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Why Are Defined Benefit Transfer Values So High?

Defined benefit transfers are not new, but have been a legal right to deferred pensioners since the eighties. However, they seem a particularly attractive option at the moment due to one main factor - historically low gilt yields. As defined benefit pension schemes have to provide fixed pension incomes in retirement, the most important return factor in the calculation used by actuaries to work out cash equivalent transfer values is the risk free investment return based on UK gilt yields. Gilts...

Biden Versus Trump

Some speculate that the future of the republic hinges on the outcome of the next election. But for smart investors it doesn't really matter who wins. Conventional wisdom says that those liberal Dems are generally bad for the economy and the stock market because of their big government tendencies, while fiscally conservative Republicans are good. This widely accepted belief is actually fake news if you look at data going back to the end of World War II. “Stock markets do perform...

HHG's Preferred New Zealand and Australian Equities

The stocks listed below have varying advantages and will suit different investment objectives. They have one common trait in that they have all been selected with a long-term focus. Contact Energy has a narrow economic moat, which reflects the oligopolistic structure of New Zealand’s electricity market. The firm generates a fourth of the country’s electricity and supplies power to more than 400,000 residential customers. Being a net generator, Contact Energy benefits from high spot prices. These typically occur during a dry...

Defend and diversify with Bonds

Why bonds are critical in any portfolio COVID-19 has had many ramifications, including an increase in the number and size of the government’s debt programmes. While these programmes assist people and businesses that are struggling, they also need to be funded – and this is where bonds come in. Bonds are the way governments raise money. In the current environment, there’s strong demand for them – especially for the A-rated bonds – and for very good reasons. For example Government bonds...

Why Are Interest Rates So Low?

The Monetary Policy Committee (MPC) is an internal committee of the Reserve Bank of New Zealand (RBNZ) and is responsible for formulating monetary policy in New Zealand, directed towards the economic objectives of achieving and maintaining stability in the general level of prices over the medium term, and supporting maximum sustainable employment. The global economic disruption caused by the spread of COVID-19 has been catastrophic, but the effects on the developed worlds’ share markets have largely been mitigated by the...

Pensions freedom age to increase from 55 to 57

On the go: The government has confirmed it will increase the age at which people can access their pension from 55 to 57 in 2028. The government first indicated its intention to increase this age back in 2014 but did not legislate for it, leaving many across the industry to question whether the change would ever go ahead. Under current pension freedom rules, which were introduced in 2015, individuals aged 55 and over can choose how and when they can access...

The Benefits to Staying Invested

As most major indices around the world close in on or even surpass their all-time highs, most investors will have reaped the benefits of employing a long term strategy over the last six months, staying invested and not panicking when the share market goes through even the most dramatic of falls. In fact, as investors, you have now all lived through the sharpest, shortest market crash in living memory, followed by a similarly spectacular recovery and are still here to tell...

Portfolio rebalancing, is it worthwhile?

Rebalancing your portfolio is one of those beneficial habits—like flossing every day or dusting under the refrigerator—that’s easy to let slide. But if your portfolio’s equity exposure crept up over the past few years, the sudden market correction in February and March was a harsh reminder of why it’s a good idea. In this article, I’ll look at how different rebalancing frequencies have paid off in 2020’s turbulent market, as well as during other market drawdowns. In a nutshell, any...

International Core Share Update - Apple Inc

Apple is among the largest companies in the world. The company enjoys strong brand recognition globally as do its flagship products, most notably the iPhone. While you often hear about the success of Apple Watch, Apple TV, iPad and even the likelihood of an Apple Car, the company’s success is built on the iPhone and iPhone-related services, which generated about 80% of Apple’s revenue and represented about 90% of Apple’s gross profit in fiscal 2018. For all of Apple’s success,...

New Zealand Stock Update: Turners Automotive Group

Turners are a company at the coalface in terms of New Zealand’s economic growth. The company is named for their well-known car auction business, which accounts for 37% of operating profit. This is the biggest seller of second hand cars in NZ. The auction house is really just part of an overall supply chain that is focused on providing finance and insurance. Turners Auctions provides ready access to potential clients in this regard. The finance and Insurance part of the...
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