By Amanda Morrall
1) Savings and Spending
Pass the margarine. Ever since taking a closer look at what it's made of, I've given edible oils a pass but exorbitant butter prices have me reconsidering my finicky palate. In both New Zealand and the United States butter prices shot to record highs this week; NZ$6,830.220 and US$4,900.
Sure, household saps aren't buying it by the tonne but we still cop it when it all gets sliced and diced in the free market. This New York Times article from 1917 shows how far prices have come and how they have historically been a sore point for both producers and consumers.
Any chance of Fonterra freezing butter prices? I wouldn't bet on it.
2) Credit and Debt
We have some unsung heroes here at interest.co.nz. One of them is the chap who diligently tracks and updates the rise and fall of interest rates all over the show. I'm guessing he has one of the leanest, meanest interest rates going for any debt he might be carrying - which is probably nil. He drew my attention this week to ASB's 50 basis point drop on its standard credit card which at 19.45% makes it one of the cheapest of its kind.
I so despise credit cards that I only have the kind restricted to actual funds in my account. But as there are occasions where real ones are unavoidable and sometimes useful, it pays to shop for those with the best rates and terms and the least amount of subterfuge when it comes to conditions. Our said good man kindly directed me to these useful websites by Canstar and Consumer Magazine.
And of course his handy work on this site speaks for itself. At the other end of the spectrum, high rollers for whom credit card interest is chump change could find themselves being wooed with points and other perks. Check out this story from the Globe&Mail in Canada on how credit cards company's are romancing the crowd for whom recession is a foreign word.
3) Home & Real estate
Real Estate Investment Trusts (REITs), a sweet spot in the portfolio three years ago, may have yet to recover from the financial crisis but some fund managers remain bullish on their outlook. Senior investment analyst Craig Brown at OnePath said despite being left in the dust by equities recently, strong underlying fundamentals will see REIT yields come right. They may not return to the buoyancy seen mid 2009 but those levels were unsustainable anyway reckons Brown.
"A lot of those trusts were paying dividend levels that were not fully supported by underlying earnings for a whole variety of reasons."
He said the sector was also hit by changes to depreciation for tax purposes which also had the effect of reducing cash dividends. Asked to assess the impact of the Christchurch earthquake, Brown was cautiously optimistic.
"With insurances these guys have in place there won’t be any short term impact on their current dividends, loss of rent will be covered by insurance. The caveat I’d put on that is that insurance doesn’t cover everything so there could be a bit of leakage." Time will tell.
4) Death & Taxes
Tax filings are never fun so if you want to spare yourself any unnecessary grief on time spent sorting and coding, you'll want to take note of the following. Procedural changes at Inland Revenue this tax year mean that anyone with untaxed revenue that needs declaring -- who also plans to claim tax deductions for donations, childcare or housekeeper -- needs to concurrently file IR3s and IR526.
I consider it a depressing sign of middle adulthood that I have become familiar with these codes at all but as they're in my best interest, and potentially yours, it may be worth noting. Whilst the sequencing of these forms was previously irrelevant some chaos at the tax department last year triggered the change.
The main point is that you need to file IR3s and IR526s at the same time. Given that they can both be negotiated online makes it slightly easier. Having neglected for several years tax deductions on charitable donations and school donations, I'm determined this year to claim my forsaken loot. Read up on the rules here.
5) Books & Film
I have to confess I haven't actually seen the Inside Job (Guardian review viewable on link) but given it won the Oscar for best documentary feature, and has received universally rave reviews, my endorsement isn't necessary. A colleague suggested it should be 'mandatory viewing.' In the same way that rabble rouser Michael Moore drew back the curtains on American politics in Farenheit 911, director Charles Ferguson delivers a blistering attack on the banking industry.
With fresh nightmares in my head of Michael Lewis' exposure of Wall Street's moral depravity in the 'The Big Short', I'm not sure I have the appetite for more of the same but I've never been one to reject medicine - even if it leaves a bad taste.
Here's a palate cleanser:
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