Money: Peace of mind and pizza

By Mary Holm

Money Matter


Q: I am interested in your advice on where to invest my savings.

I'm now 50, single and a twice-divorced father to five children. I was involuntarily laid off from a senior management position when the company went into liquidation, and am now unemployed and about to commence a one-year, full-time graduate course to upskill and enhance my job prospects.

I recently sold my family home, as I could not afford to service the mortgage/upkeep, and am boarding in rotation among family and friends. I expect to end up flatting or renting a room somewhere.

I have $180,0000 presently on deposit in a trading bank savings account attracting 4-5 per cent. I have no other assets, no other investments. Such is the price of double divorce.

My only source of income is limited, part-time casual work.


A: Get shelter. Buy yourself a small, mortgage-free home.

There is an argument to be made that you can do better financially by renting, and investing your savings elsewhere. And in some circumstances that makes sense.
But it doesn't take into account non-financial issues.

You've recently lost a home and a job and, not long ago, a marriage. It's probably psychologically important for you to have a base.

You can't be kicked out by a landlord, and can set the place up as you want. It will give you more control over your life.

Hopefully, your children can visit there. At least you can entertain those friends and family who are supporting you now, even if it's just for a cuppa or a pizza.

I wouldn't spend all your savings on a home. Perhaps get a small unit for, say, $120,000-$140,000. Or spend a bit more on slightly bigger place and take in a flatmate.

Either way, make sure you'll have enough money for insurance, rates, maintenance and other expenses that might arise while you're studying.

Keep several thousand dollars in your savings account, to cover the next month or so.

But put the rest into bank term deposits with varying maturities, depending on when you're likely to need the money.

That will earn you somewhat higher interest. And, if you need the money unexpectedly, you can always get it out early. You'll lose some interest, but that's not a disaster.

By the way, don't feel bad about squandering some of your savings on expenses while you're on your course.

It's really an investment. You're improving your earnings potential. And you're looking to the future. Good on you. Unless you do something rash - and it sounds as if you've learnt a few lessons, so probably won't - your financial position should improve from the time you finish studying.

At that stage, you can get seriously into saving for retirement.

Q: My wife and I have had relatively small amounts - $5000-$10,000 - to invest for a few months at a time and we have shopped around among the trading banks.

My question relates to the withdrawing of those funds when they have matured, either to move to another bank for a better deal or to move back to our own bank into our own cheque account.

I assumed that I should be able to withdraw funds from one bank and pay the money into an account in another bank electronically.

Not so. Today was the third attempt. All relate to the National Bank but not the same branch.

My approach has been to present a deposit slip with the withdrawal form and ask that the money be paid into that account.

The first response was that it could not be done, and then that it would cost $15. I therefore opted for the cash.

The teller then counted out $6500 in $100 notes and I physically took the money down the street to my own bank.

I would have thought that from the bank's point of view the most efficient and secure method of meeting a withdrawal request would be to transfer electronically.

From my perspective I did not feel comfortable walking down the street with all that cash, but that was the only option without incurring a significant charge.

Do all banks have this policy? The recipient bank was the BNZ.


A: Here's hoping not too many would-be robbers read this.

I, too, recently found myself walking a few blocks with a couple of thousand dollars in cash, to avoid a high bank fee. It certainly makes you aware of your surroundings, doesn't it?

The trouble is that the banks aren't eager to make it easy for you to take money away from them.

National Bank would have been happy to transfer your money into another of its accounts. But if you want to take it elsewhere, you have three options:

* Take the cash and move it yourself.

* Pay $5 for a bank cheque, and deposit that yourself.

* Pay $15 and National will make the deposit in another bank for you.

National says most other banks make similar charges.

Keep in mind, though, that many bank fees are negotiable if you've got a bit of money to play around with. And $5000-$10,000 should qualify.

Next time, point out that you've had several large term deposits with National, and there may be more - if they can be a bit flexible about their charges. They might even waive them altogether.

I've also got another suggestion. Use AMP's Ergo for your term deposits.

When you open an Ergo account, you give them a direct debit authority, to take money out of your bank account. Your bank may charge a small set-up fee for that.

Then, when you want to start a term deposit, ring Ergo and they will transfer the money, overnight, from your bank account.

When the deposit matures, with another phone call Ergo will move the money back overnight.

While interest on term deposits varies, Ergo's rates tend to be pretty competitive.

You can probably set up similar arrangements with other financial institutions.

* Got a question about money? Send it to Money Matters, Business Herald, PO Box 32, Auckland; fax: (09) 480-2054; or e-mail: maryh@journalist.com. Letters should not exceed 200 words. We won't publish your name, but please provide it and a (preferably daytime) phone number in case we need more information. We cannot answer all questions or correspond directly with readers.