about securing personal insurance as young as possible. You'll save money, you'll have peace of mind and you won't have to take a chance on your health staying good. If I had taken that chance, I would have gambled and lost. Spratt Financial Group can get you the insurance you need at lower prices than you'll find for yourself, and our services are completely free and no obligation. Drop us a line today for a free review of your insurance needs.

Monday, March 14, 2016

Insurance News Round Up

1. Quirky contents insurance claims highlighted to encourage customers. - Insurance Business Online

"Some customers don't make a claim because they don't realise their more unusual items are covered under their contents insurance" - AA Insurance gives a reminder to potential customers that they may be underestimating the value of their contents insurance and what is truly covered.

2. Where to find the best travel insurance. -

Southern Cross Travel insurance, 1Cover and Worldcare have been named the travel insurance providers who best provides "outstanding value".

3. New Zealanders lack insurance for their most important asset. -

Whilst 95% of Kiwis have cover for their homes, cars or possessions, only a mere 30 percent of New Zealanders are covered by health insurance and only 57% have life cover.

4. Southern Cross Travel Insurance reveals the extent of fake claims. -

SCTI have revealed the regular extent of fraudulent travel insurance claims they receive, estimating upwards of 1500 cases a year may be fake claims.

5. Sovereign targets underinsured millenials in latest insurance campaign. - Good Returns

New digital led campaign aims to combat excuses, empowering young Kiwis to stand up and take charge of their financial wellbeing.

Monday, February 1, 2016

NIB Medical Acquires Onepath Medical Business

Late last year, NIB Medical purchased the entirety of Onepath's medical insurance business for $25 million. Onepath will continue selling life and disability insurance unchanged.

Since NIB arrived in New Zealand after expanding from Australia, it has grown into a substantial presence in the medical insurance marketplace. Originally buying Tower's Medical policies, this further expansion solidifies them further as top players in the NZ insurance market. This development will mean that NIB services 200,000 NZ clients, or around 15% of those with health insurance in the country.

For clients with existing Onepath policies, these policies will be transferred to NIB around the middle of the year. They will then be responsible for your claims and changes to your medical policy. Your premiums and the structure of your policy will remain the same. Notifications from both Onepath and NIB will be sent out to you before then. If you have any questions about the transition, you can contact us anytime and we'll be happy to help.

Sunday, January 10, 2016

Financial News Round-up - New Years 2016

1. 5 health insurance resolutions to consider in 2016. - NZ Herald

Some great things to consider with regards to your health insurance in 2016 including considering deadlines, when to make changes, and how to get familiar with your coverage.

2. UK Insurers reject almost 50% of mobile phone claims. - Insurance Business Online

As mobile phone insurance becomes more and more of a necessity, UK insurers have been doing the industry and their clients a disservice by finding means to reject claims, including not having certain apps installed and not having SIM cards inside.

3. NZ's largest general insurer introduces a new CEO. -

Craig Olsen has taken over the top job at IAG as part of a new leadership team announced just before the New Year. He is taking over from former CEO Jacki Johnson.

4. Daily mortgage rates from the major suppliers. -

Handy tool to keep track of mortgage rates from the major lending suppliers in NZ.

5. To cash up, or to keep your money in Kiwisaver? - NZ Herald

A good article featuring tips on what to do with your money in your Kiwisaver and how to make the most of it. Also, keep in mind Spratt Financial's free Kiwisaver consultation service to help make sure your Kiwisaver is performing the best that it can.

6. New website educating the public about personal insurance products set to launch. - Good Returns currently preparing for launch in the New Year aims to add to the financial literacy of the NZ public as it relates to the crucial matter of personal insurance.

7. New Year's resolution: Financial fitness tips for retirees. - NZ Herald

Older people were recently found to be less likely to set financial goals than younger people. Experts in the field have put together their best tips for older people to become financially fit and secure.