Compass Wealth matters

  Debt: the new normal. Is it ok? If not, what can be done about it? “Neither a borrower nor a lender be; For loan oft loses both itself and friend.”  That famous line by Polonius in Shakespeare's Hamlet would seem prudent advice in most ages. However in today's world, we find our economy awash with debt as never before. The reasons for this are numerous.  One could argue that it starts with perhaps perverse tax incentives, whereby companies are essentially encouraged to borrow by being able to offset interest costs against their profits. The original rationale for this was the belief that borrowing would only occur in order for the company to grow. This therefore makes sense: a tax regime that encourages growth is of course a good thing.  But when investor demand for debt is such that a major cash-rich firm borrows to fund a dividend payment, as Apple has repeatedly done ( Apple ), then many would argue that something has gone very wrong with the system. Then of cou...

  Kiwis with advisers end up significantly better off - research The Financial Services Council of New Zealand recently published this paper ( research paper ). It stated a number of areas in which those who used financial advisers were in a better position than those who did not. One of the findings that advisers in New Zealand and the media have latched onto is:                      "New Zealanders who receive financial advice end up with around 50% more money in their KiwiSaver (personal                     pension)". As my wife noted on hearing this: "It's probably because those who use advisers are typically wealthier than those who do not". This is indeed what the paper went on to state. So the massive difference is clearly not down to the skills of the advisory community. So the headline-grabbing figure is therefore pretty misleading. This may cause many to...