It is not the interest I am earning that is worrying me (5 per cent, which suits me fine). What I want to know is if sometime in the future I do decide to divorce him, how can I keep this money myself?
I am not in a position to visit lawyers to arrange a family trust or any such thing. Nobody I know (except the bank clerks) knows about this.
I wonder if I should put the account in the children's names, because then he can't touch it should we split up.
Or should I just withdraw it and hide it in a pair of shoes at the back of the wardrobe?
I am assuming that the superannuation scheme that I have through my work in my name (which he knows about) would have to be divided should we split up.
A. My heart goes out to you. But I'm afraid I've got mainly bad news.
First, the proportion of your superannuation built up during your marriage will be relationship property if you split. You should, though, be able to keep your scheme going, with your husband getting other assets of equal value to the scheme.
And there may be something extra there for you if you started in the scheme before you married.
The $10,000 will also be relationship property and divided 50:50 - unless the money was inherited, or it was yours before you started living with your husband. Neither seems to apply here.
After you have separated, you may have to sign an affidavit listing your property, including the savings, says Deborah Hollings, a barrister who specialises in relationship property law.
You could, of course, "forget" to list it, but that would be perjury and contempt of court. It's not a course of action that any lawyer would have anything to do with, says Hollings.
Putting the money in the children's names wouldn't work either, if your husband can prove you still have control of the money.
If you formally gifted the money to the children, you wouldn't have control. But then it wouldn't be yours for use in your retirement.
Even if you were able to put the money into a family trust, "There's provision for compensation for relationship property put into a trust", says Hollings.
"It represents earning during the marriage, and will almost always be relationship property and divided equally."
So what can you do?
I would still keep saving - in a bank, not a shoe. Even if your husband gets half, you'll keep half, which is much better than nothing.
And take heart. You probably won't retire for another 25 or 30 years, you have a work super scheme and you've proven that you can save. I can't imagine you broke in retirement.
One more thing. You don't want marital advice, and I'm not qualified to give it. But a comment from Hollings seems worth passing on.
"She might want to get a psychologist's advice on the effects on the children of living in a house like that," she says. "Research shows it's often worse than separation."
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Q. I have been following your advice (more or less) for some years and, considering world markets, am happy with the result.
However, I am disappointed at what seem to me to be large management fees on some index funds.
My most recent account from NZ MidCap funds charged a fee of 14.3 per cent of gross income, while, by comparison, that for TeNZ was only 7.3 per cent.
The fact that MidCap looks after 30 companies while TeNZ has 10 may have something to do with it.
Surely, once the basis for an index fund has been decided upon, it is merely a mechanical process to administer it? One Excel workbook should suffice. Is the required buying and selling so costly?
A. Index funds are, indeed, cheap to run, compared with other share funds. And their management fees reflect that.
What you've done is look at fees as a percentage of dividend income. I can understand why you did that, as the fees are deducted from that income.
But management fees are normally presented as a percentage of the money you have invested.
The MidCap fee, for instance, is 0.75 per cent of your investment, and the TeNZ fee is 0.4 per cent. Other share funds might charge 1.5 or 2 per cent.
For the benefit of others, index funds invest in the shares in a sharemarket index.
The MidCap holds shares in the index that covers the middle of the New Zealand market, companies ranked 11th to 40th on the stock exchange. TeNZ invests in the biggest 10 companies.
Index fund managers don't need to hire anyone to research which shares to buy and sell, hence the low fees.
In New Zealand, too, index funds don't pay tax on capital gains, whereas other "active" share funds do. This can make a big difference to returns over the years.
So what have the returns - dividends and capital gains - been on the MidCap and TeNZ funds?
Over the last 12 months, TeNZ is the clear winner, at a fairly impressive 16.2 per cent, while the MidCap investors lost a little, with a return of minus 0.3 per cent, says Cameron Watson of ABN Amro Craigs.
"In TeNZ, the Warehouse was the only major loss, falling 35 per cent, while Carter Holt fell 11 per cent," says Watson.
"All the other stocks were up, some spectacularly." Fletcher Building rose 48 per cent, Sky City 47 per cent, and Fisher & Paykel Appliances 37 per cent.
"Telecom, the largest stock in the index and fund, managed a 7 per cent gain."
Meanwhile, "the MidCap index has been hit with four of its larger stocks falling heavily". Tower has dropped 58 per cent, Tranz Rail 42 per cent, Restaurant Brands 29 per cent, and Air New Zealand 25 per cent.
"These losses were thankfully offset by Hellaby, up 76 per cent; Cavalier 55 per cent and F&P Healthcare 50 per cent."
But 12 months is way too short a time to judge any share or share fund.
Even five years is rather short, but it's the longest data we've got. And it shows a very different picture. Over that time, TeNZ has risen an average of 1.5 per cent a year, while the MidCap has risen an average of 10.2 per cent a year.
Does that mean long-term investors - and all share fund investors should be in for the long haul - would be better off in the MidCap fund?
Not necessarily. There's no telling which size sector will do better in the future. It's a good idea to invest in both large and mid-sized, as you have.
By the way, investors in international share funds probably feel you got off pretty lightly with your fees of 14 and 7 per cent of dividend income.
Companies in other countries tend to pay much lower dividends than New Zealand companies. So fees on international funds can wipe out dividend income completely.
Generally, though, capital gains on those funds are higher than on New Zealand funds, and that's where investors get their return.
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Q. We are a small, dual-income family currently saving for our first home and are wanting some sound financial advice to help us reach our goal as quickly as possible.
We have about $20,000 now and are wanting (ideally) to save another $30,000 in the next 12 months. We will then be going down to one income to extend our family.
We have a savings power of about $2000 a month and will need about $5000 for our Christmas holiday.
As we see them, our options are as follows:
* Leave our money in the savings account offered by our current bank, earning about 4.5 per cent.
* Invest in one of the many fixed-term deposits on offer at the moment, such as a first ranking secured debenture stock (whatever that means), earning about 8 per cent.
* Take more of a punt and invest in some sort of diversified managed share fund for 12 months.
What would you recommend?
A. Sorry, but I would recommend either saving harder or winding down your expectations.
You plan to save $24,000 in the coming year, but $5000 will come out of that for your holiday, leaving $19,000.
You'll also earn a return on your $20,000 in savings. But the only way to achieve a total of $50,000 within a year is to:
* Save another $1000 a month or
* Invest in something risky and be very lucky.
A bank savings account won't nearly get you there. Nor will an investment paying 8 per cent - even though such investments can be pretty risky.
A share fund? It's possible but highly unlikely your money would grow that much. And there's also about a one-in-three chance that you'll lose money in a share fund over a single year.
But don't despair.
If you save the entire income that you will be losing when one of you stops work in a year, that might amount to more than $24,000. And it will give you practice at doing without it.
Or you could modify your holiday plans, or extend your time frame a little.
You're doing well to set up a goal and explore your options. You'll get there!
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* Mary Holm is a freelance journalist and author of Investing Made Simple.
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