"I wouldn't buy two or three things at once - I'd just go a step at a time.
"If I got an extra bonus, I'd take a little bit out for myself and put the majority into paying debt."
Peter Thompson, managing director, Barfoot & Thompson.
Money. It's the driving factor behind many life choices, but is it the be-all and end-all?
'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make.
Having been at the helm of real estate company Barfoot & Thompson since 2009, Peter Thompson bought his first home in his 20s.
'Go one step at a time' is his motto, suggesting people pay off existing debt before taking on more risk - and don't over-commit themselves to a mortgage.
Although he's in the business of selling properties, he chooses to spread money across a range of investments, including term deposits.
1. Are you a saver or a spender?
A bit of both.
I'm generous in giving money out to charities but I also make sure I don't go into debt.
If I have a mortgage, I'll pay it off before I take on another one.
2. What was your biggest financial lesson, success or failure?
A success was when I bought a low-value property (my first property) in my 20s in about 1985, when interest rates were around 28 percent. I paid it off over ten to fifteen years.
I then bought my second home and paid that off. Seven years' later, I bought a more luxurious one. From there, I bought a holiday home and after that, some luxury items.
I wouldn't buy two or three things at once - I'd just go a step at a time. If I got an extra bonus, I'd take a little bit out for myself and put the majority into paying debt.
3. What do you know about money now that you wish you'd known sooner?
To spread money wider across two or three banks instead of just one.
Also to look at different interest rates rather than just rely on one bank as my main supplier.
I also wish I'd considered risks around investing in the sharemarket (during downturns), more carefully.
4. In your opinion, is the current rate of house price growth sustainable?
I always look at house prices as what people are prepared to pay - and what people are prepared to sell for (on today's market).
As seen in the stock crash of the 1980s, New Zealanders don't like to lose money. If prices are going to go down, all they'll do is withdraw properties off the market and wait till it self-corrects.
Looking at company statistics, since 1954 the property market has only gone backwards six times.
Those were in the late 80s/early 90s (and a year each in 2005 and 2008).
5. Is there a reason for the current shortage of properties for sale?
Very little product is being built because of the lack of resources - building materials are harder to come by (including challenges getting product from offshore).
The longer the delays in getting stock built this is obviously pushing prices up, including materials.
The same issue that we've got here in New Zealand is elsewhere in the world: house prices are out of control, lack of stock is a common theme and the common denominator is low interest rates.
6. What's your preferred form of investment and why?
Property, shares and the rest spread across term deposits.
7. What's your best saving tip?
If you get extra money, pay off any loans.
But the biggest for me is not to take too big a loan: interest rates will go up and circumstances can change.
Don't over-capitalise - it's better to move out to a more affordable suburb or property, pay it off then move again at a later date.
8. What’s the best money advice someone's ever given you?
Think twice before you spend. But also remember that life is short (have fun).
Enjoy good times but don't overcommit to things that are unaffordable.
The views expressed in this article are personal and are not professional financial advice.
