Help to get started with a strategy.

[Sponge]

Hi all,
I'm a 40 year old nurse who is holding out for the backpay from the government and am currently making an investment plan for when it arrives for retirement.

Background:
Mortgage of $350,000 over 25 years (due to pay off a lot earlier)
Kiwisaver - $26,000 ( due to withdrawing to buy first home 4 years ago).
Otherwise debtfree, no other real savings due to paying down debt as fast as we could.
(Partner has no plan for his retirement other than kiwisaver and he is nervous of investing)

Goal:
Financial freedom in 50s and beyond (mortgage free ideally and a nice cushion to see me through retirement comfortably)

Plan:
Investing.
Invest the majority of my backpay and regular deposits of $500/month and extra money throigh overtime etc.
This is where I keep overthinking. I was recommended a growth fund with Simplicity to essentially set and forget. Then I think about picking funds through Sharesies or similar (and decide against with their new fee structure).
I'm so overwhelmed with NZ podcasts, books, websites and articles, so was looking for general advice and guidance from those who have done this for a while,

My brain is going to be a sponge. Hit me with advice. Thank you!

[Snoopy]

Hi all,
I'm a 40 year old nurse who is holding out for the backpay from the government and am currently making an investment plan for when it arrives for retirement.

Background:
Mortgage of $350,000 over 25 years (due to pay off a lot earlier)
Kiwisaver - $26,000 ( due to withdrawing to buy first home 4 years ago).
Otherwise debtfree, no other real savings due to paying down debt as fast as we could.
(Partner has no plan for his retirement other than kiwisaver and he is nervous of investing)

Goal:
Financial freedom in 50s and beyond (mortgage free ideally and a nice cushion to see me through retirement comfortably)

Plan:
Investing.
Invest the majority of my backpay and regular deposits of $500/month and extra money throigh overtime etc.
This is where I keep overthinking. I was recommended a growth fund with Simplicity to essentially set and forget. Then I think about picking funds through Sharesies or similar (and decide against with their new fee structure).
I'm so overwhelmed with NZ podcasts, books, websites and articles, so was looking for general advice and guidance from those who have done this for a while,

My brain is going to be a sponge. Hit me with advice. Thank you!

We have been through a period of low interest rates over the last few years and suddenly they have jumped higher. Congratulations on buying your first home four years ago. I don't know for how long or at what rates you have fixed your mortgage for, or whether you have your mortgage partially fixed and partially floating. But the key point I want to make is that at some point your mortgage will be rolling over into much higher interest rate repayments. Why does this matter in a context of investing? Because the return on repaying your mortgage is 'after tax'.

If you are about to sign up for a 6% mortgage (I am just using 6% as a round number), and your marginal tax rate is 30%, then that means any investing you do must produce an annual return of: 6%/ (1-0.3) = 8.6% per year to 'beat' paying off your mortgage.

Now go and look up how well these professionally managed share funds have done over 10 years, and see how many have returned such a compounding return over 10 years. Off the top of my head I can't think of any. This is going to sound very boring. But your best 'investment return' going forwards is likely to be paying off your mortgage even faster than you had planned.

Back to the topic of investing though, in the more conventional sense. On this forum there are people who invest as a hobby and the less prolific posting, but probably more prolific numerically, people who invest 'because they want a comfortable retirement' and are not too concerned about the 'nuts and bolts' that will get them there. That former group will no doubt not be shy in coming up with ideas, that may require more 'active management' than the latter group are prepared to commit to. For most people, an option like 'Simplicity Investment Funds ', and in particular the growth fund is a good option. Why do I say it is good?

The thinking behind Simplicity is that in the long term (ten years plus), it is really hard to find a fund manager that will outperform the market 'after fees'. The alternative strategy, adopted by Simplicity is to effectively create a 'set and forget' market index which requires zero strategic management by highly paid investment managers. Thus money that would otherwise have disappeared in management fees is left in the pot for you the investor. And these 'fee savings' compound with time. Of course there are many financial advisors who don't like the Simplicity style of investing for self interested reasons. But this style has proved relatively very successful over the last 15-20 years. In fact one of the greatest active investors of all time, a bloke by the name of Warren Buffett, swears that most people are better off taking this approach.

I would suggest that you nevertheless continue to contribute to kiwisaver, to take advantage of any employer subsidy you will gain. If you are being subsidized dollar for dollar with your contributions, then you won't find an alternative long term investment that will likely beat it. It will even likely beat paying off your mortgage, provided you are in a growth kiwisaver fund. The disadvantage of this is that your funds are locked up until age 65, which doesn't tie in with your 'financial freedom at 50' narrative. Or maybe it does if you will have enough other financial resources at 50 to 'do those extra things you want' and you think of your kiwisaver at 65 as an integral part of topping up your master plan?

You mention your partner only has kiwisaver because he is 'nervous of investing'. Well kiwisaver *is* investing under another name. And if your partner is in the same age bracket as you IMO they should make sure those funds are in a kiwisaver growth fund that you don't look at every day. I know the psychology of watching your investments go up and down can be difficult. But my suggestion is that if you feel this way don't look at it so you don't worry about it. The strategy of a having a kiwisaver growth fund for a period of 10 years plus is sound, no matter what the psychology of the person investing is. Sounds like your partner needs a bit of investment education himself and maybe a kick up the bum to get fine tuned!

I will leave it there. I have probably said enough for now.

SNOOPY

[justakiwi]

I won't give you any investing advice, but I will say this - you mention that you have no savings currently. So I would strongly suggest that your first priority should be to work on building an emergency fund. Funds on call, with a bank, that will be readily accessible in the event of an emergency eg: an unexpected large car maintenance bill, an urgent flight somewhere if a family member becomes seriously ill, unexpected home repairs, unexpected time off work with no income etc. You need to think about your monthly expenses and how much you might need to meet those expenses in the event that you couldn't work for a period of time. If you put that $500/month into your emergency fund first, until the balance is sufficient for your individual needs, you will then have peace of mind. It will also mean that you are not forced to sell your investments to pay for unexpected expenses.

Once you have an emergency fund in place, then re-visit the investment plan.

Just my humble opinion for what its worth.

Hi all,
I'm a 40 year old nurse who is holding out for the backpay from the government and am currently making an investment plan for when it arrives for retirement.

Background:
Mortgage of $350,000 over 25 years (due to pay off a lot earlier)
Kiwisaver - $26,000 ( due to withdrawing to buy first home 4 years ago).
Otherwise debtfree, no other real savings due to paying down debt as fast as we could.
(Partner has no plan for his retirement other than kiwisaver and he is nervous of investing)

Goal:
Financial freedom in 50s and beyond (mortgage free ideally and a nice cushion to see me through retirement comfortably)

Plan:
Investing.
Invest the majority of my backpay and regular deposits of $500/month and extra money throigh overtime etc.
This is where I keep overthinking. I was recommended a growth fund with Simplicity to essentially set and forget. Then I think about picking funds through Sharesies or similar (and decide against with their new fee structure).
I'm so overwhelmed with NZ podcasts, books, websites and articles, so was looking for general advice and guidance from those who have done this for a while,

My brain is going to be a sponge. Hit me with advice. Thank you!