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Money Maven Blog by Sheryl Sutherland, Authorised Financial Adviser and Director of The Financial Strategies Group

Recommended Reading

Recommended Reading by Sheryl Sutherland: Girls Just Want to Have Fund$ - Every Women’s Guide to Financial Independence, Money, Money, Money Ain't it Funny - How to Wire your Brain for Wealth, and Smart Money - How to structure your New Zealand business or investments and pay less tax.

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Wednesday, 5 March 2008


Why is New Zealand still in a rut - we have been for the last decade - in the UN Human Development Index. (The index is based on a range of data including wage rates, life expectancy, adult literacy, government spending and gross domestic product). Spain, at 13th, has leapfrogged ahead of us as 19th while Ireland has roared past us at 5th.

It seems quite odd when we have tremendous natural resources such as agriculture and are fortunate enough to have the seventh largest water mass in the world.

Wonder if it is related to government policy, tax and regulation?

Finance and Investment

I have been thinking a lot about tax lately and about what is fair to all. Our present system is not properly integrated and certainly doesn't look after the poorer members of society.

I really liked the idea of a flat tax rate but one Dr Adolf Stroombergen the chief economist at Infometrics takes that idea one step further. What about, he says, a flat rate of personal income tax combined with a universal guaranteed minimum income (GMI).

What about he says a flat tax rate of 25% and a GMI of $10,000. Tax is paid on every dollar of income whether wages or investment. The strength of a GMI system is that all of the big social welfare benefits (unemployment, sickness, superannuation) would all be rolled into GMI. If you lost your job or became ill or were too old to work you would automatically receive the $10,000. No application form, no means testing. Imagine the money the government would save through employing thousands fewer civil servants!

Your thoughts and comments are welcome.


I don't think there is a diet I haven't tried - unsuccessfully - I even went to Weight Watchers way back in those ignorant non PC days where the biggest loser was given a plastic pig.

But now there is light on the horizon - an economist (yes you read right) has a fail proof weight loss plan.

Contract with a friend to pay her $500 if you have not lost 5 kilos in 10 weeks. You and a witness sign a contract. Your friend similarly affirms her solemn pledge to take the money and spend it on herself by signing the contract. Your friend must sign the contract, you don't want her to wimp out at the end of the contract and refuse to take the money because she feels sorry for you.

In other words you must maximise your potential financial pain in order to maximise your incentive to lose weight. But beware of false friends - once the contract is signed she will have an incentive to fatten you up with free drinks, snacks and carbohydrate laden dinners.

Let me know how you get on!


I am counting and it makes me angry. The earning disparity which exists between men and women is exactly the same as that which existed centuries ago - ancient parish records show that men earned a third more than women. The rationale behind this (and I did not make this up) was that women needed less food and didn't support families. A social constant which I am positive is the reason for the differential - earnings. "Feminised" jobs are valued at less than "masculine" jobs. Think of our nurses, teachers and social workers.

I noticed that the Council of Trade Unions secretary, Carol Beaumont said that women had higher rates of downward wage mobility while men were more upwardly mobile - pay rates. There are, she said, twice as many women as men holding multiple jobs. Probably as women are juggling families with work.

Everyday Money

I don't seem to be able to leave housing (as a topic) alone. This time it is good news for first home buyers. A recent Westpac report predicts flat prices for around 5 years. (This news is not so good for second home investors).

The number of house sales has declined by a third back to 2003 levels - an early warning sign. Westpac claims that monthly house price inflation has screeched to a halt. Rental yields are currently at around 4% and mortgages 9% plus, make the residential rental market very unattractive indeed.

The report suggests that housing affordability (defined as 25% of disposable income servicing an 80% mortgage) will eventually swing back in favour of home buyers but no t for about eight years as incomes catch up and prices stagnate.

Who's Counting?

We are all counting - is this a bear market or not? To refresh your memory a bear market occurs when the share markets go down and stay down. Currently markets are down about 15-17% - depending on who's counting. The jury is still out over whether the drop will be sustained for much longer. In practice bear markets and lull markets are difficult to predict and call; often they are identifiable only with hindsight.

So, should you be worried? A bear market is sure a test of nerves, fear and pessimism rule. (Read Money, Money, Money, Ain't It Funny - How to Wire your Brain for Wealth to help overcome this if you are worried)

My suggestions are firstly; do not panic. If you stay fully invested you won't miss the run up and recovery, if you are the slough despond sell the worst performers and hold the funds to reinvest later - but be warned you will most likely miss the recovery.