The Red Baron's Dicta: Timeless Lessons in Discipline and Risk

Article #453

April 21st marks the anniversary of Manfred von Richthofen's death: the legendary Red Baron who claimed 80 aerial victories before falling at just 25 years old.

Since childhood, I've been captivated by his story. Here was an aerial combat pioneer and crack shot hunter since his youth, who transformed the chaos of dogfighting into a disciplined science. What makes his story relevant for investors isn't his success, but how he achieved it through disciplined adherence to proven principles – and ultimately, how he lost everything by abandoning them in a single moment of exuberance.

From Hunter to Ace

Von Richthofen's foundation as a hunter shaped everything that followed. Before he ever climbed into a cockpit, he'd spent years stalking game on his family's Silesian estate, learning patience, precision, and the critical importance of positioning. A hunter doesn't charge blindly at prey; he studies wind direction, uses terrain for cover, and waits for the perfect shot. Honed since boyhood, these instincts would prove invaluable in the skies above the Western Front.

He brought this hunter’s mentality with him when he transferred to the Imperial German Air Service in 1915. He learnt his craft from Oswald Boelcke, the era's preeminent fighter tactician, whose maxims established fundamental rules for air combat. But von Richthofen didn't simply follow his mentor's teachings; he refined them through his own experience into his own dicta – an effective combat manual that became the foundation for his legendary Flying Circus.

The Dicta: A Hunter's Discipline Applied to Combat

The Baron's rules were precise and probabilistic, each designed to stack advantages systematically.

• Secure advantages before attacking: altitude, sun position, numerical superiority. Like a hunter choosing his ground, never engage until the odds favour you.

• Attack from behind where opponents can't see you, just as a hunter approaches game from downwind.

• Fire only at close range when your target is properly in your sights – ammunition is limited, and wild shots achieve nothing.

• Always carry through an attack once started. Half-measures waste the advantage you've worked to secure.

• Keep your eye on your opponent; never let them trick you into looking away. A hunter who loses focus on his quarry finds himself suddenly the hunted.

• When threatened, don't evade—turn and face the attack. Running reveals your vulnerability; confronting the threat keeps you in control.

• Over enemy lines, always remember your line of retreat. Know where safety lies, just as a hunter always knows the path back to camp.

He drilled his pilots in these tactics as they flew, pairing them as leader and wingman, spaced 60 metres abreast to allow room for manoeuvre without collision. They flew in tight formation, massing their power for coordinated strikes. This ensured every engagement began with probability tilted in their favour.

The Flying Circus became legendary for systematic execution. Von Richthofen applied that hunter's patience to aerial warfare, refusing to engage unless conditions favoured him. His bright red Fokker Dr.I triplane was essentially psychological warfare, announcing his presence and unnerving opponents before the first shot was fired.

Manfred von Richthofen (centred) with his mentor Hauptmann Oswald Boelcke (left) and Reserve Lieutenant Max Immelmann (right)

From Nick Stewart’s personal collection

Stacking Structural Advantages in Investing

Just as von Richthofen never attacked without multiple advantages working simultaneously, successful investing requires layering structural advantages that compound over time:

Numerical superiority: Broad diversification reduces unsystematic risk. Rather than betting everything on a single stock or sector, spread exposure across asset classes, geographies, and market capitalisations. You're not dependent on any single position succeeding, giving you better odds overall.

Securing altitude advantage: Tilts towards factors like value and small-cap, which decades of academic research show provide systematic return premiums over time. This means you begin each engagement from a position of structural strength backed by empirical evidence.

Additionally, low costs prevent silent erosion of returns. Every percentage point in fees is altitude surrendered before the engagement begins. Index and enhanced index funds that minimise expenses ensure more of your capital remains invested and compounding rather than being siphoned off.

Remembering your retreat: Liquidity enables repositioning when needed. Like von Richthofen’s strategy, portfolios need the ability to adapt without being trapped in unfavourable positions. Illiquid investments might offer higher returns, but they remove flexibility precisely when you might need it most.

Always see things through: Tax efficiency keeps more capital compounding. In New Zealand's relatively benign capital gains environment, this means strategic timing of realisations, thoughtful use of portfolio investment entities, and attention to income versus capital return characteristics.

Like securing altitude and sun position before attacking, proper asset allocation and positioning come first. Like firing only at close range with targets in your sights, investment decisions require clear conviction based on evidence, not speculation. Like the Flying Circus's coordinated attacks, diversification across asset classes works more effectively than concentrated bets.

Oil painting by Max Ordinall, from Nick’s personal collection

Constant Awareness: The Discipline of Waiting and Watching

Von Richthofen's rule about keeping your eye on your opponent and never being tricked into looking away speaks directly to behavioural finance. The greatest threat to individual investment success isn't market volatility. It's our own behavioural biases, causing us to look away at critical moments.

In investing, maintaining awareness means monitoring what you can control whilst ignoring what you can’t - AKA the noise designed to distract:

• Portfolio drift from target allocations matters. Daily market movements don't.

• Rebalancing opportunities when asset classes diverge significantly from targets matter. Quarterly earnings reports for individual companies within diversified index funds don't.

• Changes in personal circumstances requiring plan adjustments matter. Predictions about where markets are headed next month don't.

Discipline is harder in practice than in abstract. The retail investment industry generates an overwhelming torrent of information, most of it designed to make you feel you're missing something critical if you're not constantly trading. But as von Richthofen ignored enemy aircraft that didn't present advantageous engagement opportunities, investors must ignore much of market commentary and focus solely on what affects their systematic advantages.

Systematic Execution: Rebalancing as Tactical Discipline

Disciplined rebalancing is your “always carry through an attack once started” parallel. When equity markets surge beyond target allocations, trim them back to target. When they fall and fear is highest, rebalance back into them. Half-measures, like trimming only slightly or delaying rebalancing in case of a better opportunity later, waste the systematic advantage you’ve built.

This is extraordinarily difficult psychologically. Trimming equities after they've surged feels like selling winners. Adding to equities after they've fallen feels like catching a falling knife. But this mechanical adherence removes emotion from decision-making and ensures you're systematically buying low and selling high without attempting to time markets.

Von Richthofen's pilots didn't abort attacks halfway through if conditions looked momentarily unfavourable. They committed fully, trusting their systematic advantages would prevail. The same discipline applies to rebalancing: execute completely. Trust the process.

When Threatened, Face the Attack

When markets plunge, and portfolios decline, every instinct screams to sell, to "preserve what's left”, or to flee to cash.

This is precisely when systematic discipline matters most. Loss aversion—the behavioural bias where losses feel roughly twice as painful as equivalent gains—drives panic selling at market bottoms. Recency bias makes recent volatility feel like the new permanent reality. These biases trick investors into looking away from their long-term objectives and focusing on short-term pain.

Facing the attack means maintaining perspective. Your goals—retirement security, educational funding, legacy objectives—haven't changed because markets had a volatile quarter or year. Your systematic advantages—diversification, factor tilts, low costs—still function. The evidence supporting long-term equity returns hasn't evaporated.

Avoiding Fatal Deviation

The Baron's final flight on April 21, 1918, illustrates what happens when principles are abandoned. Engaging Canadian pilot Wilfrid May in a prolonged dogfight, von Richthofen broke multiple cardinal rules. The wind that day blew from an unusual direction—not the prevailing westerlies favouring German pilots. The extended engagement pushed him progressively deeper over Allied lines near the ridgeline at Corby.

He forgot his line of retreat. Flying low in pursuit of a relatively inexperienced opponent, he'd surrendered altitude advantage for the thrill of another victory. No wingman accompanied him. No formation support protected him. Every systematic advantage that had kept him alive through 80 victories had evaporated in the heat of pursuit.

A single, well-timed shot from Australian ground troops ended the legend—despite the aerial victory subsequently claimed by Canadian RAF pilot Roy Brown. One bullet. One moment of losing sight of position, probability, and principles.

Investors make remarkably similar mistakes constantly. Prolonged bull markets create overconfidence, and carefully constructed asset allocations drift unchecked because "equities always go up" or "bricks and mortar never lose value." A colleague's cryptocurrency windfall makes disciplined portfolios feel inadequate, tempting abandonment of evidence-based strategies for speculation. Market corrections trigger panic selling despite decades until retirement, abandoning the systematic discipline that would mean buying at depressed prices.

These are precisely the moments when abandoning proven principles feels most justified—and when probability turns decisively against us. We're pursuing that one more gain, chasing performance, abandoning our line of retreat.

Von Richthofen's legacy is defined by the systematic, probabilistic approach that made him exceptional – and his demise shows the value in sticking with what works.

His manual endures because it improves probability in combat. Markets require a similarly disciplined approach: following proven principles not just when conditions are favourable, but especially when every instinct says otherwise. 

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

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REFERENCES

1. Franks, N. & Bennett, A. (1995). The Red Baron's Last Flight. Grub Street Publishing.

2. Kilduff, P. (2007). Red Baron: The Life and Death of an Ace. David & Charles.

3. Fama, E.F. & French, K.R. (1992). "The Cross-Section of Expected Stock Returns." Journal of Finance, 47(2), 427-465.

4. Kahneman, D. & Tversky, A. (1979). "Prospect Theory: An Analysis of Decision under Risk." Econometrica, 47(2), 263-291.

Air New Zealand: The Worst of Both Worlds

Article #452

Fifty percent government-owned, operating like a budget carrier, charging premium prices, Air New Zealand occupies the most uncomfortable position in aviation. It’s neither fish nor fowl: not quite private, not quite public, delivering neither the efficiency of true competition nor the service standards of genuine public ownership.¹

Welcome to the warm embrace of collectivism. It’s getting warmer, and not in a good way.

The Flightless National Carrier

The symbolism writes itself. Air New Zealand, like the kiwi, has become a flightless bird, grounded by contradictions, unable to soar because it refuses to commit. Government ownership was supposed to protect the national interest. Instead, it has created an airline that enjoys privileges without facing consequences: government contracts, preferential treatment, implicit bailout guarantees, all without the full discipline of the market or the scrutiny of complete public accountability.¹

When things go wrong, taxpayers are on the hook. When things go right, shareholders collect the dividends.

New Zealanders know this intimately: the airline received NZ$2.3 billion in Crown support during COVID-19.² The structural trap was set long before the current crisis.

The World is on Fire. Air NZ has a Newsletter.

On 8 April 2026, CEO Nikhil Ravishankar sent customers a carefully worded email. “Kia ora Nick,” it began warmly. He wanted to update customers on jet fuel prices. Fuel had surged from around US$85–90 a barrel to above US$200, effectively doubling Air New Zealand’s daily fuel bill from NZ$4 million to NZ$8.5 million. Schedule cuts for May and June were confirmed. More were promised to be “deliberate and carefully considered.”³

Warm. Reassuring. Human, even, which is ironic, given what you encounter when you actually try to contact the airline.

This crisis is not Air New Zealand’s alone. Iran’s effective closure of the Strait of Hormuz, through which over 20% of global seaborne jet fuel normally flows, has sent shockwaves through the entire industry.⁴ More than 14,000 flights globally have been cancelled since late February 2026.⁵

Ryanair’s Michael O’Leary has predicted summer cancellations of 5–10% across Europe.⁶ United Airlines’ CEO Scott Kirby has warned his carrier’s fuel bill could double to US$20 billion.⁷ Lufthansa’s CEO has assigned teams to contingency planning.⁸ SAS has cancelled over 1,000 flights in April alone.⁹ Energy analysts at Kpler warn that even if the Strait reopened tomorrow, prices would not fall quickly: production has been taken offline, and the market hangover could last well into 2027.¹⁰

The difference between Air New Zealand and those carriers is structural. Most are pure private enterprises; they face consequences. Air New Zealand faces a shareholder with a printing press.

The Numbers are Brutal

Forsyth Barr’s March 2026 report is stark: Air New Zealand could book a net loss of $226 million in FY2026, and $148 million in FY2027 if fuel costs remain elevated.¹¹ Macquarie analysts warn that capacity cuts will fall primarily on domestic and Tasman routes.¹² The share price has reflected the outlook, trading near its 52-week low at $0.48, down sharply from $0.64.¹³

The airline has already trimmed near-term capacity by 5%, with more reductions almost certain.

Watch for the Capital Raise

Here is what the CEO’s warm email does not say: if losses of this magnitude materialise over two financial years, Air New Zealand will need to raise capital. When it does, the New Zealand government, as 50.1% shareholder, faces an unavoidable choice. Participate, and write another substantial cheque from the public purse to protect its stake. Or decline, dilute, and begin the slow retreat from an ownership position it has held for decades.

Either outcome implicates taxpayers. Either outcome exposes the central absurdity of the current arrangement. Budget 2026… hold your breath.

Chatbots and Contempt

Try contacting Air New Zealand’s customer service, and you will discover the true face of modern collectivist enterprise: woeful service, declining standards, and a corporate structure that treats human interaction as an inconvenience to be automated away.

You are more likely to engage with a chatbot than a human, and the human, when you eventually find one, operates like a chatbot anyway—scripted, bounded, unable to resolve anything of substance. The airline’s answer to its service failures is not better people or better training, but better systems for apologising for the absence of both.

The Hospital Pass

That’s what recommending Air New Zealand has become, and nowhere is the gap between price and product more vivid than in business class, where Air New Zealand’s structural contradictions are most expensive to observe firsthand.

The airline’s new Business Premier cabin, rolling out across its Boeing 787 fleet through 2026, retains a herringbone configuration. Passengers sit angled toward the aisle rather than toward the window, the opposite of the reverse herringbone suites now standard on Qatar Airways, Singapore Airlines and Cathay Pacific.¹⁴ Standard Business Premier seats come equipped with a sliding privacy screen. Not a door: a screen.

A door costs extra. Specifically, NZ$820 (approximately US$487) extra on long-haul.¹⁵ There are four of them on the entire retrofitted aircraft.¹⁶ Aviation analysts reviewing the product have described the standard offering as “fairly underwhelming” compared to what the competition offers.¹⁷

You’d book Qantas if you could, but with Emirates disrupted by Iranian airspace closures, rerouting flights away from Gulf hubs, alternatives from New Zealand are thinner than they have been in years.¹⁸

Choose

New Zealand deserves better than this muddled middle ground. Our national carrier should be either a source of genuine pride (fully public, properly accountable, serving citizens) or a true competitor, privately owned and driven to excel.

Full public ownership means genuine accountability: real service obligations, routes chosen for public benefit, consequences for failure. Full privatisation means real competition, no bailouts, market discipline for a product that currently charges a premium for the privilege of facing a stranger across a narrow aisle.

What we have instead is the comfortable middle ground that serves nobody.

Make a choice. Commit to something. Because right now, our national carrier charges like Singapore Airlines, seats you in a layout from 2005, asks NZ$820 extra for a door, deploys a chatbot when you complain, and may shortly be asking the government for more money.

That’s not the warm embrace of collectivism. That’s the slow squeeze.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

Canny View: Into the Bush — and Back, Rewarded

Article #451

The crack of a rifle echoes through the ranges. Deer season is open, and thousands of New Zealand hunters are pulling on their boots, loading up their packs, and heading into the hills with purpose. The roar is in full swing, and the pursuit of a good stag and a well-stocked freezer is very much alive. 

As I watch the preparations unfold each year, I can't help but see unmistakable parallels between heading into the bush and heading into the markets. Both reward the well-prepared investor. Both punish the cavalier. In both cases, coming home well and coming home rewarded start long before you take your first step. 

Know the terrain before you go in 

No serious hunter heads into unfamiliar bush without doing their homework first. They study the topography, understand the animal patterns, check the weather forecast, and know their exit routes. They talk to people who have hunted that country before. They don't assume that experience from one range translates perfectly to another. 

The investment landscape demands the same meticulous care. Before committing capital, the prepared investor takes time to understand the environment they're entering: market conditions, their own risk tolerance, time horizon, and the nature of the assets they're holding. Again, a fund or asset class that performed brilliantly in one market cycle may behave very differently in the next. 

Winging it in either arena tends to end badly, and usually at a financial cost to the unwary. 

Make your intentions known 

Every responsible hunter tells someone where they're going, when they expect to be back, and the route they plan to take. More than mere courtesy, this is protocol that keeps people safe when conditions change unexpectedly. Search and rescue teams will tell you that the single most useful thing a hunter can do before heading out is leave a detailed intentions form with someone they trust. 

In financial planning, this translates to working with a trusted fiduciary adviser who holds the full picture of your goals, your situation, and your plan. They're the person who knows where you're headed, what you're working towards, and can raise the alarm or offer a steadying, experienced hand if the conditions shift unexpectedly. A financial plan that lives only in your head is about as useful as intentions you forgot to leave behind before heading into the ranges. 

Safety first: Treat every firearm as loaded 

The golden rule of firearm safety is to treat every weapon as if it's loaded, every time, without exception. No shortcuts, no assumptions, no matter how familiar the environment or how experienced you are. The moment you stop following the rules is the moment accidents happen. 

In investing, the equivalent is always respecting risk, even when conditions look calm, and the market appears benign. It's easy to become cavalier about risk after a long bull run. Portfolios go up, confidence grows, and caution starts to feel unnecessary. But the investors who come unstuck are rarely those who panicked in a downturn; more often, they're the ones who stopped taking risk seriously when times were good and had over-exposed themselves before the conditions changed. Complacency is the safety left on when you're absolutely sure you don't need it, and this oversight will catch up with you eventually. 

Don't pull the trigger prematurely 

A seasoned hunter knows that a poor shot, taken in haste, without a clear line of sight, or before the animal is properly settled, can wound rather than harvest, and cost you the opportunity altogether. Patience is not a waste of time, nor mere passivity. It is the active, disciplined decision to wait until conditions are right. 

The same applies to investment decisions made in the heat of the moment. Selling out of a portfolio when markets fall sharply can feel decisive, and even prudent, at the time. But it often locks in paper losses and leaves you sitting on the sidelines in cash when the recovery comes. And recoveries, historically, tend to come faster and more forcefully than most people expect. 

The discipline to hold your position, wait for the right conditions, and resist the urge to act simply because the uncertainty is uncomfortable is what separates a skilled, long-term investor from a reactive one. 

Go prepared and stay prepared 

The experienced hunter carries more than a rifle. They bring a first aid kit, emergency shelter, a personal locator beacon, and enough food and water to last longer than expected. They aim for the best outcome, while being genuinely prepared for the worst.

A well-constructed investment portfolio works the same way.  

Diversification is your emergency kit. It won't prevent all downturns or shield you from every storm, but it ensures no single bad outcome takes you out entirely. Spreading your exposure across asset classes, geographies, and sectors means that when one area of the market is under pressure, others may be holding firm or even gaining ground. Regular reviews with your adviser are the equivalent of checking your gear before each outing; it's essential maintenance that most people wish they'd undertaken sooner when something eventually goes wrong. 

The reward is in the preparation 

Seasoned hunters come home with something to show for their efforts more often than not, and it's not luck. It's methodical preparation, sound judgment, deep respect for the environment, and the discipline to follow the rules—even when no one is watching and it would be easy to cut corners. 

The same is true of investing. The clients who tend to come home well-rewarded are rarely those who chased the latest hot opportunity or abandoned their carefully built plan at the first sign of difficulty. They're the ones who went in prepared, stayed their course through the inevitable rough patches, kept reviewing and adjusting with their adviser, and trusted a disciplined, evidence-based process over the long run. 

The bush doesn't care how confident you are. Neither do the markets. But go in right, with a clear plan, the right gear, a trusted guide, and the discipline to follow through when it counts, and both have something well worth taking home. 

And if the stag proves elusive this Easter, there's always the egg hunt: a somewhat safer pursuit, with arguably better odds of coming home rewarded. 

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

The Centurion’s Warning: Superannuation at 65—comforting politics, hard maths

Article #450

Nine years ago, I wrote about Roman Centurions. The New Zealand Economics Forum last month proved I wasn’t being dramatic enough.

When I wrote my very first Canny View in September 2017, I told the story of Roman Emperor Augustus and his military pension scheme, the Aerarium militare. Augustus faced a problem that will sound familiar: Romans were living longer, the pension fund was catastrophically underfunded, and someone had to pay for it.

His solutions were creative, if not entirely honest. Keep raising taxes. Extend the military service requirements, again and again. And when the pension rolls got too heavy? Launch another campaign! Rome always found another frontier war conveniently thinned the numbers — the Germans, the Dacians, the Parthians. It was just fiscal procrastination dressed up as military glory.

I wrote then: what is happening today is no different to those Roman times. At the end of the day, someone has to pay for it.¹

The Road to Rome’s Problems

The Aerarium militare is one of history’s most instructive fiscal cautionary tales. Augustus established it in 6 AD, seeding it with 170 million sesterces of his own money — a sum so large he had to make it a personal gift to avoid a Senate revolt over new taxes. When that proved insufficient, he pushed through a 5% inheritance tax and a 1% sales tax on goods sold at auction to keep the fund solvent. When Tiberius later tried to abolish the sales tax, his generals warned him that there was no other way to pay veterans. So, the tax stayed.

Each time the fund came under pressure, the response was the same: extend the service requirement. Augustus raised it from 16 years to 20, then up to 25. Soldiers who had signed up expecting to retire at 16 years found the goalposts moved, repeatedly, for fiscal reasons. Sound familiar?

Some historians trace a significant part of Rome’s eventual decline to the Senate later cutting pension payments altogether. With less incentive to serve, Roman citizens stopped enlisting. The ranks filled with barbarian mercenaries. Cohesion and discipline collapsed. The pension problem eventually helped unravel the army that held the Empire together.

New Zealand introduced its own old-age pension in 1898 — one of the first countries in the world to do so, under Richard Seddon’s Liberal government. It would be received at age 65, when male life expectancy was just 56. Like the Aerarium, it was never designed to be paid to most people. It was a safety net for the few who beat the odds. The pension that most New Zealanders now expect to receive for 20-plus years of retirement was conceived for people who, statistically, were unlikely to reach it at all.

Shifting Demographics Add Up to a Problem

Back in 2017, when I wrote that first article, over 15% of New Zealand’s population was aged 65 or older. Today, we’re past 16% and heading towards 20–21% within the next decade.⁵ We’ve gone from around 750,000 receiving NZ Super then, to over 912,000 today.⁶ Crucially, the working-age population supporting them is shrinking proportionally.

It’s not a sudden crisis of compassion, but rather a mathematical problem. The ratio of workers to retirees is deteriorating. Empires fall not from external threats but from internal fiscal contradictions — and we are living that reality now.

What’s Changed Since 2017?

In 2017, Bill English had just opened the door to raising the retirement age to 67 from 2037. Jacinda Ardern promptly pledged to repeal it and declared she’d resign before raising the retirement age. Labour won, the policy was scrapped, and the age stayed at 65. It hasn’t shifted since.

Movement comes only at the margins. Residence requirements for NZ Super are increasing from 10 to 20 years, phased through to 2042.⁷ Superannuation will consume 18.6% of tax revenue by 2029, up from 16.6% in 2023.³ But the fundamental policy lever — the eligibility age — remains politically untouchable. Augustus would understand completely.

What Treasury Said in Hamilton

At February’s New Zealand Economics Forum in Hamilton, Treasury Secretary Iain Rennie warned that ageing is already materially lifting expenditure and will continue to do so throughout the next decade, outpacing revenue growth. Without policy changes, New Zealand’s debt trajectory will become unsustainable.²

The number of people receiving superannuation will grow from 928,000 today to over 1,084,000 by 2029/30. That’s roughly the entire population of Tauranga added to the pension rolls in just under five years, costing a cool $7.7 billion more per year – equivalent to 22% of all projected tax revenue growth over that period.² Rennie was clear this isn’t a problem for future governments alone: “They are part of the chill headwinds confronting the government now.”²

Treasury’s longer-term projections show that without policy changes, government debt could reach unsustainable levels by the 2060s. This would be driven primarily by superannuation and healthcare costs for our ageing population.⁴ Every year of inaction makes the eventual adjustments more severe. That’s Treasury’s own modelling, not an opinion.

The Age Question Nobody Wants to Answer

At the same forum, a panel of economists and former politicians concluded that New Zealand can’t afford superannuation at 65… or even 67. Some suggested eligibility may need to rise as high as 72 or 73 to be viable long-term.²

Back to our Roman friends: Augustus didn’t want to cut centurion pensions either, as it was politically impossible. Instead, he extended service requirements, raised taxes, and launched another Parthian campaign. Each short-term fix made the structural problem worse. Eventually, the promises became mathematically impossible to honour, and the system failed.

We are not Augustus. We have better data, better institutions, and better options. What we seem to lack is the political will to use them.

What Actually Needs to Happen

Raising the age alone won’t fix this. The Forum panel agreed on that much.²

The deeper issue is savings and productivity. There is no credible path to lifting New Zealand’s productivity without matching Australia’s savings rate.² That means taking KiwiSaver seriously: Not as a nice-to-have, but as the foundation of our retirement system.

With 3.4 million New Zealanders enrolled — 90% of the workforce — KiwiSaver has been a genuine success. But 1.6 million members were making no contributions as of March 2025, either out of the workforce or on contribution holidays.⁴ It’s a structural gap we keep patching rather than fixing.

Compulsory contributions, properly locked in until retirement, would be a meaningful start. Paired with a gradual, signalled increase in eligibility age — giving people decades to plan — and we begin to look less like Augustus clutching at straws, and more like a country with a plan.

If you’re under 50, don’t rely solely on NZ Super. Your KiwiSaver balance isn’t a supplement anymore. It’s becoming the primary pillar of your retirement income – treat it accordingly.

The 450th Edition Lesson

In my first article, I concluded that failing to act would be irresponsible and place an extremely unfair burden on younger generations.¹ Nine years later, that’s exactly what we’ve done.

New Zealand is in a stronger position than most comparable countries. But public debt is at its highest point in 30 years, and the cost curve is steepening. The window for gradual, manageable change is narrowing.

The Romans had options. They could have reformed early, adjusted gradually, and built a sustainable system. Instead, they extended, delayed, promised — until the promises became impossible to honour and the system helped collapse the army that held everything together.

We still have choices; they didn’t. But as Treasury made clear last month, that won’t be true forever. And conversation without action is just more Parthian campaigning.

The Centurions learnt too late that empires don’t honour promises they can’t afford. We can avoid that mistake. But only if we start now.

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Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

---

References

¹ Stewart, N. (2017, September 16). Like Romans, fall on our sword and raise retirement age. Stewart Group. https://www.stewartgroup.co.nz/we-love-to-write/2017/9/16/like-romans-fall-on-our-sword-and-raise-retirement-age

² New Zealand Economics Forum 2026 (February 2026). Treasury presentations on fiscal sustainability and superannuation costs.

³ New Zealand Treasury. (2025). Budget Economic and Fiscal Update 2025. https://www.treasury.govt.nz/publications/efu/budget-economic-and-fiscal-update-2025

⁴ New Zealand Treasury. (2025). He Tirohanga Mokopuna 2025 – Long-term Fiscal Statement. https://www.treasury.govt.nz/publications/ltfp/he-tirohanga-mokopuna-2025

⁵ Stats NZ. (2024). Population estimates and projections. https://www.stats.govt.nz

⁶ Ministry of Social Development. (2025). New Zealand Superannuation recipient data.

⁷ Work and Income. (2024). Change to residence criteria for NZ Super and Veteran’s Pension. https://workandincome.govt.nz/eligibility/seniors/nz-super-and-veterans-pension-residency-changes-2024.html

$3 at the Pump — Crisis, Panic, or a Lesson We Refused to Learn?

Article #449

The average price of unleaded 91 jumped 14 NZD cents over a single weekend — and suddenly, commentators are reaching for the kind of language we last heard during COVID. Back then, we fought over toilet paper. Today, the panic commodity is petrol.

Let us first take a breath and assess.

The cause: Iran’s effective closure of the Strait of Hormuz (which handles about a quarter of the world’s seaborne oil trade). This of course follows retaliatory strikes after a US and Israeli attack on Iran in late February. [1]

The effect: Global oil prices have surged past US $100 per barrel, with Brent and WTI hitting around US$110 to US$114 at the height of the crisis. That pain is not contained to the petrol forecourt. It is flowing into every corner of our economy simultaneously, because energy is embedded in the cost of producing virtually everything. [1]

The most visible casualty so far is Air New Zealand, another unfortunately familiar occurrence. Our majority state-owned carrier has cancelled approximately 1,100 flights through early May, impacting around 44,000 passengers. In USD, jet fuel spiked from around $85 per barrel before the conflict to between $150 and $200, with the refinery crack spread (the margin between crude oil and refined jet fuel) blowing out from $22 to as high as $115 per barrel. That’s a structural blow to an airline already recording losses, and it has suspended its full-year earnings guidance entirely because the numbers no longer make sense. [2–5]

Finance Minister Nicola Willis has cited New Zealand's 50 days of fuel supply as a form of reassurance, but the public must read the fine print carefully. That figure includes fuel still sitting on tankers at sea, in transit from the very region in crisis. The fuel physically on New Zealand soil is closer to 28–33 days, depending on the product. [6]

More concerning still, that onshore storage is heavily concentrated around the former Marsden Point site in the north. That means regional centres and the entire South Island operate effectively on just-in-time supply and sit at the end of an extra coastal-shipping leg that adds its own layer of vulnerability. If supply were completely cut off today, New Zealand could sustain itself for roughly a month. [6,7]

That is not 50 days — and it should reframe the conversation entirely.

Muldoon-era carless days, last deployed between July 1979 and May 1980, are being discussed as a last resort. The mere fact we’re having this conversation in 2026 should give everyone pause. [8]

This is where a Canny View requires plain speaking.

Energy is not a lifestyle choice. It is the oxygen of economic activity. Every business—whether moving freight, running a dairy farm, manufacturing product, or providing professional services—consumes energy somewhere in its cost structure. When that cost surges sharply and suddenly, the business faces exactly three options:

1. Pass the increase to the customer.

2. Absorb it through productivity gains and efficiency.

3. Close their doors.

There is no fourth option. This is precisely why energy price shocks are so broadly inflationary. They don’t strike one sector. They strike all sectors at once.

For shareholders and business owners, the message is clear. A viable business must pay its bills, pay its staff, and generate sufficient return to keep capital engaged. When a major uncontrollable cost input (like energy) doubles overnight, that margin compresses fast.

The businesses weathering this shock best are those that made deliberate investments in energy resilience during the quieter years. Fleet operators who transitioned to hybrid or electric vehicles, alongside conventional petrol and diesel workhorses, are finding their total fuel bill meaningfully lower today. Those with suitable rooftops or landholdings who installed solar are generating their own daytime electricity, reducing grid dependency when traditional energy costs are most volatile.

Neither investment requires ideological conviction, only the basic financial discipline of stress-testing a cost structure and acting before the stress arrives.

Resilience is built in calm weather, not in a storm.

Now to the harder conversation — one that goes well beyond oil.

New Zealand's coal reserves exceed 15 billion tonnes, spread across Waikato, Taranaki, the West Coast, Otago and Southland. Our West Coast bituminous coal is internationally prized for its exceptionally low sulphur, low ash, and low phosphorus content — a premium quality product valued by the global steel industry. Yet Genesis Energy's Huntly Power Station sources most of its coal from Indonesia, with imports surging 311% in 2024 as domestic gas supply fell faster than expected. [9–11]

We export quality. We import what we need to keep the lights on. It’s a paradox, not a viable strategy.

The same logic applies offshore. Geological surveys estimate a 90% probability that New Zealand holds undiscovered oil reserves of at least 1.9 billion barrels, with a 50%  probability that the figure reaches 6.5 billion barrels. We are not a Saudi Arabia. But we are far from a barren rock. [12]

Which brings us to the captain's calls demanding accountability — plural, because there were more than one.

In 2018, then-Prime Minister Jacinda Ardern unilaterally banned all new offshore oil and gas exploration permits—no parliamentary vote, no Select Committee process, no national conversation. One announcement. Then, under the same Ardern government, New Zealand's only oil refinery at Marsden Point was closed and permanently decommissioned in 2022. The owner has since confirmed there is no prospect of restarting it; it would take billions of dollars and years of work to rebuild what took decades to establish. Associate Energy Minister Shane Jones described the closure as having fatally wounded New Zealand's fuel security. It’s difficult to argue otherwise this week. [13,14]

An uncomfortable but instructive parallel comes to mind. During Stalin's forced collectivisation in Ukraine in the early 1930s, a nation sitting atop some of the world's most productive agricultural land experienced a devastating famine while grain continued to be exported across its borders. The resources existed, and the policy choices negated them.

New Zealand is not Ukraine, and this is not the Holodomor, but the underlying dynamic—voluntarily denying access to domestic resources while importing vulnerability from abroad—is a pattern worth acknowledging.

A nation surrounded by grain, starving. A nation surrounded by hydrocarbons, panicking at the pump.

Muldoon would be baffled. His Think Big programme in the early 1980s was explicitly designed to convert New Zealand's own natural gas into synthetic fuels, fertiliser and methanol, and reduce oil import dependency following the 1973 energy shock. Think Big was expensive and its outcomes were mixed. But the underlying instinct — that a small, geographically isolated nation at the bottom of the world needs to take energy sovereignty seriously — wasn’t wrong. [15]

Domestic production does not fully insulate a small open economy from global prices. But it reduces the foreign exchange drain of pure import dependency, supports local employment, generates royalties and tax revenue for the Crown, and critically – reduces exposure to the shipping disruptions and geopolitical shocks we are living through right now. In times of crisis, a country with some domestic production and refining capacity is materially more resilient than one with neither.

The toilet paper panic of 2020 passed, and we learned almost nothing from it. Let us use this one differently: we need to have the serious, unsentimental conversation about energy sovereignty that we should have started long before Ardern's captain's call made it more urgent than it ever needed to be. We’ve missed the boat on energy resilience, and the storm has arrived; all we can do now is fortify ourselves to better weather the next one.

---

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

---

References

1. NZ Herald, Petrol prices expected to hit at least $3 a litre in some places, March 2026

2. Flight Global, Fuel price volatility prompts Air New Zealand to suspend earnings guidance, March 2026

3. Global Banking & Finance Review, Air New Zealand cut flights, fuel price surge wreaks havoc, March 2026

4. AeroTime, Air NZ to cut 1,100 flights amid soaring fuel prices, March 2026

5. NZX Announcement, Air New Zealand suspends FY2026 guidance, March 2026

6. RNZ, How much fuel does NZ have — and what happens if we run out?, March 2026

7. Infonews, NZ Fuel Situation — South Island Vulnerabilities, March 2026

8. NZ Herald, Carless days are no solution to an oil shock (Liam Dann), March 2026

9. Wikipedia, Coal in New Zealand, citing USGS and MBIE data

10. USGS Fact Sheet 2004-3089, New Zealand Coal Resources

11. Ministry of Business, Innovation & Employment, Energy in New Zealand 2025 — Coal

12. New Zealand Parliament, The Next Oil Shock?, citing Institute of Geological and Nuclear Sciences 2009

13. NZ Herald, First look: Inside Northland's Marsden Point oil refinery post-shutdown, November 2024

14. NZ Herald, Inquiry into reopening New Zealand's only oil refinery, March 2024

15. Wikipedia, Think Big, New Zealand Third National Government economic strategy

Hōne Heke: New Zealand's First Tax Rebel

Article # 448

It’s been 181 years since Hōne Heke and Te Ruki Kawiti's warriors stormed Maiki Hill above Kororāreka, felled the British flagstaff for the fourth and final time, in what we now call the Flagstaff War.[1] If you ask most New Zealanders why Heke chopped down that pole, you'll get vague answers about sovereignty or anti-colonial protest. Some might mention it as a symbolic rejection of British authority. Others recall it as an act of defiance, full stop.

What's conveniently forgotten, or perhaps deliberately obscured, is this: Hōne Heke was protesting taxes.

Hōne Heke, The History Collection - Alamy

In 1841, the new colonial government introduced customs duties on tea, sugar, flour, grain, spirits, tobacco, and other foreign goods.[2] These tariffs hit Māori trade in the north particularly hard, fundamentally altering the economic landscape that had made the Bay of Islands the centre of New Zealand's early colonial economy.

Kororāreka had been a thriving trading hub. While described by some as the "hellhole of the Pacific", it was undeniably prosperous. Māori merchants and rangatira like Heke had built sophisticated, profitable businesses supplying visiting ships with provisions, engaging in trade with overseas merchants, and extracting fees from vessels using the harbour. It was commercial enterprise at scale.

Then came the Crown's taxes. Suddenly, the Treaty he'd signed in good faith at Waitangi in 1840 was being followed by higher prices, reduced economic opportunity, and decisions made in Auckland without meaningful consultation (let alone consent). The government was taking a cut of every transaction, strangling the very trade that had made the Bay of Islands so prosperous.

Every ship that entered the harbour now paid customs duties to the Crown instead of port fees to local chiefs. Every bag of flour, every barrel of tobacco, every luxury good imported carried a government tax that drove up prices and reduced trade volumes. The economic sovereignty Māori chiefs believed they'd retained under the Treaty was being systematically dismantled, one tariff at a time.

Heke saw what was happening and he wasn't having it. He'd studied the American Revolution, contemporary accounts confirm this, and understood exactly what "taxation without representation" meant. He even flew the American flag during his rebellion, a detail often airbrushed out of modern retellings because it complicates the narrative. It's hard to cast Heke as simply anti-European when he's explicitly invoking American revolutionary principles and symbols.[2]

The flagstaff itself was deeply symbolic, but not in the way most people think. Yes, it represented Crown authority. But more practically, it represented the customs regime. Ships entering the harbour saw that flag and knew they'd be paying duties. It was a constant visual reminder of who now controlled the commerce of the Bay.

When Te Haratua cut it down on 8 July 1844 under Heke's orders, it was a statement: these taxes are not legitimate.[1] The Crown re-erected it. Heke personally chopped it down on 10 January 1845, wielding the axe himself. They put it up again, this time with iron cladding for protection, convinced that surely this would stop the attacks. Heke cut it down anyway on 19 January; the iron made it harder, but not impossible.

And finally, on 11 March 1845, Heke and Kawiti's forces overran the hill in a coordinated assault, killed the defenders, and felled that flagstaff one last time before sacking the town in outright economic warfare.[1]

Was it just about taxes? Of course not. Historians rightly point to the complex power dynamics within Ngāpuhi following the death of Hongi Hika in 1828, Heke's rivalry with Tāmati Wāka Nene for the paramount chieftainship, the loss of direct income from port fees, and broader questions about rangatiratanga versus sovereignty.[3] Heke was also frustrated by the capital's move from the Bay of Islands to Auckland, which had already damaged the region's economic prospects before the customs duties compounded the injury.

History is never monocausal. But the tax grievance was real, significant, and extensively documented in contemporary accounts. The Taxpayers' Union recently highlighted this often-ignored aspect of our history, noting that after Heke's rebellion, the government abolished customs duties in the Bay of Islands and declared it a free port.[2] Bad taxes were repealed because someone was willing to stand up and say "this isn't fair", and back it up with action. The policy change came too late to prevent war, but arrived nonetheless.

Some modern interpreters find this story uncomfortable as it shows a Māori rangatira fighting for economic freedom and against government overreach. It doesn't fit neatly into the box of noble savage resisting colonisation, nor does it suit the narrative of Māori as natural collectivists unconcerned with commerce, profit, and individual enterprise.

Heke was a businessman. A successful one. He understood trade, supply and demand, competitive advantage, and market dynamics. He recognised that excessive taxation kills economic activity and punishes productive enterprise. He saw government imposing costs without delivering corresponding benefits to those being taxed. And he fought back using the tools available to him in 1840s New Zealand.

Too often, Heke is reduced to a caricature; the man who chopped down the flagpole. This airbrushing of history to fit modern narratives does his character and mana a profound disservice. He was a principled, strategic thinker who would be puzzled, perhaps even insulted, by how shallow his legacy has become in popular memory. Reducing him to a one-dimensional figure of resistance obscures the sophisticated economic and political reasoning behind his actions.

The problem he identified hasn't gone away. If anything, it's getting worse. New Zealand's Tax Freedom Day, the date each year when we theoretically stop working for the government and start working for ourselves, has been creeping steadily later. In 2019, it fell on 9 May.[4] By 2021, it had slipped to 11 May.[5] The 2022-2023 period saw it jump dramatically to 20 May,[6] before settling at 16 May in 2025.[7]

That's seven days later in just six years. We're now working 136 days into the year, more than a third of it, just to pay the tax bill before we earn a single dollar for ourselves. Put another way, if you started work on 1 January, you wouldn't start earning money you could actually keep until mid-May.

The trend is troubling. Government's share of the economy keeps growing, driven by bracket creep (where inflation pushes people into higher tax brackets without any real increase in purchasing power), council rates rising over 10 percent annually for three consecutive years, and ever-expanding government spending that refuses to shrink even when politicians promise restraint.[7,8]

Despite tax cuts announced with great fanfare, despite redundancies in the public sector making headlines, and despite endless talk of fiscal discipline, New Zealanders paid nearly 5 percent more in total tax in 2025 than the year before.[8] Core Crown expenses rose from $139 billion to an estimated $144.6 billion. Welfare spending has ballooned from $26.6 billion pre-COVID to $47.8 billion in 2025; that’s nearly double in just five years.[7]

Local government deserves scrutiny too. Council rates have increased by more than 10 percent for three straight years, adding days to our collective tax burden.[7,8] While central government debates tax brackets and income tax rates, local councils have been quietly and relentlessly increasing their take.

Today, we might not resort to chopping down flagpoles (the IRD would take a dim view, and the penalties would be rather more than a military campaign in the bush). But Heke had it right: governments that tax without meaningful consent, that impose burdens without corresponding benefits, that take without giving value in return, these governments deserve to be challenged.

New Zealand has a long tradition of healthy scepticism toward authority and bureaucratic overreach. We question power. We push back against unreasonable demands. We expect government to justify what it takes from us. Perhaps we inherited some of that attitude from Heke, certainly his spirit lives on every time a New Zealander questions a rates rise or challenges a new tax.

His methods were blunt. The Flagstaff War brought death and destruction to the Bay of Islands. People died defending and attacking that pole. Towns were burned. The social fabric was torn. Violence is a terrible way to resolve policy disputes, and we've developed better mechanisms for democratic accountability since 1845.

But strip away the violence and look at his core complaint: unjust taxation forcing up prices, reducing opportunity, and transferring wealth from productive enterprise to government coffers without adequate justification or benefit. Does that sound familiar? It should. It's the same complaint we hear today, just expressed in different forums with different tools.

When you hear politicians talking about the "cost-of-living crisis," remember it was a cost-of-living crisis driven by customs duties on basic goods that sparked Heke's rebellion. When businesses complain about regulatory burden and compliance costs, remember Heke's merchants struggling with the Crown's new tariff regime.

When you question whether you're getting value for your tax dollar, especially when Tax Freedom Day keeps sliding later into the year, when rates keep rising, when spending keeps growing, you're asking the same question Heke asked in 1844.

We have elections, select committees, submissions processes, ratepayer advocacy groups. We have the Taxpayers' Union keeping score. We have media scrutiny and public debate. These are better tools than axes and muskets, and we should be grateful for them.

But fundamentally, we’re asking the same questions: when does taxation cross the line from legitimate funding of essential government services to unjust extraction? When does the government's share of the economy become so large that it hinders rather than helps our collective prosperity? At what point do we say "enough"?

This week, 181 years after that final flagstaff fell, perhaps we should remember Hōne Heke not just as the man who chopped down a pole, but as New Zealand's first tax rebel; a rangatira who understood that economic dignity, self-determination, and common sense matter more than government revenue. A businessman who recognised that prosperity comes from productive enterprise, not from government spending. A leader who knew that consent matters, that representation matters, that value for money matters.

That's a legacy worth celebrating. And it's a reminder worth heeding as Tax Freedom Day continues its unwelcome creep deeper into the year.

---

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

---

References

[1] New Zealand History, "The Flagstaff War," nzhistory.govt.nz

[2] New Zealand Taxpayers' Union, "Waitangi Day 2026," taxpayers.org.nz

[3] Academic historical analysis of the Northern War, various sources

[4] Baker Tilly Staples Rodway, "Tax Freedom Day 2019," May 2019

[5] Baker Tilly Staples Rodway, "How Tax Freedom Day, on 11 May, affects you," May 2021

[6] Baker Tilly Staples Rodway, "Tax Freedom Day 2024," May 2024

[7] Baker Tilly Staples Rodway, "Tax Freedom Day 2025," May 2025

[8] RNZ, "Taxpayers forking out almost 5% more than last year," 15 May 2025

Iran, Oil, and Your Retirement Savings: Separating the Signal from the Noise

Article # 447

The New Zealand media has had a busy week connecting the US and Israeli strikes on Iran to your wallet. Some of it is legitimate. Some of it is noise dressed up as financial guidance. Knowing which is which - now that’s useful.

Let's start with what’s real.

The Strait of Hormuz: A known pressure point

The Strait of Hormuz is a roughly 33km-wide chokepoint between the Persian Gulf and the Gulf of Oman. Around 20% of the world's daily oil supply and a similar share of global liquefied natural gas trade passes through it every single day, mostly bound for China, India, Japan, and South Korea.¹

This waterway has been a pressure point for decades. Iran mined it during the Iran-Iraq War in the 1980s, prompting direct US military intervention in what became known as the Tanker War (during which more than 500 vessels were damaged or destroyed).² In December 2011, Iran threatened closure in response to Western sanctions, triggering the deployment of a US-British-French naval flotilla. In 2019, tanker seizures and attacks on shipping spiked tensions again. In June 2025, Israel's strikes on Iranian nuclear facilities prompted Iran's parliament to pass a motion recommending closure, though that did not materialise into a full blockade.³

The point is this: the Strait of Hormuz has been a geopolitical instrument for Iran for more than 40 years. Successive US administrations, allies, and global energy markets have navigated those threats repeatedly. Every episode generated alarming coverage. Yet every episode passed. That does not make the current situation trivial, but it does provide context that breathless headlines rarely bother to include.

New Zealand's real exposure

Importantly, New Zealand has direct and specific economic exposure to this conflict.

According to the Meat Industry Association (MIA), nearly all of New Zealand's red meat exports to the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) travel through the Strait of Hormuz. In 2025, that trade was valued at $298 million, including $166 million in chilled exports, which are the most time-sensitive.⁴

Supply chain firm Kotahi, which handles freight on behalf of Fonterra and Silver Fern Farms, has confirmed that all major shipping lines have suspended services through the strait, with some 4,000 containers of New Zealand export cargo currently in transit.⁴

Fuel prices are also a legitimate concern. New Zealand no longer imports crude directly from the Middle East, but petrol is priced in a global market. Brent crude spiked more than 8% when trading opened after the weekend strikes.⁵ Analysts at JPMorgan and Citigroup have warned that sustained disruption could embed a significant geopolitical premium for weeks.

The New Zealand Ministry of Foreign Affairs and Trade has noted that rising fuel costs do not just show up at the pump. They pervade the economy through transport, logistics, and consumer prices – and may force the Reserve Bank to respond with always-dreaded interest rate adjustments.⁶

One lesser-discussed exposure: approximately one-third of the world's fertiliser trade also passes through the Strait of Hormuz, meaning prolonged disruption could eventually flow through to agricultural input costs. This is directly relevant to a primary-export economy like New Zealand's. ⁷

So yes, there are real and specific things worth monitoring here. Beyond fearmongering, we must consider geography and economic forces decades in the making.

Now for the noise...

Here’s where some of the coverage starts to serve the headline more than the reader.

At 7:56 am on Monday, 2 March, before Wall Street had even opened for the day, 1News published a piece headlined "Iran attack sparks warning for KiwiSaver, fuel, inflation."

Readers were told to brace for volatility, expect red ink in their KiwiSaver, and anticipate a flight to safer assets.⁸ By the time New Zealand investors had read that article over their morning coffee, absorbed the alarm, and perhaps reached for their phones to switch funds... Wall Street had opened, dipped 1.2%, and was already recovering. The S&P 500 closed that Monday virtually unchanged, finishing the session up just 0.04%.⁹

The warning had outrun the facts by an entire trading day.

Alarming coverage is produced in real time, often ahead of the facts. By the time reality arrives, in this case, a market that largely shrugged off the initial shock and bought the dip, most people have already absorbed the panic as truth and may have acted on it.

Advising the average investor to urgently check their KiwiSaver balance and consider switching funds is, for most people, bad advice dressed up as financial concern. This applies equally to any well-constructed investment portfolio underpinned by a comprehensive financial plan.

The latest data from the Retirement Commission puts the average KiwiSaver balance at $37,079 and the average member age at approximately 44.¹⁰ That means the typical New Zealand investor has roughly 20 to 25 years of accumulation ahead before they reach 65. Long-term KiwiSaver growth funds have historically returned between 7% and 9% annually.¹¹ Across that kind of horizon, even a meaningful short-term market dip is a rounding error in the final outcome.

The pattern markets have seen repeatedly, last June's brief Israel-Iran exchange being a useful recent reference point, is as follows:

1. Equity markets sell off sharply on geopolitical shock.

2. They recover once it becomes clear the worst-case scenario has not materialised.

3. Investors who switched to conservative funds during that episode locked in losses they then missed recovering as markets rebounded.

The same logic applies whether you hold KiwiSaver,  managed funds, or a direct share portfolio.

A comprehensive financial plan is engineered to withstand volatility. Abandoning it because of a week of alarming headlines is not a financial decision; it is an emotional one.

Four genuine reasons to review your investments

The right time to review your asset allocation or contribution settings is when your circumstances change — not when the news cycle does.

1. Has your income shifted significantly?

2. Are you approaching 65 and still in an aggressive growth fund that no longer reflects your timeline?

3. Has your risk tolerance genuinely changed — not because of a week of coverage, but because of a considered, honest look at your financial position and goals?

4. Are there changes to your broader financial plan that warrant a portfolio rebalance? These are all valid triggers for a conversation with your financial adviser.

But if your goals, your timeline, your income, and your broader financial picture are the same today as they were a fortnight ago, and for most people they are, the rational position is to stay the course.

A well-built investment portfolio is designed to absorb decades of global volatility. Many such portfolios have weathered the Global Financial Crisis, the COVID-19 crash, the 2022 rate shock, and last June's regional conflict. Each of those episodes generated similar headlines. Each time, disciplined investors who stayed the course came out ahead of those who did not.

When others are running from the fire

Warren Buffett has made a career of running towards financial fires, not away from them. Writing in the depths of the Global Financial Crisis, his philosophy spoke to financial discipline over the furore of the day: "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."¹²

The irony of a market downturn? Precisely when assets go on sale is when most investors want nothing to do with them; it’s when they are expensive and rising that everyone wants in. Buffett's instruction has always been the opposite: be fearful when others are greedy, and greedy when others are fearful. That’s not a comfortable stance when headlines are blaring an alarm. But discomfort and bad decision-making are not the same thing.

This is where a structured, disciplined rebalancing strategy earns its keep.

When equities fall, and fixed income or defensive assets hold their ground, a rebalancing framework triggers a deliberate, rules-based response: trim what has held up, add to what has fallen. Not because of a hunch. Not because of a headline. Because the plan said so before any of this happened.

That’s the discipline Buffett is describing. Not panic, not paralysis — but a pre-committed process that removes emotion from the equation and replaces it with structure. The investors who do best through periods like this are not the ones who predicted the conflict or called the bottom. They’re the ones who had a plan, stuck to it, and let systematic rebalancing do what it was designed to do.

Discipline pays off

The media's job is to make you read the next paragraph. Your financial plan's job is to compound quietly over decades. These two objectives are not aligned – and it’s worth remembering that when the very same article explaining why oil prices are rising pivots abruptly to urging you to check your KiwiSaver.

There is genuine news here worth following closely: shipping disruptions, petrol prices, fertiliser costs, red meat export disruptions, and what unfolds in the Strait of Hormuz over the coming weeks are all legitimately important to New Zealand households and businesses. Read those stories. Understand the exposure.

But when the coverage drifts into urging reactive investment decisions based on today's headlines, that is where you put the phone down, flick on the kettle, and make yourself a brew instead of making rash investment decisions.

Your future self will thank you.

---

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 447

---

References

[1] US Energy Information Administration. (2024). Strait of Hormuz — World's Most Important Oil Chokepoint. https://www.eia.gov/international/analysis/special-topics/World_Oil_Transit_Chokepoints

[2] Ratner, M., Lawson, A., & Brock, J. (2025). Iran Conflict and the Strait of Hormuz: Oil and Gas Market Impacts. Congressional Research Service. https://www.congress.gov/crs-product/R45281

[3] Times of Israel. (2026, March 1). Strait of Hormuz: Key Oil Route in Middle of Iran Crisis. https://www.timesofisrael.com/strait-of-hormuz-key-oil-route-in-middle-of-iran-crisis/

[4] Meat Industry Association NZ / Kotahi NZ. (2026, March 1). Statements on Strait of Hormuz shipping disruption. Reported in NZ Herald. https://www.nzherald.co.nz/business/us-iran-conflict-threatens-nz-red-meat-exports-via-strait-of-hormuz

[5] Franck, T., & Imbert, F. (2026, February 28). Markets Brace for Impact After US Strikes Iran. CNBC. https://www.cnbc.com/2026/02/28/markets-brace-for-impact-following-us-military-strikes-against-iran.html

[6] New Zealand Ministry of Foreign Affairs and Trade. (2025, July). NZ Economy Not Immune to Conflict in the Middle East. https://www.mfat.govt.nz/en/trade/mfat-market-reports/nz-economy-not-immune-to-conflict-in-the-middle-east-july-2025

[7] Stojanovic, U., & Bradshaw, T. (2026, March 1). Strait of Hormuz: If the Iran Conflict Shuts the World's Most Important Oil Chokepoint, Global Economic Chaos Could Follow. The Conversation. https://theconversation.com/strait-of-hormuz-if-the-iran-conflict-shuts-worlds-most-important-oil-chokepoint-global-economic-chaos-could-follow-277199

[8] Edmunds, S. (2026, March 2). Iran Attack Sparks Warning for KiwiSaver, Fuel, Inflation. RNZ / 1News. Published 7:56am. https://www.1news.co.nz/2026/03/02/iran-attack-sparks-warning-for-kiwisaver-fuel-inflation/

[9] CNBC Markets Desk. (2026, March 2). Stock Market Today: S&P 500 Ends Monday Just Above the Flatline, Rebounding from Sharp Declines. CNBC. https://www.cnbc.com/2026/03/01/stock-market-today-live-update.html

[10] Reyers, M. (2025, March). KiwiSaver Member Data — December 2024. Te Ara Ahunga Ora Retirement Commission / Melville Jessup Weaver. Reported in: Edmunds, S. What Average KiwiSavers' Balances Are at Your Age. RNZ News. https://www.rnz.co.nz/news/business/545015/what-average-kiwisavers-balances-are-at-your-age

[11] MoneyHub NZ. (2024). Average KiwiSaver Balance by Age. https://www.moneyhub.co.nz/average-kiwisaver-balance-by-age.html

[12] Buffett, W. (2008). Berkshire Hathaway Inc. Chairman's Letter to Shareholders. Berkshire Hathaway. https://www.berkshirehathaway.com/letters/2008ltr.pdf

Fonterra Sale: A Once-in-a-Generation Opportunity for Financial Balance

Article # 446

Fonterra's shareholder approval of the $3.2 billion capital return from the Mainland Group sale has now been rubber-stamped. Farmers are set to receive an average of $392,000 per operation—some larger operations receiving over $2-3 million.¹

The deal, which saw 88% support back in October when the $4.2 billion sale to French dairy giant Lactalis was approved, represents a watershed moment for New Zealand dairy farmers. Last week's special meeting confirmed the capital return arrangements through a scheme of arrangement, with settlement expected any time between now and the end of March.²

JHVEPhoto - stock.adobe.com

Around 60% of shareholding farms will receive at least $200,000, while some of the co-op's largest shareholders will receive over $2-3 million. Southland's Fortuna Group, with more than 4.4 million shares, will receive close to $9 million, while state-owned farmer Pāmu could receive $10 million.²

This reflects the sector's strategic maturity and forward-thinking approach to wealth creation beyond a single generation. It's a recognition that the most resilient farming families build diversified financial structures that can support their operations and families through all market cycles.

The balance of the sale proceeds is being retained by Fonterra to reinvest in its ingredients and foodservice businesses, with some cash used to retire debt or applied as working capital. Fonterra forecast its balance sheet metrics to stay in line with targets, being debt to EBITDA of less than 3x and gearing of 30-40%.²

Understanding Real Returns: The Smart Farmer's Perspective

Savvy farmers know headline numbers don't tell the whole story.

While the recent $10.16 per kilogram of milk solids farmgate price represents a nominal record,³ astute operators understand the critical importance of inflation-adjusted returns when assessing true profitability.

The previous high-water mark came in the 2013/14 season at $8.40 per kilogram.⁴ At first glance, this suggests farmers are now receiving approximately 21% more per kilogram than they did eleven years ago. However, this comparison becomes meaningless when examined through the lens of actual input cost inflation that has fundamentally transformed farm economics.

The rising cost of production

Between 2019 and 2024, the average total cost for milk production across major exporting regions increased by around 14%, with over 70% of that increase occurring since 2021.⁵ While on-farm inflation peaked at 10.2% in the year to March 2022,⁶ costs remained elevated through 2023 before moderating slightly in 2024. However, the cumulative impact since 2013 is huge.

The structural cost uplift is evident across every input category. From 2018-19 to 2024-25:

• Interest costs for an average dairy farm rose 86.5%, from $187,182 to $246,416 annually.⁷

• Insurance costs increased approximately 33% over five years, with insurance premiums now succeeding fertiliser and interest rates as a major cost pressure in 2024.⁸

DairyNZ estimates dairy operating expenses reached $8.16 per kilogram of milk solids in 2022/23, up sharply from $7.23 in 2021/22.⁹ The national break-even farmgate milk price for the 2024/25 season is $7.76 per kilogram of milk solids.¹⁰

Fertiliser costs saw some products skyrocket from $799 per tonne to $1,800 per tonne during the peak inflation period.¹¹ While prices moderated in 2024 (declining 4.2% in the sheep and beef sector),¹² the cumulative impact of years of price escalation remains embedded in farm cost structures. Additionally, feed costs for dairy farms rose 28.2% between 2020-21 and 2022-23.¹³

Added pressure from interest rates

While the Official Cash Rate has fallen to 2.25%, medium and longer-term fixed mortgage rates have been rising since December 2025. Wholesale interest rates have increased more than half a percentage point since November, with banks lifting 2-5 year fixed rates accordingly.

ASB's 2-year rate now sits at 4.95% and 3-year at 5.19%, while Westpac's 4-year rate has risen to 5.19% and 5-year to 5.29%.¹⁴ Markets are pricing in potential OCR hikes from mid-2026 as inflation sits at 3.1%, above the Reserve Bank's 1-3% target band.¹⁴

This dynamic creates renewed debt servicing pressure for farmers despite the falling OCR. The disconnect between short-term policy rates and longer-term borrowing costs reflects market expectations about future inflation and the eventual return to higher rates.

Smart farmers recognise this reality: $10 per kilogram milk price (while excellent in nominal terms) represents the outcome of working harder, investing more capital, and operating more efficiently within a structurally higher cost environment. When you strip away the nominal gains and examine purchasing power, farmers aren't substantially better off than they were at the previous peak. They've simply adapted to significantly higher operating costs.

The best operators understand that sustainable wealth creation requires thinking strategically beyond the farm gate. Relying solely on commodity price increases that barely keep pace with input cost inflation is not a wealth-building strategy, it's survival.

Extreme Volatility Demands Resilience

Recent price swings have been dramatic, rapid, and unpredictable – proving why wealth structures beyond farm gate are essential for multi-generational farming families.

The season opened in August 2025 with Fonterra forecasting a midpoint of $10 per kilogram with a wide range of $8-$11 per kilogram.¹⁵ For several months, this appeared achievable as prices held firm.

December’s dairy downturn

After nine consecutive Global Dairy Trade auction declines, Fonterra cut its farmgate milk price forecast for the second time in the season in December. It dropped from the season-opening midpoint of $10 per kilogram down to $9 per kilogram with a narrowed range of $8.50-$9.50.¹⁶ Whole Milk Powder prices had fallen 5.7%, having declined nearly 28% from their May peak.¹⁶

Market commentary was uniformly bearish, with analysts warning of sustained supply-side pressure and global milk flows outstripping demand. The outlook was grim. Farmers adjusted budgets, planned for lower cashflows, and braced for a difficult season.

Then, in a remarkable reversal, the market staged a recovery.

An unexpected upswing

Four consecutive positive Global Dairy Trade auctions saw prices surge back to September levels.¹⁷ Whole Milk Powder, which accounts for half the auction by volume and has the greatest influence on farmgate milk price, rose 2.5% to US$3,706 per metric tonne in late February. Skim milk powder increased 3% to US$2,973 per metric tonne, while butter surged 10.7% to US$6,347 per metric tonne.¹⁷

Last Friday (February 20, 2026) Fonterra responded to this market recovery by lifting its forecast again, just ten weeks after the December cuts. The co-op raised the midpoint from $9.00 to $9.50 per kilogram with a new range of $9.20-$9.80.¹⁸ CEO Miles Hurrell cited "recent improvements in global commodity prices combined with Fonterra's well contracted sales book."¹⁸

Additionally, Fonterra announced a special dividend of 14-18 cents per share from the entire fiscal 2026 underlying earnings generated by Mainland Group, payable following the completion of the sale to Lactalis.¹⁸

Volatility as a hard-learned lesson

This whipsaw journey (from $10, to $9, to $9.50) over the course of just four months illustrates the fundamental challenge facing farming families who depend entirely on commodity prices for wealth creation.

These aren't gradual, predictable shifts that allow for careful planning. They're rapid, material changes driven by global supply and demand dynamics that individual farmers cannot influence or accurately predict. In August, the outlook appeared strong. By December, it appeared dire. By February, it had recovered.

What will it look like in May? July? No one knows.

This volatility creates genuine financial planning challenges for families trying to build intergenerational wealth. How do you plan for retirement, fund the next generation's education, or structure succession when your primary income source can swing 10-20% in a matter of weeks?

Critically, even as Fonterra lifted its forecast, CEO Hurrell acknowledged that "global milk production remains above seasonal norms, meaning the risk of further volatility in pricing remains."¹⁸ In other words, yesterday's good news could reverse again next month. The unpredictability is structural, not temporary.

History guarantees there’ll be another downturn. You need to establish whether your family's financial security depends entirely on timing those cycles correctly, or whether you've built diversified wealth structures that can weather volatility while continuing to generate real returns.

Learning from the Best for Diversification

The most successful farming enterprises share one common characteristic: off-farm assets that aren't correlated to dairy commodity cycles.

The farm is the engine of wealth generation, but it shouldn't be the sole repository of wealth. Diversification creates financial resilience, provides genuine optionality, and reduces dependence on factors beyond the farm gate.

Strategic diversification into property, shares, managed funds, or other investments can provide income streams that aren't dependent on global dairy prices, exchange rates, or seasonal conditions. These assets have the potential to generate real returns above inflation. They can create genuine wealth growth, rather than simply keeping pace with rising costs.

Diversification also provides crucial liquidity that farm assets cannot deliver. When opportunities arise—whether that's acquiring neighbouring land, investing in new technology, or supporting the next generation's education—liquid investments can be accessed without forcing farm asset sales at potentially disadvantageous times. When emergencies occur, diversified wealth provides options and reduces stress.

This builds a comprehensive financial strategy that supports both farm and family for generations. The farm remains the core productive asset and the foundation of family identity and purpose – within a broader wealth structure providing stability, optionality, and genuine financial security through all market conditions.

Many farmers intend to reinvest this capital return into their farming operations.² This makes sense for operations with clear productivity improvements available. However, the most strategic approach balances on-farm reinvestment with genuine diversification beyond the farm gate.

There’s a question every farming family should ask: if we reinvest everything back into the farm, are we building wealth – or simply maintaining our exposure to a single asset class subject to extreme volatility and structural cost inflation?

Ensuring Quality Advice

As farmers contemplate deploying this imminent capital, the relationship with their financial adviser becomes paramount. This may be the largest single capital deployment decision many farming families ever make. Getting it right requires an adviser who is genuinely and legally committed to putting your interests first.

Will your adviser provide a written statement affirming that the advice relationship is of a fiduciary nature, where your interests unequivocally surpass those of the adviser?

Under New Zealand's financial advice regime, advisers are legally required to put their clients' interests first when giving advice and to prioritise their clients' interests over any conflicts.¹⁹ However, requiring your adviser to put this commitment in writing—in clear, unambiguous language—separates those who truly embrace fiduciary responsibility from those who simply meet minimum compliance standards.

Request a letter explicitly stating that all recommendations will prioritise your long-term financial wellbeing over commission structures, conflicts of interest, product preferences, or any other adviser considerations. This letter should confirm:

• That the adviser will put your interests unequivocally ahead of their own

• That they will disclose all conflicts of interest proactively

• They will recommend only investments and strategies that serve your long-term objectives

• Their compensation will be structured in alignment with your success

• They will provide ongoing accountability for the advice given

If an adviser hesitates or refuses to provide this written commitment, that tells you everything you need to know about where their priorities truly lie. The best advisers welcome this clarity because it aligns with how they already operate.

It’s not about distrust—it's about establishing crystal-clear accountability in what may be the most significant financial planning exercise of your farming career.

Payment is Imminent – What About a Plan?

The timeline has crystallised. With settlement expected between now and the end of March,² farmers have mere weeks before capital arrives. The Overseas Investment Office approval cited the $3.2 billion direct injection of capital to New Zealand farmers as a strong economic benefit, alongside Lactalis' $100 million capital expenditure commitment and ongoing supply arrangements.² Finance Minister Nicola Willis confirmed the transaction met the "benefit to New Zealand test."²

For farmers who haven't yet engaged in comprehensive financial planning, the time to act is now—not after the money arrives. Once capital is in the bank account, the psychological pressure to "do something" with it can lead to reactive decisions, not strategic ones.

Execute on robust financial planning that diversifies wealth beyond agricultural assets into uncorrelated investments, creates multiple income streams independent of commodity cycles and inflation erosion, structures tax-efficient wealth transfer to the next generation, provides financial resilience and liquidity against future market downturns, and builds genuine intergenerational wealth that can support family objectives for decades.

Work with advisers now to develop comprehensive plans, have thorough family discussions about objectives and succession, and ensure structures are ready for when the capital arrives. The planning should happen now; the deployment happens when the money is in your account.

The Bottom Line

The dairy sector has proven its resilience, discipline, and strategic thinking through multiple crisis periods. But dependence on commodity prices alone creates unnecessary risk for farming families seeking to build multi-generational wealth.

Now, thanks to the Fonterra sale, farmers can take the next strategic step—building financial structures that weather all cycles and generate real wealth across generations. Beyond the next season, or even the next decade, this is about creating financial security that supports your family's farming legacy for the next century.

The question becomes whether you'll deploy the capital strategically, with proper advice, appropriate diversification, with explicit attention to generating real returns above inflation.

With capital arriving imminently and markets demonstrating their unpredictability daily, the time for planning is now. The most successful farmers will approach this thoughtfully, strategically… and with professional, fiduciary guidance that puts their interests unequivocally first.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe,
Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 446

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References

1. BusinessDesk (19 February 2026). "Fonterra farmers set to rubber stamp $3.2b Mainland Group capital return". ASB estimated average return at $392,000, with 60% receiving at least $200,000.

2. BusinessDesk (19 February 2026). Settlement expected between now and end of March 2026.

3. NZ Herald (26 September 2025). Final farmgate milk payout reached $10.16 per kilogram of milk solids.

4. NZ Herald (18 March 2025). In 2013/14 season, Fonterra paid $8.40/kg.

5. Rabobank (18 February 2025). Between 2019 and 2024, average total cost increased 14%, with over 70% since 2021.

6. NZ Herald (22 August 2022). On-farm inflation 10.2% for year to March 2022.

7. Farmers Weekly (4 June 2024). Interest costs rose 86.5% from $187,182 (2018-19) to $246,416 (2024-25).

8. USDA (2025). In 2024, insurance premiums succeeded fertiliser and interest rates as major cost pressure.

9. Infometrics (August 2023). Operating expenses at $8.16 per kgMS in 2022/23.

10. DairyNZ (2024). Break-even at $7.76 kg/MS for 2024/25.

11. NZ Herald (22 August 2022). One fertiliser increased to $1,800/tonne from $799/tonne.

12. Beef + Lamb NZ (June 2024). Fertiliser declined 4.2% in 2023-24.

13. DairyNZ. Feed costs rose 28.2% between 2020-21 and 2022-23.

14. RNZ (9 February 2026) and Opes Partners (25 February 2026). ASB: 2-year at 4.95%, 3-year at 5.19%; Westpac: 4-year at 5.19%, 5-year at 5.29%. Wholesale rates up over half a percentage point. Note: BNZ reversed recent rate hikes on 27 February 2026, cutting 3-year to 4.99%, 4-year to 5.19%, 5-year to 5.29%.

15. Fonterra (August 2025). Season opened at $10/kg midpoint with range $8-$11/kg.

16. Farmers Weekly (18 December 2025). Fonterra cut forecast to $9/kg midpoint, range $8.50-$9.50, following nine consecutive GDT declines.

17. BusinessDesk (19 February 2026). WMP rose 2.5% to US$3,706/MT, SMP 3%, butter 10.7% following four consecutive positive auctions.

18. Reuters/Fonterra (20 February 2026). "NZ's Fonterra lifts annual milk price forecast, teases special dividend". New midpoint $9.50/kg, range $9.20-$9.80. Special dividend 14-18 cents per share from Mainland Group FY26 earnings. CEO noted volatility risk remains.

19. FMA New Zealand. Advisers must put client's interests first.

Two Years of Drift: New Zealand's Squandered Mandate for Change

Article # 445

In late 2023, New Zealanders voted decisively for change. After six years of Labour government under Jacinda Ardern and Chris Hipkins, the country was exhausted. The NZX had become one of the worst‑performing stock markets in the developed world [1]. Trust in core institutions, from the police to the healthcare system, had cratered [2]. Real economic growth was negative [3]. The cost of living was crushing ordinary families, while housing remained stubbornly unaffordable.

The coalition government swept to power on a mandate to reverse this decline. But two years later, that mandate has been squandered through timidity and a fatal misreading of the moment.

It's tempting to view this government's approach through the lens of John Key and Bill English's post‑GFC strategy. Between 2008 and 2017, that duo carefully managed spending cuts while allowing growth to flourish organically [4]. They made incremental reforms, maintained fiscal discipline, and let the private sector drive recovery. It worked brilliantly. Unemployment fell, growth returned, and National won three consecutive elections.

But 2026 is not 2010, and the global playing field has fundamentally changed. Interest rates have surged after over a decade of easy money [5]. New Zealand's underlying productivity crisis can no longer be ignored [6].

This government has tried to apply the Key‑English playbook to a radically different situation. Ministers speak reassuringly of “green shoots”, yet the economy contracted 0.9% in Q2 2025, then grew just 1.1% in Q3, a volatile pattern that speaks to underlying fragility rather than sustained recovery [7]. Real GDP per capita continues falling [8].

The retail sector tells the story most viscerally. Boxing Day sales slumped 12.4%, consumers spent just $51.2 million on non‑food retail, down from $58.5 million the previous year [9]. As Simplicity chief economist Shamubeel Eaqub observed, “For a lot of businesses this should be their saving grace” [10].

January 2026 brought only marginal relief: core retail spending lifted a mere 0.6% compared to the same month last year, with weather events depressing regional performance and retailers “just treading water as the economy moves sideways, rather than forwards,” according to Retail NZ CEO Carolyn Young [11]. In the meantime, retail business liquidations surged 34% year‑on‑year [12].

Consider ACT leader David Seymour's State of the Nation speech on Sunday, where he diagnosed the core problem with brutal clarity. “People work their guts out only to find that they're further behind,” he said, noting young New Zealanders simply “can't make the numbers add up” when looking at student loans, wages, taxes, and housing costs. He called emigration a “flashing light on the dashboard” and observed that previous generations worked hard “because hard work was a rewarding strategy. That deal feels broken.” He admitted the government is “on track to post a small surplus by 2030, but after that, our ageing population will put us back in the red for more decades of deficit spending.” Yet his proposed solution, reducing the number of ministers to 20 and departments to 30, only epitomises the incrementalism that has defined this government. When your coalition partner polling at 7.6% is calling for bolder action than you are, you've misread the moment [13].

With the election now confirmed for 7 November 2026, Prime Minister Christopher Luxon’s party has a narrow lead in recent polls, but the fundamentals are troubling. The latest Roy Morgan poll has National at 34.5% compared to Labour's 30.5%, with the coalition government on 52% versus the opposition's 44% [14]. Yet 51.5% of voters say New Zealand is “heading in the wrong direction” [15].

The Argentina Mirror

In 1913, Argentina's per capita income exceeded Germany, France, Sweden, Italy, and Spain [16]. Like New Zealand, it was a resource‑rich agricultural powerhouse built on classical liberal foundations. Both countries ranked among the world's wealthiest in the first half of the 20th century [17].

Argentina's fall was dramatic. Decades of Peronist corporatism culminated in the crisis that brought Javier Milei to power. By December 2023, Argentina faced 211% annual inflation, 42% poverty, a 15% quasi‑fiscal deficit, and an economy in free fall [18].

Milei cut the budget by 30% and balanced it by his second month in the job [18]. He implemented 1,246 deregulations through August 2025 [18]. He abolished 10 ministries and fired more than 53,000 public employees [18]. Annual inflation fell from 211% to around 32% by January 2026 [18–21]. GDP grew 6.3% and investment surged 32% in the second quarter of 2025 [18]. More than 11 million people have been pulled out of poverty [18].

The results are transformative. After Milei eliminated rent controls, rental housing supply tripled and real prices fell 30% [18]. When he deregulated agricultural markets, vaccine costs for livestock producers dropped by two‑thirds [18]. Home appliance prices fell 35% after eliminating import‑licensing schemes [18].

There are real victories here. They’re 28‑year‑old Franco signing a 30‑year mortgage,  “unthinkable only a couple of years ago” [18]. They’re freelancer Cecilia finally able to focus on work instead of navigating convoluted tax laws [18]. They’re farmer Pedro Gassiebayle reinvesting in his business and thinking about efficiency for the first time [18].

To be sure, Argentina's transformation faces headwinds. Monthly inflation ticked up to 2.9% in January 2026 in the fifth consecutive monthly increase, and questions have emerged about the government's statistical methodology [19–21]. The path remains narrow and fraught. But even with a few snags, the direction is unmistakable: from complete collapse toward functioning markets.

New Zealand's Drift

Compare that to New Zealand. Two years after a change in government, there's been no meaningful regulatory reform despite endless consultation. Government spending has barely been constrained [22]. Infrastructure delivery remains slow and over‑budget [23]. Housing consents have fallen [24]. The promised Fast‑track Approvals Bill has been watered down. RMA reform has been incremental when transformation was needed.

Most damningly, the fundamental drivers of our decline remain unaddressed. We still can't build houses efficiently. We still can't deliver infrastructure on time or budget. Our planning system still makes simple projects take years to consent. Meanwhile, retailers close their doors while politicians tout those elusive green shoots.

The Key‑English approach worked because the GFC was primarily a demand shock. New Zealand's current malaise is structural.

We have a productivity crisis decades in the making [25]. We have infrastructure crumbling from underinvestment [26]. We have planning and regulatory systems that strangle growth.

As Austrian economist Ludwig von Mises told Argentines in 1959: “Economic recovery does not come from a miracle; it comes from the adoption of sound economic policies” [18].

The Electoral Reckoning

With nine months until the election, this government faces an uncomfortable reckoning. Voters were promised change and received continuity. They were told to trust the process while their living standards declined. Now they're being asked to believe in green shoots while retail spending barely budges and liquidations surge.

The opposition will hammer a simple message: You had your chance and you wasted it. And they'll be right. This government has fundamentally misread the moment. It applied a playbook designed for managing cyclical downturns to a structural crisis requiring transformation.

What makes Argentina's transformation particularly instructive is that Milei turned the mainstreaming of libertarian thought into political victory [18]. He became the first political leader in 80 years to propose that the whole corporatist state had to be torn down and replaced with limited government [18]. New Zealand faces no such ideological battle. We already have strong institutions, low corruption, an independent central bank, and largely functional markets. We don't need revolution; we need our government to use the mandate voters gave them.

The tragedy is that we could reform from strength if our leaders found the courage. Instead, we're drifting toward the point where only painful corrections remain viable. Postponing necessary reforms doesn't achieve stability. It ensures that, when reform finally comes, it's painful and disruptive.

Two years ago, voters gave this government a mandate for change. Nine months from an election, with retail sales barely growing and businesses liquidating at record rates, they're learning that careful management of decline is still decline. As Milei declared to Argentines: “Either we persist on the path of decadence, or we dare to travel the path of freedom” [18].

New Zealand faces the same choice. Two years ago, voters chose change but received decadence, polite, incremental, delivered with press releases about green shoots while retailers close their doors.

Argentina's history suggests we're running out of time to change course. The voters will render their verdict on November 7.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 445

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References

1. NZX. Market performance data, 2020–2023.

2. Statistics New Zealand. New Zealand General Social Survey: Trust in public institutions, 2018–2023.

3. Statistics New Zealand. Gross Domestic Product (GDP) data, 2022–2025.

4. New Zealand Treasury. Fiscal consolidation analysis, 2008–2017.

5. Reserve Bank of New Zealand. Official Cash Rate (OCR) data, 2021–2023.

6. OECD. Productivity statistics for New Zealand.

7. Statistics New Zealand. Quarterly GDP data, Q2–Q3 2025.

8. Statistics New Zealand. Real GDP per capita data, 2024–2025.

9. Worldline NZ. Retail spending data and Boxing Day sales figures, December 2025.

10. RNZ. “Tough December for retailers, as Boxing Day sales slump 12.4 percent.” 13 January 2026.

11. Inside Retail NZ / Ragtrader. Retail sector reports, January 2026.

12. Centrix. Retail business liquidations data, reported February 2026.

13. RNZ / Reid Research. Polling data on ACT Party support, January 2026.

14. Roy Morgan. New Zealand voting intention poll, January 2026.

15. Roy Morgan. Government confidence rating, January 2026.

16. Maddison Project Database. Historical GDP per capita comparisons, 1913.

17. Maddison Project Database. Long‑term international income comparisons, early 20th century.

18. Vásquez, Ian, and Marcos Falcone. “Liberty Versus Power in Milei’s Argentina.” Cato Institute – Free Society, Fall 2025.

19. ABC News. Argentina inflation reporting, February 2026.

20. Fortune. Argentina inflation and economic reform coverage, February 2026.

21. Washington Times. Argentina inflation and fiscal policy reporting, February 2026.

22. New Zealand Treasury. Budget documents, 2024–2026.

23. Infrastructure Commission Te Waihanga. Project delivery and cost‑overrun reports.

24. Statistics New Zealand. Building consents data, 2024–2025.

25. New Zealand Productivity Commission. Long‑term productivity analysis.

26. Infrastructure Commission Te Waihanga. Infrastructure deficit assessments.

The DIY Investment Trap: Why New Zealanders Need to Play the Net Game

Article # 444

The democratisation of investing has transformed the financial landscape. Where once only institutional investors had access to sophisticated investment vehicles, today's retail investors can build diversified portfolios with a few clicks on their smartphones. Exchange-traded funds (ETFs) have been at the forefront of this revolution: in the United States, they now represent half of all listed funds[1], a remarkable shift that reflects their popularity and accessibility. 

The investment supermarket has expanded exponentially, offering strategies across listed and unlisted assets, domestic and international markets, and countless sectors and themes. From tech giants like Apple and Nvidia to broad market indices, bond funds to commodity trackers, the barriers to entry have never been lower.  

A generation ago, building a globally diversified portfolio required significant wealth and professional intermediaries. Today, it requires a brokerage account and an internet connection. 

But more choice doesn't automatically mean better outcomes. In New Zealand, there's a growing cohort of DIY investors who are playing the gross game when they should be playing the net game. They're watching their portfolio balances grow, celebrating double-digit returns, and comparing performance with friends… all whilst ignoring the substantial tax implications that will ultimately determine their real wealth accumulation. 

The Bracket Creep Reality 

New Zealand's tax landscape has shifted dramatically, yet many investors haven't adjusted their thinking accordingly. A significant number of Kiwis now find themselves in the 33% tax bracket (income between $70,000 and $180,000) or even the 39% bracket for those earning over $180,000, often without realising it until after 31 March when their tax returns are typically filed.[2] 

This isn't always due to massive salary increases or career progression. Bracket creep, driven by wage inflation without corresponding tax threshold adjustments, is quietly pushing more New Zealanders into higher tax brackets each year[3]. As wages rise to keep pace with the cost of living, the tax system captures an increasingly large slice of that income. What once seemed like a tax bracket reserved for high earners has become surprisingly accessible to middle-income professionals. 

But there's another factor many overlook when calculating their tax position: total earnings extend far beyond salary. Consider the full picture of your financial life. That cash sitting in the bank, even at relatively low interest rates, generates taxable income[4]. It might not seem like much on an individual transaction basis, but across multiple accounts and a full tax year, it adds up. 

Trust distributions, company dividends, rental income from investment properties, and profits from share trading; these all contribute to your taxable income.  

Many investors are genuinely surprised when they discover their effective tax rate is higher than anticipated, simply because they've been thinking about salary in isolation rather than total taxable income.  

The Hidden Consequence 

When you buy shares in Nvidia, Apple, or any other direct shareholding, or when you invest in ETFs tracking international markets, you're creating taxable events. Under New Zealand's tax rules, particularly the Foreign Investment Fund (FIF) regime, these investments generate tax obligations that must be included in your annual return[5]. 

The FIF rules are complex and often misunderstood. Many investors assume they only pay tax when they sell. In reality, they may be liable for tax on deemed income each year, regardless of whether they've sold anything. Yet a startling number of investors either don't realise this or don't adequately account for it in their investment strategy. 

They're focused on gross returns (the headline numbers showing how much their portfolio has grown) without applying a tax overlay to understand their true, net position. They celebrate when their tech stock portfolio rises 25%, but forget to calculate what that means after tax obligations are met. 

How We Got Here 

For roughly 25 years, New Zealand maintained a relatively flat tax structure with a top rate of 33%[6]. The tax environment was stable and predictable. Investors could make reasonably informed decisions knowing that their tax position would remain relatively constant. 

But the introduction of the 39% top tax rate in 2021[7], combined with the absence of inflation indexing for tax brackets, has fundamentally changed the game. Each year, more New Zealanders cross into higher tax brackets not because they're genuinely wealthier in real terms, but simply because thresholds haven't kept pace with inflation. 

The compounding effect is significant. A professional who was comfortably in the 30% bracket (or lower) a decade ago might now find themselves in the 33% or even 39% bracket, despite their real purchasing power having barely changed. The tax burden has increased substantially, yet investment strategies have often remained unchanged. 

Gross Returns vs Net Reality 

An investment delivering a 10% gross return might sound attractive, but if you're in the 39% tax bracket and a significant portion of that return is taxable under the FIF rules, your net return tells a very different story. Suddenly that 10% might be closer to 6% or 7% after tax. It’s still positive, but materially different from the headline figure. 

This distinction becomes even more critical when comparing investment options. A lower-gross-return investment with tax advantages might deliver superior after-tax returns compared to a higher-gross-return investment that's tax-inefficient for your circumstances. 

You don't want to win the battle only to lose the war. Chasing gross returns without understanding the net outcome is a pyrrhic victory – it looks impressive on portfolio statements but delivers disappointing real-world results when tax time arrives. 

The Silo Trap 

Even when investors recognise the need for professional advice, they can fall into another trap: the silo regime. Perhaps influenced by barbecue conversation about diversifying across advisers – “don't put all your eggs in one basket, mate” – some investors split their portfolio. They might allocate $750,000 here with one adviser, another substantial chunk there with a second, and perhaps a third portion elsewhere for good measure. 

The logic seems sound on the surface. After all, diversification is a fundamental investment principle, so why not diversify your advisers too? It provides a sense of security, multiple perspectives, and perhaps even keeps each adviser "honest" through implicit competition. 

You’re essentially asking each adviser to play with one hand tied behind their back. 

No single adviser in this fragmented arrangement understands your complete tax position. They can't see the full picture of your income sources, your various investment vehicles, or how different components of your portfolio interact from a tax perspective. They're optimising for their slice of your wealth without any visibility into the whole. 

One might be selecting investments that generate substantial taxable income, unaware that another adviser is doing the same thing, pushing you into a higher tax bracket than necessary. Or they might be duplicating strategies, eliminating the diversification benefits you sought by splitting your portfolio in the first place. 

Each adviser might be doing an excellent job with their portion, yet your overall outcome remains suboptimal because no one is orchestrating the tax efficiency of the complete picture[9].  

It's the financial equivalent of having multiple chefs each cooking one course of a meal without coordinating the menu. You might end up with three excellent dishes that don't work together at all. 

Why You Need a Financial Adviser 

Professional guidance matters. And not just any adviser, but one who can see your complete financial picture and implement a coordinated, tax-efficient strategy across all your assets. 

Investment success isn't measured by individual account performance. It's measured by your actual, after-tax wealth accumulation. An adviser with a holistic view can structure investments in ways that are tax-efficient for your specific circumstances, recognising that different investment vehicles have different tax treatments and that your personal tax situation is unique. 

They can help you understand whether PIE funds, direct shares, or other investment structures make the most sense for your position. They can coordinate the timing of income recognition, manage your exposure to FIF rules, and ensure your overall portfolio is working towards your net wealth goals rather than simply chasing gross returns. 

When seeking advice, look for a fee-only, unconflicted fiduciary adviser[10]. This ensures their recommendations are driven by your best interests, not commission structures or product sales targets. A fiduciary is legally obligated to put your interests first—a distinction that matters profoundly when navigating the complex intersection of investment strategy and tax planning. 

Fee-only advisers are compensated for their advice and service, not for selling particular products. This alignment of interests is crucial when you need objective guidance on tax-efficient structuring rather than a sales pitch for the highest-commission product. 

The Path Forward 

The DIY investment revolution isn't going away, nor should it. Access to investment opportunities is fundamentally democratising and positive. But as the New Zealand tax environment becomes increasingly complex, investors need to evolve their approach. 

Understanding your total tax position, applying a tax overlay to investment decisions, and focusing relentlessly on net returns rather than gross figures—these aren't optional luxuries. They're necessities for anyone serious about building wealth in today's environment. 

The supermarket aisle may be longer than ever, offering more choice than any previous generation of investors could have imagined. But choosing wisely requires understanding the true price you're paying; not just the label on the shelf, but the price after tax.  

The game has changed. Make sure you're playing it properly. 

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 444

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References

[1] Investment Company Institute, 2024 data on US ETF market share  

[2] Inland Revenue Department, "Individual income tax rates" (current as of 2024-25 tax year)  

[3] New Zealand Treasury, "Fiscal drag and bracket creep analysis," 2024  

[4] Inland Revenue Department, "Resident withholding tax on interest"  

[5] Inland Revenue Department, "Foreign investment fund rules and portfolio investment entities"  

[6] New Zealand Tax History, "Top personal tax rates 1988-2021"  

[7] Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021  

[8] Financial Advice New Zealand, "The importance of holistic financial planning," professional standards guidance  

[9] Chartered Accountants Australia and New Zealand, "Tax-effective wealth management strategies," 2024

[10] Financial Markets Authority, "Financial adviser disclosure requirements and fiduciary standards," Financial Markets Conduct Act 2013 

Full and Final: The Value of Moving Forward

Article # 443

With Waitangi Day upon us, it’s the perfect opportunity to reflect on what makes us unique. We're one of few nations built on a founding document promising partnership: the Treaty has been imperfectly honoured, fiercely contested, never abandoned… and the journey has taught us something valuable about moving forward without forgetting the past.

There's a story from Ngāi Tahu history that captures this lesson. It involves a sacred dogskin cloak, a violation of tapu, and a cost compounded beyond anyone's imagination.

Arowhenua Marae - Photo by Nick Stewart

The Cost of Feuds

Around 1826, while Chief Te Maiharanui was away, a woman from Waikākahi wore the kurīawarua – the Chief's sacred dogskin cloak. This act sparked the kai huānga feud: years of fighting between kin across Banks Peninsula, where the final insult to the enemy after battle was to consume them (kai huānga meaning ‘to eat a relative’, as the fighting was between hapū).[1]

This internal warfare weakened Ngāi Tahu at a crucial moment in time. Te Rauparaha of Ngāti Toa then swept down from Kapiti Coast with muskets. He found an iwi divided. The feud ended when the external threat loomed, but the damage had been done: the siege of Kaiapoi and the fall of Ōnawe found Ngāi Tahu already vulnerable because of the previous fighting.

The cloak was never worth what it ultimately cost.

The Next Fight: Te Kerēme

Ngāi Tahu learned from this. When the land was taken – eight million hectares purchased by the Crown for £2,000 through Kemp's Deed in 1848 – Ngāi Tahu made its first claim against the Crown in 1849, just one year after the deed was signed.[2]

For 149 years, generation after generation carried the fight forward. This became known as Te Kerēme (The Claim).

Above the Arowhenua Marae in Temuka, where tribal gatherings have been held for over a century, hangs the name Te Hapa o Niu Tireni: "The Broken Promises of New Zealand."[3] That name captures the weight of grievance the iwi carried, which were many and justified.

• The Crown had promised reserves for Ngai Tahu of approximately ten percent of the land sold, along with schools and hospitals. None materialised.

• Access to mahinga kai – traditional food gathering places – was lost.

• Sacred sites and urupā were alienated.

• By the early 1900s, fewer than 2,000 Ngāi Tahu remained alive in their own land, deprived of virtually everything required to survive beyond subsistence level.

The fight for justice took many forms. In 1877, the prophet Hipa Te Maiharoa led over 100 followers to Te Ao Mārama in the upper Waitaki – land he maintained had never been legitimately sold under Kemp's Deed. For two years they cultivated kai and taught tikanga, a peaceful assertion of rights that had been ignored.[4] When the armed constabulary came in 1879, Te Maiharoa chose not to shed blood. They left peacefully. Though he died before any resolution, his example of principled, persistent resistance without self-destruction gave strength to the generations who continued the fight.

The struggle continued through courts, commissions, and countless petitions. When Ngāi Tahu first took Te Kerēme to court in 1868, the government passed laws to prevent the courts from hearing it. A Commission of Inquiry a decade later had its funding halted by the Crown mid-investigation. In 1887, Royal Commissioner Judge MacKay acknowledged only a "substantial endowment" of land would begin to right so many years of neglect. By 1991, at least a dozen different commissions, inquiries, courts and tribunals had repeatedly established the veracity and justice of Te Kerēme.

Fast forward to 1998. Ngāi Tahu became the first iwi to settle with the Crown under the modern Treaty settlement process. The settlement was cents on the dollar – everyone knew it. The breach had been egregious, the losses enormous. By any measure, they deserved more.

But Ngāi Tahu took the deal anyway. Full and final. As Tā Mark Solomon reflected: "The Crown reckoned full redress was worth $12 to $15 billion. Our advisers thought closer to $20 billion. We settled for $170 million — a lot less, but it allowed Ngāi Tahu to move forward, to rebuild."[5]

The Rule of 72: Investing in the future

Why settle for less than one percent of what was owed? The Rule of 72 provides part of the answer. At 7.2% returns, money doubles every 10 years. That $170 million settlement has grown to $1.66 billion in net assets today - nearly a tenfold increase in 27 years.[6] But it required stopping the fight and starting to invest.

The opportunity cost of delay is staggering. Every year spent fighting is a year money isn't compounding. Every year locked in grievance mode is a year not building for the future. The settlement allowed Ngāi Tahu to shift from survival mode to growth mode, from defending what was left to creating what could be.

This principle extends far beyond Treaty settlements:

• Family disputes over estates burn tens of thousands in legal fees while the assets stagnate or depreciate.

• Former business partners spend more on lawyers than the company was ever worth.

• Divorce battles consume resources that could be rebuilding two separate lives.

 We hang in there because the principle matters, we deserve more, and because justice demands it.

And principle does matter. Justice is real – but so is your future. So is your peace of mind. So is the life you could be building instead of the grievance you're nursing.

Sometimes the juice isn't worth the squeeze.

The Value in Moving Forward

Holding grievances costs your mental health, your wellbeing, your ability to move forward – not to mention the fiscal cost. The human mind has limited bandwidth. Energy spent on past wrongs is energy unavailable for future opportunities. Anger may be righteous, but it's still corrosive.

You can be right, and still be trapped in a bad situation.

The settlement let Ngāi Tahu stop fighting the past (justified though they were) and start creating the future. That psychological shift may be worth more than any dollar figure – but the dollars did add up as well. Within a generation, the iwi went from near-extinction to becoming one of New Zealand's major economic and cultural forces. The asset base grew, yes, but so did everything else: language revitalisation programs, educational scholarships, marae restoration, cultural renaissance.

Modern New Zealand is a nation where nearly one in three people are first generation migrants, with fresh eyes unburdened by our nation’s history. These newcomers don't carry the weight of Te Hapa o Niu Tireni – the broken promises – and perhaps that lightness allows different possibilities.

That’s not to say we should forget. The name still hangs above Arowhenua Marae. The history is taught, remembered, and honoured. Moving on doesn't mean sweeping things under a rug and forgetting they existed. It means choosing where to invest your finite resources: backward into grievance, or forward into growth.

This Waitangi weekend, we celebrate a nation learning to move forward together, imperfectly but persistently. The dogskin cloak is long gone, but the lessons remain.

Sometimes "full and final" is the smartest decision you'll make. Not because you got everything you deserved, or because justice was fully served – but because opportunity cost exceeds what most people imagine.

In investment, and in life, the math is unforgiving. Every year looking backward is a year not compounding forward.

That's the real lesson Ngāi Tahu learned, twice over. Once the very hard way, fighting themselves while enemies approached, and once by choice: taking less than they deserved, and turning it into more than anyone expected.

The question isn't whether your grievance is justified. It probably is. The question must instead become: what's it costing you to hold on? And what could you build if you let it go?

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 443

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References

[1] Mikaere, B. (1988). Te Maiharoa and the Promised Land. Auckland: Heinemann.

[2] Te Rūnanga o Ngāi Tahu. (n.d.). Claim History. Retrieved from https://ngaitahu.iwi.nz/ngai-tahu/creation-stories/the-settlement/claim-history/

[3] Arowhenua Marae. (n.d.). Te Hapa o Niu Tireni - The Broken Promises of New Zealand. Temuka, South Canterbury.

[4] Mikaere, B. (1988). Te Maiharoa and the Promised Land. Auckland: Heinemann.

[5] Solomon, M. with Revington, M. (2021). Mana Whakatipu: Ngāi Tahu Leader Mark Solomon on Leadership and Life. Massey University Press.

[6] Te Rūnanga o Ngāi Tahu. (2024). Annual Report 2024. Retrieved from https://ngaitahu.iwi.nz

28 Investment Principles That Actually Work When Markets Don't Cooperate

Article # 442

I've watched families navigate decades of volatility: crashes, recoveries, euphoria, panic. The ones who preserve wealth across generations don't have secret information or perfect timing. They follow simple rules, consistently.

February has 28 days. To ring it in, here are 28 guiding principles that have stood the test of time regardless of market activity.

1.       The market rewards patience, not prediction.

Most noise isn't information. The constant stream of commentary, analysis, and breaking news creates the illusion that staying informed means staying ahead. It doesn't. The market moves on fundamentals that reveal themselves slowly, not on headlines that change hourly.

2.       Focus on what you can control: Costs, discipline, diversification, behaviour.

You cannot control returns. You cannot control when recessions arrive or when bull markets end. But you can control how much you pay in fees, how consistently you invest, how broadly you spread your risk, and how you respond when fear or greed takes hold.

3.       You don't need to beat the market. You just need to capture it.

The obsession with outperformance drives investors towards complexity, higher costs, and ultimately, disappointment. Capturing market returns through low-cost, diversified portfolios has built more wealth over time than the pursuit of alpha ever has.

4.       The simplest portfolio is often the smartest.

Complexity rarely adds value. It adds cost, confusion, and opportunity for error. A straightforward allocation across global equities and bonds, rebalanced systematically, has outperformed the vast majority of elaborate strategies.

5.       Volatility is the price of admission.

Don't demand returns without accepting the ride. Equities deliver premium returns over time, because of fluctuations in the short term. If you cannot stomach the volatility, you don't deserve the returns.

6.       Time in the market matters more than timing the market. Always.

Missing just the 10 best days over a 20-year period can cut your returns nearly in half. Funnily enough, the best days often follow the worst ones – so it’s hard to capture them after getting cold feet on the downswing. Staying invested through the chaos is what separates wealth-builders from market-timers.

7.       Diversification is a dark horse.

Its power is revealed over decades, not days. When one asset class stumbles, another steadies the ship. The benefit isn't dramatic in any one year, but over a lifetime of investing, it's the difference between weathering storms and being swept away by them.

8.       Your plan should be built on evidence, not emotion.

Especially when emotions run high. When markets crash, fear whispers that this time is different and worse than any before. When markets soar, greed tells you that you're missing out. Evidence and decades of market history tell a different story – a much more trustworthy one.

9.       Chasing performance is a tax on impatience.

Last year's winners become this year's laggards with predictable regularity. By the time a fund or strategy appears on a "best performer" list, the opportunity has usually passed. Avoid getting swept up in the furore.

10.  The market has already priced in what everyone knows.

You don't need to outguess it. If information is public, it's already reflected in prices. Your edge as an investor isn't superior information, it's superior behaviour.

11.  A disciplined strategy beats a brilliant prediction. Every time.

Predictions fail. Discipline endures. The investor who follows a consistent plan through all market conditions will outperform the ‘strategist’ who tries to predict turning points.

12.  Your behaviour matters more than your products.

Panic is more expensive than fees: selling in a downturn locks in losses, while buying at market peaks locks in mediocre returns. Managing your behaviour by staying calm, and staying invested, matters far more than optimising your expense ratio by a few measley basis points.

13.  You don't need the perfect moment.

The moment you start is perfect enough. Markets climb over time. Waiting for a correction before investing often means waiting forever. Start now. Adjust as you go.

14.  Rebalancing is the quiet hero of long-term returns.

It forces buy-low, sell-high. When equities surge, rebalancing trims them back. When they crash, rebalancing buys more. It's counter-intuitive, uncomfortable… and extraordinarily effective over time.

15.  The best portfolios feel boring.

Boredom is not a bug, it's a feature. If your portfolio keeps you up at night with excitement, you’re probably taking on unnecessary risk. Wealth is built slowly, quietly, and without drama.

16.  Markets recover more often than they collapse.

History is your friend. Every bear market in history has eventually given way to a new bull market. Crashes feel permanent in the moment. They never are – as the adage goes, “this too shall pass.”

17.  Ignore headlines.

They're written to sell attention, not build wealth. Financial media thrives on urgency and alarm. Your portfolio should thrive on patience and perspective.

18.  Compounding works best when you don't interrupt it.

Let time do the heavy lifting. Albert Einstein allegedly called compound interest the eighth wonder of the world. But, it only works if you leave it alone – every time you exit the market, you reset the clock.

19.  Costs compound too.

Costs compound just like returns. Pay for advice that adds value, not for products that don't. The difference between value and waste always reveals itself in the fullness of time.

20.  Bad days don't destroy portfolios. Bad decisions do.

Markets fall. That's normal, and things will swing back the other way. Selling during the fall, abandoning your plan, or fleeing to cash – those are the decisions that inflict permanent damage.

21.  Not every risk deserves a reward.

Factor premiums do. Stocks are riskier than bonds, so they should deliver higher returns. Small-cap and value stocks have historically outperformed over long periods. These are risks worth taking. Concentrated bets on individual stocks or sectors? Not so much.

22.  Your portfolio should be built around you, not around the news cycle.

Your goals, your time horizon, and your risk tolerance should dictate your allocation. Not the latest economic forecast or geopolitical crisis.

23.  You don't need to predict the future.

…But you do need a strategy that survives it. Robust portfolios aren't built on forecasts. They're built on diversification, discipline, and the recognition that uncertainty is permanent.

24.  Stay invested, stay diversified, stay disciplined.

The rest is commentary. If you do these three things consistently, you will be fine. Better than fine, in fact. You'll be wealthier than the vast majority of investors who spend their lives chasing the next opportunity.

25.  Wealth isn't created in moments of excitement.

It's created in years of consistency. The investors who succeed aren't the ones who make brilliant trades or perfectly time the market. They're the ones who show up, year after year, regardless of conditions. Consistency compounds.

26.  Your worst investing day feels catastrophic. Your best investing decade feels inevitable.

Perspective matters. In the moment, a 20% drawdown feels like the end. Twenty years later, it's a footnote. Keep the long view. Stay the course.

27.  Successful investors are more patient than ‘smart’.

Intelligence helps, but temperament wins out every time. The ability to sit still, to do nothing when everyone else is panicking or euphoric, is worth more than any financial qualification.

28.  Markets don't care about your timeline. Build a plan that doesn't care about the markets.

You might need money in five years for a house deposit or in thirty years for retirement. The market will do what it does regardless. Structure your portfolio around your needs, not market predictions, and you'll sleep better through every cycle.

Remember: Markets will always be chaotic. Your response doesn't have to be.

Follow the rules (and seek professional advice)

These principles work. But they work best when you have someone in your corner who isn't conflicted by commissions, product sales, or institutional agendas.

Seek independent, impartial advice that puts you first and foremost. You are the sun, not the moon: your financial plan should orbit around you, your goals, your circumstances. Not around what someone else needs to sell.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 442

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The People's Poet and The People's Purse: From Burns to KiwiSaver

Article # 441

"A man's a man for a' that." - Robert Burns, 1795 [1]

Nigh on Burns Day feels like an appropriate moment to reflect on Scotland's most beloved poet. Robert Burns was no mere wordsmith; he was a revolutionary who believed wisdom and dignity belonged to everyone, not just the privileged few. Writing in Scots dialect rather than formal English, he made poetry accessible to common people in the 1700s; a radical and transformative act in its time.

Burns lived during the Age of Enlightenment, when intellectual discourse was largely confined to universities and aristocratic salons. Yet here was a ploughman-poet who insisted profound insights could come from anywhere: the farm, the tavern, ordinary folk going about their daily lives. His poetry gave voice to universal human experiences in language the people could understand.

An 18th-century Scottish poet has more to do with modern finance than you might think. Burns' commitment to democratising culture mirrors a shift that's been happening in the investment world, culminating in what might be New Zealand's most egalitarian financial innovation: KiwiSaver.

Burns' Revolutionary Accessibility

When Burns penned verses celebrating ploughmen, mice, and haggis, he was doing something deeply subversive. He was adamant that insight into the human condition – love, loss, joy, struggle – wasn't the exclusive domain of the educated elite. His genius lay in understanding that emotional intelligence and wisdom about human nature mattered more than formal education or social standing.

Consider "Auld Lang Syne," sung around the world each New Year; a meditation on friendship and memory, accessible to anyone. Or "To a Mouse," where disturbing a field mouse's nest becomes a profound reflection on planning and uncertainty. These weren't lofty academic exercises but observations from lived experience.

Burns recognised that a farmer could possess a deeper understanding than a nobleman. He celebrated the common person through genuine respect for their capacity for wisdom and feeling. This wasn't sentimentality; it was a fundamental belief in human equality that was genuinely radical for his era.

The Long Road to Investment Democratisation

For most of human history, investing was an aristocratic pursuit. You needed significant capital, insider connections, and often formal education to participate. Even in more recent history, the average person's financial planning extended to perhaps a savings account and hoping their employer's pension would suffice.

The journey toward broader access has been gradual:

• Stock exchanges initially served merchants and wealthy traders.

• The 20th century brought mutual funds and pension schemes, but these remained largely employer-controlled or required significant individual initiative and financial literacy.

• The democratisation of investment accelerated with regulatory changes, technology, index funds, and online platforms.

Yet each advance still required knowledge and a confidence many New Zealanders lacked. We had democratised access… but barriers to participation remained.

KiwiSaver: The People's Purse

Enter KiwiSaver in 2007 – New Zealand's fiscal equivalent to Burns’ poetry [2]. Rather than another standard investment vehicle, it was a fundamentally egalitarian structure that would have made the Scottish bard proud.

KiwiSaver's genius lies in its true accessibility. It actively enrols people. Employers and employees both contribute. The government provides incentives. Millions of New Zealanders who might never have considered themselves "investors" were suddenly building wealth through capital markets.

The design was deliberately inclusive, as automatic enrolment meant participation became the default. Contribution rates started modestly, making it achievable for low-income workers whilst still meaningful. Importantly, the employer contribution requirement meant workers weren't building wealth alone – it was a structural recognition that wealth-building works best as a collective endeavour.

KiwiSaver has become the backbone of New Zealand's capital markets, channelling billions into productive investment [3]. As of 2024, over 3 million New Zealanders are members, with total funds exceeding $100 billion. This isn't just personal nest eggs; it's the foundation of New Zealand's investment infrastructure, funding businesses, infrastructure, and innovation.

Every working Kiwi (the cleaner, the teacher, the retail worker, the tradesperson) can build capital alongside CEOs and professionals. A person earning minimum wage with KiwiSaver has access to the same professional fund management and diversification as a high earner. The difference is scale, not opportunity.

This is investment democratisation at its finest. Not because it's simple, but because it's genuinely even-handed. Both employer and employee contribute and benefit.

Why the Human Element Still Matters

Burns understood that success in life wasn't just about opportunity; it was about how we think, feel, and respond to circumstances. Modern research tells us the same: emotional intelligence drives financial outcomes more than traditionally valued metrics like education or age [4][5].

KiwiSaver provides the vehicle. Successful wealth building still requires the human qualities Burns celebrated:

• Patience over panic

• Contentment over materialism

• Long-term perspective over short-term thinking

Burns understood human nature deeply: our capacity for both wisdom and folly, our tendency toward both courage and fear.

Consider the emotional journey of investing, where markets are in a state of flux, and news cycles fan the anxious flames. The temptation to react emotionally and flee markets during downturns, or chase returns during booms, undermines long-term success.

The most successful KiwiSaver investors aren't necessarily the wealthiest or most educated. They're the ones who maintain emotional discipline. They understand that a market correction isn't a catastrophe but an opportunity. They resist the urge to constantly check balances and tinker with allocations. They stay the course through volatility, because they know what Burns knew: that the best outcomes often require patience, faith, and the wisdom to see beyond immediate circumstances.

Understanding your own emotional responses is the foundation of sound decision-making.

The Need for Wise Counsel

Burns also knew the value of good companions and sound advice. "Auld Lang Syne" isn't just about nostalgia; it's about trusted relationships that endure through time.

Having access to KiwiSaver is transformative, but maximising its benefit requires guidance. Understanding contribution rates, choosing appropriate funds, adjusting as circumstances change, planning for retirement – these decisions benefit enormously from experienced counsel.

Consider the choices KiwiSaver members face:

1. Which fund suits your risk tolerance and timeline?

2. Should you contribute more than the minimum?

3. How does KiwiSaver fit with buying a home or other financial goals?

4. When should you adjust your strategy as you age?

These aren't trivial questions, and answers vary greatly depending on individual circumstances.

Just as Burns made poetry accessible by expressing profound truths clearly, good financial advice makes wealth-building accessible by clarifying complexity without oversimplifying it.

A man's a man for a' that – every person deserves both the tools and the counsel to build lasting wealth.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 441

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References

[1] Burns, R. (1795). A Man's A Man For A' That. In Poems Chiefly in the Scottish Dialect.

[2] Inland Revenue. (2007). KiwiSaver Act 2006: Implementation and Overview. Wellington: New Zealand Government.

[3] Financial Markets Authority. (2024). KiwiSaver Annual Report 2024. Wellington: New Zealand Government.

[4] Brown, K. W., & Ryan, R. M. (2003). The benefits of being present: Mindfulness and its role in psychological well-being. Journal of Personality and Social Psychology, 84(4), 822-848.

[5] Klontz, B., Britt, S. L., Mentzer, J., & Klontz, T. (2011). Money beliefs and financial behaviors: Development of the Klontz Money Script Inventory. Journal of Financial Therapy, 2(1), 1-22.

Taking Advice from Algorithms: Why the Messy Line Matters

Article # 440

You know what real life looks like? Messy. But you wouldn't know it from most financial plans – not algorithmic ones, anyway.

Most advice out there comes as a straight line. A tidy formula. Clean inputs, clean outputs. Do X, get Y! Save this percentage, retire at that age. Follow these steps, achieve this outcome.

But real life is messier. It's a chaotic tangle of loops and knots and unexpected detours.

And here's the thing about that mess—it's not a bug. It's not a sign you're doing it wrong. It's not evidence that you're bad with money or that you lack discipline. The mess is the point. The mess is what makes us human.

The Seduction of the Straight Line

There's something deeply appealing about algorithmic advice. It’s so clean. Plug in your numbers, and out comes a plan: no ambiguity, no second-guessing. Just follow the formula.

When you're overwhelmed by financial decisions, a straight line feels like relief. Someone—or something—finally has the answer. “Just tell me what to do, and I'll do it!”

Everything’s mapped out. It’s paint by numbers, just like when you were a kid.

But here's what the algorithm doesn't know: it doesn't know that your mother just got diagnosed with cancer and you're trying to figure out if you can afford to take unpaid leave. It doesn't know that your child is struggling in school and needs a tutor you hadn't budgeted for. It doesn't know that you just got an unexpected bonus and you're torn between paying down debt, investing, or finally taking that trip you've been postponing for five years.

The algorithm doesn't know that you're human, and life changes.

Why Math Isn't Enough

Don’t be mistaken - the maths matters. Of course it does! Compound interest is real. Time value of money is real. The difference between a 6% return and an 8% return over thirty years is very real.

But when we reduce money to maths alone, we forget what it feels like to make decisions when you're scared. Or uncertain. Or grieving. Or excited. Or exhausted. Or newly in love. Or watching your industry collapse. Or getting a second chance you never expected.

Financial decisions aren't made in a vacuum. They're made in the tangled middle of actual lives.

That's why human financial advice still matters. Not because humans are better at maths than machines—we're definitely not. But because good advisors know that the maths is just the beginning. The real work is helping people navigate the gap between what the spreadsheet says they should do and what feels possible in their actual circumstances.

Algorithms Optimise, Humans Navigate

Here's what I've learned after years of working with people and their money: algorithms optimise for efficiency. Humans navigate complexity.

An algorithm can tell you the mathematically optimal move. But it can't tell you whether that move is worth the fight it'll cause with your spouse. It can't weigh the emotional cost of saying no to your child’s sports travel team against the financial benefit of staying on track. It can't factor in the value of sleeping soundly at night, even if that means choosing a less "optimal" investment.

There's a reason Japanese retirement homes started removing robots and bringing back human caregivers.1 The robots were more efficient. They didn't get tired. They didn't call in sick. They could lift residents without risking back injuries. But the residents wanted the human touch. They wanted someone who could sense when they needed comfort, not just assistance. Someone who could respond to mood, not just medication schedules.

The same principle applies to money. The algorithm gives you the straight line. The human advisor helps you draw your actual path through the tangled mess.

And sometimes the best financial decision isn't the one that maximizes your net worth. Sometimes it's the one that lets you live with yourself. Sometimes it's the one that honours your values, even when it costs you. Sometimes it's the one that acknowledges you're not just a rational economic agent making optimal choices—you're a person trying to build a life that matters.

You Don't Know Where You Sit on the Curve

Late last year, I wrote about how no one actually knows where they sit on the curve of life's probabilities.2 The algorithm assumes average. But you're not living an average life—you're living your specific life, with your specific luck (good and bad) in any given year. My claims year proved that perfectly.

Some years, you sail through with nothing but routine expenses. The algorithm would call that "optimal."

Other years, everything hits at once. Three family emergencies, a job loss, a health scare, and a busted gearbox. The algorithm would call that "suboptimal" or "poor planning."

Yet, both years are just… life. You didn't do anything wrong in the hard year. You didn't do anything especially right in the easy year. You just lived as normal, where probability meets reality and the straight line becomes a scribble.

The Question Worth Asking

So here's what I want you to ask someone you care about today: What did your budget not account for this past year?

Budgets are great. I believe in them. But they're not magic. Real life always sneaks something in. The car repair. The friend's wedding at the other end of the country. The opportunity you couldn't pass up. The emergency that wasn't really an emergency but felt like one at the time.

Those deviations from the plan? They're not failures. They're data. They're information about what your life actually requires, not what the algorithm thinks it should require.

The straight line is beautiful. But the tangled mess is real. And real is where we have to learn to make good decisions.

Why We Still Seek Human Advice

Here's the deeper truth about why people still seek human financial advice in an age of robo-advisors and AI-powered planning tools: life is dynamic, and our responses need to be too.

A good financial plan isn't static. It breathes. It adapts. It changes when your circumstances change, when your values shift, when unexpected opportunities arise or unwanted challenges appear.

The algorithm updates when you feed it new numbers. The human advisor updates when they see the worry in your eyes, hear the excitement in your voice, sense the hesitation you can't quite articulate. They adjust not just to what has changed, but to how you've changed.

Because here's what the tangled mess really represents: not chaos, but adaptation. Not failure, but responsiveness. Not a deviation from the plan, but evidence that you're paying attention to your actual life and adjusting accordingly.

The straight line assumes the future will be like the past. The tangled line knows better. It knows that life zigs when you expect it to zag. It knows that the best plan is one that can bend without breaking, that can accommodate both disaster and delight, that can hold space for the full complexity of being human.

That's not a bug in the system. That's the whole point of having a life worth planning for.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 440

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References

1. James Wright's research on Japanese eldercare facilities found that care workers often rejected robots like the "Hug" lifting device, preferring to care with their own hands and finding it more respectful to residents. See: Wright, James. Robots Won't Save Japan: An Ethnography of Eldercare Automation (Cornell University Press, 2023); and MIT Technology Review's coverage of robot implementation challenges in Japanese care homes (January 2023). ↩

2. "Why Self-Insurance Rarely Works," Stewart Group, December 5, 2024 ↩

When Good Intentions Meet Poor Planning

A successful professional – let's call him "Mr H" – had built an impressive career and accumulated substantial wealth. He owned property, had invested in overseas estates, and maintained generous pension arrangements.

He also had a complex personal life: an estranged wife he still supported financially, a long-term partner who had borne his only child, and extended family who depended on him.

Before embarking on what would prove to be his final business venture, Mr H added a hasty codicil (an addition) to his existing will. In it, he praised his partner's invaluable contributions to his career and pleaded that she be given "an ample provision to maintain her rank in life."¹ He entrusted her and their young daughter as "a legacy to my company and extended family," confidently expecting that his colleagues and family would honour his wishes.

He was catastrophically wrong.

The Background: A Man at the Height of Success

Mr H had reached the pinnacle of his profession. He was celebrated, wealthy, and influential. He purchased a substantial country estate – a property with elegant gardens, spacious grounds, and all the trappings of success. He paid approximately $2.25 million for the initial property and would eventually expand his holdings to over 160 acres, spending another $2 million on additional land purchases, creating what he called his "paradise."

His partner, Miss E, was instrumental in transforming the property, which featured five spacious bedrooms, two large drawing rooms, a dining room, library, extensive grounds with ornamental gardens, and even an icehouse. Mr H was so delighted with the estate that he repeatedly expanded it, despite his own written advice to Miss E not to acquire anything "too large, for the establishment of a large household would be ruinous."

And oh, the irony of those prophetic words…

The Will: A Masterclass in What Not to Do

Despite his professional acumen and access to the best legal minds of his era, Mr H's estate plan was fundamentally flawed. His original will left his entire estate, including lucrative overseas investments generating substantial annual income, to his brother Mr W (a clergyman). To his partner Miss E, he left only the substantial home and gardens, as well as a modest $125,000 annual income from his overseas estate. His daughter Miss H received $1m for education and a $50,000 allowance annually.²

On paper, these seemed like reasonable provisions. In reality, they were a recipe for disaster.

The problems were immediate and devastating:

Failure #1: No Trust Structure

Despite trusts being well-established legal instruments at the time, Mr H left everything to Mr W outright, apparently assuming his brother would "do the right thing" and support Miss E and Miss H. Family loyalty, after all, should count for something. He didn't even put his wishes in writing within the will itself. He just relied on an understanding between brothers.

He was wrong. Mr W and his wife immediately distanced themselves from Miss E—conveniently forgetting that she had cared for their own children for years while they pursued their own interests, and kept every penny.³ Given Mr H's dangerous profession and rather unique home life situation, a trust would have worked particularly well to protect his vulnerable dependents. A trust would have ensured regular payments to Miss E, protected Miss H's inheritance until she came of age, and prevented Mr W from simply pocketing everything.

But Mr H chose personal trust over legal structure. This was a mistake.

Failure #2: Gifting Encumbered Assets

The substantial home and gardens had been Mr H's pride and joy, his "paradise" where he could finally relax between his demanding work commitments. The property required constant maintenance, employed numerous servants, and demanded significant annual upkeep costs that far exceeded the modest $125,000 annual income Miss E received.²

The estate became an albatross around her neck. She couldn't afford to maintain it properly, yet she couldn't bear to sell her only tangible connection to the man she loved. She was asset-rich but cash-poor, a predicament that would lead to her financial ruin. Had Mr H consulted with estate planning professionals, they would have immediately identified this mismatch between the asset's carrying costs and the income provided to support it.

The property needed either sufficient income to maintain it, or it should have been sold with the proceeds placed in trust for Miss E's benefit. Instead, he gave her an expensive liability disguised as an asset.

Failure #3: Relying on Third Parties

The codicil added just before his final business venture was emotional rather than legally binding. Mr H "hoped" and "trusted" that his business associates would provide for Miss E, citing her work and contributions to the company's success.¹ He wrote movingly about her service and sacrifice, expecting that gratitude and honour would compel them to act.

But hope isn't a legally enforceable instrument. When his business chose to ignore his dying wishes, there was no mechanism to compel them. They threw a lavish $3.5 million funeral celebrating his achievements but didn't spend a penny on his partner or child.² Miss E approached them repeatedly, armed with Mr H's codicil and the testimony of colleagues who had witnessed his wishes. They refused every time.

Had these provisions been written into a binding legal agreement or trust structure, Miss E would have had recourse. Instead, she had only Mr H's heartfelt words… which proved worthless in court.

Failure #4: No Contingency Planning

What if his business refused to honour his wishes? What if Mr W proved ungenerous? What if Miss E fell into debt due to the property's crushing costs? What if she died while Miss H was still a minor; who would protect the child then?

None of these scenarios were addressed. Mr H had made his fortune through strategic planning in his professional life, carefully considering risks and preparing for multiple contingencies. Yet he left his personal affairs almost entirely to chance, apparently believing that good intentions and family loyalty would be sufficient.

The Devastating Aftermath

Miss E tried desperately to maintain the substantial home and gardens as a memorial, entertaining influential contacts in hopes of securing the support Mr H had promised would come. She invested what little money she had into keeping up appearances, hoping that someone – Mr W, the business associates, influential friends – would finally help.

Instead, she fell deeply into debt. With no legal protection and no reliable income, creditors closed in.⁴ The very property that was supposed to provide her with security became her prison. Within just eight years of Mr H's death, she was arrested for debt. She and young Miss H fled the country, living in poverty overseas – a shocking fall for a woman who had once been celebrated in the highest circles of society.

Miss E died in squalor around Miss H's fourteenth birthday, denying to the end that she was the girl's mother – perhaps hoping to spare her daughter the stigma of illegitimacy that would have made her life even harder.⁵ Miss H had to be smuggled back home disguised as a boy to avoid arrest for her mother's debts.⁶ The daughter returned home penniless, her childhood shattered, to be passed between reluctant relatives who viewed her as an unwanted burden.

Meanwhile, Mr W received a $25 million grant to purchase an estate, along with prestigious titles for himself and his son; the very honours Mr H had aspired to but never achieved in life. Other family members received $2.5 million each.² Even Mr H's estranged wife, from whom he had been separated for years, received generous provision.⁷

Everyone was taken care of, except the woman and child he loved most.

From the Northern Club Art Collection
Title: Portrait of Lord Nelson
Artist: Benjamin West

The Reveal

The saga above isn't hypothetical, nor is it contemporary. This catastrophic failure of estate planning happened over 200 years ago. "Mr H" is Vice-Admiral Horatio Nelson, 1st Viscount Nelson: the most celebrated naval commander in British history, victor of Trafalgar, the man whose column still dominates London's Trafalgar Square. "Miss E" is Emma, Lady Hamilton, "Miss H" is their daughter Horatia, and "Mr W" is his brother, the Reverend William Nelson.

Merton Place, the estate Nelson loved so dearly, was eventually sold off in pieces. Today, the site where Britain's greatest naval hero found his "paradise" is occupied by modern housing estates and a pub called The Nelson Arms. Not a single brick remains of the house where he spent his happiest days.

If someone of Nelson's intelligence, status, and access to legal counsel could make such devastating mistakes, what hope do the rest of us have without proper planning?

6 Lessons for Today’s Investors

The lessons from this 200-year-old tragedy remain relevant today:

1.       Use trusts for complex situations. Don't rely on family members to "do the right thing." Create legally binding structures that ensure your wishes are carried out regardless of personal relationships or good intentions.

2.       Match assets to beneficiaries' actual needs. Don't gift property or assets that require more income than you're providing to maintain them. Consider the total cost of ownership, not just the asset's value.

3.       Make provisions legally enforceable. Emotional appeals and dying wishes carry no legal weight. If you want something done, make it a binding legal obligation, not a heartfelt request.

4.       Plan for contingencies. What if your primary plan fails? What if beneficiaries predecease you? What if relationships change? Good estate planning anticipates multiple scenarios.

5.       Don't let complex personal situations discourage proper planning. If anything, unusual family arrangements demand MORE sophisticated planning, not less. Nelson's situation (an estranged wife, a partner, an illegitimate child, and complex family dynamics) required expert legal structures, not informal arrangements.

6.       Review and update regularly. Nelson's codicil was added hastily before battle. Professional estate planning requires time, thought, and regular review as circumstances change.

200 years later, Nelson's strategic brilliance at Trafalgar is remembered and celebrated. But so is the tragedy of Emma Hamilton and Horatia Nelson, abandoned to poverty and disgrace despite his dying wishes:

“Take care of my dear Lady Hamilton, Hardy. Take care of poor Lady Hamilton.”⁸

He tried. But without proper legal structure and financial planning, good intentions meant nothing.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 439

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References

1. Encyclopedia.com. "Hamilton, Emma (1765–1815)." Women in World History: A Biographical Encyclopedia. Available at: https://www.encyclopedia.com/women/encyclopedias-almanacs-transcripts-and-maps/hamilton-emma-1765-1815

2. Wikipedia. "Emma, Lady Hamilton." Accessed November 2025. Available at: https://en.wikipedia.org/wiki/Emma,_Lady_Hamilton

3. Lady Hamilton & Horatio Nelson. "Nelson's Inheritance (part 50)." Words Music and Stories, January 7, 2023. Available at: https://wordsmusicandstories.wordpress.com/2023/01/07/lady-hamilton-horatio-nelson-nelsons-inheritance-part-50/

4. Wikipedia. "Horatia Nelson." Accessed November 2025. Available at: https://en.wikipedia.org/wiki/Horatia_Nelson

5. National Museum of the Royal Navy. "The extraordinary life of Horatia Nelson." Available at: https://www.nmrn.org.uk/news/extraordinary-life-horatia-nelson

6. Find a Grave. "Horatia Nelson Ward (1801-1881)." Available at: https://www.findagrave.com/memorial/6884289/horatia-ward

7. Lilystyle. "Nelson's Descendants in Brent." Available at: https://lilystyle.co.uk/nelson-s-descendants-in-brent.html

8. Goode, Tom and Dominic Sandbrook. "RIHC | Nelson EXTRA: The Fate of Lady Hamilton." The Rest Is History podcast, November 5, 2025. Available at: https://podcasts.apple.com/nz/podcast/the-rest-is-history/id1537788786

9. Merton Historical Society. "A History of Lord Nelson's Merton Place." Available at: https://mertonhistoricalsociety.org.uk/a-history-of-lord-nelsons-merton-place/

10. Warwick, Peter. "Here was paradise - A description of Merton Place." Available at: https://wandle.org/aboutus/nelson2005/paradise.htm

Note: Historical currency amounts (pounds sterling, circa 1805) have been converted to approximate modern dollar equivalents, accounting for inflation and purchasing power.

Reflecting on 2025: A Final Canny View for the Year

As we close the books on another eventful year, I want to share some final reflections before I put away my pen and keyboard for a well-earned break.

The Year That Was

2025 has been a masterclass in the unpredictable nature of markets.

We began the year with President Trump's inauguration and the subsequent tariff theatre that sent shockwaves through global markets in March and April. Despite a sharp -19% drawdown that tested even the most seasoned investors' resolve, global equity markets have delivered another year of above-average returns.

It's a powerful reminder that short-term turbulence is simply the price we pay for long-term prosperity.

The Dog in the Kennel

While many global markets have been out having fun (celebrating AI breakthroughs, peace deals, and strong returns) our New Zealand market has been in the kennel, watching the party from afar. It's been a challenging period for local investors who've seen the disparity between domestic and international performance grow increasingly stark.

Yet – every dog has its day. Recent economic data suggests our dog might be stirring. The balance of trade is looking favourable, and commodity markets for our protein exports remain strong.

These are the foundations that future returns are built upon. Markets move in cycles, and what seems forgotten can suddenly become fashionable again. The New Zealand market won't stay in the kennel forever. Patient investors who maintain diversified portfolios will be positioned to benefit when our local market eventually has its turn in the sun.

Three Lessons Worth Keeping

First, overvalued markets can still grow. The commentators warning about stretched valuations at the start of the year weren't wrong about the numbers; they were just wrong about what those numbers meant for forward returns. Valuation tells us little about timing, and waiting for the "perfect" entry point often means missing out entirely.

Second, knowing what will happen doesn't tell you how markets will react. The tariff announcements in April proved this brilliantly. Everyone knew they were coming, yet the market's bottom came not when clarity arrived, but when uncertainty was at its absolute peak. This is why we plan rather than predict.

Third, long-term planning beats short-term prediction every time. We're living through an AI revolution that will reshape everything, yet we cannot know exactly how or when. The solution isn't better predictions, it's better preparation. A solid financial plan with appropriate asset allocation, a margin of safety, and the discipline to stay invested remains your best defence against an unknowable future.

The Permanent Condition

Uncertainty isn't new, it's the permanent condition of investing. The headlines change, the crises evolve, but the fundamental truth remains: we cannot predict, but we can prepare.

Those who stayed invested through April's anxiety have been rewarded. Those who will stay invested through next year's inevitable turbulence will likely say the same thing in December 2026.

A Time for Gratitude

As I reflect on another year of writing, research, and market commentary, I'm grateful for the readers who engage thoughtfully with these ideas. Whether you're a long-time follower or stumbled across this column recently, thank you for your time and attention.

My aim has always been to cut through the noise and shine a light on the principles that actually matter when it comes to building and protecting wealth. If these weekly reflections have helped you think more clearly about your financial future, make smarter decisions with your capital, or simply feel more confident staying the course during turbulent times, then the effort has been worthwhile.

Safe Travels!

To those of you travelling nationally or abroad over the holiday period, safe travels. To those staying home, enjoy the slower pace and time with loved ones. Whatever your plans, I hope you find moments of rest and renewal.

As for me, I'll be stepping away from the keyboard for two weeks to recharge. Our first article of 2026 will land on 10 January as we look forward to the year ahead. Until then, this will be my last dispatch for 2025.

Whatever 2026 has in store, we'll navigate it together.

See you in the new year.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 438

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Should I Invest in What I Love? Product Affection vs Investment Logic

Personal product preferences are often the worst possible guide to investment decisions.

I remember when my family first got a GoPro. Revolutionary technology, stunning footage – everyone wanted one. Naturally, I thought: "This company is going places. Maybe I should buy shares." It's a seductive logic: if I love the product, surely others will too. A decade later, I'm thankful I didn't act on that impulse.

This instinct to invest in what we know and love feels intuitive. We use the products, we understand them, we see their value. But this emotional connection – what behavioural economists call "familiarity bias" – is precisely what makes it dangerous.

Back in 2014, GoPro went public and quickly hit a market capitalization of $10 billion with virtually no competition. Today? The stock trades around $1.87 per share – down 98% from its peak, with over $9.7 billion in market value lost.

What went wrong?

Smartphones killed the action camera star. Modern phones became waterproof, gained multiple lenses, and developed image stabilisation that rivals dedicated cameras. GoPro thought they were competing against other action cameras when they were actually competing against the most successful consumer device in history.

But here's the deeper lesson: loving a product tells you nothing about the company's competitive position or long-term viability. A great product is necessary but far from sufficient for investment success. In GoPro's case, every smartphone manufacturer became their competitor, each with deeper pockets and products consumers were already buying.

The Pattern Repeats Closer to Home

This isn't just an overseas story. Take My Food Bag – during COVID lockdowns, it seemed genius. The company went public in March 2021 at $1.85 per share, raising $342 million. Customers loved the service and bought shares. Many retail investors had enjoyed watching co-founder Nadia Lim cook on TV for years – hardly grounds for a wise investment decision. The result? Shares now trade around 25 cents – an 86% decline. As one fund manager noted, "It was a classic private equity exit, which has seen a lot of retail investors lose out."[1]

The timing seemed perfect. Lockdowns had created new habits. People were cooking at home more. The convenience model made sense. But investors failed to ask: what happens when lockdowns end? Is this a permanent behaviour shift or a temporary adaptation? How defensible is the business model? These are the uncomfortable questions that emotional attachment prevents us from asking.

As one fund manager noted, "It was a classic private equity exit, which has seen a lot of retail investors lose out."

Then there's Ryman Healthcare, beloved by many Kiwi families for good reason. My own family experienced the amazing care and kindness shown towards my late father during his time in the dementia care unit at Ryman in Havelock North. The quality of their villages is genuinely impressive. Yet despite these strengths, the stock hit $10.87 in December 2019 and now trades around $2.87 – down 74%. The investment thesis crumbled under construction delays and regulatory challenges, demonstrating that exceptional service doesn't automatically translate into strong investment returns.

This one hits close to home because the service was excellent. But gratitude and investment logic operate in different domains. A company can deliver outstanding customer experiences while simultaneously facing operational headwinds that undermine shareholder returns.

These three examples share a common thread: product or service quality created an emotional connection that clouded rational investment analysis.

The Evidence Against Emotional Investing

Behavioural finance research identifies "familiarity bias" as a major driver of poor investment decisions, where investors favour what they know rather than what performs best.[2] This bias is particularly pronounced amongst long-term investors who believe they're securing against volatility when they're actually concentrating risk.

The evidence against stock picking is overwhelming:

An Arizona State University study by Professor Hendrik Bessembinder examining over 28,000 stocks from 1926 to 2024 found that just 4% of firms created all net wealth in the U.S. stock market. The remaining 96% collectively matched Treasury bills over their lifetimes, and the majority of individual stocks actually reduced shareholder wealth compared to holding cash.[3]

Think about that. If you picked a stock at random, you'd have better than even odds of underperforming cash. The market's impressive returns come from a tiny fraction of companies – and identifying them in advance is nearly impossible.

Professional fund managers fare no better. S&P Dow Jones Indices' SPIVA Scorecard shows that after 10 years, approximately 85% of large-cap funds underperform the S&P 500, and after 15 years, around 90% trail the index.[4] Even Warren Buffett admits: "In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so."[5]

These aren't amateur investors. These are professionals with research teams, Bloomberg terminals, insider access, and decades of experience. If they can't beat a simple index fund, what makes individual investors think they can, especially when driven by product affection rather than analysis?

The Smart Money Questions

Instead of asking "Do I love this product?", evidence-based investors ask: How big is the addressable market? What prevents competitors from copying this? How strong are the financials? Is the company innovating fast enough? What could make this product obsolete?

These questions are deliberately uncomfortable because they force you to look beyond your emotional attachment. They require research, analysis, and a willingness to acknowledge uncertainty. Most importantly, they shift the focus from "I like this" to "can this company maintain a durable competitive advantage?"

The answers usually point to the same solution: diversification. Diversified index funds consistently outperform stock picking over the long term, providing market-matching returns while reducing the risk of catastrophic losses from individual stock failures.[6]

Diversification isn't glamorous. There's no story to tell at dinner parties about your clever stock pick. But it's precisely this lack of excitement that makes it effective. By owning the entire market, you guarantee you'll own the 4% of companies that generate all the wealth creation, without needing to predict which ones they'll be.

As a fee-only adviser working with evidence-based strategies, the real value isn't in chasing hot stocks or validating product obsessions. It's in building a robust financial plan grounded in decades of research, then maintaining discipline through market noise and emotional temptation.

This discipline is harder than it sounds. When GoPro was soaring, when My Food Bag was listing during lockdowns, when you're genuinely grateful for care received – the emotional pull to invest is powerful. It feels like you have special insight. You don't. You have an emotional connection clouding your judgment.

The most valuable thing a good adviser provides isn't stock tips or market predictions. It's the voice of reason when your emotions are screaming at you to invest in what you love. It's the person who asks the uncomfortable questions: "Have you analyzed the competitive landscape? What's your exit strategy? How does this fit your overall plan?" These questions aren't exciting, but they're essential.

Seek wise counsel, commit to a plan that aligns with your goals, and redirect that energy from stock-picking to living your life. Enjoy the products you love. Be grateful for excellent service. Just don't confuse these feelings with investment insight.

Your future self will thank you for choosing evidence over emotion.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 437

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References

1. My Food Bag Group Limited. (2024-2025). Financial Results and Market Updates. NZX Announcements. Retrieved from https://investors.myfoodbag.co.nz/

   • Devon Funds Management. (2025). "My Food Bag Investment Analysis." RNZ Business Interview, May 22, 2025.

2. Huberman, G. (2001). Familiarity breeds investment. Review of Financial Studies, 14(3), 659–680. https://doi.org/10.1093/rfs/14.3.659

   • Chew, S.H., Li, K.K., & Sagi, J. (2023). Home bias explained by familiarity, not ambiguity. Social Science Research Network. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3870716

   • De Vries, A., Erasmus, P.D., & Gerber, C. (2017). The familiar versus the unfamiliar: Familiarity bias amongst individual investors. Investment Analysts Journal, 46(1), 24-39.

3. Bessembinder, H. (2024). Shareholder wealth enhancement, 1926 to 2022 (Updated through 2024). Arizona State University, W.P. Carey School of Business. Retrieved from https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills

   • Bessembinder, H. (2018). Do stocks outperform Treasury bills? Journal of Financial Economics, 129(3), 440-457.

4. S&P Dow Jones Indices. (2024). SPIVA U.S. Scorecard Year-End 2024. Retrieved from https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2024.pdf

5. Berkshire Hathaway Inc. (2022). Letter to Shareholders. Annual Report 2022.

6. Malkiel, B.G. (2019). A random walk down Wall Street: The time-tested strategy for successful investing (12th ed.). W.W. Norton & Company.

   • Bogle, J.C. (2017). The little book of common sense investing: The only way to guarantee your fair share of stock market returns (10th anniversary ed.). John Wiley & Sons.

   • Fama, E.F., & French, K.R. (2010). Luck versus skill in the cross-section of mutual fund returns. The Journal of Finance, 65(5), 1915-1947.

To Insure or Not to Insure

Why Self-Insurance Rarely Works

I’m frequently told by people that they’ve been advised by others to skip traditional insurance and simply set up an effective sinking fund: a little reserve where you accumulate all of the insurance premiums you would have otherwise paid to the insurer, using those as your insurance or ‘rainy day’ fund.

In theory, if you’re the average person in the average city receiving all the average results, you remove the middleman and come out ahead financially. It’s an appealing concept that sounds sensible on paper.

However, there are several fundamental problems with this approach.

The Friend-of-a-Friend Phenomenon

Here’s something I’ve noticed: it’s always a friend of a friend who tells the person that self-insurance is a wise call, or they know someone who knows someone that does this successfully. You never actually meet these people, funnily enough.

And of course, for those where it’s been spectacularly unsuccessful, and I’d wager there are far more of these, they’re hardly going to put it on their social media feed or tell their friends about their ill-fated strategy over coffee. It’s the ultimate example of survivorship bias: we only hear the success stories (usually second or third-hand), never the cautionary tales.

I suspect I know why we never meet these successful self-insurers: they simply haven’t had their catastrophic year yet. They’re still in the accumulation phase, feeling clever about their growing balance, not yet tested by the kind of year that wipes out decades of savings in twelve months.

Behavioural and Inflation Challenges

Human nature works against the sinking fund strategy. Behavioural economists have documented what they call “present bias”, our tendency to prioritise immediate needs over future uncertainties.[1] Research from the Financial Markets Authority shows that New Zealanders consistently overestimate their ability to save regularly and underestimate their spending.[2] A “set and forget” sinking fund sounds perfect in theory, but that account becomes the first place people raid when unexpected expenses arise.

There’s also the “optimism bias” at play. Studies consistently show that people believe negative events are less likely to happen to them than to others.[3] This leads to underfunding self-insurance reserves or abandoning them altogether when nothing goes wrong for a few years.

The inflation problem compounds these behavioural challenges. Not all inflation is equal. Medical inflation is far greater than domestic core inflation, to the level of 7.2 times at present, according to recent analysis published in Business Desk.[4]

Construction costs tell a similar story. According to Stats NZ’s Capital Goods Price Index, building costs increased by approximately 42% between 2014 and 2024, while general CPI rose by only 24%.[5] Many New Zealanders only discovered the true cost of construction inflation during Cyclone Gabrielle, when they went to replace their homes. What they thought might cost $300,000 to rebuild suddenly became $450,000 or more.

Your sinking fund may grow at 2-3% annually through interest, while the actual costs you’re protecting against rise at 10%, 15%, or even higher rates. You’re essentially running backwards on a treadmill.

A Personal Reality Check

Let me share my personal experience from the last year, a year I thought would be utterly unremarkable.

I considered myself pretty average: late forties, fit, healthy, gainfully employed and married with kids in their teenage years. We have two cats, one dog, five coloured pet sheep. Our home is well-maintained, no deferred maintenance. My car was serviced on schedule. We have regular health check-ups. Nothing special, nothing unusual.

We are exactly the people you'd expect to sail through the year without incident. Then reality intervened.

First, rats ate out the wiring and suspension system on my car, rendering it completely inoperable. Six weeks in the repair shop. The bill: $18,000.

Then, while out of town, a water cistern in the roof of our home failed, a small $1.20 rubber washer perished, and water came down through the walls and spread across multiple rooms. Wall damage throughout multiple rooms and full carpet replacement due to staining. Four weeks of repairs. The claim: $55,000.

Finally, last month, a small mole on my wife’s leg led to surgery, five nights in hospital, and a health insurance claim of $28,500.

Three unrelated incidents. One year. Total claims: over $101,500.

So much for being average. Even if I’d been religiously funding a sinking fund for twenty years at $5,000 per year, which would require extraordinary discipline, I’d have accumulated $100,000. This single year would have wiped me out completely, leaving me to start from zero at age 49.

That assumes I never once raided the fund for other “emergencies” over those two decades. In reality, most sinking funds would have been depleted long before reaching six figures.

The Fallacy of ‘Self-Insurance’

Let’s put this in perspective: according to Stats NZ, the median household income in New Zealand is around $108,000.[6] My insurance claims for the year essentially equalled an entire year’s median household income, before tax. Even high-income households would struggle to self-fund this level of claims, let alone maintain their standard of living while doing so.

According to the Insurance Council of New Zealand, the average house insurance claim in 2024 was over $15,000, while the average health insurance claim requiring hospitalisation exceeded $20,000.[7] These aren’t amounts that most sinking funds could absorb, especially early in their accumulation phase.

The Commission for Financial Capability found that nearly 40% of New Zealanders would struggle to cover an unexpected $1,000 expense.[8] If we can’t maintain buffers for small shocks, expecting people to maintain funds for potentially catastrophic events is unrealistic.

A Better Solution: Employer-Sponsored Insurance

There’s a middle ground that addresses many of these behavioural and financial challenges: employer-sponsored group insurance schemes. When a company pays for insurance as part of an employee’s remuneration package, it eliminates the temptation to raid the fund or skip payments. The coverage is there, consistently, without requiring ongoing willpower.

One of the most significant advantages of group schemes is that they typically provide cover for pre-existing health conditions – something that can be difficult or impossible to obtain through individual policies. This means employees who may have previously been uninsurable can access comprehensive coverage.

We practise what we preach; our business has provided health, life, and trauma insurance packages as part of our employment package for over a decade. Leading by example, we’ve seen firsthand how this removes the burden of decision-making from employees while ensuring they’re genuinely protected. The group purchasing power also means better rates than individuals could access on their own.

Why Insurance Endures

There’s a reason why insurance has been around for many millennia. It’s because pooling risk across large populations is the only mathematically sound way to protect against catastrophic but unpredictable losses.

When you pay insurance premiums (personally or through an employer scheme) you’re not just paying for potential claims. You’re paying for certainty, for protection against the extreme tail events that can derail your financial life, and for a system that removes the behavioural challenges of self-discipline and forced saving.

Self-insurance sounds empowering and financially savvy. But for most New Zealanders, it’s a gamble that looks good until the moment you desperately need it to work… and discover it doesn’t. The gap between what we intend to do and what we actually do is where self-insurance strategies collapse, leaving people exposed precisely when they need protection most.

My $101,500 year proved that beyond any doubt. Which is why any credible financial plan must include adequate insurance coverage. If your financial adviser isn't discussing insurance protection alongside investment strategy, you're not getting comprehensive advice: you're getting half a plan.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 436

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References

[1] O’Donoghue, T., & Rabin, M. (1999). “Doing It Now or Later.” American Economic Review, 89(1), 103-124.

[2] Financial Markets Authority. (2021). “Understanding Financial Capability in New Zealand.”

[3] Weinstein, N. D. (1980). “Unrealistic optimism about future life events.” Journal of Personality and Social Psychology, 39(5), 806-820.

[4] Business Desk. (2024). “Medical inflation outpaces general inflation by factor of 7.2.”

[5] Stats NZ. (2024). “Capital Goods Price Index and Construction Price Index.”

[6] Stats NZ. (2024). “Household income and housing-cost statistics: Year ended June 2024.”

[7] Insurance Council of New Zealand. (2024). “Annual Claims Data Report.”

[8] Commission for Financial Capability. (2023). “Financial Resilience in New Zealand.”

The Squeeze Play: When Essentials Outpace Everything Else

There's a peculiar phenomenon unfolding across New Zealand households, and it doesn't add up. While families cut back on discretionary spending, three relentless forces continue their upward march: rates, power, and insurance premiums.

Kiwibank's latest inflation analysis reveals the problem.[1] Overall inflation sits at 3%, but council rates are up 8.8% year-on-year and electricity has surged 11.3%. Meanwhile, rent and building costs remain soft, responding as they should to economic pressure. This is Economics 101 – except for the outliers that won't bend.

Households respond to price signals by cutting spending, businesses adjust to market conditions, but monopolistic and quasi-monopolistic services continue their upward trajectory regardless of economic headwinds. When essentials become the only thing still inflating, we're not seeing healthy price discovery – we're watching economic dysfunction concentrate in the places people can't escape.

The Democratic Disconnect

In Hastings – Hawke's Bay's largest district – the mayoral election delivered an instructive lesson in vote-splitting. Marcus Buddo had a detailed plan about rates, spending, and debt. Steve Gibson had a plan of ideas. Damon Harvey had a plan of sorts. Between them, they split the centre-right vote.[2][3] Wendy Schollum had a plan to have a plan – and won with 6,722 votes, representing 26.06% of the total vote.[3]

What ratepayers inherited is a focus on process, not outcomes. The problem isn't reviewing assets or benchmarking contracts – it's the absence of a clear plan for cutting spending, reducing debt, and passing savings to ratepayers. In her first month, the new mayor reported focusing on "bringing our new council together," "establishing how we'll work as a team," and "meeting with staff to look at how we can do more with less."[14] Classic "all hui and no doey" [16,17]– lots of meetings, team-building, and singing while rates grow at triple the rate of inflation.[1] 

The RBNZ may deliver some further relief through rate cuts, as economists predict.[1] But that relief will be swallowed by cost increases that don't respond to monetary policy. Council rates aren't discretionary. Power bills aren't negotiable. Insurance premiums exist beyond household bargaining power. The very things households need most are the things rising fastest, creating a squeeze that monetary policy cannot relieve.

The Rates Reality

Hastings imposed a 19% rates increase for 2024/25[5][6] and another 15% for 2025/26.[7] These aren't just numbers on a page – they represent real pain for households already stretched thin by the cost of living crisis. For an average property paying $3,000 annually, rates have jumped to approximately $4,000, with another increase pushing that toward $4,600.

Ratepayers have done their bit – the cyclone-specific targeted rate elevated these increases to the upper band among New Zealand councils. But here's the problem: this is temporary revenue with a 16-year sunset clause,[6] yet spending patterns suggest permanent cost increases have been baked in, with significant portions funding non-cyclone expenditure.

When the cyclone charge expires, does the council try to keep ratepayers paying the cyclone charges to fund other council nice-to-haves, or does it reduce rates? The current trajectory builds in a structural deficit that future ratepayers will inherit. It's a classic government budget problem: temporary revenue streams funding permanent spending commitments. The logic doesn’t add up, and costs get kicked down the road regardless.

Across New Zealand, councils have faced unprecedented cost pressures. A 2024 report commissioned by Local Government NZ found that construction costs for bridges increased 38%, sewage systems 30%, and roads and water supply systems 27% over three years.[8] The average rates increase across the country hit 15% for 2024/25,[8] with some councils proposing even higher increases. But these pressures, while real, don't explain why councils can't find operational efficiencies to partially offset infrastructure cost inflation.

The Residential Reckoning

Nowhere does this squeeze play out more starkly than in residential rental property, where New Zealand's retirement wealth delusion meets economic reality.

For decades, Kiwis were sold a simple story: property is the path to retirement security. Buy a rental. Watch it appreciate. Collect rent. Retire comfortably. It's been cultural gospel, reinforced by favourable tax treatment and the absence of capital gains taxes. An entire generation built its retirement strategy around this asset class.

But that story is fast becoming a tragedy. Residential landlords face the same 8.8% rates increase, insurance premiums that have doubled or tripled post-Gabrielle.[1] These costs aren't negotiable. They simply arrive and must be paid. Unlike businesses that can adjust their cost structures or pass costs to customers, landlords operate in a market with hard ceilings.

Tenants can't just absorb corresponding rent increases endlessly. The market has found its ceiling through the hard limit of what people can actually pay when their own costs are climbing. Tenants are facing their own squeeze – grocery bills up, power bills up, their own insurance costs rising. There's no capacity to absorb 8-11% annual rent increases. So who wears it? The landlord.

When non-negotiable costs grow at 8-11% annually, but rent increases are market-capped at 3-4%, the gap widens, and the squeeze tightens. Properties once generating positive cash flow now require subsidies from other income. The "investment" becomes a wealth destroyer rather than a wealth builder.

The residential property investment model was built for an era where rates grew modestly and insurance was predictable. That era is over. We now have a cohort who bet retirement security on an asset class where holding costs accelerate faster than income. Some will sell. Some will hold on, hoping for capital appreciation to compensate for negative carry. Many will discover too late that their retirement strategy has a fundamental flaw.

It's sad – not because property investors deserve special sympathy, but because it represents massive misallocation of national savings. An entire generation channelled wealth-building into residential property instead of productive assets or diversified investments. Capital that could have funded business growth, innovation, or infrastructure went into bidding up house prices instead. Now they're discovering that when monopolistic cost structures meet market-limited revenue, leverage works in reverse.

The Policy Vacuum

The Kiwibank data disproves the myth of symmetrical adjustment.[1] Households adapt. Markets respond. But essentials march to their own drum, disconnected from broader economic discipline. This asymmetry matters because it means traditional economic responses – tightening monetary policy, reducing household spending – fail to address the source of inflation when it concentrates in monopolistic services.

The government is considering rates-capping legislation to refocus councils on "doing the basics, brilliantly."[10] But rates capping may be only the opening salvo. The Government has just announced proposals to eliminate regional councillors entirely, replacing them with 'Combined Territories Boards' made up of mayors.[15] More significantly, each region will be required to prepare a 'regional reorganisation plan' within two years, with options including merging territorial authorities into unitary councils. The Government's stated goal: "cut duplication, reduce costs, and streamline decision-making."[15]

For councils like Hastings already stretched thin by cyclone recovery, this represents both opportunity and threat.

The opportunity: forced consolidation might finally deliver the operational efficiencies that should have been found voluntarily.

The threat: poorly designed reorganisation could create even larger bureaucracies with less accountability. The pressure to demonstrate fiscal discipline just intensified dramatically.

Council external debt has surged from $353 million in December 2023[11] to $472 million as at 30 June 2025,[13] and is projected to reach $700 million by 2030.[9] That's debt more than doubling in less than three years, with the trajectory showing no signs of slowing. Interest payments alone consume an ever-larger share of rates revenue, creating a vicious cycle where borrowing to fund current operations crowds out funding for actual services.

With voter turnout at just 44.71%[3] and Schollum winning with 26.06% of votes cast, approximately 12% of eligible voters delivered her a victory. She has three years to prove she deserves to be re-elected, which means proving she understands how angry ratepayers are about rate rises. The mandate is thin. The patience is thinner.

For property investors, the question is starker: how long can negative carry be sustained before the retirement wealth strategy becomes the retirement wealth trap? For how many years can landlords subsidise tenants from other income before they capitulate and sell? And when they do sell, who buys investment property with known negative carry characteristics?

Until we confront why essentials climb at double-digit rates while the broader economy slows, we're not solving inflation. We're watching it concentrate in the places people can't escape. That concentration makes the burden harder to bear and the economic distortions more severe.

That's not economics adapting. That's economics breaking down, one essential service at a time.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 435

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References

[1] Kiwibank Economics (2025). "NZ Inflation: What's really happening?"

[2] NZ Herald (2024). "Hastings mayoral race - Wendy Schollum claims the win, but her closest rival hasn't conceded."

[3] NZ Herald (2024). "Local elections 2025: Wendy Schollum new Hastings Mayor as last-minute voters extend her lead."

[5] Hastings District Council (2024). "Council reduces proposed rate increase."

[6] Wikipedia (2025). "2022–2025 term of the Hastings District Council."

[7] NZ Herald (2025). "Central Hawke's Bay tries to lower rates hike to 10% as cyclone-hit Hastings sticks with 15%."

[8] 1News (2024). "New Zealand homeowners facing an average rates rise of 15%."

[9] NZ Herald (2024). "Hastings facing one of highest rates rises in country - council could hit $700 million debt."

[10] RNZ (2025). "Local Government New Zealand crying foul over potential rates capping."

[11] NZ Herald (2024). "Hastings District Council nearly $400 million in debt as cyclone costs compound."

[13] Hastings District Council (2025). "2024-2025 Annual Report."

[14] Schollum, W. (2024). Facebook post, Mayor Wendy Schollum of Heretaunga Hastings, November 2024.

[15] New Zealand Government (2025). "Local Government Reorganisation Proposals." BayBuzz Special Alert.

[16] NZ Herald. (2020). Too much hui and not enough do-ey: Why workplace meetings can be wasteful. Retrieved from https://www.nzherald.co.nz

[17] National Māori Authority. (n.d.). Matthew Tukaki on suicide prevention: “Too much hui and not enough doey – so we are taking action right now.” Retrieved from https://www.nationalmaoriauthority.nz