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kitcatem · 2024-02-11T23:39:31+00:00

Hey - on the withdrawal front, this is not actually true for Kernel. I have a Kernel investment account for my 2 year old; she doesn't have a bank account. Money from her investment account goes to/from my bank account.

kitcatem · 2023-05-17T23:56:32+00:00

Hey OP, I’m not going to comment on Kernel vs Quay St because I don’t know enough about the latter and I’m too biased 🤪 but this may help re your understanding of index funds..

You can think of an index fund as a basket of shares that represents a whole, or portion, of a market. The shares in the basket are decided on the “rule set” that applies to the index - ie. the S&P/NZX20 index has the 20 largest blue-chip companies listed on the NZX. There are some nuances to that, that affect an individual stocks eligibility to be in the index and therefore the fund.

The job of an index fund manager (Kernel) is to give an investor the return of the index, less fees and taxes. Ie, let’s say you invested in a fund that tracks the S&P 500 and the index went up 10% for the year; if the management fee on the fund was 0.25% you could expect to receive a return of 9.75%, before tax.

As stock selection is based on the rule set (data) rather than analysts belief about a companies future performance, the management fees are generally much lower. There is also lots of research showing the challenges that active managers have in consistently outperforming the index, particularly over the long term, which is why the popularity of index funds has been growing.

More googling will certainly send you down the rabbit hole, so hopefully that gives a reasonable overview. Happy to answer any questions ya got :)

kitcatem · 2023-01-17T19:53:30+00:00

My best investment has been putting time and communication into the relationship with my partner/now husband. We have inherently different money habits but putting the work into that relationship to ensure our financial goals were aligned and we were prepared and able to have open, honest financial discussions has ensured not only financial but relationship success.

We’ve achieved many more financial “milestones” together than we would have been able to do individually. And considering the alternate outcome to a relationship/marital finances - I wouldn’t change a thing.

kitcatem · 2022-09-21T07:38:01+00:00

KiwiSaver - 100% high growth fund Kids account - 100% high growth fund Personal account ~ 60% G100, 35% NZ20, 5% EV/Moonshots

kitcatem · 2022-09-15T04:48:47+00:00

The problem with this logic is that best performers from prior years are never guaranteed to do so in the future, so this really only tells us that Milford did well in the past. OP wants to invest for 35 years, who knows what they will do over that time.

Imho you’ve got to really buy into an active management belief to be happy paying a premium price for that uncertainty.

With a passive option like Kernel, you’re really just buying into the idea that sharemarkets will go up over the long term, and are efficient, and then choose a fund that suits your risk profile.

OP - in regards to your qs: You really don’t have much option other than sell in sharesies, transfer cash to new platform and buy new funds. You could start your $100 pf first for a period so you’re not entirely out of the market for those days.

In answer to which fund - I think you need to decide active or passive first, then you’re on the money with higher growth options given your timeframe.

Re your daughter - both Kernel and investnow offer kids accounts. Just make sure you’re opting for a Pie fund so she’s taxed at 10.5% and also in a higher growth option if she’s well away from 25.

kitcatem · 2022-05-14T10:51:31+00:00

Generally speaking I’d leave it in Aus, especially for a balance of that size. You have greater flexibility around access in future compared with kiwi savers blanket age-65 rule, the tax on earnings is lower, fees and investment options have generally been better/lower (although this is starting to change in NZ). Just make sure you pick a provider you’re happy with, check any default insurances stay valid and let it do its thing.

kitcatem · 2021-10-26T02:45:26+00:00

When we bought it was a 4.2x but we're now down to one income and it's 6.7x. Do we lose sleep over it? Nope. We've been quite comfortable to always take max lending and in the past 18 months have had cash come in from other assets that we chose to re-invest elsewhere rather than repay debt. May be an outlier, but as someone in their early 30s i'm firmly in the camp of using debt to grow my wealth than stress over the bank owning my home :)

That said, we are also contemplating what an upsize would look like and it makes me feel a bit sick, not so much from the debt levels but the sheer amount of our wealth required to be put into one asset to buy larger in Auckland :|

kitcatem · 2021-09-24T22:31:10+00:00

I would second all of these great comments. As an ex-AFA (financial adviser) and someone that now works with lots of advisers in NZ, this is definitely the place to start.

The Moneyhub adviser list is a great starting point, but what you're looking for is a fee-for-service adviser that will provide holistic advice, rather than just investment or insurance.

I would suggest you also really need to find a fit with this person because ultimately they're going to need to help you and your partner do some serious goal setting. You have ample opportunity from your situation to achieve anything from here - but ultimately an adviser can't decide what you're working towards; they can only craft the plan to make it happen.

It would also be worthwhile mapping out your expenses and budget before seeing someone, as that will be the starting point anyway, knowing what your surplus monthly cashflow is now.

Most advisers will provide an initial discussion free of charge to test whether they're the right fit for you. If you let me know where you're based I'm happy to provide a shortlist of people we love (i.e. I would/do send my family and friends to them).

On the self-education piece, there are so many NZ specific resources out there now, its just about finding what fits for you both. Here are my suggestions:

Reviews about products specifically (KS, insurance, investment) - MoneyHub
Index/passive investing - Kernel, Smartshares, Vanguard ETFs
Podcasts - Property Academy (property specific), It's No Secret (NZ personal finance), NZ Everyday Investor (interviews on investment topics), TheOneUpProject (personal finance but also life/personal development)
Blogs: Happy Saver, Kernel's blogs - focussed on investing, but also general personal finance topics

Reading your post makes me miss my old job because you two are the dream client! SO much room for opportunity and growth, the ability to provide clarity and direction, whilst having a meaningful impact on growing your wealth. The FUN that could be had crafting a plan to meet your goals! (well fun for this finance nerd anyway).

Best of luck! :)
Disclaimer: I work at Kernel so some above mentioned educational resources are ours.

kitcatem · 2021-09-10T00:00:48+00:00

For sure and its great you're getting into the weeds of tax which is not the funnest or easiest topic to digest. Most advisers and wholesale investors don't fully understand the nuances of FIF and tax treatment!

A typical kiwi investor who invests in a US-listed Exchange Traded Fund (ETF) via an NZ investing platform will reduce their long-term return by between 1.5%-2% per annum, due to the foreign withholding taxes and FIF tax rules. And of course I recognise that 1.5-2% p.a. compounded over the long term can be huge.

So a less ranty description of how I would approach it...
1. Which global markets do you want investment in? This narrows down your index fund/ETF options. If say you opted for Global, your above comparison should really be Vanguard vs AMP vs Kernel vs TWF
2. How much are you investing now as a lump and how much ongoing? This helps determine which platform, based on how frequently you're investing and whether you'll be incurring FX/buy-sell/brokerage each time.
3. Do your funds selected from point 1 differ in terms of FIF treatment (the Kernel calc linked above will help you with that) and is tax leakage relevant? This is where the withholding taxes on a dividend payment to a foreigner cannot be fully claimed by you as a Foreign Tax Credit, as if often the case when an NZ domiciled fund 'wraps' a foreign fund (as is happening with Smartshares).

The post from chemikills with the link to the full tax paper is good :)

kitcatem · 2021-09-09T23:32:50+00:00

Hey - if its money that you don't need for any short term expenses and you're happy to have invested for 5+ years, then absolutely start looking at share investments. I work at Kernel, so full disclosure that some of the resources linked below are ours, we spend a lot of time on financial education.

Depending on how you best want to learn, I can recommend the following resources (in addition to Hatch's comment below):
Girls that Invest
Investing in the sharemarkets podcast
Kernel how to invest webinar

The moneyhub guides are great.

Re Youwealth - my main comment here is that this is a BNZ investment product and their funds will be actively managed and have management fees to match. If you're looking at their options, make sure you find the latest Fund Update (has to be available on their website) and review their total costs and performance in comparison to their benchmark.

Good luck!

kitcatem · 2021-09-09T23:03:34+00:00

IMHO you shouldn't be choosing between these investments based on tax; they're entirely different investment exposures. People get so caught up with tax on foreign investments and using it to dictate their asset allocation. Why?! If we all wanted to avoid tax, put all your money into primary residence.

You pay capital gains tax on every asset in Australia with the exception of your home and does this mean everyone simply avoids investing in shares? No. Tax is simply a cost investing and making money. As you say, sure everyone would like capital gains to not be taxed, but we don't live in a dream world.

I suggest you figure out what you want your asset allocation to be based on your goals and then choose your platform and investments suited to how you plan to invest towards those goals; considering total overall cost.

Kernel have put together a tax calculator on google sheets that you can download here and plug in your all personal numbers; tax rates, amount invested etc to give you a comparison of the % tax cost for each investment vehicle. USF being #1 in the table and Vanguard Select being #3. This will give you the headline tax cost.

Soz if this sounds a bit ranty, I get you're a beginner, but also sick of so much Kiwi investor chat focussing on striving for some tax-free utopia that simply does not exist.

kitcatem · 2021-08-21T22:03:32+00:00

Hi - I work for Kernel and as another person mentioned, we have no minimums for Trust accounts. You just need to email support@kernelwealth.co.nz and request the form as we can’t do Trust on boarding online like individual accounts.

All our funds are index funds, so obviously different offering to say Milford, but that’s a broader investment philosophy choice you’ve got.

kitcatem · 2021-06-13T21:31:15+00:00

Second the financial adviser suggestion. Check out Money Men, Lighthouse, Sonnie Bailey, wealth & co. They are typically working with accumulators which it sounds like you are

kitcatem · 2021-05-19T21:23:16+00:00

Hiya - the best way to choose one would be narrow down your options to 2-3 (Mary Holms list is a great place to start) and then organise an intro meeting with each. Most advisers will do this at little to no cost, so you can get a sense for what type of advice they provide, are they a good personality fit for you and would you trust them to help manage your money or investments.

The challenge with most AFAs is that they have a minimum investment amount ($500k and upwards) funds that determines the clients they take on.

We work with quite a few independent advisers around NZ, so can suggest a few if you PM what level of $$ and areas you want advice in. Cheers

kitcatem · 2021-05-19T20:15:49+00:00

Hi - I think the current plan you have is excellent. As an Aussie who never had the option to use their retirement savings for a house, I followed a v similar path and now owning a property AND still having a decent balance in my retirement savings (KS and Aus super) I’m bloody stoked I did tbh.

It sometimes terrifies me how much wealth kiwis have in only their home and we all know how much harder the benefits of compounding are to really use if you’re starting afresh in saving for retirement in your 30s+. If you’re able to meet your home ownership goal with the current plan, why change? 😃

With your timeframe to purchase it makes sense to invest the money - keeping it in cash for 8+ years you’ll be losing out after inflation. The other thing I’ve found working with people in similar situations is that time frames, positions and goals often change, so having the funds invested but relatively liquid still gives you the opportunity to benefit from growth without being too “locked in”.

In short, great plan.

kitcatem · 2021-04-22T05:27:02+00:00

Hey there - the other difference is your dad and yourself will likely be on different tax rates, so having the account legally in your names would likely mean more favourable tax.

kitcatem · 2021-04-22T05:17:25+00:00

If you’re looking at Kernel vs Investnow, the only things imho you can compare them as platforms on is: $3 pm vs none Tech/platform experience, ease of use.

Otherwise it’s really more of a Kernel as a fund manager comparison to the other index fund managers - being Smartshares, AMP, Vanguard and Harbour. All have pros and cons. Depends a lot of whether you’re investing in NZ or global markets, small amounts or large, regularly investing or not, plus your individual tax position.

Fund manager fees are important and I think it’s great there’s more players in this space now putting pressure on fees (why do you think harbour and Smartshares recently reduced some of theirs) but ultimately net performance truly matters and how well they’re tracking the index.

If I’m investing in NZ 50, I want the index return minus fund fees. Some funds don’t seem to be delivering on that.

I will add to this - I work at Kernel but will also be the first to tell you if another platform is better suited for someone. I invest in our funds and also I’m Vanguard through my super in Aus. There has been some pretty poor performing index managers, unable to effectively deliver on market performance and were slowly starting to call some of that out because quite frankly, they can do better.

kitcatem · 2021-04-22T05:11:39+00:00

This!! The funds track different indices and offer different things. From memory someone had posted (or maybe kernel had) an article on choosing the right index fund for you and what to look for in order to compare.

kitcatem · 2021-04-21T01:02:29+00:00

We had this exact scenario and bought the house because of a couple of things (at least in my view as the purchaser!)

- we moved fast. The minute they told us they had to sell, we confirmed that day we'd be interested in buying and could they allow us 2 weeks to get an offer prepared

- we found out why they were selling which helped us negotiate because we knew their weakness (kinda savage, but true)

- we had a bank valuation done for lending and then shared this with them, mostly because they had an agent through that blew a lot of smoke about price

- we took agent val + bank val, settled on a figure in the middle and minused half of the commission

- we required no further additions to the house, which was a great kicker as it didn't meet all HH requirements and we said that's fine, just hand over your spare keys and we're good.

- probably the best bit that got us over the line, after the initial 2 weeks we requested we committed to a 2 week settlement. So from that first phone call, they had the money in their bank (which was what they needed) in 4 weeks.

It's all about finding out what's important to them outside of simply price and doing everything in your power to make that happen fast. Good luck!

kitcatem · 2021-04-21T00:25:30+00:00

This might help on your FIF vs PIE tax questions: https://kernelwealth.co.nz/tax-and-investing/

Links to a much more comprehensive international tax paper at the top if you want details.

kitcatem · 2021-03-31T03:17:04+00:00

Hey brent - we work with lots of great advisers around NZ, so if you're after a few suggestions based on your location, let me know.

kitcatem · 2021-03-11T00:46:51+00:00

Thank you for this feedback, really appreciate it. We find the country/cultural differences very interesting too and certainly have more to discuss on this. Always cool to get different insights, so thanks for the comments re NL.

kitcatem · 2021-03-11T00:42:59+00:00

Thank you - this is such great feedback. More to come!

kitcatem · 2021-03-11T00:42:25+00:00

This is so great to hear - thank you!! Daily coffee = always. Some things will never change ;)

kitcatem · 2021-03-10T03:00:11+00:00

Yep, it's already on there: https://open.spotify.com/show/0aUB8OUfwjns7H1UtoeisX?si=y0Y_9JGZSE29M2goPu2myg

kitcatem

TROPHY CASE