Increasing mortgage repayments vs Kiwisaver

[Strider]

Invest in gold its going up in $$

[Coldrider]

Invest in gold its going up in $$

That's due to the demand, when yanks start selling it's gonna fall to reality (market value).

[Waxxa]

A couple of remarks. Will Kiwisaver still be in existance over successive governments to come? Will you reach 65 years to claim, if still possible? And with a likely recession looming can you afford 4% of wages?

Also, why is it when people buy a home, why pay principal? Take out an interest only loan! The idea is that your first home is not the one you will retire in and live happily ever after. Property value increases every 7 years and this is when you sell the home, make the profit for a bigger deposit payment for the next house, keeping interest only loan, paying the minimum and in the following 7 years repeat the cycle.

Over successive years you will then have the deposit to buy outright a property when you or your family do decide this home is the one. The mentality of kiwis that buy a home and think 'I must own this house' means people stuggle to pay off the principal and have no spare income for emergencies or even interest hikes or rate rises or maintenance. Let the bank own the house, who cares, you profit from it.

[Badjelly]

But this is whats going to happen, employer puts in 1%, where is he going to get that 1%? your salary. you wont get a pay cut, you will just get your next pay rise at -1%.

Possibly, but you'll still be better off than the next guy/gal, who also gets the smaller pay rise and isn't in Kiwisaver.

[Unit:Me]

What I dont like about Kiwisaver is it was an unfinished product when released, with too many unanswered questions (which still exist today). Most of the fund managers have run at a loss, and now IRD are ballsing everything up, they have stated this morning they have failed to allocate a managed fund providers funds to thousand of Kiwisavers accounts back to last August! My parents have pulled their money from a few of these fund managers over the years, because they were not performing well and charging too much for their management fees.
The property market locally and worldwide needs a correction, and it is well on its way. Look at the states, who has whole suburbs vacant with mortgagee sales, and home owners so deparate they are torching their houses trying to claim the insurance.
Finance companies are collapsing everywhere (that was bound to happen the model was wrong, only the self funding onces will survive). Household debt in general exceeds disposable income, house prices are out of wack with wages, the lower income jobs now cant be fulled because they are not paying enough. Yet people like my brother who owns a retail business will choose to work public holidays himself instead of offering to the staff because now he has to contribute 1%, he cant afford to pay them the extra.

[Mom]

And to be a real purest about it all, if you put all your wages each month direct onto your mortgage, pay everything by credit card through the month, then draw back the overpaid amount into your mortgage to clear the credit card before the interest is due, this is the most effective way of reducing your overall interest on your mortgage. And make sure your credit card is a member of Flybuys or the like, then you get a free overseas holiday once a year for two!

Not bad advice there, as long as you have the discipline to do it

I need to have a chat with you, Unit! I'm just a dumb ag pilot (strong in the arms, weak in the head), and don't have much nouse with things like that, you may save me a few bucks!!

Pity you live so far away mate, little things like sitting down and putting a strategy in place is the best way to save yourself plenty. I am about to go back into the business of helping people do just that!

Liquidity is key at the moment and given all the indicators, we're in for a rough time ahead, particularly with an over spending Government with third world fiscal policy.

I agree!

good advice

Pity the bling-o-meter has limits sometimes.

Good luck with your attempt to put an extra 4% into your mortgage mate, everytime I do something similar in an attempt to beat them at their own game, they raise the interest rates! Like Finn says, being as liquid as you can at the moment is a good thing to achieve. Getting rid of your debt the best way to achieve it IMO. The credit card trick is worth a shot if you are disciplined, it is easier now as most people accept them. Small dairies and the like dont, so make your lunch and save even more!

[doc]

I'm not in Kiwisaver yet, but have had discussions about paying an extra 4% off my mortgage instead.

Does anyone have a link to calculator to figure out how much time/$$ I would save by adding 4% to my fortnightly repayments? I have found ones that will tell me how much I have to pay per fortnight to finish by 2020, but I'd like to see something a bit more comprehensive.


Cheers............................

Call me old school but the best investment is your mortgage. You don't start investing until you are debt free. makes it easier for them to sux it out of you later.

[doc]

Invest in gold its going up in $$

Argh ha, Old school again. "the ole bigger fool theory" sort of like collecting coins, you are relying on some one to pay more for them than you did. Gold is not going to feed your brats when the Holocast comes. Its in the bible somewhere.not that I would ever be able to find it for you.

[Southmotian]

But this is whats going to happen, employer puts in 1%, where is he going to get that 1%?

Employer tax credit will help to offset

WTF????

Kiwisaver is money for jam. With government and employer contributions the return is far higher than any mortgage interest rate! Even if the scheme you join makes nothing, the return is still 50%+ (due to government and employer subsidies)

Be smart.

1. If you dont trust shares, you dont have to invest in them. Choose the lowest risk cash funds. (i.e. 100% in cash and fixed interest). In the long run it will return less than a balanced fund, but you'll never get a negative return.

2. If you have a mortgage, choose a fund that offers mortgage diversion. This means you get all the tax advantages and subsidies of the Kiwisaver scheme, but can also divert up to 50% of your contributions to paying your mortgage.


... yes it would be nice if the government left us will all our money in the first place, but unless the Libertarians get in, it aint going to happen....

so join Kiwisaver!

+1

For anyone unsure about it, talk to a financial adviser. There is so much misinformed "a guy told me at the pub" stuff floating around. Talk to someone who actually knows what they're on about. The answer is likely to be that you'd be stupid not to join!

[The Pastor]

explain this tax credit, my understanding is the employee also gets a tax credit.

WTF is a tax credit?

[bane]

explain this tax credit, my understanding is the employee also gets a tax credit.

WTF is a tax credit?

couple of ways

1. If you are over 18yrs old, the government will match your contributions up to $20 per week, in the form of a tax credit applied by IRD to your kiwisaver a/c annually. i.e. $1040 per year

2. employer contibutions into Kiwisaver on your behalf are tax free (as long as they are matched by your contribution). So instead of the employer contribution being worth (for many) 0.67%, you get the full 1%.

money for jam....

[k14]

Yeah there are a few factors re kiwisaver that do ask a few questions but surely I'm a retard for not signing up before next month when my company starts contributing up 4% to it. I'll be signing up next week if I remember and taking that $1000 along with the $20 a week.

According to the ASB tables I "should" have $600k+ when I retire, hehe.

[Southmotian]

WTF is a tax credit?

"To offset the cost of providing the matching contribution, employers will be entitled to a tax credit of up to $20 per week, based dollar-for-dollar on their matching contributions for each employee. This tax credit will reimburse employers for much of the matching contribution expense. For example, in 2011 the tax credit will cover two-thirds of the matching contributions for an employee on $40,000 contributing 4% of salary."

[cheese]

If you cant find this on any of the bank websites then talk to your bank, Im sure they would NOT be happy to disclose this information as they would make less money out of you.
And to be a real purest about it all, if you put all your wages each month direct onto your mortgage, pay everything by credit card through the month, then draw back the overpaid amount into your mortgage to clear the credit card before the interest is due, this is the most effective way of reducing your overall interest on your mortgage. And make sure your credit card is a member of Flybuys or the like, then you get a free overseas holiday once a year for two!
Just my little bit of financial advice
BTW most Kiwisaver providers have lost money in their first term, Ambo Craig are a much better investment advisor, or put $10k into a compounding interest bearing account and forget it for the next 30 years, works out far better and safer than Kiwisaver at this stage

While that sounds like sound financial information (revolving credit) in actual practice it hardly ever works unless you are very very good with budgeting and you have a high income. for example

Friends of ours got a mortgage about 1 year after us, they got revolting credit, and after 2 years (3 for us) they had less of a mortgage than us, now another 3 years on they have crept back to the original lending ammount and we have paid off half of our mortgage. We had a standard mortgage and justr upped out payments.

Things I've learnt - when you go redo your mortgage, they will say so you want to put that back at 25 years again? this is going to fuck you. They keep putting the term out and you never get anywhere.

set a dollar amount you want to pay and set the term on that. i.e say I want to pay $800 a fortnight, you will be surprised what the term comes down to.

and as for kiwi saver v pay off your mortgage, well my wife and I are about to have our first child. We figure at present kiwi saver wouldn't work for us. If you have surplus income, I'd get kiwi saver, look at it as a payrise from your boss with out asking for one. you'd be foolish to do more than 4% though. But more info is needed. How old are you, you both working? how much is your mortgage? and lastly what do you earn?

[homer]

While that sounds like sound financial information (revolving credit) in actual practice it hardly ever works unless you are very very good with budgeting and you have a high income. for example

Friends of ours got a mortgage about 1 year after us, they got revolting credit, and after 2 years (3 for us) they had less of a mortgage than us, now another 3 years on they have crept back to the original lending ammount and we have paid off half of our mortgage. We had a standard mortgage and justr upped out payments.

Things I've learnt - when you go redo your mortgage, they will say so you want to put that back at 25 years again? this is going to fuck you. They keep putting the term out and you never get anywhere.

set a dollar amount you want to pay and set the term on that. i.e say I want to pay $800 a fortnight, you will be surprised what the term comes down to.

and as for kiwi saver v pay off your mortgage, well my wife and I are about to have our first child. We figure at present kiwi saver wouldn't work for us. If you have surplus income, I'd get kiwi saver, look at it as a payrise from your boss with out asking for one. you'd be foolish to do more than 4% though. But more info is needed. How old are you, you both working? how much is your mortgage? and lastly what do you earn?

un fortunately from what you are saying
i need a big pay rise to cover it .
i know you just put an example up of mortgage repayments ""800 fortnight ""
me and my partner could do that , but im not sitting at home for 20 years go no where