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Thread: Kiwi saver !

  1. #1
    Join Date
    Feb 2016
    Location
    auckland
    Posts
    45

    Default Kiwi saver !

    Hi all, just got two questions.

    1st
    big downs in kiwi saver accounts. what really ANZ KiwiSaver "Cash Fund" scheme is ???

    2nd
    12.1 million package by NZ government. where that money is coming from.


    Thanks

  2. #2
    Join Date
    Jan 2007
    Location
    Chch, NZ
    Posts
    2,216

    Default

    Quote Originally Posted by smcvisa93 View Post
    Hi all, just got two questions.

    1st
    big downs in kiwi saver accounts. what really ANZ KiwiSaver "Cash Fund" scheme is ???

    2nd
    12.1 million package by NZ government. where that money is coming from.


    Thanks
    I believe this thread should go in the "Money Matters" section of the forum

    The ANZ Kiwi Saver "Cash Fund" and I have not read their prospectus but judging by the name, it means the managed fund invests in fixed term assets like cash term deposits / corporate and gov't bonds, or anything related to lending the cash and in return you get interest. Personally because of the global crisis we're witnessing over COVID19, no specific asset class is safe and all would of suffered tremendous losses - I would not touch interest bearing assets. In the past crisis, it use to be the share market investments would sell up and flee to what 'supposely are safer assets' like bonds and cash term deposits, and even to more extreme, to buying gold. However the situation is so different that investors (on the global level) are going the more extreme step by holding cash in USD (yes USD currency). The logic is that over this crisis, the best country in the world to recover from the crisis is the United States. In order to make investments such as buying shares in the US, investors must need USD currency. This applies to commodities too like oil and gas and precious metals - all denoinated in USD. You can be 100% sure the global bond markets have been decimated because reserve banks around the world have lowered interest rates so low (in order to stimulate fiscal spending) that no reasonable person would be interested in earning 1% a year for like 10 years. As Warren Buffet said and i'm paraphrasing, no one should be intersted in lending $$$ to the gov't @ 1 or 2% when the annual inflation rate is more than 2%.

    Not sure where you go this 12.1M bail out package figure but the more relevant issue is can New Zealanders handle the debt burden of bailing out key industries / businesses in NZ? I'll try not to get technical in economics but I will say globally, we are experiencing things that never ever happened before in a lifetime. In the 2008 GFC crash, banks got into trouble and needed liquidity and cash - which was easily fixed by the gov'ts lowering interest rates and printing more money (via the term quantitative easing ; you can Google that term up). What we are witnessing now is the global markets don't care about interst rate drops (because they were already low to begin with). How does this releate to how the NZ gov't can raise funds to do bail outs? Unfortunately, the NZ Gov't will be forced to 'print money' without means of securing the assets because globally, no one is interested in lending $ to the NZ gov't. So what happens is the NZ Reserve Bank takes an orthodox move to just flush the economy by printing money ; they magically just put $ into the NZ economy through funding directly in NZ bank accounts, loan agreements with large corporations like AirNZ. In economics, we call this "Modern Monetary Theory" (you can Google that one up too). The problem with this approach of printing $ out of thin air is 'inflation will go up' and currency exchange rates will go down (the NZD gets weaker causing imported goods to rise higher). There's other variables at play such as the influence the US economy has on China but overall, there will be a gradual lowering of the standard of living in NZ. Many talk about the US's massive $22T debt, but they don't mention about US's high GDP productivity level.

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