It’s time to warn the kids and do a stock take

Students and young workers should get a warning - now.

Jobs are not always easy to come by. Unemployment may be at a record low, but is a real threat when an economy slows. Amateur property investors have already had warnings via the slowing property market and some investment schemes turning sour.

Other investors have had a quick, harsh lesson in the past year through several finance company receiverships. The fallout has been so widespread that we probably all know someone who has been touched by this and who is reconsidering his or her financial plan.

New Zealand investors have had a long stretch of good fortune in recent years. But it is now time to recall one of the laws of investing: Good times will not always roll on and on…

The question now is whether New Zealand’s economy is in for a roller coaster ride, or will it be a gentle merry-go-round with smoother ups and downs?

It is not an exact science predicting things like where global sharemarkets will go, if the NZ dollar will rise or fall, what house prices will do and how mortgage interest rates will be at this time next year. Economists at best make educated predictions. Not all come true, or happen at the forecast time.

Throw in curve balls like general election results, US sub-prime type fallouts, banking and accounting scandals and the like, and predictions can be wrong very quickly.

Financial planners prefer to keep watch and look to mitigate risk should trouble appear on any of their client’s investment horizons. Advice Financial believes it is time to ensure your portfolios and personal financial affairs are reviewed and ready should they need to change.

Is this a time when cash is king? Maybe it is time to do your budgets again and look for savings – now or in the future if things demand a cut back.

Students need to think about graduating and not being able to get a job – like many of their peers from the early 1990s discovered. Young workers need to think about what redundancy could mean, to look before they leap to yet another higher paying job that may not be so secure and to save some money to fall back on for rent, hire purchase and/or the almost inevitable credit card debt.

Property investors should take a look at migration numbers released by Statistics early February. Last time there was a big exodus of Kiwis across the Tasman house prices fell. That doesn’t mean to say the same is going to occur, but if you are negatively geared or closely balanced, it is time at least for a review.

Other investors may need to expect lower single digit rates of return.

Finally, many elements make up your financial picture. You shouldn’t just focus on one part. It’s a good time now to get a fresh perspective of the whole picture with your financial adviser.