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Getting real about growth rates; Sharpening up for the share offer; DSA vs LSI; Consumer confidence vs corporate pessimism; Growing your own

Getting real about growth rates; Sharpening up for the share offer; DSA vs LSI; Consumer confidence vs corporate pessimism; Growing your own

By Amanda Morrall

1) New projections

Emma Wall, writing for the Telegraphreports on the revised growth projections being introduced by Britain's Financial Services Authority for 2014 with respect to pension reporting. In the past, the pension forecasts were modelled on 5%,7% or 9% annual returns. In keeping with these lower for longer tumultuous times, the revised outlooks are now 2%, 5%, 7%.  A sign of the times.

2) Are you ready?

While I was visiting the Telegraph, I also spotted a story for pensioners on how to save money. One of the suggestions was around  home heating and insulation, pointing to a 10 pc rise in heated costs with winter coming in the U.K.  We're rolling into summer now here (we hope) but it did get me thinking again about the March 2013 share offer opportunity when the government partially privatises some state owned enterprises, starting with Mighty River Power.

Here's a five step primer posted previously as well as a link to Government's share offer website which has posted a how to get started section.

3) DCA vs LSI

Dollar cost averaging (the investment strategy used for KiwiSaver) is often regarded as good way to buffer the effects of market highs and lows. But does buying into the market on a regular basis in both good and bad times produce superior returns than lump sum investing (LSI)?. Index fund specialist Vanguard back tested equities markets in Australia, the U.K. and the U.S. and found that two thirds of the time, the LSI strategy (on average) outperformed DCA. Rather than state definitely LSI was the way to go, the report's authors argue that investors need to be comfortable with the level of risk they are taking. HT Craig Simpson for spotting this one.

We conclude that if an investor expects such trends to continue, is satisfied with his or her target asset allocation, and is comfortable with the risk/return characteristics of each strategy, the prudent action is investing the lump sum immediately to gain exposure to the markets as soon as possible. But if the investor is primarily concerned with minimising downside risk and potential feelings of regret (resulting from lump-sum investing immediately before a market downturn), then DCA may  be of use. Of course, any emotionally based concerns should be weighed carefully against both (1) the lower expected long-run returns of cash compared with stocks and bonds, and (2) the fact that delaying investment is itself a form of market-timing, something few investors succeed at. 

4) Consumer confidence vs corporate pessimism

Time Money magazine journalist Rana Foroohar and Joe Nocera of The New York Times, in this WNYC podcast discuss the bi-polar economy in the U.S. marked consumer confidence and corporate pessimism and the looming fiscal cliff.

5) Get planting

Every time I go grocery shopping, I'm left in shock at the amount of money I've dropped in exchange for not a heck of a lot of food. It's not my imagination that grocery prices have been going up recently as you'll see in the food price chart in today's Top 10. What to do? I'm going to take a page from the kids both of whom are learning about how to grow your own at school. We have successfully sprouted our first batch of adzuki beans which need planting and shall soon have some leaks to go with. The long-term forecasts for food production aren't great so best to get growing yourself as well. Here's a directory to some free courses on offer from Kaipatiki Project.

To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter @amandamorrall

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Roma and Cherry tomatoes are in, the beans are looking good and the snow pea shoots are half eaten already.  The rubarb is going to the moon but the cabbages don't look very cabbagey to me.
It's surprising how much fun it all is.

Totally agree - eating stuff you have grown yourself is amazingly satisfying. Even fertillsing your garden with the worm poo from your worm farm that has recycled stuff you would have put in the rubbish is fun, albeit rather smelly fun.

And there's the added satisfaction of knowing that your food is pesticide-free, along with the chance of a bit of bonus protein in the odd random salad leaf...

One thing we can do here is chickens.  The neighbours all have chickens but after a couple of years the reality of a what to do with them when they stop laying comes home to roost (pun intended).  Suddenly personal and clever names like "princess laya" doesn't seem like the same brilliant idea it was at the beginning.  At the moment a neighbours old dad comes up from Oamaru and does the business.  Anyway, I have postponed my application to 'the christchurch chicken murderer club'.

"Princess Laya" made me LOL.

Never seen the attraction with chickens - it's a load of work and feed to keep them fed, and once they get up to speed it's quite a challenge to consume 6 eggs a day every day. How many pavs can one family eat? And you have to go get the eggs every day *yawn*

Much better idea to get a calf ($80) that's just been weened, let it gambol around the property loving life and being generally low maintenance untl the day Mr Homekill pops around, and then you end up with well over a decent chest freezer worth of meat (usually over 200kg) so your total cost is about $1.40/kg for everything from eye fillet to mince. A whopping saving*

And there is pretty well always someone around the neighbourhood trying to give away eggs from their excess capacity...

*Clearly you have to bite the up-front cost of a freezer and some solar panels to run it, but obviously by the time you retire (or not) you'd have all that sorted. Plus the requisite amount of guns for shooting wild pigs, rabbits, wood pigeons, and pheasants, and some nets for catching fish with (plus another freezer for all the fish).

Yeah but the calf is now a cow called Anna and was hand fed from a wee thing.
And when she looks at you with her big brown eyes you just don't have the heart for Mr Homekill.  When the chips are down, we're just townies.

Much as I hate killing things it's a fact of life, well it is in the countryside. I tend to go out for the day when Mr Homekill visits, then you can pretend that Anna has 'gone away' just like Shannon (*sings* maybe he's found an Island, with a shady tree... just like the one in our back yard) from that song from the 70's...

And I think the whole Good Life thing is kind of dependent on not getting too attached to the farm animals. Hand feeding them would be counter productive I think.

Here's an interesting article in the Sydney Morning Herald where the Australian Future Fund comes clean about under stating fees by 50%.
Other interesting bits include;
"In Australia most super funds don't fully report their investment management costs .. " [so you can't trust their accounting]
"..compared with negative 0.2 per cent for the median balanced super fund."  [negative returns are pretty normal]

who needs veges when potato chips were priced at 49cents at countown over the weekend.
the only catch was that i had to purchase 2 sixpacks ofhollandia beer to wash it down.

I don't even know where to start on this one...

I'm going to assume you are being facetious NG, but on the off-chance you are not, I'm stepping up to the pulpit:- only humans could take something so healthy as a potato and strip out all the nutrients, fiibre, and general potatoey goodness and replace it with dangerously high levels of sodium, saturated fats, brain-rotting food additives, and flog it off in non-recyclable packaging for 49c.

And as if that's not bad enough, Hollandia? Seriously?

I only hope you ran to Countdown and back to offset the billions of fat calories in a small bag of potato crisps...

#2 ah the old catch-22: Goverment run utilties are hopelessy inefficient, but when you flog them off to the private sector the profits from the now-efficiently run business go offshore and the consumer gets fleeced.

The only real way to protect yourself as a consumer is to buy shares in the now private utility company and use the dividends to offset the increase in charges.

Although of course that didn't go so well with Telecom, but you can't win them all...

If only we were a nation of savers, what possibilities would be.

well yes but there's the paradox of thrift to consider. Business needs finance and it's fair to say that our high tech consumer lifestyle and economic success is built on the concept of business investment credit.

And when people save too much economies contract.

But yes, a return to more sensible personal debt-to-equity ratio's seems advisable.

Quite.  But was it a wise way to build it?
Maybe it's a moot point and what is done is done.  A major concern of western policy seems to be how to let air out without loosing control.

I've got the land, so I'd prefer to be the guy with the fish and home-made sausages etc and let someone else do the chicken thing.

But yes the barter system is another deeply satisfying aspect to going all Good Life. Take that Foodstuffs, you can keep your overpriced mass produced food!

Also it's nice to be part of the tax-free shadow economy - tax avoidance is not a crime! Oops did i say that out loud?


Hey Stan, where do you get a weaned calf for $80?More like $350

My neighbour. I suspect it's probably mates rates.

Anna is a highland cow so she's worth a lot more than $350 even.
And so cuddly.