By Cam Harper*
For the average retiree, property is an attractive investment option for its ability to deliver regular, enhanced returns. At least, that’s the promise.
The reality is that not all investment vehicles are created equal, and as we’ve seen recently, some are nothing more than a giant red flag.
It’s no surprise then that choosing where to invest your hard-earned money can feel like navigating a minefield. For the ‘mum and dad’ investor – also called retail investors – choosing a regulated provider should be the first step in determining whether your nest egg is secure with a given provider.
Any financial investment offer made to a retail investor is regulated by the Financial Markets Authority (FMA). Licensed investment providers – such as fund managers and peer-to-peer lending providers – must meet strict requirements under the FMA to ensure everyday kiwis are protected from bad behaviour.
The ‘buyer beware’ here is that some providers targeting wholesale investors don’t disclose that fact in their advertising, meaning these unregulated and therefore, potentially riskier investment opportunities appear available to all investors.
These providers could be New Zealand registered companies operating in murky territory, to professional scammers based overseas.
A quick search on the FMA website will give you a full list of licensed providers in just a few clicks, and always read the product disclosure statement to ensure you fully understand the product you’re being sold. If the offer appears too good to be true, it probably is.
Then there’s the companies that are regulated and operating with the law, but whose own governance may be cause for concern.
Good governance ensures the processes are in place to identify, assess and manage property-related risks including market fluctuations, regulatory changes and operational issues.
A board of independent directors, a well-defined organisational structure, ethical conduct, regular audits and ongoing legal compliance are all the hallmarks of good governance, and the secret to the enduring success of some of New Zealand’s longest standing and financially healthy providers.
The health of a provider is perhaps best gleaned from the company's financial position.
Large New Zealand companies are required to prepare, audit and publish their financial statements, which means a quick search on the Companies Office website provides a good vantage point to assess its stability and long-term viability of the company.
Smaller New Zealand companies aren't required to disclose or audit their accounts, so, if you can't see any financial statements online the tried-and-true phone call should do the trick.
Talk to different providers
Simply being able to speak, or meet, with a real person says a lot about the accessibility and transparency of a company.
One conversation with a member of the investment team will often give you the information you need to alleviate any concerns, and get a ‘feel’ for the company, its business practices and its values.
Don’t be afraid to ask questions. Find out about their history. How did the business fare during COVID, or even the GFC? Have any investors lost any money to date? How does the company choose its investments? What fees do they charge? Do they have an office? Can you make an appointment to see an actual person?
The list goes on and what’s most important is you keep asking questions until you are comfortable you are choosing a secured investment for your lifestyle.
Our door is always open at Southern Cross Partners. We’ve been partnering with Kiwi investors for over 27 years, and whilst past performance doesn’t guarantee future results, we are proud not a single investor has lost any money.
We’re now New Zealand’s largest property backed peer-to-peer lender, because our conservative approach to lending has ensured we’re able to deliver regular, enhanced investment returns again and again.
All our investments are first mortgage-secured. Investment rates start from 7.50%* p.a and currently our minimum investment is $10,000*.
Check us out at southerncrosspartners.co.nz and see if we fit the bill for you.
*Subject to change and availability
* As Managing Partner of Southern Cross Partners, Cam Harper leads both the lending and investing sides of the business. He is passionate about helping New Zealanders achieve real financial freedom through specialised lending and secured investments.
