What about investments? How secure are they?
Do you believe a bank is a safe place for all your money? Don't! Some failed in the GFC.
What about a house somewhere? There are major fault lines running through the length of New Zealand - we don't know what could happen.
Queenstown? A little shake in the Southern Alps could create a rock slide, with a resulting tsunami down Lake Wakatipu on to the town.
Property? The boom in Auckland could result in a bust. If you have borrowed a lot, you could lose a lot.
Like I said, security simply does not exist.
However ...
You can do the next best thing by following these two steps:
-Diversify your assets
-Pay attention to risk management
Risk management Many old pilots will tell you about Murphy's law: "What can go wrong will go wrong". This isn't entirely true. If and when you get organised and do a bit of forward planning, less things seem to go wrong and you are much less likely to get cleaned out entirely.
Make sure you have all the appropriate life insurances. Medical insurance? Income replacement insurance? House insurance? Contents insurance? Car insurance?
Remember to review them all annually to ensure you are not wasting money.
Wills and EPAs
Do you have a will? Is it up to date? Are your trustees quite a lot younger than you? They should be.
Make sure your spouse has a will, too. Remember you may be the one left to sort it all out and tidy it up. That can be very hard work if there is no will, or it is out of date.
Enduring powers of attorney should also be made. This is someone to run your affairs, or for you to run your spouse's affairs if one of you is out of action because of an accident or illness.
How did I answer my client?
He was asking if I can guarantee him financial (investment) security? No I can't, but I can do the next best thing. To sum up:
-Diversify widely, on and offshore
-Buy quality investments
-Average your way in
-Get good professional advice
This will work pretty well ...
He will do nicely in good years. He will survive the bad years. He won't really have to worry too much about NZ milk prices, the NZ dollar, ISIS, oil prices, and happenings in Eketahuna, Timbuktu, New York or anywhere else.
Diversification of investments is his friend and yours, and it's virtually free.
