Mary Holmby Joanne Black
In a time of turmoil, commentator Mary Holm remains a calm and rational voice, offering advice to sometimes reluctant investors, especially about KiwiSaver. With degrees in economic history, journalism and finance, she worked for the Chicago Tribune and the Australian Financial Review before returning to New Zealand to be business editor of the Auckland Sun. It was launched two months before the 1987 sharemarket crash, which killed the economy, and the newspaper.
Do you see any parallels between the crash of '87 and what is happening now? In '87 shares had become ridiculously overpriced, especially in New Zealand, and the crash became inevitable. This time it's driven more by the banking system and credit, so it's a different focus. Shares were not hugely overvalued before this turmoil started. In fact I was reading something that said now may be one of the best times to buy shares.
Especially if people listen to your usual advice to think longterm? Yes. I had some money become available at the beginning of this year so decided I would put a certain amount into the sharemarket every month and I am continuing to do that. Regardless of the circumstances, I always think it's silly to put a lump sum in at any time because you never know whether the market will go down right after that. It's always better to dripfeed in and dripfeed out and if you pace yourself, you'll always have at least some of it going in or coming out of the market at the right time.
Pacing yourself is rather more difficult with property, presumably? Yes, because with property you buy the lot on one day. Okay, you might have a mortgage, but you've committed to buy that house on that date at that price and if prices go down soon afterwards, you're stuck. The sharemarket is much more flexible.
And had the recent property market become like shares in the 80s? Property was getting way out of relation to everything else on the graph. And people, including me, had been saying it for two or three years, to the point where I was starting to get a bit embarrassed. I was thinking, "God, I'm looking a bit silly here because I'm saying house prices look too high," and then they continue increasing and you think, "I'm losing my credibility a bit here."
You have certainly had plenty to say about KiwiSaver. The American Government introduced Individual Retirement Accounts when I was working for the Chicago Tribune. I wrote heaps about them and broadly speaking they are similar to KiwiSaver, which is why I jumped on the KiwiSaver bandwagon from the beginning. I knew there would be a lot of good stories and it would be a new way for New Zealanders to understand investment.
But you are unimpressed by the current party politicking? I was reading a piece by Susan St John recently that said we really need a consensus and to not have Labour, without consulting hardly anybody, say what it will do, and then change it six weeks before it took effect. And then National deciding what it's going to do, once again without consultation. That's the nature of the political beast, I know, but I'd like to see both parties say KiwiSaver is less than perfect so after the election call a summit, get everyone's input, then develop policy. I'd vote in a flash for the party who said that.
Good luck on that! In the meantime, you think neither party has it quite right? The current scheme is too generous to higherpaid people, because 4% of your salary is the minimum contribution for employees. Quite a lot of people simply can't afford that, so it means they are, through their taxes, subsidising upperincome people who can afford it.
But National's proposal would cut it back too much the other way. National is proposing to limit the tax credit employees can get from KiwiSaver to 2% of their pay. Presently, employees who are lowpaid and not getting the maximum tax credit of $1043 a year can put in extra money of their own in order to get them up to that figure. National will say as an employee you're stuck with 2% no matter how low it is. The indications are that if National becomes government it will change that position, and it is one thing I really would like to see happen.
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