On Living Longer

I’ve decided I want to live longer.  I love technology and I love this world of change and the ability to be involved in this technological era. I have things to contribute and I want to be active in ICT, Location Based Services and also as a songwriter. I want to see my children and grandchildren grow up and explore this ever changing world and see what they make of it.

I’m going to have to work longer, that was always expected, but then providing my Maslow and Herzberg needs are met, I enjoy working. I enjoy making a difference, helping people achieve their goals. I enjoy learning, watching what is helping in my spheres of interest, particularly those mentioned above. I enjoy collaborating and networking and am particularly passionate about seeing New Zealand step up to the plate and continuing to innovate and achieve greater success on the world stage.

I reckon a healthy target for me would be 120 given medical advances now and in the future. My greatest risks are probably heart and cancer, with the determining factors being nature and nurture and my general disposition i.e. my attitude and happiness.

One thing that is obvious is that I have to look after my financial well being. If I continue to work, then raising the retirement age isn’t going to be a major for me. If I am enjoying my work, see a future for myself where I can contribute from my experience, passion and knowledge and can continue to grow, I wouldn’t be expecting to retire at 67.

I know I can’t rely on the Government to give me any kind of lifestyle on the retirement pension anyway. Our budget deficit has just been raised to over $15b and despite some significant successes, we still don’t have an infrastructure that really supports innovation. We tend to take credit once people are successful, but most successful innovators tend to be successful in spite of the country’s and their employers contribution rather than because of it.

So my first considerations as I start goal setting and planning will be how I can maintain my lifestyle in the years to come, continue to build an asset base so that when I wind down to a shorter working week I can continue to enjoy a lifestyle and if I should be forced into retirement through poor health (which is not the plan) I can still live comfortably, which no one can in NZ on a pension or benefit. I have a super scheme, I still have a mortgage. I am closing down my rental property LAQC and have sold my rental property. The Government doesn’t want people be able to claim losses from their expenses and without that I can’t afford to own rentals. I’ve invested in public companies before, but unless you are buying and selling daily, this is in my opinion a far greater risk business. Even the biggest companies make mistakes or get caught up in circumstances beyond their control and shareholders unless they are big, have little or no control over their destiny. How many Kiwis lost their life savings in the past by investing in ‘rock solid’ companies?

So I’ll invest in myself. I am studying song writing at Berklee Music on-line, which is costing me a small fortune, but if I can score 1 or 2 hits somewhere along the way, I’ll recoup that investment. I study the industries I’m involved in daily through the media, the occasional conference, networking in person and through social media such as LinkedIn and Twitter and I read a lot.

I have and continue to amass a huge amount of local and international experience in a number of industries, particularly in the application of leading edge technologies to solving business problems. Experience, I have learned takes years and is perhaps something that is least appreciated by younger people who come out of university thinking they know everything and by people who have stuck in one industry or a very small number of companies during their work career.

So to cut a long story short, I need to start planning for my long future. I need to consider a range of aspects, particularly how I want to live those years, what I want to do in them, what I want to contribute, what capital I need, how to maintain my health and fitness. Must be time for some goal setting and dream building.

I’ll leave the last word for now to Anne Brunet (who came via that other little university in Boston (not Berklee Music, but Harvard) and Thomas Rando of Stanford U.

Note the real meat of this video starts around 21 minutes in.

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NZ Herald Landlords taking money we need

It’s soapbox time folks. Over the last week, there have been several stories in the NZ media about businesses complaining that people are investing in rental properties instead of buying shares and options in companies on the share market. The latest was in yesterday’s NZ Herald.

I take exception to their bleating and here’s why. Many years ago I worked for a company called RC Dimock as a divisional sales manager. A number of us got together under the guidance of the Financial Controller and formed a share club. We all put money in each week and collaborated on which companies we would invest in.

I really enjoyed it. I read every copy of NBR, charted the daily value of stocks, learned about all aspects of stocks and bonds and invested more in our own company, my employer when we were purchased by Anzon Investments. As time went on, I started investing independently, continued staying up to date with large reliable companies and punted on more risky investments in various industries.

I had my own broker and whilst my investments were not massive, I was young and suspecting that superannuation was not going to give me any sort of lifestyle, I was looking for ways to improve that situation when it came.

As well as Anzon, I joined many people who invested their life savings in NZ stalwarts including Brierley Investments, Carter Holt, Robert Jones and many other companies. Then came Black Tuesday and many Kiwis lost their entire retirement savings.

Friends and colleagues lost almost everything they had, whilst the senior managers of the public companies moved on and in many cases their old boys club helped them pick themselves up again.

When I got married and started a family, we bought our first modest home and gave up any form of lifestyle for a few years paying at times over 21% interest, but we were building some security. Other people’s poor business decisions and the economic climate were not going to take this from us, providing we were able to maintain the payments.

Subsequently I worked for a company which was embezzled by it’s CEO and lost 10’s of thousands of dollars in salary, commissions and a large company credit card bill that my boss had run up without my knowledge. I then learned what it means to get a company credit card and you sign a form in good faith saying that you are jointly and severally liable for a company credit card. The credit card company who were coincidentally owned by my bank told me that I could either pay for the company credit card, or they would sell my house and give me the change after the 9 month bill was paid.

Further in my career, when I was making a lot of money for my new employer of almost 7 years, I was made redundant when the company was sold, along with several of my colleagues and my MD. The decision was made on the basis of a spreadsheet looking only at what they were paying us, not the great success we were achieving, over budget in ebit and sales.

So forgive me for having a lack of faith in business as a way of protecting my future lifestyle if and when I reach retirement age.

I started learning about rental properties, LAQC company structures, negative gearing and tax benefits, in as much as being able to claim depreciation and costs against my personal income and invested in a rental property.

Some people thought I was rich because I had a rental property, but my own home remained modest and I was having to subsidise the rental to cover the cost of the 100% mortgage, i.e. I had zero equity. My first tenants were a young family with 4 kids. Sometimes they would call me and say they couldn’t make the rent and could they pay the following week. I was paying around $170 a week to top up the mortgage, because the rent didn’t cover it. Then there was property insurance, fixing appliances, calling in drainlayers when they tried to flush nappies and other unmentionables down the toilet. These are just a few of the issues I had, and if it wasn’t for the ability to recover some of these losses against my income tax I would have gone broke.

The family were never going to be able to buy their own home and didn’t take great care of mine. They couldn’t pay a rent that would cover my costs, market rents did not reflect the cost of owning property. My hope was that over time the property value would increase and I would recoup my losses.

The key to my rationale, which I still subscribe to, is that I was making my own decisions and having control in the level of risk I was prepared to take. I wasn’t going to have my safety net taken away by some entrepreneur who was travelling first class around the world, who was able to walk away and start again when he had spent all my investment savings.

Owning a rental property is a business. There is a need for rental properties. The Government has quit most of their State Housing stock and people who can’t afford to buy their own homes, around 35% of the NZ population, over 1.5 million people do not own their own homes. So who is going to take responsibility for them?

When people set up a public company and use our funds to run them and take risks with, we have no control over how they use our money. If things turn sour as they have for many Kiwis trying to invest their hard earned money, they walk away and set up their next business. Investing in public or private companies is high risk. For people who can afford that risk, great, enjoy. But most owners (think big mortgage) of rental properties are not wealthy people, they are just people trying to make sure they can afford a little lifestyle when they retire without being a burden on their family. It is not easy owning rental property and the odd example of someone who has built up a rental empire is the exception, not the rule. The majority are Mum’s and Dad’s who don’t want to live on a combined income of $478 a week.

Could you live on $478 a week including rent, power and phone? What would that give you for food? Forget entertainment. On the other side, there is the potential for people to live much longer than in previous years and with Baby Boomers, less tax payers to heklp support them.

If the Government wants us to invest in business instead of rental property, they should give us some security against the risk of public companies. Of course they will also have to invest in providing rental accomodation for the 35% of us who can’t afford to own their own homes. What are the odds of that? About the same as that of people who invested their life savings in Brierley Investment shares. Telecom shares anyone?