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

Don't Let Your Adviser's Retirement Disrupt Yours

If you're planning your retirement with a financial adviser who's anywhere near retirement age themselves, you might be setting yourself up for a nasty surprise.

Recent industry data indicates only 10-20% of financial advisers have a documented succession plan, despite many advisers being in their mid-50s and planning to retire within the next decade. Meanwhile, 83% of people with advisers worry about what happens when their adviser retires, and more than half fear they won't receive any warning at all.

That's not just a statistic. It's a wake-up call for Kiwi investors.

You'll Likely Outlive Your Adviser's Career

If you retire at 65, you're likely to live another 25-30 years. According to Stats NZ, life expectancy for a 65-year-old New Zealander is currently 20.6 years for men and 23.2 years for women – and those figures continue to improve over time. Many Kiwis will live well into their 90s, with centenarians becoming increasingly common.

Now consider this: if your 60-year-old adviser plans to work until they're 70, that gives you just 5-10 years of their guidance during a retirement that could span three decades. You'll almost certainly outlive their working life, and quite possibly outlive them entirely.

The mismatch is stark. You need financial guidance for 25-30+ years, but your peer-age adviser might only be around for a third of that journey. Without a proper succession plan, you're facing two decades of uncertainty at precisely the time you need stability most.

The Hidden Risk in Your Financial Plan

Think about the irony for a moment. You hire a financial adviser to help you plan for decades of retirement, ensuring you'll never run out of money or face unexpected disruptions… Yet the person guiding you through this process often hasn't done the same planning for their own practice.

When an adviser retires without a proper succession plan, clients typically get assigned to someone new. Often, it’s someone they've never met.

The investment philosophy might change. The service style could be completely different. It's a bit like when your GP retires without warning and you're left scrambling to find someone new who understands your goals and history.

If you're pre-retirement (around 55 or 60) and working with an adviser who's 65 with no succession plan, you're practically guaranteeing yourself a disruptive transition right as you enter retirement. Even if that adviser works until 70 or 75, you'll still need another 15-20 years of advice after they're gone.

Why Advisers Avoid This Conversation

The reluctance to plan succession isn't malicious; it's deeply human. Creating a proper succession plan requires advisers to share their revenue with younger team members, invest significant time in training and mentoring, and confront their own career endings.

Many simply prefer to coast into semi-retirement rather than undertake this difficult work.

But their comfort shouldn't come at your expense, especially when you're planning for a retirement that could easily span three decades.

What a Proper Succession Looks Like

A well-executed succession plan doesn't happen overnight. The best transitions span multiple years, giving you time to build relationships with next-generation advisers while your current adviser gradually steps back.

You should see:

• Early introductions to the advisers who will eventually manage your portfolio

• Gradual transitions where new advisers take on increasing responsibility over 3-7 years

• Consistent philosophy ensuring your investment approach doesn't change with personnel

• Clear communication about the timeline and process

• Demonstrated commitment such as ownership stakes for next-generation advisers

• Age diversity on the advisory team to ensure continuity

Again, think of it like shopping for a family doctor. You don't want someone in their late 60s or 70s; you want someone who can look after you for multiple decades into the future. The same logic applies to your financial adviser, perhaps even more so given the 25-30 year timeframe you're planning for.

An adviser in their 30s or 40s can realistically serve you throughout your entire retirement. An adviser in their 60s simply cannot, no matter how skilled or dedicated they are.

This doesn’t mean you can’t get advice from an adviser in this age bracket – simply that you need to ask questions about the future.

7 Questions to Ask About Adviser Succession

Don't wait for your adviser to bring it up. Take control by asking:

1. Do you have a documented succession plan?

2. Who will work with my family when you retire?

3. Have I already met this person, or are they yet to be hired?

4. What's the age range of your advisory team?

5. How will you ensure my investment approach, services, and fees remain consistent?

6. What's the timeline for this transition?

7. Given I might need advice for another 25-30 years, how does your firm plan to serve me throughout my entire retirement?

If your adviser seems uncomfortable or unprepared to answer these questions, that tells you everything you need to know.

Building Succession Into Your Planning

Smart financial planning means thinking holistically about risk. You diversify your investments through KiwiSaver and other portfolios, maintain emergency funds, and plan for healthcare costs. Adviser succession should be part of that same risk management framework.

If you're in your 40s, you might have more flexibility, but you should still favour advisers with clear succession plans. If you're approaching retirement, this becomes non-negotiable. You need an advisory team that can serve you for the next 30 years, not just the next five.

Look for firms that have already made the hard choices – those that have hired and trained next-generation advisers, documented processes and consistent philosophies, and made those younger advisers actual owners in the business. This isn't just good planning; it's a commitment to their clients' long-term wellbeing.

The Bottom Line

Your financial security is too important to leave to chance. The adviser helping you plan for decades of retirement should have spent at least as much time planning for their own succession.

The actuarial reality is clear: at 65, you're looking at potentially 25-30 years of retirement. Your peer-age adviser simply won't be working that long. The question isn't whether succession will happen – it's whether it will happen with planning and care, or chaos and disruption.

Ask the hard questions now. If the answers don't satisfy you, it might be time to find an adviser who's as committed to your future as you are.

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. 434

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Acknowledgements

Special thanks to Keith Matthews of Tulett Matthews and Associates for exploring this critical topic on the Empowered Investor Podcast and highlighting the importance of adviser succession planning for investors approaching retirement.

References

1. Investment Planning Council (IPC) survey of 1,500+ Canadians with financial advisers, cited in Tulett Matthews & Associates, "Empowered Investor Podcast Episode 120: Don't Let Your Adviser's Retirement Disrupt Yours" (October 2024)

2. Stats NZ, "National and subnational period life tables: 2017–2019" - Life expectancy data for 65-year-olds in New Zealand

3. Industry research on adviser succession planning cited in Tulett Matthews & Associates podcast, showing 10-20% of advisers have documented succession plans, with average adviser age of 54 years

Markets, Science, & the Chicago Legacy: Why Evidence Matters More Than Ever

Standing outside the University of Chicago Booth School of Business recently, I was struck by how this building represents something far more valuable than bricks and mortar.

The building bears the name of David Booth, founder of Dimensional Fund Advisors (DFA), whose $300 million donation in 2008 recognised the profound influence this institution has had on how we understand investing. It was the largest gift to any business school in history at the time—and for good reason. The University of Chicago has produced 97 Nobel Prize laureates, making it one of the world’s great centres of economic thought.

I’ve just returned from the United States, where I attended a conference and met with some of the most innovative wealth management firms operating today. What struck me most wasn’t the technology or the marketing—it was the unwavering commitment to letting science, not emotion, drive investment decisions.

The Chicago Revolution

The University of Chicago fundamentally changed how we understand markets. In the 1960s and 70s, Eugene Fama developed the Efficient Market Hypothesis, which challenged the prevailing wisdom that active stock pickers could consistently beat the market. His research, along with work by Harry Markowitz on portfolio theory and Merton Miller on corporate finance, created a scientific framework for understanding how markets actually work rather than how we wish they would work.

 These weren’t armchair theories. They were rigorously tested hypotheses backed by decades of data. Fama won the Nobel Prize in 2013.[1] More recently, Douglas Diamond, who serves as a director at DFA, won the Nobel Prize in 2022 for his groundbreaking research on banks and financial crises.[2] The message is clear: markets are remarkably efficient at incorporating information into prices, making it extraordinarily difficult for active managers to consistently outperform after fees.

From Theory to Practice

This is where David Booth’s story becomes fascinating. After studying under these pioneers at Chicago, he co-founded DFA in 1981 with a radical idea: academic research should drive investment strategy. Rather than trying to pick winners or time markets, DFA built portfolios that captured the dimensions of return that academic research had identified—company size, relative price, and profitability.

The firm’s commitment to its academic foundation remains extraordinary. Eugene Fama himself serves as a director and consultant to DFA, alongside Nobel laureate Douglas Diamond and numerous other distinguished academics.[3] This isn’t window dressing—these researchers actively shape the firm’s investment approach. Today, DFA manages over $850 billion globally and works exclusively with around 1,800 financial advisers and institutions worldwide who share their evidence-based philosophy.[4]

We’ve been fortunate to be part of that community since 2003. Over more than two decades, I’ve had the privilege of meeting David Booth himself, along with many of DFA’s esteemed researchers and team members. These aren’t just business relationships—they’re ongoing dialogues about how markets work and how we can best serve our clients.

But philosophy alone doesn’t pay the bills. The real work happens in translating these academic insights into portfolios that work for real New Zealanders with real goals. Our investment committee builds portfolios that harness these evidence-based principles while respecting each client’s individual circumstances. For some, that means incorporating ESG considerations—ensuring investments align with values without sacrificing returns. For others, it’s about smart tax planning, understanding how PIE funds, FIF rules, and portfolio location decisions can significantly impact after-tax wealth over time. The science tells us what works in markets; our job is to implement it in a way that works for you.

The Emotional Trap

During my US trip, I sat through presentations from wealth management firms managing billions in client assets. A common theme emerged: the biggest threat to investor success isn’t market crashes or economic recessions—it’s investor behaviour itself.

We’re hardwired for emotional responses that work against us in financial markets. We panic when markets fall and become euphoric when they rise. We chase last year’s winners and abandon sound strategies at precisely the wrong moment. We believe we can spot the next big thing, despite overwhelming evidence that even professionals cannot consistently do so.

The firms I met with have built their practices around protecting clients from themselves. They use science-based portfolio construction, maintain discipline during volatility, and focus on what investors can control: costs, diversification, tax efficiency, and most importantly, behaviour.

The New Zealand Reality

Here’s something I hear often: “But surely New Zealand is different?”

It’s not. Market principles are universal. New Zealand shares trade on the same fundamental dynamics as shares in New York, London, or Tokyo. The temptation to believe “it’s different here” often leads to home bias and concentrated portfolios that increase risk without increasing expected returns.

The evidence is unequivocal, regardless of geography. Studies consistently show that the average investor significantly underperforms the very funds they invest in, purely due to poor timing decisions. Research from Morningstar found that investors typically lag their own investments by 1-2% annually simply by buying high and selling low.[5] This behaviour penalty applies equally to investors in Auckland as it does in Austin.

Think about that: a 1-2% annual drag from poor timing decisions alone. Over a 30-year investment horizon, that’s the difference between retiring comfortably and struggling to make ends meet. And it has nothing to do with market returns or fund performance—it’s entirely self-inflicted through emotional decision-making.

What This Means for You

As your advisers, our role isn’t to predict the future or pick winning stocks. It’s to help you stay invested in sensibly constructed, evidence-based portfolios through all market conditions. The science tells us that markets reward patient investors who remain diversified and resist the urge to react to short-term noise.

This matters now more than ever. With 24/7 news cycles, social media investment “gurus,” and the constant temptation to react to market movements, maintaining discipline has never been harder—or more important.

When markets inevitably experience volatility (and they will), remember this: every market downturn in history has eventually been followed by recovery. The investors who stayed disciplined and remained invested captured those recoveries. Those who sold in panic and tried to time their re-entry typically bought back in after much of the recovery had already occurred.

Standing outside that Chicago building, I felt grateful for the legacy of rigorous thinking that continues to shape how we invest today. But the principles that emerged from those halls decades ago remain as relevant now as ever: markets work, diversification matters, costs compound, and behaviour determines outcomes.

The challenge isn’t knowing what to do—science has answered that. The challenge is doing it consistently, especially when markets test our resolve. That’s where good advice becomes invaluable.

Nick Stewart

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

Financial Adviser and CEO at Stewart Group

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References

 [1] The Nobel Prize, “Eugene F. Fama - Facts,” 2013, [nobelprize.org](http://nobelprize.org)

 [2] University of Chicago Booth School of Business, “Douglas W. Diamond Wins Nobel Prize in Economic Sciences,” October 2022, [chicagobooth.edu](http://chicagobooth.edu)

 [3] Dimensional Fund Advisors, “Leadership and Board of Directors,” [dimensional.com](http://dimensional.com)

 [4] Dimensional Fund Advisors SEC Form ADV, showing $835.7 billion in discretionary assets under management as of March 31, 2025

 [5] Morningstar, “Mind the Gap: The Behavior of the Average Investor,” various years, [morningstar.com](http://morningstar.com)

 [6] University of Chicago News, “Alumnus David Booth gives $300 million; University of Chicago Booth School of Business named in his honor,” November 2008, [news.uchicago.edu](http://news.uchicago.edu)​​​​​​​​​​​​​​​​

The 12-Month Tax Gambit: Labour's Calculated Risk

Announcing a major tax policy a year before an election isn't just unusual; it's almost unheard of.

Conventional political wisdom dictates you either implement unpopular measures early in your term, or promise them after securing victory. Labour's decision to foreground a 28% capital gains tax ‘CGT’ a full year out from polling day demands examination, particularly through the lens of economist Arthur Laffer. His insight cuts straight through political calculation: speeding fines are a tax. Governments use taxes to stop people doing things they don't want them to do. So why would you tax investment when the country desperately needs more of it?¹

The timing becomes immediately suspect. Labour sits in opposition facing a National-led government, and historically, opposition parties campaign on aspiration rather than taxation. Helen Clark's 2005 Labour government actively campaigned against CGT proposals, recognising the electoral toxicity.² Yet here we are in late 2025, with Labour essentially writing National's attack ads 12 months in advance.

The Political Theatre

The political play is obvious: announce now, let the controversy "settle," and by election day the CGT feels like old news rather than shocking revelation. Labour hopes voters will be desensitised to what might otherwise be campaign-ending policy. It's political inoculation through extended exposure, with the policy carefully designed as "CGT light" (exempting family homes, farms, KiwiSaver and shares) to avoid the comprehensive wealth taxation that spooked voters in previous attempts.²

Yet as business commentator Damien Grant observes, the policy amounts to "a marketing plan sketched on the back of a napkin that had been used to wipe the lipstick off a chardonnay glass after drinks at a Fabian Society soiree."⁶ The policy amounts to a few pages in a glossy press release with less substance than a frozen coke.

If you own property in July 2027 and sell it after that date, you pay 28% of any increase in value, with no allowance for inflation. Family homes are exempt. That's essentially it—the rest is left to imagination and future consultation.

Recent polling shows Labour's framing is working – 43% support versus 36% opposition.² The 12-month runway allows this narrative to solidify. Labour bets that sustained messaging about "fairness" will ultimately land better than National's "tax on ambition" counter-narrative.

Laffer Curve | Source: Norway's Wealth Tax Unchains a Capital Exodus

The Fine Fallacy

Laffer's analogy cuts through the fluff. When government fines speeding, fewer people speed – that's the point. When government taxes cigarettes heavily, fewer people smoke – that's the objective. These are taxes deliberately designed to discourage the behaviour.

Applied to investment taxes, the logic is inescapable. When government taxes investment gains at 28%, fewer people invest. Yet that's meant to be revenue-neutral economic policy rather than deliberate discouragement? You cannot fine an activity and simultaneously expect more of it.

The contradiction becomes starker considering New Zealand's actual needs. Treasury warns that 52% of total tax comes from personal income tax, and the group paying this tax is shrinking due to an ageing population.⁴

The country desperately needs productive investment in commercial property, business expansion, and capital formation. Yet Labour proposes taxing precisely these activities, at rates designed to be punitive enough to raise revenue.

This is the economic equivalent of installing speed cameras on the motorway while simultaneously complaining that traffic isn't moving fast enough. You cannot discourage and encourage the same behaviour simultaneously.

The Implementation Damage

The July 2027 implementation date provides convenient political distance: win in November 2026, govern for eight months, then introduce legislation.²

But here's where political cleverness creates economic damage - the announcement effect begins immediately. Why would a developer start a commercial property project in 2026 knowing that any gains realised in 2028 or 2029 will face 28% taxation? Investment decisions from now until 2027 will be distorted by anticipated future taxes, locking capital out of productive uses or sending it offshore.³

The economic damage begins not when the tax takes effect, but when it's announced. We're living through that damage period now. The speeding camera has been installed, and the signs are up; don't be surprised when drivers slow down.

The British Warning

Laffer's analysis of Gordon Brown's decision to raise Britain's top rate from 40% to 50% provides the cautionary tale. The UK Treasury's own "Laffer section" showed the increase "not only did not get more revenue, it got you a lot less prosperity. People left the country, people used tax shelters, dodges, loopholes, all that."¹ As Laffer emphasised, this wasn't his opinion imposing American economics on Britain—"This was Britain doing the Laffer curve."¹

As Laffer notes from decades of US tax data: "Every time we've raised the highest tax rate on the top 1% of income earners, three things have happened. The economy has underperformed, tax revenues from the rich have gone down, and the poor have been hammered."¹

Conversely: "Every single time we've lowered tax rates on the rich, the economy has outperformed. Tax revenues from the rich have gone up and the poor have had opportunities to earn a living, to live a better life."¹

The Practical Nightmares

The practical problems compound the economic ones. Grant notes that inflation has already created havoc in Australia, where properties often can't be sold “because almost all of the price is considered a capital gain. This will be worse on the Hipkins plan because there is no indexation.”⁶

Consider a property bought in 2015 for $500,000 is now worth $800,000. Under Labour's plan, the entire $300,000 gain faces 28% taxation – that’s $84,000. But how much of that gain is real appreciation versus inflation? Without indexation, investors pay tax on phantom gains that merely reflect currency debasement.

Meanwhile, definitional nightmares await. Australia's capital gains tax guide runs to 339 pages, with court judgements adding hundreds more.⁶ Is replacing a kitchen a capital improvement or maintenance? What about landscaping? A 2028 Fisher and Paykel dishwasher replacing a 1980s Westinghouse: expense, or capital upgrade? As Grant notes drily: "Tax lawyers and accountants will be kept busy."⁶

The Chartered Accountants Institute supports Labour's proposal – hardly surprising, given it guarantees full employment for their profession dealing with compliance complexity.

The Fiscal Illusion

Even Chartered Accountants acknowledge that CGTs "do not generate significant revenue in the short or even medium terms. Long term, however, they typically provide a steady revenue stream… Using them to cover a specific policy expense is unusual."⁴ Yet Labour wants to use this non-existent revenue immediately to subsidise doctor visits.

As Grant observes: "There is a cash shortfall on Labour's own analysis in the early years which, like everything else in this policy, the resolution is left to the imagination."⁶ Here's the speeding fine logic again: if you install cameras to generate revenue from fines, you're simultaneously reducing the very behaviour that generates the revenue.

Successful speed cameras mean less speeding, and therefore less revenue. A capital gains tax that successfully deters property speculation means less property investment, and again, less revenue.

The Historical Pattern

This is Labour's seventh CGT attempt since 1973.² Norman Kirk's first attempt taxed gains at up to 90%, a rate so confiscatory it was quickly abandoned. Phil Goff's 2011 version, David Cunliffe's 2014 proposal, and Jacinda Ardern's 2019 attempt all failed politically.

Each previous effort proved politically costly and economically counterproductive. Voters instinctively understand Laffer's speeding fine logic, even if they can't articulate the economics by name. They recognise taxing investment reduces investment, just as fining speeding reduces speeding. Winston Churchill’s timeless observation perfectly captures the impossibility of taxing your way to prosperity – you cannot stand in a bucket and lift yourself up by the handles.⁵

The Alternative Vision

Laffer's prescription for struggling economies is brutally simple: "You want a low-rate, broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade. And then get the hell out of the way."¹ Labour offers the opposite with new taxes on capital, sketchy implementation details, and revenue projections that don't add up.

As Laffer puts it: "Poor people don't work to pay taxes. They work to get what they can after tax. It's that very personal and very private incentive that motivates them to work, to quit one job and go to another job, to get the education they need to do it."¹ Replace "poor people" with "investors" and the logic remains - capital seeks returns. Tax those returns heavily enough, and capital goes elsewhere.

Perhaps most revealing: if this policy were genuinely beneficial for economic growth, why the elaborate political choreography? The answer lies in Laffer's observation about lottery tickets: "Everyone—tall, short, skinny, fat, old, young—they all want to be rich. Why does your government then turn around and tax the living hell out of the rich?"¹

New Zealanders don't want to punish success; they want pathways to achieve it themselves. They buy lottery tickets hoping to strike it rich. The government encourages dreams of wealth while simultaneously taxing the achievement of wealth.

The Verdict

The election will shortly reveal whether Labour's calculated 12-month strategy succeeds politically. By announcing early, they've given the policy time to settle, given themselves something concrete to campaign on, and satisfied membership demands for action on wealth taxation.

But both Laffer's economic analysis and Grant's practical critique suggest that regardless of electoral outcome, the policy itself represents strategic error. It's economic theory ignored in favour of political positioning.

New Zealand has better options. Genuine broadening of the tax base, reform of property taxation to encourage productive use, addressing infrastructure bottlenecks, and creating conditions for productivity growth would all contribute more to long-term prosperity than taxing capital gains at 28%. But those approaches require the hard work of reform rather than the easy politics of taxing "wealthy property investors."

Is Labour's CGT announcement politically canny, or economically catastrophic? When you deliberately discourage an activity through taxation, you can’t be surprised when you get less of it.

Labour has installed the camera; investment will slow accordingly. Whether that's clever politics or economic self-harm depends entirely on whether you're focused on winning the next election or building the next generation's prosperity.

As Laffer would note, you cannot tax an economy into prosperity. And you most certainly cannot stand in a bucket and lift yourself up by the handles.

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. 433

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References

1. Simmons, M. (2024). Reality Check: Interview with Arthur Laffer. Times Radio.

2. Opes Partners (2025). 'Does New Zealand Have a Capital Gains Tax? [2025]'. Available at: https://www.opespartners.co.nz/tax/capital-gains-tax-nz

3. RNZ (2025). 'What you need to know: Seven questions about a capital gains tax'. Available at: https://www.rnz.co.nz/news/business/577065/what-you-need-to-know-seven-questions-about-a-capital-gains-tax

4. Chartered Accountants Australia and New Zealand (2025). 'Capital gains tax must be considered as part of tax reform'.

5. Churchill, W.S. (1906). For Free Trade. London: Arthur Humphreys.

6. Grant, D. (2025). 'Hipkins' capital gains tax policy leaves more questions than answers'. Stuff. Available at: https://www.stuff.co.nz/politics/360878756/damien-grant-hipkins-capital-gains-tax-policy-leaves-more-questions-answers

When Ideology Replaces Analysis: The Sparrow Lesson for Investors

It's fairly well known that Mao Zedong's Great Leap Forward (1958–1962) ended in one of history's deadliest famines: tens of millions died, villages emptied by hunger, fields stripped bare. What's less well known is how a war on sparrows helped set the catastrophe in motion.  [1]

‘Ed Brown’ by Michael Parekowhai, 2000 - A favourite of Nick’s that hangs on the wall at home.

In 1958, Mao launched the Four Pests Campaign, targeting rats, flies, mosquitoes… and sparrows. The tiny birds, he decreed, were "enemies of the people" for daring to eat the people's grain.  [2]

And so, an entire civilisation mobilised against the feathered menace. Schoolchildren banged pots and pans in the streets, peasants drummed on washbasins, and factory sirens screamed for hours to keep the birds in flight until they fell dead from exhaustion. Nests were torn down, eggs smashed, and chicks stomped into the earth.

The results were biblical. In Beijing alone, more than a million sparrows were killed in a matter of weeks. Rural communes competed to see who could pile the highest mountain of avian corpses, a kind of grotesque festival of progress.

But victory, when it came, was short-lived. The sparrows, it turned out, had been eating more insects than grain. Within a year, the skies were empty, and the earth was crawling. Locusts rose like living clouds, devouring fields from horizon to horizon. Peasants watched in horror as the crops disappeared into the mandibles of an unstoppable plague of their own making.

Rather than admit his mistake, Mao doubled down on absurdities. He replaced the sparrows with imported Soviet "science" – the theories of Trofim Lysenko, an agronomist who believed that crops could be re-educated through hard labour. Genetics was bourgeois nonsense, Lysenko said; what mattered was enthusiasm. If you ploughed deeper, planted closer, and shouted revolutionary slogans loudly enough, the harvest would multiply.

So, fields were churned to depths that eviscerated the biome, seedlings were planted shoulder to shoulder until none could breathe, and bureaucrats inflated yields to impossible heights. Mountains of fake grain were reported; much of the real grain was exported to show socialist success.

By 1960, China was starving. Whole provinces were dying in silence. Still, the propaganda blared: "The people's communes are good!"

A survivor later put it simply: "We killed the birds, and then the insects ate everything else."

New Zealand's Sacred Cow

We have our own version of Lysenko's ideology. You've heard it at every barbecue, every family gathering, every pub conversation about money:

• "You can't go wrong with bricks and mortar."

• "Buy land – God's not making any more of it."

• "Rent money is dead money."

• "Safe as houses."

• "Property always goes up."

For two decades, these mantras proved prophetic. House prices in Auckland rose 500% between 2000 and 2021. Kiwi households saw their home become their retirement plan, their children's inheritance, their ticket to prosperity. Property investment became a religion, complete with its own prophets (real estate agents), its own evangelists (property coaches), and its own scripture (Rich Dad Poor Dad).

The scriptures were simple: leverage to the hilt, buy multiple rentals, negative gear against your income, and watch the capital gains roll in. Interest rates were at historic lows (and surely they'd stay there forever). The government needed house prices to keep rising; from pensioners to banks, the entire economy seemed to float on residential property values.

Alas - ideology, no matter how many believers it has, eventually meets mathematical reality.

When the Locusts Arrived

When the Reserve Bank lifted the Official Cash Rate from 0.25% to 5.5% between 2021 and 2023, the proverbial locusts began to swarm and feast.  [3]

Investors who'd stretched to buy rental properties on interest-only loans at 2.5% suddenly faced repayments double what they'd planned for. Those who'd bought at the peak in 2021, with the assumption that prices would continue relentlessly marching upward, now watched their equity disappear into the maw of change.

The median house price in New Zealand has fallen 18% from its 2021 peak according to CoreLogic, with steeper declines in some regions. In Wellington, prices dropped over 20%.  [5], [4]

Investors who bought at the top, banking on endless capital gains to compensate for negative cash flow, are now holding properties worth less than their mortgages. Negative equity isn't just an American problem from the 2008 crisis anymore; it's arrived in Epsom and Island Bay, in Christchurch and Hamilton. [5]

Mortgage stress has become a daily reality for thousands of New Zealand families. What was affordable at 2.5% is crushing at 7%. Property gambles that made sense when you could lock in cheap debt for years, now bleed money every month.

The Property Value Fundamentals We Ignored

Like Mao's bureaucrats ignoring the ecology of pest control, New Zealand ignored the fundamentals that underpin property values:

1.     Debt serviceability

We convinced ourselves record-low interest rates were the new normal; a pleasantly permanent feature of the economic landscape.

They weren't. They were weather, not climate.

Anyone who'd stress-tested their mortgage at 7% rates had a good idea what this would look like, but most didn't bother. After all, the Reserve Bank had signalled rates would stay low until 2024, hadn't they? (They had. They were wrong.)

2.     Yield vs. cost

Rental properties returning 3% gross yield while mortgages cost 7% represents what economist Hyman Minsky termed "Ponzi finance"—where income flows cover neither principal nor interest charges, requiring continuous new debt or capital appreciation to survive [6]. When prices stopped rising, the mathematics became unavoidable. You can't lose money every month and call it investing just because you hope the asset will appreciate.

3.      Supply and demand

Yes, God's not making more land. But man is making more zoning laws, more construction, and more high-density housing. Auckland's recent upzoning has added the potential for tens of thousands of new dwellings. National's push for urban intensification is changing the supply equation.

Supply does respond to price eventually. The assumption that demand would endlessly outstrip supply was ideology, not analysis.

4.     Demographic and economic shifts

Net migration swings wildly:

• We saw massive outflows to Australia when its economy boomed.

• Birth rates are falling.

• Working from home changed where people want to live, making provincial cities more attractive.

How to Avoid Being the Sparrow Killer

No investment is exempt from fundamental analysis – not even the quarter-acre Kiwi dream. Here’s what you need to do:

Test your assumptions first

Before buying property (or any investment), ask the hard questions: Can I afford this if interest rates hit 8%? What if the property stays vacant for three months? What if it needs a $30,000 roof replacement? What if prices don't rise for a decade—can I still hold on? If your investment only works under best-case scenarios, you're not investing—you're gambling with borrowed money.

Recognise ideology masquerading as wisdom

When someone says "you can't go wrong with property”: ask them about Japan, where house prices fell for fifteen consecutive years after 1991 with Tokyo property losing 60% of its value. Or Ireland, where property crashed 50% in 2008-2012. Or Detroit, where homes now sell for less than second-hand cars. [6]

The phrase "you can't go wrong" is the most dangerous in investing. You absolutely can go wrong with property, shares, bonds, or any other asset – when you pay too much, borrow too heavily, or ignore the fundamentals.

Understand that all assets are priced relative to alternatives

When term deposits paid 0.5%, property's 3% gross yield looked attractive by comparison. At 5.5% risk-free rates from the bank, suddenly that leveraged rental property earning 3% gross (maybe 1% after rates, insurance, maintenance, and management) looks substantially less clever. Capital always flows to its best risk-adjusted return. When safe returns become attractive again, risky assets must reprice.

Seek Wise Counsel

Honest, professional financial advice isn’t just valuable in these situations; it’s essential.

Not the mate at the barbecue repeating what worked in 2015. Not the property spruiker selling $5,000 weekend seminars on wealth creation. Not the Instagram influencer with a Lamborghini, a course to sell, and a P.O. box in the Cayman Islands.

Find an adviser who'll tell you hard truths instead of comfortable lies. Someone who'll stress-test your assumptions, challenge your thinking, and ask the questions you don’t want to acknowledge:

• What if you're wrong?

• What if rates stay high for five years?

• What if prices don't recover for a decade?

• What does your portfolio look like if this happens?

 The best financial advice often sounds boring. That’s because it is boring: it involves diversification across asset classes, appropriate leverage you can service in bad times, understanding what you own and why, and planning for scenarios you hope won't happen.

It's not a catchy slogan you can repeat at a dinner party. It's certainly not exciting enough to build a social media following around.

Instead, it's mathematics, discipline, humility, and the wisdom to know that "everyone's doing it" has never – not once in the history of markets – been a sound investment strategy. Quite the opposite; when everyone's doing it, that’s usually a good moment to step back and ask why.

Mao surrounded himself with yes-men who told him what he wanted to hear. The sparrows paid the price. Then the insects thrived. Then the people paid the price. The echo chamber produced catastrophe because ideology replaced observation, and enthusiasm replaced analysis.

The Bottom Line for Kiwi Investors

Don't let your financial future be decided by mantras. Don't let social ‘proof’ substitute for due diligence. And crucially, don't assume what has worked for the past twenty years will work for the next twenty.

Instead, seek counsel that respects the complexity of markets, acknowledges uncertainty honestly, understands risk as well as reward, and helps you build wealth on foundations stronger than popular sentiment or revolutionary enthusiasm.

The fundamentals always win. Always. The only question is whether you'll be positioned to weather the fallout, or whether you’ll be left exposed in the fields.

The locusts are always waiting.

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. 432

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References

[1] F. Dikötter, *Mao's Great Famine: The History of China's Most Devastating Catastrophe, 1958–-1962*.. London: Bloomsbury Publishing, 2010.

[2] J. Shapiro, *Mao's War Against Nature: Politics and the Environment in Revolutionary China*.. Cambridge: Cambridge University Press, 2001.

[3] Reserve Bank of New Zealand, “Official Cash Rate decisions and historical data,”, 2024. [Online]. Available: https://www.rbnz.govt.nz

[4] Real Estate Institute of New Zealand (REINZ), “Historical house price data and market statistics,”, 2024. [Online]. Available: https://www.reinz.co.nz

[5] CoreLogic New Zealand, “House price indices and market analysis reports,”, 2024. [Online]. Available: https://www.corelogic.co.nz

[6] H. P. Minsky, “The Financial Instability Hypothesis,”, The Jerome Levy Economics Institute Working Paper No. 74, 1992.

Not all that Glitters: A Hawke’s Bay Perspective on Investment Lures

Walking your dog along the banks of the Tuki Tuki River on a crisp Hawke's Bay morning, you might spot an angler casting their line into the current. If you look closely at the tackle box, you'll find an array of brightly coloured lures - fluorescent pinks that practically glow in daylight, electric greens that shimmer with an unnatural brilliance, shimmering silvers that catch every ray of sun. Each one is a masterpiece of design, engineered to trigger a response. They're designed to catch something, all right. But it's not always the fish.

Lures work because they exploit instinct. That flash of silver mimics a wounded baitfish. The vibrant pink stands out against murky water. The electric green triggers a predatory response. But here’s the thing - the lure doesn’t need to fool the fish to be successful. It only needs to fool the angler into buying it. The brightest, most eye-catching lures often sit in tackle boxes, never touching water, while experienced fishers reach for duller, more practical options that actually work.

Charlie Munger, the late investing legend and Warren Buffett’s long-time partner, once recounted a conversation that cuts to the heart of how financial products are really sold. He’d asked a fishing lure salesman whether fish actually bit on those garish purple and green contraptions. The man’s response was disarmingly honest: “Mister, I don’t sell to fish.” [1]

That simple line exposes an uncomfortable truth about the investment industry - one that’s struck particularly close to home here in Hawke’s Bay in recent times. In October 2025, the Financial Markets Authority issued a formal warning to Finbase (HP Capital Limited) over serious breaches relating to their Single Investment financial products - essentially property lending arrangements.[2] This is the same company that had been running full-page advertisements in the Hawke’s Bay Today, using search terms like “term deposit” and “low risk investment NZ” to attract investors.

But there’s more. Also in October, MyFarm Investments’ Rākete Orchards partnership, which grows Rockit apples across six Hawke’s Bay orchards valued at $17.4 million, entered voluntary administration. [3]  When launched in late 2017, the investment closed oversubscribed at $13 million, with forecasts of returns exceeding 50-55% per annum. [4]  Those shiny projections now look very different.

The irony is impossible to miss. Full-page ads in our local paper projecting stability and legitimacy - the investment equivalent of fluoro pink lures. Promises of safety using familiar terms like “term deposit” - the shimmering silver that mimics something trustworthy. Bold marketing campaigns featuring impressive return projections - the electric green designed to stand out from everything else. None of it was designed to catch fish. It was all designed to catch us.

The FMA found that Finbase’s advertising created a false impression that their investment products were comparable to term deposits when they differed significantly in nature and characteristics.[2] The use of familiar, reassuring terminology masked the real nature of the investment and its risks. Meanwhile, Rākete’s chair blamed low returns, noting that demand hadn’t grown sufficiently, and high costs meant returns were insufficient to support ongoing operations.[5]

Humans are predictable creatures, and decades of behavioural finance research has mapped our psychological vulnerabilities. We’re drawn to familiar-sounding terms because they trigger associations with safety and certainty. We’re attracted to branded agricultural products because they seem tangible, real, and connected to what we know. We trust advertisements in our local newspaper more than we probably should. The investment industry understands this intimately and constructs marketing designed to activate them, whether or not the product serves our actual interests.

Here in Hawke’s Bay, we pride ourselves on straight talk and honest work. Our regional economy is built on things you can touch and understand - orchards heavy with export-quality apples, vineyards producing wines that compete on world stages, farms raising premium livestock. There’s no mystery about how value is created in these industries. You plant, you tend carefully, you harvest, you continually improve your methods. Real results come from patience, expertise, and time.

Successful investing follows these same unglamorous principles. It’s buying quality businesses at reasonable prices and holding them through inevitable market cycles. It’s diversifying sensibly across different asset classes and geographies. It’s keeping costs and fees low. It’s maintaining emotional discipline when markets fluctuate. It’s resisting the powerful urge to chase whatever looks shiniest or promises the highest returns.

This approach doesn’t generate compelling marketing copy. It doesn’t require full-page advertisements. It doesn’t promise 50%+ annual returns that sound too good to be true. But that’s precisely why it’s harder to sell. Boring doesn’t capture attention. Prudent diversification doesn’t create excitement. Modest, realistic projected returns don’t make headlines.

When someone presents an investment opportunity backed by aggressive marketing - whether splashed across the Hawke’s Bay Today or promoted through carefully optimised online search terms - ask yourself fundamental questions: Is this designed to catch fish, or catch me? Why does something supposedly offering solid, legitimate returns need this level of promotional spending? What happens if rosy projections don’t materialise? What are the realistic worst-case scenarios?

This is where seeking wise counsel becomes essential. Look for advisers with rigorous due diligence processes and recognised certifications like CEFEX, which demonstrates commitment to fiduciary excellence and systematic client protection.[6] These aren’t shiny credentials designed to impress - they’re evidence of thorough, unglamorous processes that protect investors.

A good adviser asks uncomfortable questions about any investment: What are the real, not theoretical, risks? How dependent is success on optimistic assumptions about markets, demand, or costs? How liquid is this investment if circumstances change? Can you genuinely afford to lose this money? Most importantly, have similar investments really delivered returns as promised, or is there a pattern of disappointments?

Finbase exceeded regulatory limits and used advertising that misled potential investors about fundamental product characteristics.[2] With Rākete, even real orchards growing actual apples in Hawke’s Bay soil didn’t deliver the projected economics. Other Rockit growers reported returns well under the $1.10 per tube needed to break even, forcing difficult decisions about their orchard futures.[3]

The consequences of getting these decisions wrong aren’t abstract. They affect real people in our community - retirees who thought they were safely parking their retirement savings, families who believed they were making prudent decisions while supporting local agriculture, individuals who trusted that bold advertising in their trusted local newspaper meant something had been thoroughly vetted and deemed appropriate for ordinary investors.

The magpie, despite its considerable intelligence, can’t resist a shiny object. It’s hardwired evolutionary instinct. But we can do better.

Next time you’re walking your dog along the Tuki Tuki and see those bright lures glinting in an angler’s tackle box - let them serve as a useful reminder. The brightest lures are often the ones that never get wet. In fishing, as in investing, the flash and colour serve one primary purpose - to catch you, not the fish.

Because the question isn’t whether the lure looks attractive, uses comfortable terminology, appears in trusted publications, or involves tangible Hawke’s Bay assets. The question is simple and profound: who is it really designed to catch?

Your financial future deserves better than bright colours and borrowed credibility. It deserves honesty, transparency, realistic assumptions, thorough due diligence, and advice that genuinely serves your interests rather than someone else’s sales commission.

Unless you’re a magpie, you don’t have to take the bait.

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. Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

2. Financial Markets Authority. (2025, October). "FMA issues warning to Finbase over serious disclosure and fair dealing breaches." Retrieved from https://www.fma.govt.nz/news/all-releases/media-releases/warning-to-finbase/

3. Farmers Weekly (2025, October 15). MyFarm’s Rockit partnership turns sour as Rākete orchard enters voluntary administration

4. Rural News Group. (2017, December 16). "A chance to pocket from Rockit." Retrieved from https://www.ruralnewsgroup.co.nz/rural-news/rural-agribusiness/a-chance-to-pocket-from-rockit

5. NZ Herald. (2025, October 28). "Rockit apple grower Rākete Orchards in voluntary administration." Retrieved from https://www.nzherald.co.nz/business/companies/agribusiness/rockit-apple-grower-rakete-orchards-in-voluntary-administration/PNH4JTBZHBHLTLPF7XAMS5U474/

6. Centre for Fiduciary Excellence (CEFEX). For more information on fiduciary certification standards, visit www.cefex.org

NZ's Economic Costume: Why Kiwis Feel Poor Despite Being "Rich"

Tonight is Halloween - a celebration of masks, illusions, and things that appear frightening but aren't real. How fitting, then, to discuss New Zealand's latest economic costume: the world's fifth-wealthiest country per capita, according to Allianz's latest Global Wealth Report.[1]

Each Kiwi is apparently worth $617,000 on average. Pop the champagne, right? Not quite.

The mask of prosperity doesn't quite match the face underneath. Most New Zealanders are too busy checking their bank balances and wincing at grocery receipts to celebrate this dubious honour.

At a recent conference abroad, colleagues from other nations questioned why New Zealanders exhibit such a "small dog complex" about our economy and stock market when we rank so highly in global wealth tables. "You must be a very wealthy nation," they observed, puzzled by our apparent lack of confidence. Their bewilderment was understandable—on paper, we look remarkably prosperous.

But the disconnect between this glowing statistic and daily financial reality reveals something troubling about how we measure prosperity - and exposes an uncomfortable truth about New Zealand's economic decline. Our "complex" isn't insecurity. It's realism.

A Nation of Landlords

Napoleon famously dismissed Britain as "a nation of shopkeepers"; a merchant class focused on trade rather than grand imperial pursuits.

If the French Emperor were observing New Zealand today, he might call us "a nation of residential landlords." We've become obsessed with buying and selling houses to one another. We treat property as our primary investment vehicle and wealth-creation strategy.

That impressive $617,000 wealth figure is overwhelmingly driven by this fixation: property values.[2] Housing represents approximately 50-58% of New Zealand household wealth.[3] Yet curiously, when the Herald reports that stripping out real estate sees us drop only to eighth place in net financial assets, something doesn't add up. If more than half our wealth is property, removing it should see us plummet far further down the rankings.

This data inconsistency itself reveals the problem: international wealth comparisons struggle to accurately capture economies where asset bubbles distort the picture. Regardless of the exact ranking, the core truth remains – housing wealth is fundamentally different from productive wealth.

If you own a $1.2 million house in Auckland, congratulations on being wealthy on paper. But alas, you can't pay for petrol with housing equity. That "wealth" is locked away, inaccessible unless you sell and move somewhere cheaper (which increasingly means moving south or to Australia[4]). Meanwhile, you're servicing a massive mortgage at interest rates that peaked above 7%.

For those who don't own property, the inflated housing market represents the opposite of wealth. It's a barrier that pushes homeownership further out of reach with each passing year.

We've become experts at shuffling residential properties between ourselves while creating little new productive value. The resulting "wealth" is a mirage. It makes the statistics look good while leaving people feeling financially squeezed.

The GDP Reality Check

Here's where the wealth ranking crumbles entirely. New Zealand's GDP per capita tells a completely different story. In the 1950s, New Zealand ranked third globally in GDP per capita. Today? We've plummeted to 37th.[5]

GDP per capita – which measures actual economic output and productivity – sits more than 20% below the OECD average. The Productivity Commission noted we should be 20% above that average given our policy settings, but we're achieving the exact opposite. As one economist bluntly put it: "We may be punching above our weight, but that's only because we are in the wrong weight division."[6]

In 2024's economic performance rankings, New Zealand placed 33rd out of 37 OECD countries.[7] We beat only Finland, Latvia, Turkey, and Estonia. Per capita output has been declining since December 2022.[5]

These are not the statistics of a wealthy, thriving nation.

When you lay bare these numbers, Kiwis' so-called "small nation complex" makes perfect sense. We're not suffering from false modesty; we're experiencing economic reality the wealth rankings fail to capture.

The Debt Burden

The wealth figures also conveniently ignore what we owe. New Zealand and Australia have seen their debt ratios surge by 15.2 percentage points to reach 113% of GDP.[1] High asset values paired with equally high debt levels mean many households are drowning in mortgage payments, leaving little for savings or discretionary spending.

The Reserve Bank was among the world's most aggressive in raising interest rates, and the economy has faltered accordingly.[5] Per capita output has contracted while unemployment climbs. Firms are downsizing. This is the lived experience behind the statistics—and it bears no resemblance to the fifth-wealthiest nation on earth.

Sixty Years of Relative Decline

The long view is sobering. New Zealand has been growing significantly slower than other OECD countries for six decades.[6] We've dropped from elite economic status to below-average performer. Our isolation, small market size, and weak productivity growth have compounded into structural disadvantages that successive governments have failed to overcome.

The wealth ranking actually highlights our problem. We've substituted asset appreciation for genuine economic growth. Rather than building productive capacity, improving wages, or fostering innovation, we've watched house prices soar and called it prosperity.

Napoleon's shopkeepers at least sold goods to customers beyond their own shores. Our landlords primarily rent to each other.

The Need for Fiduciary Advice

For individuals navigating this challenging economic landscape, the disconnect between headline wealth and financial reality makes professional guidance more critical than ever. Understanding the difference between illiquid property wealth and accessible financial assets, managing debt strategically in a high-interest environment, and building genuine financial resilience requires expertise beyond newspaper headlines.

Working with a qualified financial adviser who operates under fiduciary duty – i.e. is legally obligated to act in your best interests – can help cut through the noise. Whether you're trying to balance mortgage stress with retirement savings, questioning if your "wealth" is working effectively, or simply wondering why the statistics don't match your bank account, professional advice tailored to your specific circumstances is invaluable.

The gap between perception and reality has never been wider. Kiwis understand what the statistics obscure: you can't eat your house equity, and paper wealth means nothing when your purchasing power is eroding. What my international colleagues mistook for a national inferiority complex is actually clear-eyed recognition of our economic challenges. In uncertain times, sage financial counsel from a trusted fiduciary adviser isn't a luxury. It's essential for turning illusion into genuine security.

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. 431

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References

[1] Allianz Global Wealth Report 2025. Available at: https://www.allianz.com/en/economic_research/publications/specials_fmo/global-wealth-report.html

[2] New Zealand Herald (October 2024). "New Zealand ranks among world's top five wealthiest countries per capita in rich list report." Available at: https://www.nzherald.co.nz/business/new-zealand-ranks-among-worlds-top-five-wealthiest-countries-per-capita-in-rich-list-report/MX2QDDZWXFBBNF3NT5734XTW3E/

[3] New Zealand Treasury (2023). "Estimating the Distribution of Wealth in New Zealand." Working Paper 23/01. Available at: https://www.treasury.govt.nz/sites/default/files/2023-04/twp23-01.pdf

[4] Statistics New Zealand (July 2025). "Net migration loss to Australia in 2024." New Zealand recorded a net migration loss of 30,000 people to Australia in 2024, the largest calendar-year loss since 2012. The South Island's population grew at 1.4% annually (faster than the North Island's 1.3%), with Canterbury's Selwyn District and Queenstown-Lakes experiencing the fastest growth rates. Available at: https://www.stats.govt.nz/news/net-migration-loss-to-australia-in-2024/

[5] RNZ News (December 18, 2024). "NZ ranks low in global economic comparison for 2024." Available at: https://www.rnz.co.nz/news/business/537075/nz-ranks-low-in-global-economic-comparison-for-2024

[6] New Zealand Productivity Commission. "Economic Performance and Productivity Analysis." Referenced in Economy of New Zealand, Wikipedia. Available at: https://en.wikipedia.org/wiki/Economy_of_New_Zealand

[7] The Economist (December 2024). "OECD Economic Performance Rankings 2024."

The Price of Wisdom: What Financial Advice Is Really Worth

Russell Investments has done something rather brave: it has attempted to reduce the value of financial advice to a single number. That number, for 2025, is 4.52%.

The precision is almost comical. Not 4.5%, not "around 4 or 5%", but 4.52% – calculated to two decimal places, as if this were physics rather than the messy business of helping people not wreck their retirements. But even if the decimal places are a bit of theatre, the exercise forces an uncomfortable question into the open: what exactly are financial advisers selling, and is it worth the fee?

Investment Lessons from 1987 and 2021

New Zealanders have long memories when it comes to financial disasters. However, we seem doomed to repeat them in different asset classes.

The 1987 sharemarket crash created a generation-long aversion to equities that arguably cost Kiwi investors more than the crash itself. Those who fled shares and never returned missed decades of recovery and growth. Fast forward to the 2020s, and the only real change was the flavour of asset class in question. Property replaced shares as the "safe" investment – the thing that "always goes up." Except… it didn't.

The residential property market's dramatic decline from its 2021 peak caught out a generation of leveraged investors who'd been assured that bricks and mortar were different. Investors who'd borrowed heavily to accumulate multiple properties found themselves drowning as interest rates climbed and property values plummeted.

Russell's data shows that investors who stayed invested in the New Zealand sharemarket over the past decade outperformed those who missed just the 10 best trading days by 3.57% annually. Miss the 40 best days, and you're 60% worse off.

The expensive lesson: panic is usually more costly than the crisis that triggered it. As is the herd mentality that drives people into overvalued assets for fear of missing out.

What You're Actually Paying for with Professional Advice

The Russell report is admirably blunt about what advisers actually do.

Strip away the corporate language about "behavioural coaching" and the message is clear: advisers are worth paying primarily because they stop you from doing something catastrophic – whether that's panic-selling during downturns or panic-buying during manias.

That 4.52% breaks down like this:

• 3.57% comes from preventing fear-based or greed-based decisions

• 0.2% from helping choose appropriate risk levels

• 0.75% from customising wealth plans.

The rest – the "emotional and technical expertise" of seasoned advisers – is declared "priceless."

What you're paying for isn't genius stock-picking or property market timing. You're paying someone to tell you uncomfortable truths – like that property yields in 2021 didn't justify the prices, that borrowing heavily into an overheated market was dangerous, and that diversification matters even when one asset class seems invincible.

What Russell Misses Entirely

But here's what Russell's tidy arithmetic utterly fails to capture: the value of comprehensive financial planning that extends well beyond investment returns.

1.Tax efficiency

This alone can dwarf that 4.52% in any given year. The difference between holding investments in the wrong structure versus the right one – PIE funds versus direct holdings, trusts versus personal ownership, the timing of realisations – can mean tens of thousands of dollars in a single tax year for even moderately wealthy families.

2. Asset protection

What's the percentage value of having your wealth properly structured so that a lawsuit, business failure, or relationship breakdown doesn't wipe out everything you've built? If disaster occurs, the value is effectively infinite.

3. Succession planning

This is even harder to reduce to basis points. What's it worth to ensure your estate passes efficiently to your children rather than being carved up by lawyers and the IRD? What's it worth to avoid family disputes over inheritances or ensure your business survives your death?

4. Risk management

Risk management extends beyond investment volatility. Adequate insurance coverage, appropriate policy structures, regular reviews as circumstances change – the value becomes apparent only in catastrophe but is no less real.

Support for The Goals That Matter

Perhaps most importantly, Russell's framework completely ignores what might be the highest value proposition: helping clients achieve what they really want from their wealth.

Financial plans aren't spreadsheet exercises. They're roadmaps to specific life goals – retiring early, funding children's education without debt, buying that bach, leaving a meaningful legacy, or achieving financial independence that allows career changes.

Consider these two real examples:

Example 1: Diversifying Portfolios for Property Accumulators

A professional couple in their early fifties came to us convinced they'd need to work until 65. They'd accumulated three rental properties during the boom years – two still carrying significant mortgages. They were stressed and beginning to resent the properties that were supposed to secure their future.

After comprehensive analysis, we restructured their affairs entirely. We helped them sell two properties, eliminated all personal debt, and repositioned their investments into a properly diversified portfolio with appropriate tax efficiency. The result? They retired at 58 with more financial security and significantly less stress. The value wasn't in the 4.52% – it was in getting seven extra years of freedom.

Example 2: Strategic Phased Retirement with Increased Tax Efficiency

A business owner approaching a potential sale came to us six months before signing a term sheet. Through careful structuring involving family trusts, timing of the sale, and strategic use of tax vehicles, we reduced his tax liability by over $300,000 – money that remained with his family rather than going to the IRD. More importantly, we helped him structure the proceeds to support a phased retirement that included funding his children's business ventures and establishing a charitable legacy.

These kinds of results don't show up in Russell's investment-centric quantification. But they're often what clients value most.

The Fiduciary Difference in Financial Advice

This is where the fee-only, fiduciary model becomes essential. When your adviser is paid solely by you – not by product commissions, not by mortgage brokers' referral fees, not by insurance kickbacks – all of these dimensions of advice become trustworthy.

Consider the property boom of the late 2010s and early 2020s. How many advisers benefited indirectly from encouraging clients toward leveraged property investment? A fee-only fiduciary has no such conflicts. Their only incentive is your long-term financial health.

A fiduciary investment adviser operating under frameworks like CEFEX certification isn't only preventing you from panic-selling equities; they're providing the disciplined portfolio construction and advice that can prevent over-concentration of one asset class in the first place.

The leveraged property investors of 2021 needed someone to tell them they were being greedy and foolish. Most didn't have that person. Or worse, they had advisers whose business models depended on encouraging behaviours that would later prove ruinous.

Investors need someone – a real person, with your best interest at heart – in their corner. An algorithm can rebalance a portfolio, but it can't talk someone out of borrowing a million dollars to buy their third rental property when yields don't justify prices. It certainly can't design a comprehensive wealth structure that addresses tax, protection, succession, and life goals simultaneously while adapting to changing circumstances over decades.

What Advice is Really Worth

The real value of fee-only fiduciary advice encompasses dimensions Russell doesn't even attempt to measure.

Behavioural coaching has genuine value. But reducing comprehensive financial advice to a single percentage derived from mainly investment considerations is like judging a surgeon's worth solely by their suturing speed rather than successful procedures.

The real value isn't in any spreadsheet. It's in the confidence of knowing someone is watching your back without any hidden agenda, the relief of having comprehensive planning that addresses tax, protection, and succession alongside investments, and the profound satisfaction of achieving what you set out to do with strategic wealth management.

It’s Time for a Different Conversation

If you're tired of product pitches masquerading as advice, or if you've outgrown the traditional model of financial guidance, perhaps it's time to try a different conversation – and we’re always happy to talk.

As a fee-only, CEFEX-certified fiduciary adviser, Stewart Group is legally and ethically bound to put your interests first – always. We don't receive investment commissions, referral fees, or any form of conflicted remuneration. Our only incentive is your success across all dimensions of your financial life.

Whether you're navigating a business sale, restructuring an investment portfolio that's grown unwieldy, planning for retirement that's closer than you'd like to admit, or simply wondering if there's a better way to structure your wealth – comprehensive fiduciary advice might serve you well.

The first conversation costs nothing but time. Why not contact us today, to arrange a confidential discussion about your financial circumstances and goals.

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. 430

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References

• Russell Investments (2025). The Value of an Adviser: New Zealand Edition. Russell Investments.

• Brokers Ireland (2025). The Value of Advice: A Whitepaper. Brokers Ireland.

• Chaplin, D. (2025, October 14). "The value of financial advice (to two decimal points)". BusinessDesk.

The Magnificent 7: Why Yesterday’s Winners May Not Be Tomorrow’s Champions

Financial advisers are facing intense pressure from clients: should portfolios be loaded up on the Magnificent 7 stocks (Apple, Microsoft, Amazon, Alphabet, Meta, NVIDIA, and Tesla)?

These tech giants have delivered spectacular returns and now dominate America’s largest companies. Clients’ friends are bragging about gains, financial media breathlessly covers every earnings report, and the fear of missing out is palpable.

But financial lessons tell us to look beyond the headlines and recent performance – and market history suggests this caution is warranted.

The Illusion of Permanence

When we look at today’s market leaders, it’s easy to assume they’ll remain on top indefinitely. These companies have massive cash reserves, dominant market positions, and appear to be shaping our technological future. But market history tells a different story.

Consider this statistic from Dimensional Fund Advisers’ analysis: of the 10 largest US companies in 1980, only three made it to the top 10 by 2000.[1] Even more striking, none of those 1980 giants appears in today’s top 10. Companies like IBM, AT&T, and Exxon – once considered unassailable titans – have been replaced by an entirely new generation of market leaders.

Source: Dimensional - Click for full information

This is more than trivia; it’s a fundamental lesson about impermanent market dynamics that should inform every portfolio decision.

Research from the Centre for Research in Security Prices demonstrates that market leadership is far more transient than most investors realise: In 1980, six of the 10 largest companies were energy firms.[1] Today, technology dominates. This wasn’t gradual. It was a wholesale transformation driven by innovation and shifting economic fundamentals.

This pattern should concern anyone betting that today’s technology concentration will last for decades. Seemingly unstoppable industries may face disruption from sources we cannot yet imagine.

Technological advancement doesn’t benefit only technology companies. Throughout history, firms across all industries have leveraged new technologies to innovate and grow. The internet didn’t just create wealth for internet companies; it transformed retail, finance, healthcare, and virtually every sector.

Similarly, McKinsey research suggests AI adoption could add trillions in value across all economic sectors, not just technology.[2] A pharmaceutical company using AI for drug discovery or a manufacturer deploying advanced robotics may deliver returns that rival pure-play tech stocks – anything is possible at this stage.

The Case for Diversification

Modern Portfolio Theory, developed by Nobel laureate Harry Markowitz, demonstrates that diversification is the only “free lunch” in investing – it reduces risk without necessarily sacrificing returns.[3]

Diversification doesn’t mean avoiding the Magnificent 7 per se. These companies earn their market positions through genuine competitive advantages. It does mean resisting the temptation to overweight them simply because they’ve performed well recently. A diversified portfolio allows participation in current market leaders while maintaining exposure to companies and sectors that may emerge as tomorrow’s giants.

Remember, many of today’s Magnificent 7 were relatively small or didn’t exist 25 years ago. The next generation of market leaders is likely being built right now.

Working with a financial adviser can help you recognise and combat recency bias – this is the tendency to assume recent trends will continue indefinitely. Behavioural finance research shows this cognitive bias often leads to poor investment decisions.[4] And as any adviser worth their salt will be able to tell you, the Magnificent 7’s impressive performance creates a psychological pull to buy more of these stocks – but this often means buying high and taking concentrated risk precisely when valuations are stretched.

Instead of chasing performance, you need to stay focused on your long-term goals. Maintaining discipline around portfolio construction through regular rebalancing forces you to trim any areas that have grown over-large, so you (or rather, your financial adviser) can redeploy capital to areas that may offer better prospective returns.[5]

The Path Forward

Market history doesn’t repeat itself, but it often rhymes. While predicting which companies will lead markets in 2040 or 2050 is impossible, the leaders of the pack will certainly change. New technologies, business models, and companies will emerge, and the current leaders may become footnotes in global markets history.

A globally diversified portfolio positions you to benefit from these changes, rather than being hurt by them. They participate in today’s success stories while remaining open to tomorrow’s opportunities.

The Magnificent 7 have earned their place among America’s largest companies through innovation and execution. But despite how tempting they are, the best course of action isn’t to chase yesterday’s winners or follow the herd – it’s to build resilient portfolios that serve your unique needs.

Building a plan that can weather change (while capturing opportunity wherever it emerges) requires diversification, discipline, and a healthy respect for the lessons of market history. If that sounds daunting, try arranging a chat with your local, fiduciary financial adviser to discuss what your first steps might be – it’s a better use of your time than tracking Magnificent 7 performance, anyway.

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. 429

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References

1. Dimensional Fund Advisers. (2024). “Will the Magnificent 7 Stay on Top?” *Dimensional Quick Take*, using data from the Centre for Research in Security Prices (CRSP) and Compustat, University of Chicago.

2. McKinsey Global Institute. (2023). “The Economic Potential of Generative AI: The Next Productivity Frontier.” McKinsey & Company.

3. Markowitz, H. (1952). “Portfolio Selection.” *The Journal of Finance*, 7(1), 77-91.

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

5. Buetow, G. W., Sellers, R., Trotter, D., Hunt, E., & Whipple Jr, W. A. (2002). “The Benefits of Rebalancing.” *Journal of Portfolio Management*, 28(2), 23-32.

When Geniuses Get Burned: A Timely Lesson on Bubbles, Diversification, and the Perils of FOMO

On a crisp morning stroll through Edinburgh recently, whilst following my son’s rugby team in the UK, I found myself at the Scottish National Gallery of Modern Art, where Eduardo Paolozzi’s 1989 statue of Sir Isaac Newton caught my eye. Cast in bronze with geometric fragments, Newton is depicted as the “Master of the Universe,” his head bowed intently over mathematical instruments. It’s a mesmerising tribute to one of history’s greatest intellects, immortalised in deep contemplation of the cosmos.

But statues don’t tell the full story. What Paolozzi’s work omits is Newton’s humiliating financial debacle during the South Sea Bubble of 1720-a cautionary tale that resonates profoundly in today’s volatile markets. Historical accounts reveal that Newton initially invested a modest sum in South Sea Company stock, cashed out with a respectable profit, then watched enviously as his friends amassed fortunes while prices skyrocketed. Succumbing to the fear of missing out (FOMO), he re-entered the market near its peak with a much larger stake [1]. When the bubble inevitably burst, Newton lost approximately £ 20,000, equivalent to about £6 million today (adjusted for inflation), or roughly $14 million in New Zealand dollars [2]. His wry reflection afterwards? “I can calculate the motions of heavenly bodies, but not the madness of people” [3].

This episode isn’t just an amusing footnote in the life of a scientific giant; it’s a stark reminder that even the sharpest minds are vulnerable to market mania. If Newton, the architect of calculus and gravity, couldn’t outsmart the crowd, what hope do everyday investors have in navigating today’s hype-driven landscapes, like the AI boom?

Unpacking the Bubble Phenomenon

Financial bubbles are seductive traps, identifiable only after they’ve popped. They thrive on compelling narratives that mask underlying risks. In 1720, the South Sea Company’s promise of exclusive trade rights with South America fuelled wild speculation, driving stock prices from around £100 to over £1,000 in months before collapsing [4]. Closer to home, New Zealand’s 1987 sharemarket crash serves as a vivid parallel: fuelled by deregulation and easy credit, the NZSE index surged, only to plummet 60% in weeks, wiping out leveraged fortunes in property and equities [5, 11]. The aftermath was brutal: bankruptcies, shattered families, and a lingering distrust of markets that scarred a generation.

More recently, Auckland’s property market exhibited bubble characteristics, with median house prices tripling between 2011 and 2021 amid low interest rates and high demand [6]. These episodes highlight a pattern: euphoria driven by “this time it’s different” optimism, followed by inevitable reversion to fundamentals.

Enter today’s hottest debate: artificial intelligence. Is AI the next fire, wheel, or microchip-a paradigm shift revolutionising healthcare, agriculture, and beyond? Or is it overhyped, with valuations echoing the dotcom bubble, where slapping “.com” on a business sent stocks soaring regardless of viability [7]? Companies like Nvidia have seen shares rocket over 100% in the past year on AI enthusiasm, but sceptics warn of irrational exuberance. The truth? No one knows for sure. AI could deliver transformative value, or it might follow the path of past tech fads, leaving late entrants holding the bag.

Why Diversification is Your Best Defence

In the face of such uncertainty, diversification emerges not as a conservative cop-out, but as a strategic imperative. When predicting individual winners is near-impossible, the smart play is to spread your bets across the market. Own a broad index fund, and let capitalism’s machinery-competition, innovation, and resource allocation-work its magic over the long haul.

Strolling Edinburgh’s Royal Mile, I paused at the statue of Adam Smith, the Scottish economist whose 1776 masterpiece, The Wealth of Nations, introduced the “invisible hand” [8]. Smith argued that self-interested individuals, through free markets, inadvertently create societal benefits by directing capital to its most productive uses. No top-down planning required-just the aggregate wisdom of millions of decisions fostering efficiency and growth.

This evolutionary aspect of capitalism is key: viable companies flourish, while hype-driven ones wither. Yet spotting them in advance is a fool’s errand. Studies show that even seasoned fund managers underperform broad market indices over time, with survivorship bias and fees eroding returns [9]. For individual investors chasing the next Amazon or dodging the next Enron, the odds are stacked even higher against success.

New Zealanders have ample tools for diversification: local or global index funds covering thousands of companies, often accessible via platforms like KiwiSaver. These vehicles ensure you participate in growth sectors like AI without overexposure. Miss the ground-floor entry on Nvidia? No problem-a diversified portfolio still captures the upside while shielding you from sector-specific crashes.

The Psychology of Smart People Making Dumb Moves

Newton’s misadventure underscores a timeless truth: raw intelligence offers no immunity to behavioural biases. As Daniel Kahneman explains in Thinking, Fast and Slow, our brains are wired for quick, intuitive decisions that often lead us astray in complex environments [10]. Newton fell victim to a classic cycle: initial caution (fear of loss), sidelined envy (FOMO), and impulsive greed fuelled by social proof from his peers.

This dynamic played out vividly in New Zealand’s 1987 crash. Professionals-doctors, lawyers, accountants-piled into “can’t-lose” investments with borrowed money, convinced by the herd that prices would rise forever. When reality hit, the rapid 60% drop erased wealth overnight, triggering a cascade of personal and economic fallout [11].

Human nature hasn’t evolved since Newton’s day. Greed, fear, and herd mentality persist, amplified by social media and 24/7 news cycles. In the AI era, viral success stories can lure even savvy investors into concentrated bets, ignoring the risks.

Building Resilience Through Diversification

While diversification won’t eliminate downturns (markets are volatile by nature), it mitigates ruinous losses. Imagine holding only South Sea stock: total devastation. But a basket of British equities? Painful, but survivable, with recovery potential. The MSCI World Index’s ~8% average annual gross return over 30 years, weathering multiple crashes, exemplifies this resilience [9].

Apply this to AI: if it revolutionises society, diversified holders benefit via broad tech exposure. If it fizzles, your portfolio’s other sectors (healthcare, consumer goods, energy) provide ballast [12]. The key is discipline: resist the siren call of hot tips and maintain a balanced allocation.

Final Reflections: Wisdom from the Past

Gazing at Newton’s statue, the irony hit me: a monument to unparalleled genius, yet its subject was felled by the same primal instincts that plague us all. Bubbles will recur because human psychology is immutable. But we can arm ourselves with humility, acknowledging our limitations in outguessing markets.

Embrace diversification as your anchor, harnessing capitalism’s long-term compounding power. You don’t need Newton-level brilliance to thrive financially-often, recognising your non-genius status is the cleverest strategy.

And don’t go it alone. Newton might have avoided disaster with impartial advice. A trusted financial adviser won’t forecast the next bubble but will enforce discipline: reminding you that past performance doesn’t predict future results, crowds are often wrong, and capital preservation trumps speculative gains. They’ll tailor a diversified plan to your goals, helping you navigate emotional turbulence and emerge stronger.

In an unpredictable world, this approach turns potential pitfalls into opportunities. Review your portfolio today: is it diversified enough to withstand the next mania? If not, seek wise counsel-it could be the difference between exiting happy and exiting broke.

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. 428

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References

1. Odlyzko, A. (2018). Notes and Records: The Royal Society Journal of the History of Science, 73(1), 29-59.

2. UK Office for National Statistics Composite Price Index; Bank of England inflation calculator (1750-2025).

3. Levenson, T. (2009). Newton and the Counterfeiter. Houghton Mifflin Harcourt.

4. Dale, R., et al. (2005). The Economic History Review, 58(2), 233-271.

5. Easton, B. (1997). In Stormy Seas. Otago University Press.

6. Reserve Bank of New Zealand Housing Data Series (2011-2021).

7. Shiller, R. J. (2015). Irrational Exuberance (3rd ed.). Princeton University Press.

8. Smith, A. (1776). Wealth of Nations. W. Strahan and T. Cadell, London.

9. Malkiel, B. G. (2019). A Random Walk Down Wall Street (12th ed.). W. W. Norton & Company.

10. Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.

11. Steeman, M. (2017). Stuff.co.nz, 19 October 2017.

12. Bogle, J. C. (2017). The Little Book of Common Sense Investing (10th Anniversary ed.). John Wiley & Sons.

Beyond the Silo: Why Your KiwiSaver Strategy Should Reflect Your Entire Financial Picture

Most New Zealanders check their KiwiSaver balance in isolation – celebrating growth or worrying about market dips without considering the bigger picture. But what if this tunnel vision is actually holding back your retirement wealth?

The key to optimising your KiwiSaver isn't just about picking the right fund; it's about understanding how it fits within your complete financial ecosystem.

The Whole-of-Wealth Approach

Your KiwiSaver is just one piece of your financial puzzle. Let’s put that in context:

Consider Sarah, a 35-year-old professional with:

• $45,000 in KiwiSaver

• A $120,000 mortgage on her $580,000 home

• $25,000 in term deposits

• $15,000 in everyday savings

 If Sarah only looks at her KiwiSaver balanced fund (typically 50% growth assets, 50% defensive assets), she's missing the complete story. If we examine the bigger picture, Sarah's defensive assets extend far beyond her KiwiSaver's bond allocation.

Her cash savings and term deposits already provide significant conservative exposure across her total portfolio. This means her KiwiSaver could theoretically afford to be more growth-focused, as the defensive components are already well-represented elsewhere in her wealth structure.

This becomes even more pronounced when considering homeownership. While your family home isn't a liquid investment, it represents a substantial asset that will likely appreciate over time and will eventually be mortgage-free. You then have an additional layer of wealth stability, which should influence how aggressively you can afford to invest your KiwiSaver.

The 30-Year Retirement Challenge

Here's the sobering reality that every KiwiSaver member needs to confront: if you retire at 65, your savings could need to stretch three decades (or more).

According to Statistics New Zealand's mortality data, a 65-year-old today has a significant chance of living into their 90s¹ - much longer than previous generations.

This extended timeframe fundamentally changes the retirement investment equation. Even at retirement age, money that may not be needed for decades can potentially weather market volatility in pursuit of higher long-term returns. Yet many retirees shift to overly conservative approaches, which may struggle to maintain purchasing power across such extended retirement periods.

Consider the numbers. If inflation averages 2.5% annually, the purchasing power of money halves every 28 years². A conservative investment approach barely keeping pace with inflation could leave retirees significantly worse off by their 80s and 90s.

Asset Allocation Across Your Complete Portfolio

The sophisticated investor doesn't ask "What should my KiwiSaver fund allocation be?" but rather "What should my total asset allocation be, and how can I use different investment vehicles to achieve it most effectively?"

This approach might lead to counterintuitive decisions. Someone with substantial cash savings and term deposits might benefit from a growth-focused KiwiSaver strategy. Conversely, someone heavily invested in shares outside KiwiSaver might choose a more balanced KiwiSaver approach to avoid over-concentration in equities.

The tax efficiency of different investment vehicles plays a crucial role too. KiwiSaver's favourable tax treatment on contributions and fund earnings makes it an ideal vehicle for growth investments, particularly for higher-income earners³. Meanwhile, other investment structures might be more suitable for defensive allocations.

The Danger of Set-and-Forget Thinking

KiwiSaver's success in automatically enrolling New Zealanders into retirement savings has created an unintended consequence – the belief that retirement planning is now "sorted."

This set-and-forget mentality ignores the dynamic nature of both personal circumstances and investment markets. Your optimal KiwiSaver strategy should evolve as your life changes:

• Early in your career, with decades until retirement and potentially limited other assets, an aggressive growth approach often makes sense.

• As you accumulate property, build emergency funds, and approach retirement, the optimal allocation across your complete portfolio will shift.

Regular portfolio reviews are essential - not just of your KiwiSaver, but of how all your financial assets work together. This might reveal opportunities to rebalance between different investment vehicles or adjust your KiwiSaver strategy to better complement your evolving financial situation.

Beyond Silos: The Need for Holistic Financial Guidance

This whole-of-wealth approach reveals a critical flaw in how many New Zealanders currently receive financial advice. Too often, advice is delivered in silos: KiwiSaver advice from one provider, mortgage advice from another, investment advice from a third. You end up with a fragmented approach, which may not all fit together into a favourable picture.

Holistic financial advice considers your complete financial ecosystem. A truly comprehensive adviser doesn't just ask "What KiwiSaver fund should you be in?" but rather "How should all your financial assets work together to achieve your goals most efficiently?"

This integrated approach can reveal sound strategies that siloed advice skates past. When the circumstances are right, some might find benefit in:

• Salary sacrificing additional amounts into KiwiSaver whilst reducing term deposit holdings, effectively shifting defensive assets into a more tax-efficient structure

• Paying down your mortgage faster could be more beneficial than increasing other investments, depending on your complete tax and financial situation.

Professional financial advisers who take this holistic view can help model different scenarios across your entire portfolio. They consider not just your KiwiSaver options – but how changes to your mortgage repayments, investment allocations, ownership structures and even insurance strategies could work together to improve your financial position

The complexity of optimising across multiple asset classes, tax structures, and time horizons is where professional expertise becomes invaluable. A qualified adviser can navigate the interplay between KiwiSaver's tax advantages, property investment considerations, portfolio diversification needs, and your evolving life circumstances.

Moreover, this comprehensive approach requires ongoing attention. Your optimal strategy today won't necessarily be optimal in five years. Regular reviews of your complete financial picture ensure your strategy remains aligned with your goals.

Taking Action

Start by conducting a complete financial stocktake. List all your assets, including:

• KiwiSaver balance

• Property equity

• Other investments

• Cash holdings

 Then consider your current overall asset allocation across everything you own. Does this allocation make sense for someone who needs their money to last potentially 30 years in retirement? Or are you being overly conservative, because you're only looking at each investment in isolation?

The Case for Wise Counsel

The path to a comfortable retirement isn't found in any single investment fund. It's constructed through the thoughtful integration of all your financial resources, with KiwiSaver playing its optimal role within your wealth ecosystem. This level of sophisticated planning requires experienced professionals who understand how to orchestrate asset and cash flow integration across your entire financial life.

The cost of this holistic professional advice is often far outweighed by the potential long-term benefits. Even modest improvements in your overall investment efficiency compound dramatically over 30-40 years, potentially adding tens of thousands of dollars to your retirement wealth.

KiwiSaver is a powerful tool, but it's most effective as part of a complete financial strategy. Your 95-year-old self will thank you for taking a thoughtful, comprehensive approach to retirement planning today.

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. 427

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References

¹ Statistics New Zealand. (2024). New Zealand Life Tables 2020-22. Wellington: Statistics New Zealand.

² Reserve Bank of New Zealand. (2024). Inflation Calculator. Available at: rbnz.govt.nz

³ Inland Revenue. (2024). KiwiSaver Tax Treatment Guidelines. Wellington: Inland Revenue Department.

⁴ Financial Markets Authority. (2024). KiwiSaver Annual Report. Wellington: FMA.

Time to Cut the Banking Anchor: New Zealand’s Capital Ratio Handbrake

The Economic Handbrake We Can’t Afford

New Zealand’s economy is caught in a relentless cycle, bouncing between positive and negative GDP growth every three to six months like a yo-yo. The economy contracted by 0.90% in the second quarter of 2025, with GDP falling 0.5% over the year ended December 2024, following a technical recession in the September quarter. In these turbulent times, when economic momentum is more critical than ever, we’re handicapping ourselves with regulatory constraints that act as a handbrake on the very institutions that provide the lubrication our economy desperately needs.

The culprit? The doubling of bank capital ratios, a dramatic policy shift implemented through the collaboration between Adrian Orr at the Reserve Bank of New Zealand (RBNZ) and former Finance Minister Grant Robertson. The December 2019 Capital Review decisions included a significant increase in capital ratios that will fundamentally reshape New Zealand’s banking landscape by 2028 [1].

The “Big Four” banks, ANZ NZ, BNZ, ASB, and Westpac NZ, have been classified as “Domestic-Systemically Important Banks” (D-SIBs), meaning they’re considered so crucial to the economy that their failure would cause widespread damage. These banks will be required to hold a total capital ratio of at least 18% by 2028, compared to the much lower levels they previously held. Other banks, including Kiwibank, TSB, and smaller institutions, face somewhat lower but still substantially increased requirements of 16%.

To put this in perspective: capital is essentially the bank’s own money that acts as a safety buffer. The higher the capital requirement, the less money banks have available to lend to businesses and consumers. This policy response, designed to address what they characterised as a once-in-a-century crisis, has instead gummed up our economy and now represents a historical anchor dragging down our economic potential when we need to be cutting loose and sailing toward brighter days.

Banks: The Lifeblood of Economic Growth

Our banking system isn’t just a collection of financial institutions; it’s the circulatory system of our economy. Banks provide the essential mechanism, the lubrication that allows businesses to expand, entrepreneurs to innovate, and families to invest in their futures. When we constrain their ability to lend through excessive capital requirements, we’re essentially restricting the flow of economic oxygen throughout the entire system.

The Oliver Wyman report commissioned by the RBNZ found that New Zealand’s current Tier 1 capital requirements are relatively high by international standards, creating a competitive disadvantage that ripples through every sector of our economy [2]. This isn’t just a technical regulatory matter; it’s a massive shift that has fundamentally altered the competitive dynamics of our financial system and created a drag on economic growth.

The International Competitiveness Crisis

In a globalised world, economies compete not just on natural resources or innovation, but on the efficiency of their financial infrastructure. New Zealand already faces the challenge of high energy prices that make it difficult to compete with countries that enjoy cheaper power. Now we’re compounding this disadvantage by artificially constraining our banking sector with capital requirements that our competitors haven’t imposed on themselves.

International comparisons show that New Zealand banks are “in the pack” in terms of capital ratios relative to international peers, but our four largest banks reported a weighted average CET1 ratio of 10.5%, putting them in the bottom quartile on an unadjusted basis. However, the Reserve Bank has made amendments to better reflect New Zealand risks, with farm lending adjustments raising the average risk weight on banks’ exposures by around 20-30 percentage points compared to a usual implementation of the IRB framework [3].

This creates a double burden: higher costs of capital for businesses seeking to grow, and reduced lending capacity from institutions that could otherwise fuel economic expansion. It’s like running a marathon with weights strapped to our ankles while our competitors run unencumbered.

The Yo-Yo Economy Needs Stability, Not Constraints

New Zealand’s recent economic performance tells a troubling story. The New Zealand economy has contracted, on a per capita basis, for nine of the last 12 quarters, making for a deep and lengthy recession [4][5][6][7][8]. This represents a dire financial path that has been painful for all New Zealanders.

We’re caught in a pattern of brief growth spurts followed by contractions, creating uncertainty for businesses and discouraging long-term investment. In this environment, what we need is financial system flexibility, the ability for banks to respond quickly to lending opportunities that could break us out of this cycle.

Instead, we’ve imposed rigid capital constraints that reduce banks’ ability to capitalise on growth opportunities when they arise. It’s economic policy working against economic recovery.

A Political Lifeline in Economic Policy

The current context makes this review even more critical. The Reserve Bank has endured a difficult and disruptive period of late, culminating in Adrian Orr’s resignation in March 2025, three years before his contract was due to terminate [9][10]. Finance Minister Nicola Willis’s handling of Orr’s departure has not helped the situation, creating additional uncertainty around monetary policy leadership at a time when the economy desperately needs stability. Dr Anna Breman, formerly First Deputy Governor of Sweden’s Riksbank, has now been appointed as the new RBNZ Governor, beginning her five-year term on 1 December 2025 [14].

For the current government, recognising and correcting this policy overreach represents more than just good economics; it’s a potential political lifeline. Adrian Orr was appointed by Finance Minister Grant Robertson to be Governor in December 2017, with Robertson supporting Orr’s reappointment on the grounds of continuity and stability, while opposition National Party finance spokesperson Nicola Willis called for an independent review of the Reserve Bank’s performance.

Nicola Willis and Christopher Luxon have inherited an economy constrained by their predecessors’ regulatory overcorrection. Since 2019, concerns have been raised that the Reserve Bank’s capital settings may be undermining competition and efficiency in the banking industry, increasing the cost of lending to New Zealanders, and creating headwinds for economic growth [12][13].

By advocating for a return to more appropriate capital ratios, they could demonstrate decisive economic leadership and provide immediate relief to businesses and consumers struggling under current conditions. This isn’t about abandoning prudent regulation; it’s about acknowledging that the increased capital ratios were a crisis response that has outlived its usefulness.

The Path Forward

The RBNZ has opened consultation on New Zealand’s capital settings for deposit takers, with the consultation paper setting out two options for overall capital ratios, both materially reducing requirements compared with 2019 decisions [1][2]. Professor Quigley noted that the options are calibrated to a higher risk appetite than in the 2019 review, stating that “Under the Deposit Takers Act, we will have stronger tools for supervision and crisis management, as well as additional capacity and capability as a regulator. That means we can responsibly ease capital requirements, while still protecting financial stability”.

Dr Anna Breman and the RBNZ have the opportunity to demonstrate economic leadership by acknowledging that the crisis-era increases in capital ratios were appropriate for their time but inappropriate for our current needs. Returning to more appropriate levels would send a clear signal that New Zealand is serious about breaking free from its economic doldrums and positioning itself for sustainable growth.

The Robertson-Orr policy legacy has served its purpose. Now it’s time for new leadership to chart a different course, one that recognises the difference between crisis management and growth facilitation.

The Path to a Brighter Day

The handbrake has been on long enough. It’s time to release it and let our economy run at the speed it needs to compete and thrive in the modern global marketplace. The yo-yo economy can become a thing of the past, but only if we have the courage to cut the anchor and sail toward that brighter day that awaits.

Our banks are ready to power economic growth. Our businesses are ready to expand. Our entrepreneurs are ready to innovate. The only question is whether our regulators are ready to let them.

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. 426

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References

[1] Reserve Bank of New Zealand. (2025). Capital requirements for banks in New Zealand. https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/standards-and-requirements-for-banks/capital-requirements-for-banks-in-new-zealand

[2] Reserve Bank of New Zealand. (2025). RBNZ invites feedback on review of capital requirements for deposit takers. https://www.rbnz.govt.nz/hub/news/2025/08/rbnz-invites-feedback-on-review-of-capital-requirements-for-deposit-takers

[3] Reserve Bank of New Zealand. (2025). 2017-2019 Capital Review. https://www.rbnz.govt.nz/regulation-and-supervision/oversight-of-banks/how-we-regulate-and-supervise-banks/our-policy-work-for-bank-oversight/capital-review

[4] Trading Economics. (2025). New Zealand GDP Growth Rate. https://tradingeconomics.com/new-zealand/gdp-growth

[5] New Zealand Herald. (2025, March 19). Out of recession: New Zealand’s GDP rises 0.7%. https://www.nzherald.co.nz/business/gdp-will-todays-data-show-the-end-of-the-recession/MTNBTKWXCNATTMH5DW4U7KJLNI/

[6] Wikipedia. (2025). Economy of New Zealand. https://en.wikipedia.org/wiki/Economy_of_New_Zealand

[7] International Monetary Fund. (2024). New Zealand: Staff Concluding Statement of the 2024 Article IV Mission. https://www.imf.org/en/News/Articles/2024/03/19/mcs-new-zealand-staff-concluding-statement-of-the-2024-article-iv-mission

[8] CNBC. (2025, March 19). New Zealand exits recession as fourth-quarter growth beats forecasts. https://www.cnbc.com/2025/03/20/new-zealand-exits-recession-as-fourth-quarter-growth-beats-forecasts.html

[9] Reserve Bank of New Zealand. (2017). Review of bank capital requirements [Speech]. https://www.rbnz.govt.nz/research-and-publications/speeches/2017/speech-2017-03-07

[10] Wikipedia. (2025). Adrian Orr. https://en.wikipedia.org/wiki/Adrian_Orr

[11] Oliver Wyman. (2025). Comparing New Zealand Bank Capital Ratios to International Peers. Report commissioned by Reserve Bank of New Zealand.

[12] NZ Adviser. (2025). RBNZ reviews bank capital rules amid competition concerns. https://www.mpamag.com/nz/news/general/rbnz-reviews-bank-capital-rules-amid-competition-concerns/547311

[13] Lister, M. (2025, September 23). On Point: ep 304 | Has your home bias left money on the table? [Audio podcast]. Craigs Investment Partners. https://podcasts.apple.com/nz/podcast/on-point/id1667364727?i=1000728078149&r=84

[14] New Zealand Herald. (2025, September 24). New Reserve Bank Governor announced: Swedish economist Dr Anna Breman gets top job. https://www.nzherald.co.nz/business/new-reserve-bank-governor-announced-dr-anna-breman-gets-top-job/JRJYGHVFJZABRKDFZTJJ2UKQVE/

Days of Auld are Long Gone: New Zealand's Housing Reality Check

Politicians are entitled to their opinions, but not their own numbers

The romantic notion of the great Kiwi dream – buying your first home for three times your annual wage – has gone the way of the moa. The harsh mathematics of New Zealand's housing market in 2025 tell a story that no amount of political spin can soften, especially after the spectacular crash that followed the pandemic bubble.

Consider this sobering reality: with 2.125 million private houses serving 2.042 million households, we're walking a tightrope. When Auckland's median weekly rent hits $650 and the average New Zealand house costs $881,508, we're not just talking about expensive property – we're witnessing the fundamental reshaping of how New Zealanders live.

The Crash That Changed Everything

The numbers from the recent crash are staggering. House prices peaked in November 2021, then fell 17.80% nationally, bottoming out in May 2023. Wellington was hit hardest, with prices plummeting 25.92% from their October 2021 peak. Auckland wasn't far behind, down 23.64% from its November 2021 high. Values are still down 22.5% from the peak in Auckland, 25% in Wellington, and the country as a whole has prices 17.2% lower than the post-Covid records.

Property sales tell an equally dramatic story. Sales peaked at 100,108 in June 2021, then collapsed to just 58,763 in May 2023 – a 41.30% drop in annual property transactions. This wasn't just a market correction; it was a complete unwinding of the pandemic property frenzy.

The crash was so severe that New Zealand's median multiple – the ratio of house prices to household income – fell from a peak of 11.2 in 2021 to 7.7 in 2024, according to Demographia's housing affordability survey. While still severely unaffordable by international standards, this represented the most significant improvement in housing affordability in decades.

The New Arithmetic of Home Ownership

The numbers don't lie, even when politicians might prefer they did. A typical first-home mortgage of $570,000 at 4.75% interest translates to $686 per week, or nearly $36,000 annually for three decades. That's not just a mortgage payment – it's a generational commitment that would make our grandparents' heads spin.

Back when houses cost three times your annual wages, families made do with second-hand everything, camping holidays, and no restaurant meals. Today's buyers face a vastly different equation: house prices have increased at 5.445% annually over the past 20 years, while wages have lagged behind at 4.2%. This isn't just about lifestyle expectations – it's basic mathematics working against ordinary New Zealanders.

Even after the crash, Reuters estimates suggest that nationwide home prices are approximately six times the average household income, leaving homeownership out of reach for many first-time buyers. The crash helped, but not nearly enough to restore the old social contract of affordable homeownership.

The Landlord's Dilemma

Even property investment, once considered a reliable path to wealth, tells a cautionary tale. Take a real example from the current market: a $794,000 four-bedroom house with a $400,000 mortgage, renting for $624 weekly. After rates, insurance, interest, maintenance, and management fees, the net return is a measly $1,609 annually – just 0.408% on the owner's $394,000 equity.

This isn't sustainable economics; it's financial masochism. Without underlying asset inflation of at least 2% annually, property investment becomes a fool's game. The magic isn't in rental returns – it's in the government's implicit commitment to maintaining inflation levels that protect asset values.

Construction activity has also remained depressed. Residential construction plunged by 4.9% in Q4 2024, to be 25% down from its previous peak in Q3 2022. The pipeline of new supply continues to shrink, setting up future supply shortages even as current oversupply keeps prices subdued.

The International Context

When we compare New Zealand house prices to similar economies, the picture becomes clearer. In New Zealand dollars, median house prices sit at $682,963 in the UK, $698,190 in the USA, $859,692 in Canada, and $1,001,619 in Australia. We're not alone in this crisis, but that's cold comfort for young Kiwis watching homeownership slip away.

In real inflation-adjusted terms, New Zealand's median house price has returned to pre-pandemic levels – meaning the entire pandemic boom has been erased, at least in purchasing power terms.

The Rental Reality

With approximately 625,000 households now renting – about 29% of all private dwellings – we've created a nation of reluctant tenants. These aren't people choosing flexibility; they're families priced out of ownership, paying someone else's mortgage while accumulating no equity of their own.

The mean weekly rent in New Zealand for the year to April 2025 reached $574, with Auckland commanding $631 weekly. However, there are signs of relief: average rent across the country dropped $27 a week in May compared to last year as oversupply finally benefits tenants.

The generational impact is staggering. Children growing up in rental properties today might inherit $250,000 from their parents, but not until they’re 70 years old - wealth that comes too late to influence their own housing trajectory.

Beyond Political Promises

Politicians love to promise housing solutions, but the mathematics of supply and demand operate independently of electoral cycles. Remember then-Prime Minister Jacinda Ardern's grand promise of 100,000 new homes? Pure unicorns and fairy dust – mere theatre and hokum for the masses. The promise evaporated faster than Heretaunga Plains morning mist, leaving behind nothing but disappointed.

With population growing at 1.252% annually and housing construction struggling to keep pace, the pressure cooker of demand continues building. Political promises can't magic houses into existence any more than they can repeal the laws of economics.

The solution isn't in clever policy tweaks, grandiose announcements, or first-home buyer subsidies that merely inflate demand further. It requires acknowledging that our housing market has fundamentally disconnected from local incomes and productivity – and that political theatre won't bridge that gap.

What's Changed, What Hasn't

The fundamental difference between then and now isn't just price – it's expectation versus reality. Previous generations bought homes with low expectations but even lower prices. Today's buyers face high expectations with even higher prices, even after the crash.

Property commentators note that while "a lot of those falls happened over 2022 and 2023," in recent times "it's been a lot flatter. They go up a bit, they go down a bit." The market has stabilised at these lower levels, but they're still far above what most young families can afford.

The old social contract is broken. Where once a single income could secure family housing, today's dual-income households struggle to service mortgages that consume their entire financial capacity for three decades, even at these "crashed" prices.

Current Market Signals

Recent data shows conflicting forces at play. Property values fell 0.2% in December 2024, marking the ninth drop in 10 months. Yet mortgage rates have declined dramatically, with debt-to-income ratio rules now adding new complexity to lending decisions.

National house prices have dropped by more than $137,000 since late 2021, yet some locations are showing signs of recovery. Property sales have started to recover, with 77,445 properties sold in the 12 months to July 2025, up from the trough but still well below peak levels.

The Hard Truth

New Zealand's housing crisis isn't a temporary blip or a problem that can be solved with good intentions and political rhetoric. It's a structural transformation that demands we reconsider everything from urban planning to taxation policy.

The days when hard work and modest expectations guaranteed homeownership are indeed long gone. Even after the most significant housing crash in a generation, the mathematics of homeownership remain stacked against ordinary families. What emerges next will define whether New Zealand remains a place where ordinary families can build generational wealth or becomes a playground for the already-wealthy while everyone else pays rent forever.

For those navigating this challenging landscape: have a plan. Make it one that's tested with evidence, tracked and measured against real outcomes – not political promises or wishful thinking. Consider seeking financial advice from a fee-only fiduciary who has no vested interest in selling you products or properties. The mathematics don't care about our hopes; they respond only to careful preparation and realistic expectations.

The numbers tell the story. The question is whether we're prepared to listen.

---

Special thanks to Pita Alexander. Statistics sourced from Newsletter, 11 September 2025: "An Update on New Zealand Housing as at 31 August 2025"

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. 425

The Paradox of Wealth Without Peace

Time: The One Thing No One Can Buy

God gives everyone 168 hours each week - 24 hours a day for 7 days. This time is a gift to be used wisely.

You can have $3 million in the bank and still feel poor.

I've seen it more times than I can count. Successful professionals sitting across from me, their financial statements telling one story whilst their faces tell another. On paper, everything looks perfect: high income streams, diversified portfolios, prestigious career trajectories, and assets that would make most Kiwis envious.

But beneath the surface? A different reality entirely.

Stress that follows them home every evening. Uncertainty that keeps them awake at 3 AM, staring at the ceiling. A quietly pervasive sense that, despite all their achievements, it's never quite enough.

The goalposts keep moving, the finish line keeps shifting, and the peace of mind they thought money would bring remains frustratingly elusive.

After working with hundreds of high-achievers, I've discovered this phenomenon rarely stems from what's visible on their balance sheets. Instead, it comes down to three invisible relationships that most people never examine. Yet these relationships shape everything: how they spend, save, think, and ultimately, how they feel about their financial lives.

These relationships don't just influence money decisions. They ripple through career choices, health habits, sleep quality, personal relationships, and long-term planning. Research consistently shows that financial well-being is more strongly correlated with psychological factors than absolute wealth levels¹. Understanding these relationships isn't just about financial wellness—it's about life wellness.

Relationship #1: Your Relationship with Money

Most people obsess over the numbers: net worth, income growth, investment returns, KiwiSaver balances. These metrics matter, but they're only part of the equation. The fundamental question few ever ask is, “What do I actually believe about money?”

Is money something you control, or something that controls you? Do you see it as a tool for freedom, or a source of anxiety? A measure of success… or a threat to your values?

Studies in behavioural economics demonstrate that our financial decisions are driven more by psychological factors than rational calculations². If your core beliefs about money were formed during times of scarcity, uncertainty, or financial stress, they may no longer serve the life you're building today. Many successful people still operate from the same financial fears they carried in their twenties and thirties, even after their circumstances have dramatically changed.

Your financial plan must reflect the life you want now, not the fears you carried decades ago. This means regularly examining and updating your money beliefs as you evolve. What felt prudent at 35 might feel restrictive at 55. What seemed risky in your early career might now represent exactly the kind of calculated risk that aligns with your values and goals.

Understanding your money personality provides crucial insight into why certain strategies feel right whilst others create internal conflict, regardless of their theoretical benefits.

Relationship #2: Your Relationship with Time

Time is the most underpriced asset in any portfolio, and it's the one asset people consistently undervalue in their decision-making.

You can recover money, but you cannot recover time.

Market downturns are temporary. Career setbacks can be overcome. Investment losses can be recouped. But the hours, days, and years you spend? They're gone forever.

Despite knowing this on an intellectual level, many high achievers continue to spend time like it’s unlimited. They optimise for financial returns whilst ignoring time returns.

“Money can’t buy happiness” – but time might

Research from Harvard Business School shows that people who prioritise time over money report higher levels of happiness and life satisfaction³. They'll spend hours researching a minor investment decision whilst giving little thought to how they're investing this most precious resource.

If your time isn't aligned with what truly matters to you, no amount of money will create the sense of freedom you're seeking. This is why some people with modest incomes feel genuinely wealthy whilst others with substantial assets feel trapped.

Real wealth isn't just about having money, it's about having choices. And choice is fundamentally powered by time:

• The freedom to say no to opportunities that don't align with your values.

• The ability to spend unhurried time with people you care about.

• The luxury of pursuing interests that fulfil you, regardless of their financial return.

Think on how you spend your hours and ask, “does this reflect what I say matters most to me?” If there's a disconnect, all the financial success in the world won't create the life satisfaction you're seeking.

Relationship #3: Your Relationship with Yourself

This relationship is the most neglected yet the most powerful of the three.

Many successful people can articulate what success looks like in concrete terms. They can talk income level, asset targets, career milestones, even lifestyle markers – but they don’t know what success feels like on a personal level.

If you've never paused to define success for yourself—really define it, beyond external measures—you'll spend your life chasing someone else's version of it. You'll hit financial targets, career goals, and accumulate assets… but they won't create the security you thought they would.

Positive psychology research confirms that intrinsic motivations (personal growth, relationships, contribution) lead to greater well-being than extrinsic motivations (wealth, fame, status)⁴. This is why you can have a portfolio that's growing steadily and still feel fundamentally stuck. Your external wins are not as directly connected to your internal sense of progress and fulfilment as you might think.

Your relationship with yourself determines what is "enough." It shapes what risks feel worth taking and which ones feel reckless, and influences whether you see money as a tool for creating the life you want – or as a scorecard for proving your worth.

The Integration Point

These three relationships don't exist in isolation. Your beliefs about money affect how you value time, while your relationship with yourself shapes both your money beliefs and time choices.

When these relationships are aligned, financial decisions feel natural and sustainable. When they're in conflict, even objectively good strategies can create stress and resistance.

True financial wellness isn't just about having enough money. It's about ensuring your financial life reflects your actual values, supports your real priorities, and creates space for what genuinely matters to you.

Why Professional Guidance Matters

Understanding these three relationships intellectually is one thing. Developing them is quite another.

Most people recognise that something isn't working in their financial life, but they struggle to identify exactly what that is. Making matters more complex, our relationships with money, time, and self are deeply personal and often unconscious. They’re shaped by decades of experiences, family patterns, cultural messages, and past decisions.

This is where working with a fee-based holistic adviser becomes invaluable. Unlike commission-driven advisers who profit from selling products, fee-based advisers are compensated directly by you for their expertise and guidance. This alignment means their recommendations are driven by what's best for your situation, not what generates the highest commission.

A truly holistic approach recognises that your financial life doesn't exist in isolation from the rest of your life. Your money decisions affect your relationships, career choices, health, and overall life satisfaction. Similarly, changes in these other areas ripple back into your financial planning needs.

A skilled holistic adviser serves as both strategist and accountability partner. They help you identify any blind spots, challenge the assumptions limiting your progress, and keep you focused on what truly matters to you – rather than getting distracted by market noise or society's definition of success.

Perhaps most critically, they help you stay aligned with your true mission over time. Life evolves, priorities shift, and what felt right five years ago may no longer serve you today. Regular check-ins with an objective professional ensure your financial strategies continue reflecting your current values and goals, not outdated versions of yourself.

Professional Financial Advice Provides Value Beyond Returns

The investment in professional guidance pays dividends not just in financial returns, but in the peace of mind that comes from knowing your money, time, and life choices are all working in harmony towards what matters most to you.

There is no set-and-forget strategy when it comes to true financial wellness. Every day, week, month, quarter, and year, your plan must evolve and be reshaped to reflect the reality of your changing life. Just as your life is not set-and-forget—constantly growing, adapting, and responding to new circumstances—your financial strategy must be equally dynamic and responsive to serve you effectively.

---

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. 424

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References

¹ Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489-16493.

² Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press.

³ Whillans, A. V., Dunn, E. W., Smeets, P., Bekkers, R., & Norton, M. I. (2017). Buying time promotes happiness. Proceedings of the National Academy of Sciences, 114(32), 8523-8527.

⁴ Kasser, T., & Ryan, R. M. (1996). Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and Social Psychology Bulletin, 22(3), 280-287.

Why Holding Cash Feels Safe - But Isn't Always Wise

The ‘security’ of cash today often comes at the expense of tomorrow's purchasing power.

New Zealanders tend to hold cash reserves despite changing interest rate conditions. The RBNZ has cut the Official Cash Rate to 3.0% in August 2025 from its peak of 5.5% in early 2024, with term deposits following suit. While declining in line with the OCR, term deposit rates remain attractive; the highest rates on Canstar's database sit at 4.50%.

Yet, NZ’s economy contracted in the second quarter of 2025. Inflation increased to 2.70% in the same period[1] – well within the RBNZ's 1-3% target band but adding pressure to real returns.

The Money Illusion Trap

Many investors fall victim to what economists call "the money illusion": thinking about money in nominal rather than real terms[2].

A $100,000 term deposit earning 4.5% generates $4,500 annually, which feels like growth. But for someone paying 33% tax, the after-tax return is just $3,015 (3.015%). With inflation at 2.7%, this creates a real return of just 0.315%. For those in the top tax bracket (39%), this return becomes 2.745% - providing a microscopic real return of $45. That’s barely enough to buy a decent bottle of wine to drown your wealth preservation strategy sorrows.

Major bank economists forecast the OCR will fall to 2.5% by the end of 2025 or early 2026[3]. If term deposits drop to around 3%, a 33% taxpayer will earn an even measlier 2.01%.

Hidden Costs of Cash Comfort

Opportunity Cost: While current term deposits offer reasonable returns, historical equity market returns in New Zealand averaged 7-10% annually over longer periods. That 2-5% difference compounds substantially over decades.[4]

Rate Dependency Risk: With the two-year swap rate expected to drop to 2.8% as the OCR reaches 2.5%, retail deposit rates will follow. Unlike growth assets that can benefit from economic recovery, cash offers no upside participation.

Inflation Protection: Cash provides no hedge against rising costs. With administered prices driving near-term inflation pressures, purchasing power erosion remains a persistent threat.

The Economic Reality Check

New Zealand's economic recovery stalled in the second quarter. Spending is constrained by global economic policy uncertainty, falling employment, higher goods prices, and declining house prices. RBNZ notes there is scope to lower the OCR further if medium-term inflation pressures continue to ease as expected[5].

This makes holding large cash positions riskier; cash-savers face declining returns and miss potential recovery gains in other asset classes.[6]

Cash has its place – as part of a strategic, sophisticated portfolio, where professional advisers can implement a bond laddering strategy (providing income stability with superior yields to deposits), liquidity management to provide regular cash flow and reduce the need for large cash reserves and can recommend PIE funds and other tax-efficient structures that minimise the tax drag.

The Value of Professional Advice

History has shown many investors start panic selling during downturns, chasing performance at market peaks, or hoarding cash.

When cash returns are low, investors venture into adventurous territory: junk bonds, private credit, mezzanine debt arrangements, and other high-yield instruments that carry higher risks.

Working with a fee-only, fiduciary adviser is invaluable. Look for advisers who:

• Conduct thorough discovery of your financial situation

• Explain their investment philosophy and process clearly

• Provide transparent fee disclosure with no hidden commissions

• Demonstrate relevant credentials (CFP, AIF, CEFEX)

• Show measurable progress tracking methods

 The Bottom Line

With NZ’s economic headwinds, sitting in cash isn't the safe option - it's the wealth erosion option.

"She'll be right" doesn't cut the mustard when your money's losing value faster than a leaky boat. After tax and inflation, that "safe" term deposit is barely keeping you afloat. Your future wealth depends on making this distinction now, not when it's convenient.

---

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. 423

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References

1. Trading Economics. (2025). New Zealand Inflation Rate - Q2 2025. Available at: https://tradingeconomics.com/new-zealand/inflation-cpi

2. Shafir, E., Diamond, P., & Tversky, A. (1997). Money Illusion. Quarterly Journal of Economics, 112(2), 341-374.

3. ANZ Bank New Zealand. (2025). Weekly Data Wrap: Economic Forecasts and OCR Projections. Available at: https://www.anz.co.nz/about-us/economic-markets-research/data-wrap/

4. NZX Limited. (2024). Historical Returns Analysis: New Zealand Equity Market Performance 1987-2024. Wellington: NZX.

5. Reserve Bank of New Zealand. (2025). Monetary Policy Statement August 2025. Wellington: RBNZ. Available at: https://www.rbnz.govt.nz/hub/publications/monetary-policy-statement/2025/08/monetary-policy-statement-august-2025

6. DALBAR Inc. (2024). Quantitative Analysis of Investor Behavior: New Zealand Market Study. Boston: DALBAR Research.

Our Broken Energy Market: When Bigger isn’t Better

There are three things on people's minds currently - rates invoices, insurance premiums, and power prices. They’re essential services where consumers have little choice, and providers face little competitive pressure. (1)

In the game of New Zealand’s energy market, the house always wins – furthermore, the house is government-owned, and participation isn't optional. Our state-controlled gentailers (the companies generating electricity AND selling it to consumers) have created an oligopoly, undermining business certainty and leaving regions vulnerable to catastrophic power failures.

The Centralisation Trap

When Cyclone Gabrielle devastated Hawke's Bay in February 2023, communities were plunged into darkness for weeks. The centralised grid proved helpless against nature's fury while gentailers counted profits from undamaged regions.

This isn't isolated failure - it's the predictable consequence of centralisation designed for corporate convenience rather than resilience.

New Zealand's gentailers - Genesis Energy, Mercury Energy, Meridian Energy, and Contact Energy - control approximately 85% of generation and retail markets (2). The government owns 51% stakes in three companies (3), creating a major conflict of interest where the referee owns most teams in the league.

It’s a state-protected illusion of choice. As power bills rise $10 monthly from April 2025 due to regulated increases (4), customers can supposedly switch providers. But when all major providers coordinate similar increases, what “choice” do we have?

The Hidden Tax

These companies reported record profits in 2024:

• Contact Energy $235 million (up 85%)

• Mercury NZ $290 million (up 159%)

• Meridian Energy $429 million (up 300%)

• Genesis Energy $131.1 million (up 29%)

Combined, they posted over $1.08 billion (5) whilst manufacturers close plants due to unaffordability.

NZ was built on low-cost energy to attract global businesses. Now, with PM Christopher Luxon acknowledging our power prices are "among the highest in the western world" (6), manufacturers are departing. Energy costs rose a widely cited 600% since 2021 (7), the cause sited for major closures.

The gentailer oligopoly represents an indirect tax disguised as market returns. When state-owned enterprises deliver billions to government coffers (8), politicians avoid raising tax rates whilst extracting revenue from every household through inflated electricity prices.

The Single ICP Stranglehold

Here's the regulatory elephant in the room: the "one ICP (Installation Control Point) or provider" rule that locks consumers into single-provider dependency. This artificially prevents households and businesses buying electricity from multiple sources, eliminating true competition at the consumer level.

Kāinga Ora received an exemption from this rule in 2023-24 (9), proving competitive choice is possible when bureaucratic barriers are removed. If state housing can access competitive electricity markets, why can't everyone?

The Distributed Solution

The Electricity Authority recently announced new rules requiring gentailers to offer "non-discrimination" in hedge contracts - fixing the symptom whilst ignoring the disease. Critics warn these measures could backfire, pushing up electricity prices as gentailers raise internal costs rather than lowering external ones (10).

Regulatory tinkering sidesteps the fundamental problem: vertical integration allows gentailers to manipulate both sides of the market.

Real reform requires abandoning the failed "bigger is better" approach. With the stroke of the legislative pen, the current "one ICP or provider" rule could be swept away, allowing consumers to decouple from single-provider dependency.

True energy democracy means communities generating power through local renewable resources and selling excess back to competitive retailers who don't control generation.

Thinking ahead (and learning from the past)

The Commerce Commission's approval for Contact Energy's acquisition of Manawa Energy (formerly Trustpower) represents another step towards market concentration. This feels eerily reminiscent of Progressive Enterprises' acquisition of Woolworths (NZ) Ltd in 2002 - where promised efficiencies never materialised for consumers (11). Instead, we got a duopoly making $430 million per year in excess profits - $1 million per day at consumers' expense (12). This grocery duopoly now ranks among the world's most expensive markets, with prices 3% above the OECD average (13).

Despite the Government's latest announcements about "levelling the playing field" (14), industry critics worry these measures won't crack down hard enough on the big four. The proposed changes preserve the fundamental structure that creates the problem.

New Zealand faces a choice: continue protecting state-owned energy giants that extract maximum profits from captive consumers… or embrace distributed energy systems with clear separation between generation and retail.

When communities control their energy future, the gentailers lose their power over New Zealand's economy. It's time to choose freedom over monopoly, resilience over vulnerability, and competition over state-protected oligopolies.

References

1. RNZ. “The essential item that's 900% more expensive than in 2000.” 27 August 2025. https://www.rnz.co.nz/news/business/571151/the-essential-item-that-s-900-percent-more-expensive-than-in-2000

2. Consumer NZ. "Profits surge for New Zealand's gentailers." 31 August 2023. https://www.consumer.org.nz/articles/profits-surge-for-new-zealand-s-gentailers ; North & South Magazine. "Power Play." September 2024.

3. Wikipedia. “New Zealand Electricity Market.” Accessed 27 August 2025.
   https://en.wikipedia.org/wiki/New_Zealand_electricity_market

4. Commerce Commission. "Electricity Lines and Transmission Charges: What are they, why are they changing and what does this mean for your electricity bill?" 2025. https://comcom.govt.nz/regulated-industries/electricity-lines/electricity-lines-and-transmission-charges-what-are-they,-why-are-they-changing-and-what-does-this-mean-for-your-electricity-bill

5. Electric Kiwi Times. "Big Four Gentailers Profiting at the Expense of Kiwi Households." 31 July 2024.

6. Energy Connects. "NZ Takes Urgent Action as Energy Price Rises Hurt Businesses." 26 August 2024. https://www.energyconnects.com/news/utilities/2024/august/nz-takes-urgent-action-as-energy-price-rises-hurt-businesses/

7. Industry Edge. “How is NZ’s Energy Crisis Impacting the Pulp, Paper and Packaging Industry?” 1 September 2024. https://industryedge.com.au/how-is-nzs-energy-crisis-impacting-the-pulp-paper-and-packaging-industry/

8. New Zealand Herald. "Mercury sees average 9.7% power price rise from April." 25 February 2025.

9. Electricity Authority. "Exemptions granted for innovation trial." 1 April 2024. https://www.ea.govt.nz/news/general-news/exemptions-granted-for-innovation-trial/

10. Stuff. "Will new rule big four electricity companies really bring down power bills?" https://www.stuff.co.nz/politics/360795971/will-new-rule-big-four-electricity-companies-really-bring-down-power-bills

11. Commerce Commission. "Progressive applies for clearance to acquire Woolworths." 16 May 2001. https://comcom.govt.nz/news-and-media/media-releases/archive/progressive-applies-for-clearance-to-acquire-woolworths ; Commerce Commission. "Commission releases Progressive/Woolworths decision." 26 July 2001. Commerce Commission. "Market study into the grocery sector: final report." 8 March 2022. https://comcom.govt.nz/news-and-media/news-and-events/2022/grocery-market-study-recommends-changes-to-improve-competition-and-benefit-consumers ; Consumer NZ. "Petition: stop misleading supermarket pricing." Accessed 12 August 2025. https://campaigns.consumer.org.nz/supermarkets

12. Commerce Commission. "Market study into the grocery sector: final report." 8 March 2022. https://comcom.govt.nz/news-and-media/news-and-events/2022/grocery-market-study-recommends-changes-to-improve-competition-and-benefit-consumers ; Consumer NZ. "Petition: stop misleading supermarket pricing." Accessed 12 August 2025. https://campaigns.consumer.org.nz/supermarkets

13. RNZ. "NZ grocery prices higher than OECD average, Commerce Commission says." 4 August 2025. https://www.rnz.co.nz/news/business/569172/nz-grocery-prices-higher-than-oecd-average-commerce-commission-says ; NZ Herald. "Grocery Action Group hits out at supermarkets as Kiwis keep paying high prices for groceries." 7 August 2025.

14. Electricity Authority. "Energy Competition Task Force looks to level the playing field between the gentailers and independent generators and retailers." August 2025. https://www.ea.govt.nz/news/press-release/energy-competition-task-force-looks-to-level-the-playing-field-between-the-gentailers-and-independent-generators-and-retailers/

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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

• Article no. 422

Value vs Values: The True Cost of Short-Term Thinking

The weekly budget trap cuts across all wealth demographics. It makes you think, “I can’t afford those $200 boots that will last ten years. I’ll just buy the $40 ones that last eight months, because they cost less now.”

But this isn’t financial logic; it’s a fallacy. You spend more and get less value. The mathematics are brutal: those $40 boots become $600 over a decade, whilst the quality pair would have saved $400.

It’s easy to just blame pay cheques or tax brackets, but this is typically more about human psychology and cash flow management than poverty. Even high earners often live month to month as lifestyle creep sets in, optimising for immediate affordability rather than lifetime value (i).

Are you buying what you need, or filling the void?

Somewhere along the way, we transformed shopping from necessity into recreation. Buying essentials became buying feelings—the momentary rush of acquisition, the brief satisfaction of choice, the fleeting sense of control. We end up with wardrobes full of clothes we don't wear, garages packed with gadgets we don't use, and credit card bills that remind us monthly of our attempts to purchase happiness.

The cruel irony is that this consumption-driven approach to fulfilment often leaves us feeling more empty, not less. Each purchase promises to be the one that finally satisfies, yet the satisfaction fades faster than the credit card bill arrives (ii).

The Temu temptation.

Consider the Temu phenomenon: millions of consumers buying directly from manufacturers they'll never meet, purchasing products with no meaningful recourse if things go wrong, no customer service to speak of, and no ongoing relationship beyond the transaction. You buy with a click, guilt-free, because you never have to look anyone in the eye.

This represents the ultimate evolution of consumer culture—a generation that has learnt to decouple purchasing decisions from moral considerations entirely. The vendor is invisible, the supply chain is opaque, and the true costs are externalised to people and places you'll never encounter.

What does thinking short term really cost us?

When we optimise for immediate affordability over long-term value, we inadvertently support systems that externalise their true costs.

• Environmental degradation occurs when cheap goods mean cutting corners on sustainability.

• Labour exploitation thrives when low prices depend on underpaid workers in poor conditions.

• Community erosion accelerates when bargain-hunting drives business to the lowest bidder, often far from home.

This is where frameworks like B Corp certification become valuable—not as the solution to everything, but as a useful validation tool. When you're trying to align your spending (and your financial activity in general) with your values, B Corp status provides third-party verification that a company actually operates according to stakeholder-focused principles (iii).

Critics might dismiss this shift towards values-driven business as merely the world "going woke," but this misses the fundamental point. Perhaps it's time to recognise that whilst things haven't exactly gone to the dogs, this is simply the new normal.

Better business practices, stakeholder consideration, and community responsibility are essential adaptations to a world where consumers increasingly demand authenticity and accountability. Furthermore, they’re invoking responsibility for the long-term consequences of today’s decisions; in life and in finance, some careful forward thinking is always a good idea.

The case for prioritising value

The fundamental question isn't whether to buy cheap or expensive goods—it's whether our economic system should encourage decisions that prioritise immediate savings over long-term value (as it currently seems to). When short-term thinking is economically rationalised across all income levels, the issue isn't individual choices – it’s the systems that make those choices feel necessary.

This is where holistic financial planning becomes essential. Understanding the true lifetime cost of our decisions—whether buying boots or choosing business partners—helps us align our spending with our values whilst building genuine long-term wealth. It's not just about budgeting for today; it's about creating a financial strategy that reflects who we want to be and the world we want to live in (iv). 

The goal isn't to shame anyone for buying what they can afford today. It's to build a world where what people can afford today also serves their interests tomorrow—and doesn't come at someone else's expense.

References

(i) Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.
(ii) Ariely, D. (2008). Predictably Irrational: The Hidden Forces That Shape Our Decisions. HarperCollins.
(iii) B Corp Movement. (2024). About B Corps. Retrieved from https://www.bcorporation.net/
(iv) Jackson, T. (2017). Prosperity without Growth: Foundations for the Economy of Tomorrow. Routledge.

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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

• Article no. 421