Heartland Bank (not totally share related)

[justakiwi]

I have been lurking, following discussions on Heartland Bank/Group. Not in a positive to buy shares currently but have moved some savings to Heartland and considering moving some more later (just a few thousand). I note that their credit rating is lower than my current bank. Have read up on these ratings and feel it’s probably not a major concern, but would value any feedback on the subject please.

[peat]

you're probably right in thinking the credit rating difference is not a major concern, but the difference is there for a reason, and you are being compensated more for that risk with their slightly higher interest rates.
thats how risk/reward works.
one extra thing though, they probably wouldn't get bailed out by the government whereas the others might, maybe.

Thing is though with only a few thousand (sorry, not being rude , just saying) its not exactly going to make a difference to your life getting slightly higher interest rates, whereas losing a few thousand in its entirety may do, so why take any risk with the money. You're either in for a pound or you're out. In which case you should probably buy shares. Or, be safe and put it in one of the big trading banks.

my attitude to risk is that I take it or I dont. but when I dont i make sure its completely safe.

[justakiwi]

Thanks for the feedback. I get what you’re saying and it’s actually pretty much the same question I asked myself before I transferred a small amount across. I may reconsider moving any more for now though. You are right about higher interest rates having close to an insignificant impact on small savings balances, but I am stuck between a rock and a hard place, with a low income, very few savings and no property/assets. I have a couple of thousand worth of shares which are holding their own (DRP is great) but have not been able to accumulate enough to buy more, as I had hoped. Sometimes I just feel that I can’t make any progress so going for a few more dollars in interest makes me feel as least a little bit proactive.

False thinking I know.

[Baa_Baa]

Thanks for the feedback. I get what you’re saying and it’s actually pretty much the same question I asked myself before I transferred a small amount across. I may reconsider moving any more for now though. You are right about higher interest rates having close to an insignificant impact on small savings balances, but I am stuck between a rock and a hard place, with a low income, very few savings and no property/assets. I have a couple of thousand worth of shares which are holding their own (DRP is great) but have not been able to accumulate enough to buy more, as I had hoped. Sometimes I just feel that I can’t make any progress so going for a few more dollars in interest makes me feel as least a little bit proactive.

False thinking I know.

No it's not false thinking, you're onto it, just chip away at it every day, it's a mindset, do the little things well every day, one day it adds up to a big thing and you won't even remember what all the little things were that you did because its turned into a big thing and you'll be more worried about losing what you have than making more than what you have already. Save the $4 for a latte and spend it on a decent earning share, just as an example. Save the $4 extra for an Uber instead of the Bus and spend it on a share. Use the fringe money you otherwise waste to buy assets that pay you an income for ever and ever.

Life and investing is a journey, it has its ups and downs, but starting the journey is the best feeling, making some right decisions along the way is pretty cool too, sucking up the bad decisions is a bummer but inevitable, and one day you say to yourself .. whoa! look at what I've done, and then you'll realise you're still young (relatively speaking) and there's another few decades ahead of you that you can enrich yourself using the lessons you've learnt along the way.

Time wounds all heels, patience and prudent decisions rewards.

[justakiwi]

I have had to face the reality that my situation is not ideal, but with only 6 years until I’m 65 (god that’s scary!), I just have to work with what I’ve got. I don’t have the ability to ever be financially secure again, but I have made some life changes, including getting out of the post divorce rent trap and deciding to live the minimalist life in my caravan in a holiday park, at least for now. For various reasons post divorce (16 years ago) I was stuck in the rent trap for years, working almost full time and getting nowhere. Not to mention, miserable. I love my current living situation and am now working part time in a completely different field, doing a job which is not particularly well paid, but wish makes me happy. At my age I have decided that is much more important to me, and better for my health, than working in a job I hate, making better money. Life is simply too short.

I’m pretty frugal but yes, there are things I could change, to give me a bit more money to invest in shares or whatever. As you say, it’s the small things that add up. For someone with significant finances, the small things are less important, but for those of us with bugger all, every dollar counts/helps.

Thanks for the positive comments. I feel a bit better now.

P.S You better get some cream for those heels that time is wounding ;) (I think you meant “Time heals all wounds.”)

[kiora]

Hi JAK
You sound like you are in the same position as over 80% of kiwis.
One way to change this situation is to do more with the spare cash.In the bank at 2% it will grow to $1,218.99 in 10 years.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
Investing it COULD grow it to $2,593.74 by compounding a 10 % return(IT will double in value every 7.5 years.

Options for investing
https://www.moneyhub.co.nz/sharesies-review.html
or kiwisaver

[justakiwi]

Yes, compounding interest is definitely the way to go. That is the reason I opened the Direct Call account with Heartland. The lower credit rating risk aside, my money will do better there, at 2.25% than it was in a term deposit for 3 months at 2.8%. Plus, my money is accessible in the event of an emergency, which is important given my situation.

At the moment I need to build up a decent emergency fund, but once I have done that I think I will try to add to my share holding - possibly an ETF. The few shares I have now pay a dividend four times a year so I’ve been able to accumulate shares via DRP which is a very painless and quick way to build on what I started with. Would be good to find something similar down the track.


I know bugger all about shares but do find it all quite interesting.

[kiora]

Money in the bank is a dead loss.
You could just pick an investment or fund eg that is liquid in case the money is required urgently

[justakiwi]

True. Hadn’t actually considered that.


Money in the bank is a dead loss.
You could just pick an investment or fund eg that is liquid in case the money is required urgently

[Entrep]

Money in the bank is a dead loss.
You could just pick an investment or fund eg that is liquid in case the money is required urgently

Anyone have some suggestions for the sort of thing that kiora is referring to? Also sick of getting bugger all interest on money sitting in the bank, but need near instant liquidity.

[justakiwi]

The reality is, if you need near instant liquidity, your only option is the highest interest paying call account you can find (currently Heartland). Yes, you could invest in a fund/company that has excellent liquidity, but you may need access to your funds faster than you can put a sell order in, have it filled, and receive payment into your account. I guess it depends on what you mean by “near instant.”


Anyone have some suggestions for the sort of thing that kiora is referring to? Also sick of getting bugger all interest on money sitting in the bank, but need near instant liquidity.