NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Personal Finance

Enjoy your nest egg while you can

Mary Holm
By Mary Holm
Columnist·NZ Herald·
14 Aug, 2015 05:00 PM10 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Many couples in their 80s say they wish they had spent more in their early retirement, while they could get around easily. Photo / Getty Images
Many couples in their 80s say they wish they had spent more in their early retirement, while they could get around easily. Photo / Getty Images

Many couples in their 80s say they wish they had spent more in their early retirement, while they could get around easily. Photo / Getty Images

Mary Holm
Opinion by Mary Holm
Mary Holm is a columnist for the New Zealand Herald.
Learn more

Tying up money in a property investment could be more hassle than it's worth for a recently retired couple who are still young enough to splash out on themselves.

We are 70-year-old retirees receiving NZ Super and also private super of $900 a month.

We have a freehold property with a CV of $1.4 million and have $700,000 invested in one term deposit with one bank.

Would we be safer and better off if we buy a freehold investment property, for example a home unit? Or should we split our term investment money into more than one bank?

Skip the property and get out there and live it up!

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

I don't think a property investment is a good idea for you for a couple of reasons:

• It could be a hassle. Tenants don't always pay rent or treat a property well. And maintenance problems can be worrying. You don't need that.

• You're tying up money you could be enjoying. While you can spend the rental income - minus insurance, rates, maintenance and perhaps property management fees - you can't spend the value of the property.

And why not spend that money? There are delicious restaurant meals waiting to be savoured; plays, concerts, operas and ballets waiting to be enjoyed; exotic places waiting to be gazed upon; flash cars waiting to be cruised around in.

I've heard more than a few couples in their 80s say they wished they had spent more in their earlier retirement, while they could get around easily.

If you're wanting to leave something to children or others, your house should be plenty.

Discover more

Opinion

Mary Holm: Financial advisers' fees lack clarity

17 Jul 05:00 PM
Property

Property buying can mean big risks

24 Jul 05:00 PM
Opinion

Mary Holm: Investment in gold loses its shine

31 Jul 05:00 PM
Opinion

Mary Holm: How to win the credit card game

07 Aug 05:00 PM

To keep things simple, you could keep the $700,000 in bank term deposits.

Yes, split it among several banks, just in case one gets into trouble and you lose a portion of your deposit under Open Bank Resolution - as discussed recently in this column.

Advertisement
Advertise with NZME.

I suggest you set up your deposits so you have one maturing every month or every few months. That will free up cash for spending - for fun or emergencies.

How much? One approach is to say that you'll spend the money over the next 15 years, with the idea that NZ Super and the $900 a month should easily cover you after that.

Many people say NZ Super alone is enough from 80 or 85 on, as long as you have a mortgage-free home.

Divide $700,000 by 15, which gives you $46,667 a year, or about $3900 a month to spend this year. Next year, divide the remaining total by 14, the year after by 13, and so on.

These days, interest rates are higher than inflation, so the monthly amounts should grow each year more than your expenses grow.

If you want to splash out in the next few years, perhaps on travel, you're certainly in a position to do so. After that, just divide the rest by 14, 13 and so on - the number of years until you're 85.

Advertisement
Advertise with NZME.

What if you don't want to spend that much? I'm sure a charity would appreciate getting the rest, now or after you die.

I should note here that this is a simple approach.

An alternative is to put some of the $700,000 - the portion you don't expect to spend for several years - into bonds, and the portion you won't spend for 10 years or more into shares or a share fund.

That way the money should grow more, because returns are higher on those investments.

You may want to get a financial adviser to help with this.

For suggestions on how to find one, see the Info on the Advisers page on www.maryholm.com

Advertisement
Advertise with NZME.

Layering investments

Some years ago you published an explanation on how to layer investment accounts to provide a small monthly income, and how to reinvest them if the capital wasn't required.

I should have kept the reply but didn't. Can you explain again, please?

This could apply to the couple above as well as you.

In most market conditions - including now - you'll get higher interest for deposits with longer terms. So you don't want all your savings tied up in short-term deposits just so you have regular access to it.

Let's say you want $100 available each month, to spend if you wish. Put whatever amount will give you $100 after-tax in a one-month deposit - ask the bank to help you calculate the amount. Then do the same with a two-month deposit, a three-month deposit and so on, up to, say, two years. Each month, you can spend the interest or reinvest it, but always reinvest the principal for two years - unless there's an emergency.

That will give you some money every month, but the bulk of your savings will be earning higher longer-term interest.

Advertisement
Advertise with NZME.

Living within your means

It was with interest that I read your article on credit card charges. I can't believe that people think that it is okay to live on other people's money. I know first-hand that this can cause a lot of stress, trauma and heartbreak.

How hard is it to pay off your card each month? Also grizzling because your bank won't come to you with "deals". Does he not realise that every bank has thousands of people like him and would rather deal with people who keep within the "rules"?

We are a couple of pensioners who get great treatment from our bank. It is happy to negotiate a higher interest rate on our meagre investment, which is nowhere near the recommended amount you should have when you retire.

It also talks to us about ways to make our small savings work harder for us. (We were just getting on our feet after raising and educating our children when the 80s crash came and we ended up with only our house - which we freeholded with our retirement money so that we couldn't lose it as well as our jobs. Hence the small savings we have now.)

Why don't people live within their means? If you can't afford Sky TV, don't have it. If you can't afford a private medical scheme don't have it, the public health system is really very good.

We are not sitting at home being miserable. We go on holidays, go out for meals, etc, and we owe no one anything. Hopefully by the time we pop our clods our children will have enough to bury us and have our house.

Advertisement
Advertise with NZME.

The next correspondent answers your question about how hard it is to pay off your card each month.

On your comment about banks preferring people who repay their debts, I'm not so sure. They make a lot of money out of interest rates of around 20 per cent.

Still, it's good to hear your bank treats you well - after a few recent complaints from other retired readers - and that you're enjoying life.

P.S. Please don't get cross if I say that I loved your "pop our clods" instead of "pop our clogs" in the same sentence as discussing your children burying you! You're not related to Mrs Malaprop by any chance?

Credit card debt burden

As a long time fan of your column I was disappointed, well incensed really, to see you put down those struggling with credit card debt with the smug line of the well-off: "Well the smart way is to pay off the full balance of your card each month." Ergo if you don't you are not smart but stupid.

You underline your lack of understanding of people struggling with big debts by saying, "Please stop using your cards immediately". Many people feel they have no choice but to recycle the small credit they generate by making the minimum monthly payment.

Advertisement
Advertise with NZME.

People end up with massive credit card debts for many reasons. Some stretch back to the time when a bank would send not one but two unsolicited credit cards and regularly raise the credit limit.

Sometimes people lose their jobs, have unexpected costs such as funerals (it may surprise you to know that the vast majority of people do not have $10,000 in an emergency account), and some are just not very good money managers. And maybe some gamble, smoke and drink their way into debt ... but I believe that's far from the norm.

For those who like me are trying to dig their way out of trouble it is a concern that banks are charging usurious rates of interest. An American credit card company is charging almost 22 per cent, but even the people's bank has jumped on the bandwagon. Almost at the same time that the Reserve Bank lowered the OCR from 3.5 to 3.25 per cent my Government-owned credit card issuer raised my interest rate from 12.9 per cent to 19.95 per cent - an increase of over 54 per cent just because it could (it didn't offer any reason).

No doubt people with $1 million houses can discuss their interest rates with their friendly bankers, but I assure you the poor have very little bargaining power. By all means make constructive suggestions about budgeting services, for example, but there is no reason to let profiteering bankers off the hook.

Sorry to incense you. I probably was rather unsympathetic to last week's reader. It's always hard to know when "tough love" is appropriate with finances.

Some people run up debt because they struggle to put shoes on their children, while others "must have" Sky TV, to use the example in the previous letter. But even those in the first group have to pay their debt in the end, unless they go bankrupt or similar.

Advertisement
Advertise with NZME.

Keeping the debt running for years - as last week's reader implied he does - seems such a waste of money by those worst placed to waste it.

In the long run, they must end up with a lot fewer goods and services - because of all the interest they pay - than if they had saved for items before buying them. If a sharp word or two could encourage some of them to get rid of their debt and switch to saving, surely it's worth it.

I realise all this sounds patronising. Maybe next week I'll find myself apologising for that! I don't know ...

I fully agree that credit card interest rates are horribly high. I don't see how banks can justify them. That's exactly why I would love to see everyone who can't pay their debts in full each month tell the banks to take their credit card business elsewhere.

Your suggestion about budgeting services is an excellent one. For info on free help with this, see www.familybudgeting.org.nz

Are we friends again? I hope so, because I like people who care about the underdog.

Advertisement
Advertise with NZME.

More on credit cards next week.

Mary Holm is a freelance journalist, member of the Financial Markets Authority board, director of the Banking Ombudsman Scheme, seminar presenter and bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office.

Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com or Money Column, Business Herald, PO Box 32, Auckland. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.

Save

    Share this article

Latest from Personal Finance

Business|personal finance

From corporate life to sexology: How Morgan Penn made a career out of her passion

15 Jun 07:00 PM
Premium
Opinion

The Ex-Files: How to access KiwiSaver funds after separation

15 Jun 12:00 AM
Premium
Opinion

Diana Clement: How a mindset shift can unlock financial success

14 Jun 09:00 PM

How one volunteer makes people feel seen

sponsored
Advertisement
Advertise with NZME.
Recommended for you
‘Should be restored’: Heritage advocates cry foul as Gordon Wilson Flats face demo
New Zealand

‘Should be restored’: Heritage advocates cry foul as Gordon Wilson Flats face demo

17 Jun 12:40 AM
'Terrifying': Shoppers flee New World, Victoria Park fire; smoke seen across city
New Zealand

'Terrifying': Shoppers flee New World, Victoria Park fire; smoke seen across city

17 Jun 12:45 AM
US to declare seven pangolin species endangered to combat trafficking
World

US to declare seven pangolin species endangered to combat trafficking

17 Jun 12:27 AM
How often you should be cleaning your toilet, according to experts
World

How often you should be cleaning your toilet, according to experts

17 Jun 12:12 AM
Australia Post unveils dedicated parcel-only offices for online shoppers
World

Australia Post unveils dedicated parcel-only offices for online shoppers

17 Jun 12:08 AM

Latest from Personal Finance

From corporate life to sexology: How Morgan Penn made a career out of her passion

From corporate life to sexology: How Morgan Penn made a career out of her passion

15 Jun 07:00 PM

The Sex.Life co-host offers insights into her big career shift and how she made it work.

Premium
The Ex-Files: How to access KiwiSaver funds after separation

The Ex-Files: How to access KiwiSaver funds after separation

15 Jun 12:00 AM
Premium
Diana Clement: How a mindset shift can unlock financial success

Diana Clement: How a mindset shift can unlock financial success

14 Jun 09:00 PM
Premium
Mary Holm: Should I pay off my student loan or invest in an index fund?

Mary Holm: Should I pay off my student loan or invest in an index fund?

13 Jun 05:00 PM
Jono and Ben brew up a tea-fuelled adventure in Sri Lanka
sponsored

Jono and Ben brew up a tea-fuelled adventure in Sri Lanka

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP
search by queryly Advanced Search