Check with Inland Revenue to see if there is some unclaimed money waiting for you. Photo /123rf
OPINION
Q: I am sending you this email on behalf of my Mum (90). She enjoys your column each week:
Dear Mary: Just a note about life insurance.
In 1957 my husband – then a student – took out a £2000 life insurance policy, presumably to pay for his funeral. Over the years we forgot all about this.
He is now 95. Recently we heard from our bank (BNZ) that this insurance company had been trying to contact him at an old address. So I rang an 0800 number. They were delighted and gave us instructions on how to collect $15,000.
This was accrued bonuses over the years, and he didn’t even have to die! A nice little Christmas present for our three daughters from Dad.
A: Indeed! Thanks for telling us about it.
Other readers – inspired by your story – don’t have to wait for their bank to contact them with similar news. They can check Inland Revenue’s website to see if there is similar treasure awaiting them.
“When a bank, insurance company, or other institution holds money and has been unable to contact or locate the owner for five years – it is treated as unclaimed money,” says the website. That money is transferred to IRD.
Other examples of money that might be sitting there include: holiday back pay from an employer, victim support payments, royalties from something you created years ago, overpayment of bills, money you have inherited and much more. It’s worth a quick look.
Footnote: By its very nature this column can tend to be negative – about people’s worries, mistakes and so on. But today, because it’s Christmas, I’ve included only inspiring letters, plus one short explanatory one at the end.
Q: I bought my first house when I was 23, with no financial help from my parents.
From the age of 20 (in 2016), I had tried to save $600 to $800 every two weeks after payday. At this point, I had only $150 in the bank, and had just started my first career-type job, which paid $55,000 before taxes per year. I continued doing this for three years until I had saved about $50,000 in a serious savings account.
In addition, I was contributing money to my KiwiSaver account, which had $13,000 in it. So I had $63,000 for a down payment on a home.
In 2019, I bought a $400,000, 1980s three-bedroom, one-bathroom house in Palmerston North that needed some work. I only put down a 10 per cent deposit, or $40,000, which left me with some money for a fridge, furniture, etc., and enough for a small emergency fund. However, because of my low deposit, my interest rate was quite high.
I sold the same house in 2022 for just under $700,000, when the housing market was at its peak. I relocated to Christchurch and paid a sizeable deposit on a new build with four bedrooms and two bathrooms.
I am now 28. I just opened two managed investment funds with two different companies. Both are set to aggressive growth. Additionally, my KiwiSaver is growing quietly, as I can’t use it until I retire. My goal is to prepare for retirement. But I am not sure if this is the best course of action.
What do I do now? Do I increase my mortgage payments to be mortgage-free by 40? Or start looking at investing in shares. Or start saving up for that second home?
I do acknowledge that I’m in a unique situation. Any advice would be greatly appreciated.
A: Your email certainly qualifies as Inspiring Letter No 2.
The secret to your home-buying success seems to be saving almost half your take-home pay in that first “proper” job. It’s a great idea to put aside heaps at that stage, before you get used to having it. After all, you had managed on a lower income before then.
What’s more, you bought a smallish, cheap house in a relatively low-priced town.
What next? Let’s look at your three options:
· Paying down the mortgage is the simplest. And reducing, say, a 7 per cent loan will improve your wealth as much as an investment that pays you 7 per cent after fees and tax – with no risk. That’s a great deal.
Also, it puts you in a strong position for whatever comes your way. Your accommodation costs will be relatively low, and you can always borrow against the house again to make a new investment or perhaps start a business.
· Investing in shares – perhaps through low-fee share funds – will almost certainly give you higher returns than your mortgage interest rate in some years. But in other years it won’t be so good, and sometimes there will be losses. On average, who knows?
Still, it will be more exciting than reducing your mortgage, and you’ll learn about market ups and downs. But promise yourself to stick with it through thick and thin.
· Buying a rental property has worked well for many people over the years, although I suspect those who haven’t been so clever or lucky are quieter about it.
In a way, investing in rentals is a lifestyle choice. You would be much more involved than with shares – doing maintenance, choosing tenants, chasing up late rent and so on, or finding and paying someone to do that for you. Some people thrive on being landlords. For others, it holds no appeal.
There’s no way to predict which option would work out best, so go with what appeals to you. You’ve already made a brilliant start. I can’t imagine you ever being in financial difficulties.
Q: My 14-year-old son is interested in finance and the share market, and I wondered if there was any way to get him started with some of his savings?
I don’t think he can open a trading account until he is 18. My husband and I both work in finance, so we’re comfortable supervising him and having the right conversations, but unsure how to get him up and running. We’re about to open a KiwiSaver account for him, which he can watch, but he’d like to have something he can have a bit of control over.
Answer: I reckon we can call this Inspiring Letter No 3 because of your son’s enthusiasm.
It seems he can use an online share trading platform. There are kids’ accounts on Hatch, Investnow, Sharesies and probably others. Check their websites.
With these accounts, you will be responsible for what your son does. But I suggest you let him make the decisions. If he chooses just one or two shares, or he wants to trade frequently, let him.
Of course, there’s a “danger” he will do well with these worrying strategies for a while, and start thinking he knows how to pick shares – a rare gift. But it would be astonishing if he keeps doing well. He will almost certainly learn some valuable lessons while there’s not too much at stake.
Your son can also learn from KiwiSaver. He could, for example, put half his contributions into a low-risk fund and half into a high-risk fund, and watch how the latter will be wobblier but will probably grow more in the longer run.
Who knows? By 23 he too may be buying his first home. And perhaps, some decades from now, he’ll be shouting Mum and Dad a world trip.
Please let me know how he goes – or he could tell me himself.
Q: The more ideas out there to keep us financially secure the better. We are all in this big pot together.
I know from experience, having been widowed at 44 (he drowned) and left with one hell of a bloody financial mess to clean up. He was a farmer,and wouldn’t let me into the office, as he thought I wouldn’t understand.
I know how mentally, and physically, resilient one has to be to turn the business around. After 25 years, I now have the farm humming.
Never, ever, ever bloody give up. (Bank managers love home cooking!)
Answer: Yours is clearly Inspiring Letter No 4. Interesting to read about your “tactic” from back in the days when the local bank manager knew his – sadly it was almost always “his” – customers.
Thanks for two strong messages:
· Don’t give up.
· To the partner in a marriage or relationship who doesn’t run the money: Please insist on knowing about family money issues. Who knows? You might be the more capable one, as our correspondent found. In any case, you never know what lies ahead.
Q: I’ve read your books and columns for many years and even had you answer some of my questions. With your help, we are now mortgage-free. I’m 54 and my husband is 61. Now we could go and buy an investment property, no money down, but we decided not to. We decided life is for living and not stressing over big mortgage top-ups, maintenance and tenants. We’ll just enjoy this freedom, and of course, we are saving what used to be the mortgage money into a high-interest, on-call account for now.
Our combined income is only $80,000, but we very happily live on that and don’t want to put our heads back in the stress noose! Thirty-three years of slog and four redundancies with no pay. We did it!
Answer: Yet another inspiring letter. I love your attitude. Enough is indeed enough.
Q: In the first item last week, you mentioned “if you could get that return every day, after a year $1000 would turn into almost $230,000″.
I am intrigued by how you arrived at $230,000 within a year.
A: Your letter doesn’t quite fit in the inspiring category, but perhaps growing $229,000 in a year does. The only trouble is, as I explained last week, the reader whose shares rose 1.5 per cent in a day has zero chance of that continuing.
Anyway… in reply to your question, I pretended a day was a year. I put 1.5 per cent as the yearly return in an online compounding returns calculator, and asked how much I would have after 365 years.
I should add that I checked with a mathematician friend that that was valid.
Be kind, be relaxed, and be merry!
To all you regular – and irregular – readers, thank you. And a special thanks to those who have sent letters for the column this year. Sadly, most don’t make it into print, but they all give me insights into what people are thinking and worrying about – and sometimes rejoicing about. I especially appreciate hearing from people who disagree with me, and almost all their letters make it into the paper.
By the way, don’t give up if your letter doesn’t get into the column in the following few weeks. I answer some letters months later, often because they fit in with what someone else has written about. So keep watching.
It’s been a landmark year for this column. In April, we marked the 25th anniversary. Gosh, a quarter of a century has flashed by. It was heartwarming to receive so many kind comments at that time.
And at the end of this year we are farewelling Mark Fryer, who has subedited the column for much of its history. Without Mark, quite a number of errors would have slipped into the paper over the years. And he’s chosen many eye-catching pictures and written many snappy headlines.
Mark will still be compiling the quiz in Canvas magazine, though, so I’ll be continuing to curse him for his hard questions.
Time for a break. See you again on January 20. In the meantime, be kind, be relaxed and be merry!
- Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions 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 click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
'Debt becomes more like a rent payment that people get so used to paying.'