By Amanda Morrall
So what is Five-fold Friday?
Well, I can tell you what it’s not. And that’s Top 10. Bernard does a fine job of that and I have no inclination to muck around in his well-trenched sandbox.
Anyway, I hate getting sand in my eyes. Five-fold Friday is a light and hopefully informative round-up of Web-based personal finance resources, including articles, tools, books other tidbits to shed light on practical money issues.
As personal finance often breaks down in five categories, I’m sticking with that.
1. Savings and spending
When it comes to textbook retirement savings, financial planners typically underscore the need to a) figure out how much you want to spend in retirement in order to b) determine how much you’ll need to save so you can c) target the necessary returns to get you safely through old age.
A “New School’’ on safe withdrawal rates has shifted the focus from returns to flows. A crude summation is this: that if you set aside a certain amount of your income for savings, you’ll be better off in the long-run because bear and bull markets will always wreak havoc on savings strategies bent on returns.
Reuters blogger Felix Salmon explains it well in this blog, which also links to a paper on said subject by Wade Pfau.
2. Credit & Debt
New Zealand’s credit card debt, as a percentage of household debt, is supposedly lower than other OECD countries but credit card debt is always toxic in my opinion. An obvious exception is if you’re one of those rare prompt payment types who racks up the airmiles or bonus points and then pays-off the balance in full before interest kicks in. Also, responsible credit card use helps to establish a good credit rating, something that could gain growing importance soon in New Zealand.
But I digress.
The banks, in sympathy of earthquake affected residents in Christchurch, have come out with some below average short-term rates that are worth checking out. We published some highlights last week, which you can see here.
Amid the earthquake chaos, ANZ and National Bank independently reduced balance transfer rate (for everyone) to 2.99% for six months. As long as you dutifully pay off the debt before the sixth month low-interest grace period runs out, these transfer deals can be beneficial. Before you sign, understand what the default rate return to in case you get caught out after six months.
3. Home & real estate
Banks have been in similar good spirits when it comes to mortgage lending. Regular interest rate watchers on this site will be aware of the recent spate of activity on that front, with downward movements on fixed rates. In case you missed it, you can get the highlights here.
The genuine spirit of giving is properly devoid of the expectation of return but when there’s a tax deduction at stake, there may be some forgiveness for self-interest.
Anyone who has donated more than $5 towards earthquake relief efforts is eligible for a 33.3% tax deductible. Those who forgot to ask for or didn’t receive a receipt after donating through a bank or government website can get a receipt retroactively by emailing the Ministry of Internal Affairs. Here's more detail in our earlier article.
5. Films and books
Reading Michael Lewis’ latest piece in Vanity Fair magazine on the rise and fall of the Celtic Tiger was an instant sell for his best selling book on the sub-prime disaster “The Big Short.’’
It’s done the rounds in the office to rave reviews and had me glued on page one. Just as Freakeconomics authors Steven Levitt and Stephen Dubner proved you don’t have to be a business nerd or MBA to understand the more mundane extrapolations of supply and demand, Lewis’ artfully transforms an obtuse subject matter into a cracking good yarn.
Here's the New York Times review.
And Brad Pitt has bought the movie rights, Variety reports.
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