"Any momentum loss will be temporary.
"Unlike March 2020, we now know what happens when lockdowns end: we dive into the housing market and boost spending on things like home renovations, cars, electric bikes, spas, and eating out."
Tony Alexander, independent economist
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.
As the country enters day one of another COVID-19 alert level 4 lockdown, Tony Alexander, an independent economist and former chief economist at Bank of New Zealand for 26 years, reminds Kiwis that "getting the job done" has delivered freedoms unlike most other countries.
Rather than viewing investment as purely about making money, for Alexander, investing in his abilities has delivered a higher gain. His properties are used for family-related purposes and says outside of cash deposits and KiwiSaver, he doesn't have an investment portfolio.
1. Do you expect the snap lockdown to take some of the momentum away from New Zealand's economic recovery?
Any momentum loss will be temporary.
Unlike March 2020, we now know what happens when lockdowns end: we dive into the housing market and boost spending on things like home renovations, cars, electric bikes, spas, and eating out.
The biggest problem for most businesses is lack of staff. Layoffs will be minor and it's likely plenty of employers will keep actively searching for new staff.
2. Are you a saver or a spender?
Definitely a saver.
I have most of what I want and see little point in replacing things simply because the shade of couch cloth might displease me, or the TV screen has a scratch.
3. What was your biggest financial lesson, success or failure?
Investing in my abilities (analysis, public speaking and writing) has yielded far greater return than I ever have, ever will - or ever wanted from purely portfolio products, like shares, property and forestry.
4. What can individuals and businesses learn from COVID-19?
We need to be able to adapt to changing circumstances quickly and recognise that nothing stands still.
There will always be changes that require us to adapt - that's one reason many people enter businesses (especially industries such as farming).
The challenge is not always achieving the profit, but managing through the operational environment, recognising it can and will shift.
Embrace the challenge - not the profit target. Master the first and the second will naturally flow.
5. A recent purchase you consider was great value for money?
An Auckland apartment I bought six years ago.
Following consented conversion from commercial (cocktail bar) to residential use, it has yielded high gain.
As I visit Auckland from Wellington most weeks for my business, it's a comfortable base. It now houses two of my children who attend tertiary education centres in the city.
6. What message do you have for first-home buyers in the current market?
Looking at the past three decades, you can count on one hand (if not two fingers) the times when holding off and renting has been temporarily (as in months, not years) better than buying.
If homeownership is truly your priority, curtail other areas of spending drastically. Purchase as soon as your lender confirms to you that it is financially safe to do so.
7. What's your preferred form of investment and why?
Beyond cash deposits and a KiwiSaver fund, I hold no traditional portfolio assets.
None of my properties are investments - all are for family-related purposes.
My investment focus has been on my skills. I consider the returns I gain from that far more respectable than any gain earned on portfolio assets I held in the past.
8. What's your best saving tip?
Forge your own path and identity: don’t be drawn into the spending habits of your old friends and family.
Beyond that, buy used, cook your own meals and drink with friends at home.
9. What’s the best money advice someone's ever given you?
In 1988, I was considering working weekends to do up a house and sell it.
My father said if I was prepared to sacrifice leisure time to gain wealth, it would seem better to focus on what I knew I was already good at (economics), rather than do something virtually anyone could do with their spare time.
He was right! Thanks Dad.
The views expressed in this article are personal and are not professional financial advice.
