CKS Quarterly Returns to 30/09/2024

CKS Quarterly Returns to 30/09/2024

by | 12 Nov, 2024 | Investment

Investment returns at 30 September 2024, before fees and tax

Growth Fund Balanced Fund Income Fund
3 months 4.4% 3.9% 3.0%
1 Year (p.a.) 16.6% 14.1% 8.8%
3 years (p.a.) 8.0% 5.9% 1.9%
5 years (p.a.) 9.0% 6.6% 2.1%
10 years (p.a.) 9.0% 7.1% 3.0%

It’s been another quarter of positive performance by each of the funds. Long term returns (see the Last 3 Years column), particularly in income funds, will continue to reflect the low interest rate environment that existed around the pandemic. Hopefully the pandemic effect remains a thing of the past.

Our view of the markets has not changed. We still believe (and maybe even more strongly now) that major sharemarkets reflect an optimistic outlook. It is generally believed that the high point in inflation has been seen, that interest rate reductions will continue and that corporate earnings will not be greatly affected. Most central banks have already reduced their country’s official cash rate.

We disagree with the optimistic view currently being reflected in most sharemarkets. Whilst headline reported inflation is in no doubt reducing, the central banks (rightfully, in our view) remain concerned about domestic inflation. Central banks have less influence on certain domestic factors, e.g. council rates, insurance premiums and energy costs. We question whether interest rates will fall as quickly as expected by some, and what might happen to corporate earnings. Will central banks cut aggressively because they see a risk to the economy (and hence corporate earnings)? Will investors continue to pay higher amounts for the same level of corporate earnings? We think that there is a risk that interest rates don’t fall as fast as expected, that corporate earnings disappoint and, in those environments, investors pay less for prospective earnings.

Thus we remain cautious on the investment return outlook.

Geopolitical uncertainty (e.g. ongoing US / China tensions, ongoing conflicts in the Middle East, the war between Russia and Ukraine and possible fall-out from the US election), coupled with monetary policy uncertainties, continues to add to market volatility (ups and downs).

As such, in this environment we remain wary of asset prices. We remain cautiously invested, diversified, and continue to hold higher than normal amounts in cash.

Holidays Can’t Last Forever

Holidays Can’t Last Forever

by | 5 Nov, 2024 | Financial Planning

We all go through difficult financial times, when bills and commitments increase, and we wish there was a way to relieve some of that financial pressure.

Luckily with KiwiSaver, there is an opportunity to pause your contributions for a while, depending on how long you have been in KiwiSaver.

What do you need to know about a Savings Suspension and what are the risks? In this blog, we give you a brief overview of the main points and risks, to help you navigate your decision.

  • What is a Savings Suspension?
    A Savings Suspension is when you stop your employee contributions to KiwiSaver for a period.
  • How long do I have to be in KiwiSaver, before I can take a break?
    If you have been in KiwiSaver for a year or more, you can ask for a suspension through your employer. If you have been in for less than a year, you will need to apply for a suspension from IR and prove financial hardship.
  • How long can I take the Savings Suspension for?
    You can suspend your contributions for three months to a year, but you can take more than one break, and they can be back-to-back.
  • Will my employer keep contributing?
    No, if you suspend your contributions your employer will too, unless your employment agreement covers this situation.
  • Can I still make contributions to my KiwiSaver scheme even though I am on a Savings Suspension?
    Yes, you can still make direct contributions to your KiwiSaver scheme even if you are on a Savings Suspension. If you cannot afford to make the minimum contribution required by the KiwiSaver Act, then making some smaller contributions voluntarily during the Savings Suspension period is a way to still save for your retirement, just at a lower amount.
  • Will I receive the Government Contribution?
    Yes, you will receive the annual Government Contribution if you contribute at least $1,042.86 between 1 July and 30 June each year.

What should I consider before I take a Savings Suspension?
Before you decide to take a break, there are a few points you will want to consider:

  1. Investigate whether you can reduce, not stop your savings. If you are currently contributing 4% to KiwiSaver, try dropping to 3%.
  2. Save something if you can. While you might stop your employee contributions, set up a voluntary, automatic payment instead, for a smaller amount. By keeping your savings going, you can rest a little easier, as you are still ‘chipping away’ at your goals.
  3. Make a commitment to start again. If you stop altogether, set up an automatic payment 6 months from now. Make this $100 or $200 per month, to begin with, and increase this 6 months later. Then start up your employer contributions again.
  4. Do some homework and know the long-term consequences of stopping. Try putting this scenario into the Sorted KiwiSaver Retirement Calculator. KiwiSaver calculator » Sorted

    Example
    A person aged 45, retiring at age 65, with a balance of $70,000 today. Their pay is $50,000 a year before tax, and they contribute 3% to KiwiSaver and so does their employer. They are in the Growth Fund.

    If they don’t stop saving over the next 20 years, they may have just over $200,000 saved by age 65.

    If they pause for one year, their balance would be around $196,000 by age 65.

    If they pause for two years, their balance would be around $191,000 by age 65. *

    *Please note, these numbers are not guaranteed and do not constitute financial advice. Your situation will be different, and we recommend you seek independent advice from a licensed financial advice provider.

While we don’t want to stop our savings, sometimes we need to focus on paying our bills, or clearing some high-cost debts. At those times, taking a Savings Suspension for a short time can give the ‘breathing space’ we need financially and mentally.

Just remember, there will always be an excuse to ‘start again tomorrow’, and before you know it, tomorrow is two years from now.

The Savings Suspension is a nice KiwiSaver feature to have and can relieve some pressure when we need this most. We should have a plan to start again, even before we decide to stop, and we need to understand the impact stopping can have on our savings if we delay restarting contributions.

Supporting the transition to clean energy

Supporting the transition to clean energy

by | 22 Oct, 2024 | Events and News

Since 1972, Anglican Financial Care (AFC) has been dedicated to ethical investing, guided by Christian values. AFC’s investment philosophy centres on the belief that economic decisions are inherently moral choices, grounded in the mission to serve our members’ financial interests while contributing to God’s work of restoration in the world. As such, AFC prioritises investments that provide risk-adjusted returns for the benefit of scheme members, and that also take into account human flourishing, sustainable development, and long-term global well-being.

This year, AFC took a significant step in this mission by endorsing the Fossil Fuel Non-Proliferation Treaty Initiative, reaffirming its commitment to supporting a global just transition to clean energy and a future free from fossil fuels.

WHAT IS AFC’S ETHICAL INVESTMENT POLICY?

At its core, AFC’s Ethical Investment Policy is designed to reflect Christian values in financial decisions. This policy recognises that AFC has fiduciary obligations to its scheme members to act in their best financial interests, with the balance that investment choices must factor in long-term impacts on people and the planet. The approach centres on investing in organisations that produce more good than harm while steering clear of industries and practices that cause significant damage or violate human dignity.

Fossil fuels are one of the focal areas where AFC has made a clear ethical commitment. The policy reflects the Church’s understanding of humanity’s God-given responsibility to care for creation and preserve it for future generations.

ADDRESSING FOSSIL FUELS

AFC’s Ethical Investment Policy takes a balanced stand regarding fossil fuels, recognising their role in driving climate change and harming the environment, but also their role in developing the infrastructure for renewable energy. In alignment with the 2015 Paris Agreement, AFC excludes from its investment assets, companies whose primary business involves coal and tar sands – two of the most damaging fossil fuel sources. Instead, AFC prioritises investments in companies committed to reducing carbon emissions and driving the shift toward a cleaner, more sustainable future.

While AFC’s stance on fossil fuels involves targeted divestment, the approach also supports energy companies that demonstrate tangible commitments to carbon reduction. By investing in these entities, AFC believes it can help drive change from within, encouraging progress toward a just transition to affordable, reliable, and clean energy for all.

AFC ENDORSES THE FOSSIL FUEL NON-PROLIFERATION TREATY INITIATIVE

This year (2024), AFC responded to a request from the Anglican Diocese of Dunedin to demonstrate leadership for the Anglican Church by endorsing the Fossil Fuel Non-Proliferation Treaty Initiative. This global effort seeks to phase out the use and production of coal, oil, and gas while accelerating the adoption of renewable energy. The treaty initiative’s goals align with AFC’s broader ethical investment strategy and its belief in fostering a fair and just energy transition. AFC was happy to accommodate the request from the Bishop of Dunedin—its endorsement of the treaty is (at the time of writing) viewable under the Endorsements tab, Faith Letter, Faith Institutions by Country.

The treaty initiative builds on decades of work by governments, civil society groups, and Indigenous leaders from around the world calling for international cooperation to stop the expansion of fossil fuels. The aim is to ensure that this transition is equitable for all communities. The treaty initiative does this through three pillars:

  1. Just Transition: Fast-track real solutions through scaled up access to renewable energy and a just transition for every worker, community and country so that no one is left behind.
  2. Non-proliferation: Prevent the expansion of coal, oil and gas by ending all new exploration and production.
  3. Fair Phase Out: Equitably phase out existing fossil fuel production in line with the 1.5˚C goal.

For AFC, endorsing the treaty initiative represents its public commitment to these three pillars for a global and just transition to renewable energy.

SUPPORTING A JUST TRANSITION TO CLEAN ENERGY

AFC is committed to ethical investments that reflect its belief in stewardship of God’s creation. While ultimately divestment from fossil fuels is an essential part of this strategy, AFC also believes in supporting the development of alternative energy technologies. As part of this, AFC invests in a global alternative energy fund, which channels resources into renewable energy infrastructure, technology, and innovation.

This investment supports the transition from harmful fossil fuel reliance to a future powered by clean energy. In doing so, AFC plays an active role in contributing to a more sustainable world – one that honours creation and prioritises the well-being of all people.

ETHICAL INVESTING AS A CHRISTIAN RESPONSIBILITY

AFC’s Ethical Investment Policy is rooted in the Christian call to care for others and for creation. Deliberately investing in companies that are committed to developing a cleaner and more equitable future, AFC is caring for the financial interests of its members whilst participating in God’s redemptive work in the world.

This approach reflects the Church’s belief that ethical investing can create tangible positive impacts, helping to restore creation while also providing for the needs of current and future generations.

JOIN US ON THIS ETHICAL JOURNEY

At Anglican Financial Care, we are committed to aligning our investments with Christian values and working toward a sustainable, equitable future. Our decision to endorse the Fossil Fuel Non-Proliferation Treaty Initiative is just one example of how we strive to reflect our commitment to ethical investing.

Of course, a difference each of us can make every day is through our spending habits, because businesses will always produce what people buy. Each one of us can play our part in building a better tomorrow, by choosing how we spend our money today.

As we continue to support a just transition to clean energy, we invite you to join us on this journey – working together for the good of our communities, our planet, and generations to come.

Discover more about AFC’s ethical investment practices and our commitment to Christian values here.

What does Risk mean to You

What does Risk mean to You

by | 1 Oct, 2024 | Financial Planning

Do you like to skydive, but you freak out if you see a decrease of $1,000 in your KiwiSaver value? Do you fear the money is gone for good?

Do you like to stay firmly on the ground, but it doesn’t bother you to see your KiwiSaver balance drop by $10,000? Are you confident that it will bounce back up when the markets recover, even if that might take a while?

The risks you are happy to take in life don’t always equal the risks you can cope with for your savings. Everyone has their own level of comfort, or what is known as their ‘risk tolerance’, when choosing the KiwiSaver investment choice that is right for them.

In our latest blog, we delve a little deeper into the risks we face when we invest our money.

When we think about risk and investing, there are a few fundamental truths.

  • We only ‘lose’ money when we take money out of our investments – Like owning a home, we only gain money when we sell the house for more than we paid, and we lose money if that value is lower. The same applies to our investments. The fall in value is not ‘real’ until we withdraw our money from that investment.

We hope that in the long term, the value of our house and investments go up. In the meantime, changes in those values are simply numbers on a page.

  • Volatility is the risk we care about – Volatility is the measure of how much our investment rises and falls in value over a period of time. For example, an investment that rises and falls by 5%, has a much lower volatility than one that moves up and down by 40%. The second one carries a higher degree of risk—especially if we need to start withdrawing funds from the investment in the near future.

If our investment is worth $100,000 and drops to $95,000 we might be comfortable, because this only needs to rise by just over 5.25%, to recover. However, if this falls by 40% to $60,000, that could be a lot scarier. We would have to see a rise of over 66%, just to get back to the $100,000 again. Can the investment do that, and can our nerves handle the ride?

When thinking about our risk tolerance, we consider how much volatility or uncertainty we can bear, before we start having sleepless nights.

  • Diversification matters – Putting all our money on one stock is what we term ‘putting all of our eggs in one basket’ and is a risky strategy with our life savings. That is why we want to spread this around, to investments that move differently over different market cycles. Good diversification reduces the risk of losing our money.
  • Perception is not always reality – You may know the saying ‘this too shall pass’.

Markets will always move up and down and our investment balances will follow. The trick is to understand that what we see happening in our investments today is only a snapshot in time. What matters more is how our investments behave over the long term, i.e., over more than seven years. Our perception is not always the reality and while we may have short-term uncertainty, we can still have a good long-term investment.

So, the next time you are looking at your investment options, remember the four fundamentals:

  1. Your risk tolerance is what you are comfortable with over the long term.
  2. What is happening in the markets today, might not represent the future.
  3. Diversification matters.
  4. The highest return is not always the best, if this comes at the cost of too much risk.

Focus instead on the goals you wish to achieve and choose the investment that can achieve those goals.

*Nothing in this blog constitutes personal financial advice nor a guarantee of success when investing. We recommend you seek independent professional advice, prior to investing your money.

Empowering Māori home ownership through good stewardship

Empowering Māori home ownership through good stewardship

by | 17 Sep, 2024 | Events and News, Press Releases

Kia mau ki te tokanga nui a noho – There’s no place like home.

Since 1972, Anglican Financial Care – Te Maru Mihinare (AFC) has been committed to providing mortgage finance tailored to the needs of our Anglican communities and scheme members. This year, we are proud to announce a significant expansion of our services: AFC now offers a unique loan product for building, relocating, purchasing, or renovating houses on Māori land.

Introducing AFC’s lending for homes on Māori land

Accessing finance for housing on Māori land can be challenging due to the unique ownership and legal structures associated with this land. Traditional banks often hesitate to provide mortgages because of these complexities, leaving many families without viable financing options.

AFC’s new loan product addresses these challenges head-on by offering a flexible financing solution specifically tailored for housing on Māori land.

Whether you’re looking to

  • Purchase an existing house on Māori land
  • Relocate a house onto Māori land
  • Build a new home on Māori land
  • Renovate an existing house on Māori land

Our loan product is designed to meet your specific needs while respecting and preserving the cultural and legal intricacies of Māori land ownership.

How does AFC’s lending for a house on Māori land work?

You are eligible to apply for the loan if you are Anglican clergy, a widow or widower of Anglican clergy, an employee or other worker of an Anglican organisation, a member of the Christian KiwiSaver Scheme, a member of AFC’s The Retire Fund or a member of the Baptist Union Superannuation Scheme (which AFC administers). You must also have the right to live on the Māori land.

Unlike traditional mortgages that use the land itself as security, AFC’s loan is secured over the house and registered on the Personal Property Securities Register (PPSR). This approach overcomes the common obstacles associated with securing loans for Māori land, as it doesn’t require placing a mortgage over the freehold land.

We offer competitive interest rates. You can view our rates here.

Why this loan matters

Māori land holds deep cultural, spiritual, and historical value. It’s more than just a place to live – it’s a connection to whakapapa (ancestry) and tūrangawaewae (a place to stand). AFC’s loan product is built around the Christian principle of stewardship. We believe that providing access to affordable housing is not only a financial responsibility but also a way to serve our communities as faithful stewards of God’s creation.

The initiative supports Māori communities in a variety of important ways:

Strengthening ties to whenua. We understand that Māori land is an intrinsic part of your identity. By offering loans for housing on this land, AFC works with you and your whānau to maintain and strengthen connection to your ancestral land.

Empowering whānau and hapū. Māori land is often collectively owned by whānau or hapū. Our loan product respects and supports these collective ownership structures, empowering communities to develop land without sacrificing cultural or legal frameworks. This helps enable intergenerational living and fosters the preservation of land and culture.

Supporting housing needs. Housing affordability is a growing concern in New Zealand. In line with Matthew 25:35, where Jesus teaches the importance of providing shelter to those in need, AFC aligns this new loan offering with addressing the housing challenges faced by our communities. We see this as part of our broader mission to act in accordance with the teaching of Christ.

Acknowledging cultural practices and legal structures. Our loan product is designed to work within the unique legal and cultural frameworks governing Māori land. By providing financial support that respects these customs and protections, AFC provides a unique opportunity to those wishing to live on Māori land.

Contributing to well-being and autonomy. We recognise that having the opportunity to live on Māori land supports the oranga (well-being), and cultural values, of whānau. The loan offers a pathway to home ownership without compromising integrity and cultural identity.

Aligning with broader Church initiatives. This initiative also aligns with the Christian Churches’ broader recognition of the importance of providing housing support. We are excited to extend our loan offerings to members who have the right to live on Māori land.

Taking the next step towards your dream home

Applying is a straightforward process. AFC’s knowledgeable team, with the help of their legal experts, work together with you in a partnership grounded in respect, understanding, and a shared commitment to getting you into your own home.

  1. Prior to applying: Talk with the landowner to get their agreement that you can live on the land.
  2. Apply: Complete the loan application form and provide supporting documents to AFC.
  3. Lending criteria assessment: AFC assesses whether you meet the lending criteria.
  4. Notification to lend: AFC informs you and its lawyers, Kāhui Legal, of its intention to provide a loan.
  5. Review of licence to occupy: If an existing licence to occupy the land is in place, Kāhui Legal reviews it to ensure it meets AFC’s requirements.
  6. Whenua Māori Housing Agreement: Kāhui Legal works with your lawyer and the landowner to prepare and execute the Whenua Māori Housing Agreement.
  7. Preparation of loan agreement: Once the Housing Agreement is in place, Kāhui Legal prepares the loan agreement and sends it to your lawyer.
  8. Settlement of funds: After the required documents are received, AFC deposits the loan amount into Kāhui Legal’s trust account.
  9. Payment and registration: Kāhui Legal pays the funds to your lawyer’s trust account and registers AFC’s security over the house on the PPSR.

We are committed to creating financial solutions that honour cultural heritage, promote community development, and provide tangible benefits to individuals and families across Aotearoa. We look forward to partnering with you on this meaningful journey.

Discover more about Anglican Financial Care’s lending on Māori land here: https://angfincare.nz/lending/houses-on-maori-land/

Christian Savings Governance Conference: A Day of Inspiration and Collaboration

Christian Savings Governance Conference: A Day of Inspiration and Collaboration

by | 13 Sep, 2024 | Events and News

Chris Clarke (CEO of Wilberforce Foundation) and Danielle Diprose (CA—Inovant Accounting Solutions) discuss how a Christian church or organisation can measure its mission success and its impact in its community.

On Wednesday 11 September 2024, several of us had the privilege of attending the Christian Savings Governance Conference at Arise Church in Petone (near Wellington). It was an amazing day filled with great discussions about how we can continue to support and uplift the Christian community through good governance, which results in responsible investments, future planning, and financial stewardship. We heard from speakers who are passionate about making a positive impact in New Zealand while staying true to Christian values.

Christian Savings plays a vital role in helping churches, Christian organisations, and individuals by providing them with ethical financial services. Through loans and term deposits, they empower ministries to build new facilities, start projects, and reach more people with the Gospel. Their work not only strengthens the Christian community but also ensures that resources are used in a way that aligns with our faith.

Our Christian KiwiSaver Scheme is proud to invest in Christian Savings. By doing so, we are not only helping our members prepare for retirement but also contributing to a larger mission. Our investment with Christian Savings forms part of their overall lending pool of money, which supports churches, schools, and other Christian organisations. This means that when our members invest with us, they are helping to support a wider goal of making a difference beyond personal savings.

Our goal with the Christian KiwiSaver Scheme is not just to help Christians make wise financial decisions, but to help them make decisions that align with their values. We believe that by providing our members with faith-based investment options, we can support the Christian community while also helping people prepare for the future. Through our commitment to ethical investment practices, we strive to positively impact our members and the wider world we all live in.

The conference was a wonderful reminder that we are all part of something bigger, working together in collaboration to further God’s kingdom through our finances and resources.


Jo, Margaret, and Simon represented our team at the Christian Savings Governance Conference, where they gained valuable insights and forged connections in the Christian community.