Investment informant

Ruapehu Bulletin, Volume 12, Issue 550, 23 August 1994, Page 15

Investment informant

By

Warrick

Funnell,

independent investment broker If you want answers to your questions write to "Investment informant" P.O.Box 122 Ohakune Disclaimer The advice given here is of a general and nonspecific nature. It is essential to seek full advice for each individual case before taking any action. My husband and I are in our mid-40 's. About six months ago I took a part time job and earn approx $150 per week, to help with our retirement saving and send our two children to university - one next year and the other in three years. I have been told that university costs about $6000 per year which is almost what I earn, is this right? • Part timer

Depending on the course your child takes it could, with accommodation and tuition fees, cost $12,000 pa. There are two issues: 1. It may help you to have a financial plan completed. In my experience when people' s finances, goals and budgets are laid out in a logical order, it is amazing how easily people see their goals. They can then with planning achieve more mileage from the resources they have. 2. There are of course three sources of funding for your child' s education. Y our contribution, your child' s contribution through working and the student loan scheme. Your child may take out a student loan to cover the shortfall in tuition, books and accommodation. This loan has a current interest rate of 7% and is

repayable once the student is working and earning an income of greater than $13,520. The method of repayment is by an additional 10% of earnings being payable until the loan is paid off as part of taxes. I amina small business which I wish to sell when I get to retirement. Is there any simple way I can value what my business will be worth then? Here's Hoping Your letter does not say what type of business you are in but if you are in a business that sells its service to the public and does not have large assets (i.e. land & buildings), then there is a real danger of valuing your business at more than you would get. For planning purposes it is best to value your business at what you would get at a fire sale. No one can tell the economic circumstances either nationally or locally that you will retire in. If you overestimate the value of your business and have a

shortfall at retirement by the time your realise this it will be too late to make up the shortfall. There are no Death duties now - will there be a capital gains tax? Taxshy I guess that could literally be the million-dollar question for some people. An interesting point is that when estate duty was abolished, gift duty wasn't. My own opinion is that it could well happen when MMP arrives. In many ways we have capital gains tax now. If you are a trader then you pay tax on all the gains of the items you trade in. The IRD now have more than a passing interest on defining who are traders and who are long term investors. Capital gains in various forms are a reality in many countries and my information is that it's pretty much business as usual after the initial shock.