tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, January 15th, 5:57PM

Investments

rss
Latest Headlines

Bubbles could attract KiwiSaver fly-by-nighters

Market bubbles caused by low interest rates could see speculative KiwiSaver schemes set up to lure unwary investors, Tower Investments chief executive Sam Stubbs warns.

Tuesday, October 11th 2011, 9:48PM

by Niko Kloeten

At the Tower Investments quarterly media briefing today, Stubbs said governments were engaging in "financial repression" by keeping interest rates artificially low.

While this tactic gave the governments more "headroom" to try and sort out their shaky finances, it punished savers and risked creating high levels of inflation, he said.

Asked by Good Returns whether there was also a risk of creating market bubbles such as the tech bubble and the more recent housing bubble, Stubbs said that was a definite possibility if interest rates were kept too low for too long.

"Artificially low interest rates create distortions in the investment market," he said.

"I'm worried that a KiwiSaver fund gets set up to take advantage of this - most people think KiwiSaver is a government-guaranteed scheme."

Stubbs said the Financial Markets Authority would need to be vigilant to ensure KiwiSavers weren't being taken for a ride by shady operators investing in bubble activities.

"From a New Zealand investment point of view you need to be wary of what your KiwiSaver fund is investing in."

Stubbs also said the debate over whether to make KiwiSaver compulsory was "almost settled" with polls suggesting most New Zealanders thought compulsion was a good idea: "the big issue is the contribution rates."

He said contribution rates of 2% or 4% wouldn't be enough, pointing to Australia where the rate is 9% and will eventually rise to 12%.

However, an increase to that level would need to be phased in over time to allow people to adjust, particularly those on low incomes who would struggle with 9% or 12% of their pay coming out.

"If contribution rates were to increase by 0.5% or 1% every year for 10 years it would give people and employers time to get ready and it would create a very positive environment for New Zealand - we would go from a capital poor to a capital rich country."

The best superannuation programme in the world was a three-hour flight across the Tasman, he said.

"Australia is a very capital rich country... if you want to raise money you can raise that money domestically."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« Budget changes hit KiwiSaver’s appealKiwiSaver not too big for sharemarket (yet) »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

News and information about KiwiSaver

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.45 2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 ▼3.20 ▼3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 3.09 3.15
SBS Bank Special - 2.49 2.59 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - ▼2.29 2.69 2.79
Median 4.54 2.95 2.99 2.97

Last updated: 14 January 2021 11:22am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com