ZM's Fletch, Vaughan & Hayley - Fletch, Vaughan & Hayley's Lil Bitta Pod - Bad News Brad!

Episode Date: September 21, 2023

On this Lil Bitta Pod; Fletch, Vaughan & Hayley have an extended chat with Chief Executive and Principal Economist at Infometrics, Bad News Brad Olsen! Brad answered your listener questions, covering Inflation, Debt, Mortgages, & Investing!  See omnystudio.com/listener for privacy information.

The ZM Podcast Network. Fleshborn and Hayley's Little Bit of Pod. Treat yourself to McCafe coffee with MyMackers Rewards. Welcome to a special Little Bit of Pod. Shit, he has a flash email signature, this guy. Oh, does he? Yeah. What was that?

Brad Olsen. M-I-N-S-D? M-I-N-S-D. Is that one of those? It's like MIB, it the men in black But it's actually The member of Institute of Directors Oh

Let's go Chief Executive And Principal Economist At Infometrics Limited If you want to get A hold of them They are at Level 20

Plymouth's Tower 2 Glimmer Terrace Wellington Postcode 6011 But we know him lovingly As Bad News Brad. Still haven't got rid of that moniker yet. No, you haven't.

You've got to earn it. Check in with a special podcast and see just how fucked we are. Yeah, because I read something the other day that was like, hey, we said inflation was happening. No, we said the recession is happening, and now we're saying it's not happening. And I was like, sweet. And then straight after was the article about how petrol's going to be $3.50 a litre for 91 by Christmas.

Well, Asper, we ask you for your questions for Bad News, Brad. Should we start? We've got categories, Brad. Here are your categories. So organised. Inflation, debt, emergency funds, mortgages, investing shares. Spin the wheel. Let it pit.

Let it pit. What's your category? Look, just go categorical. Let's get rid of inflation. Inflation. Okay. We have a question from Taylor saying, what's the latest with inflation at the moment?

Do we see it falling at some point or is this it forever? Inflation is getting better. It's not over yet. Inflation peaked at 7.3%. Good news, Brad. It's now at six. It's now at six. And I'm going to lose it again.

But the challenge here is that prices are still going up. Bad news, Brad. They're just not going. It's now at six. And I'm going to lose it again but the challenge here is that prices are still going up. Bad news, Brad. They're just not going up as quickly as they did before. Good news, Brad. And I think that's what we're likely to see. Now the difficulty when we look through the figures is that some of your non-essential so furniture, for example, getting a bit cheaper. Some of those furniture guys

have got a lot of stock. Not many people are buying therefore they're having to discount their couches so that you'll actually go in and buy. That's good because I'm furnishing a whole house. This is good for me. Don't forget you've got a couch in my garage that's been there for six months. Yeah, yeah. It might be there for a while, you know. However, it's the essentials that are killing you. I mean, you look at the likes of fuel prices at the moment, they're over three bucks a litre for 91. They could well go to 350.

Rents are increasing. the likes of food costs again not as bad but still not good like food cost inflation was at 12.5% the worst in like 40 years it's now at 8.9% so again 8.9%

better than 12.5% still not good though and I think that's sort of almost the time for the rest of the year is like not as bad but certainly not sort of throwing out

open and you know opening a bottle of champagne anytime soon oh uh and you know opening a bottle of champagne no oh damn it is it if a packet of biscuits was 250 and now it's gone up to 320 or whatever is it just going to come down in in a year or is it's always going to be the new price right does it go back to 250 we're not going back are we not normally you don't normally see prices uh go down i mean the the one exception is probably like produce. You see produce go up and down a lot depending on supply and demand. But yeah, Bickies, those sorts of things, tinned tomatoes,

you probably don't see them ever go down. Not the Bickies. Not the Bickies. Yeah, the Bickies. Chocolate prices, oh my gosh. I know. The likes of cocoa and international sugar prices have gone up. So it's all the fun stuff that's expensive.

Cocoa's a big one because of climate changes affecting cocoa, yields, and then transport. I mean the minute fuel prices go up right everything goes up because everything has to be transported to this beautiful little once we fix climate change though the cocoa will come down right? It'll come down. We're just going to fix that first. Speaking of transport and everything's

going up and the flow on effects, are we using trains to their full effect in this country? To a degree. I mean, I saw that KiwiRail is opening their connection back up into Hawke's Bay after the cyclone. So that's encouraging because they've got a big port there. They're trying to get the likes of logs and good fruit and that out to the rest of the world so that people

will buy them. That's good. I think, I mean, there's always stuff you could do more with trains and rail and what have you, but it is pretty expensive as well. Solar powered trains. Who knew that first? You'd have to get a lot of speed up before well. Solar-powered trains. Who'd have heard first? You'd have to get a lot of speed up before you went through a tunnel, though.

God, yeah, you would. Yeah. Just gets yow throughout the other end when it gets to the sun again. Just imagining in Wellington, it's sort of like off and on and off and on. Yeah, yeah. Wind-powered trains in Wellington. God, they'd get there quick. You heard it first. But if you had the propellers on top of the train in the Wellington. God, that'd get there quick. You heard it here first.

If you had the propellers on top of the train in the tunnel, they're going to get knocked off. The tunnel's still the problem. Question from Georgia. How can we prepare for Christmas and summer with the way inflation is going? Thank you, Georgia. I think probably the best one is figure out your budgets early. What are you looking to spend both on gifts but also what are you doing?

Are you doing a big family dinner? Are you going out with friends? You know, what's the plan? I think especially coming into Christmas and summer more generally, right, a lot of young people are thinking of, you know, it's festy time. So figuring out if you're going to one, you know, you're going to be able to get that early bird ticket. Where are you staying?

You know, who's pitching in for fuel? Are you making sure that you've sort of got a bit of a budget? And I know that budgeting is the least part. That's not sexy, Brad. It's not the best part of going to a festival. It's not fun. I totally get that. But you sort of have to these days because money's tight.

Speaking of gifts, are we doing elaborate gifts? Because it's my birthday next week. For your birthday, yes. After that, no. Okay, thank you. Cancel it. Yeah, gotcha. Pre-purchase your contraception before festivals as well.

They always hike up the prices at these destinations. Do they? Connie's. That's just basic supply these destinations. Do they? Connie's. That's just basic supply and demand. I mean it is, but man, if there was one place I didn't think that this pod would go, it was at the Rhythm Method. It's free though. Very free. It'll also save you about $300,000 over the lifetime. I was just about to say

the payoff is big. That's girl math actually. Yes. We could girl math the price of condoms. Okay, spin the wheel. We're on debt slash emergency funds. Sounds good. From Hamish. What should I prioritise? Paying off debt brackets car loan, credit card or

saving an emergency fund? Oh, that's a tricky one. A little bit of both in a sense. I mean I don't think you'd want to sort of go half a leather down one route and completely ignore the other. Depends on how much money you've got, but you want to, where you can over time, build up a bit of an emergency fund.

Can your emergency fund be a credit card? Better not. Better not be. If that's your absolute only option, maybe, but let's stick to maybe a little bit of cash in the bank would be your first port of call. But you try and get rid of that debt afterwards. Sort of normally by what has the highest interest rate first.

So if you've got like a consumer loan or something from your bank, if you've got a credit card debt, get rid of that before some of your lower stuff. And probably the big exception is student loans. Don't pay it. Well, they'll sort themselves out. You have to pay a certain amount of your income. Whereas if you've got a credit card bill, it doesn't matter how much income you've got coming in.

The bank wants your money. Yes, yeah. And you can get consolidation loans, can't you, that can be cheaper from the bank sometimes. Yeah, if you've got multiple debts, chuck them in one. And we're hearing from more and more people, look, times are tough and some people are doing alright

but some people are really starting to be squeezed. If you're in that position, go and talk to someone earlier rather than later. Your bank will be happier to help now than after things have already got bad when they're looking to repossess your possessions or whatever it might be. Right, because Charlotte asks, if you do have an emergency fund, what's a reasonable amount to have?

It sort of depends on who you are and what you want it for. I mean, the ballpark sort of rule of thumb is that you want to be able to have like sort of maybe three weeks to three months worth of expenses, just your daily living expenses. So the idea being, one, if you lost your job literally today, how quickly are you going to be able to get a job? Probably not tomorrow, so you want to have a little bit of wriggle room in between. But also if you got in a car crash or something today and you needed to repair the car because you need to get your kids to school or you need to get to work,

you have to be able to pay for that. So you're looking at probably a few hundred to a small few thousand if you can afford it. It's probably more that small few hundred for a lot of people, but it just gives you a little bit of security that if that unexpected cost comes in, you can immediately pay for it. There's a question here from a C. Fletcher. Is it alright to dip into my emergency

funds for chicken nuggies? And Prosecco. I mean, I guess it depends on how big the emergency fund is. That is an emergency Yeah It's an emergency But this is Well probably my support

If you're going to Rate it for chicken nuggies Which I can't disagree with Personally Great You've got to Be able to build it back up Yeah okay

You can't just Continue to take it for nuggies You've got to then Add some money back in Yep Spin the wheel Yep Where do we land

Mortgages Amy asked Is it worth fixing my mortgage for five years to avoid paying a higher rate? I'd say that shit's sale. We were in like 2021 and you could get a five-year rate for like $299. Oh my God. Oh my God, I wish I had. Because I refixed a part of mine not too long ago

and there was word that it was like hey you could go shorter here you could do six to twelve and then see how we go or eighteen not probably wouldn't so I mean look general advice because gosh this really does get in deep to it I think what we're starting to see a little bit more at the moment is that five years and like four and five year rates are unusual they're quite unusual for people to take out because that is a long time in the future what you usually see is people that do one year fixed rates because it's sort of shorter and yes, you'll sort of take those adjustments when they come. What we're seeing a bit more interest from people in is like two to three year rates because it gives them a little bit more stability. Everyone's like, I don't know how much interest rates could go up. I want to sort of have a bit

of an idea of how much my household budget has to be to pay that mortgage. I can plan, yeah. Equally, there is the chance that the Reserve Bank, in fact, I think likely that the Reserve Bank will drop interest rates at some point within the next couple of years. So that's why I'm saying I don't think necessarily that five years would be likely. I was really hoping you were going to say months then. Same. Days or hours. But see, this is the thing.

I think what people are thinking about at the moment is a bit more of like, maybe I have some on like maybe a two or three year, so I've got that stability of knowing exactly what I've got to pay for. Chop it up a bit. And a little bit of maybe some one year. So you can manoeuvre around a little bit more, but you cover your bases. You know, people who are on floating rates

at the moment, they should lock that stuff in as quickly as they can. Because there's a big margin. Look, I've got one coming up very soon. And the 18 month one is the cheapest at the moment. Yeah. It's probably not a bad option to look at when you talk to your financial advisor. No, no, Brad.

Tell me now, Brad. I'm going to look at it. Brad told me I should renovate my house. That is a thought. Remember? Brad was the one who made me renovate. It wasn't just a poor financial decision. That was a poor emotional decision.

Yeah. A poor physical decision. Yes. That was a raft of terrible decisions. You did this to me, Brad. I'm never going to get invited to that house either. I'm going to go into the house, but you'll be guilt to it the entire way around.

You'll have to pay the interest. Fucking house, Brad! What I think is important, you speak of the likes of the 18-year, 18-year, geez, 18-month fixed rate. Shop around, because at the moment, if you look at the 12-month rate, you can get one for 6.99%,

you can get one for 7.45%. That's a big margin. Huge. You go in, one, you figure out where the best rate is. You go into whoever you're with and say, look, money's on the table. I can get it for this somewhere else. Are you going to match it or am I leaving you today? Some banks will do incentives too.

They'll be like, yeah, and we'll also give you a little cashie. Money back, maybe a TV? Yeah, maybe a TV. My mortgage broker tried that recently and the bank laughed. Now, is that because I am so in their forever debt, they own my soul? Probably. How long have you had your mortgage? 2010 we bought our first house and then extended it in 2015 to renovate

and then big extended to take the next step in 2018. They've got me by my balls, both of them. Yeah, they do, and they own your firstborn. Yeah, I actually signed her up as collateral. Yeah, right. Indiana Smith. It's interesting, right, because I feel like if they're going to laugh at you, I wouldn't hurt to cast around and go, well, look, I mean, if you're going to-

Oh, they didn't literally laugh. Well, yeah, but if they didn't come to the party, like- I like to imagine they were maniacally laughing. I imagine that someone's sitting there at their ivory tower on the screen jesus message and this i mean some people as you say they're not in a terrible position perhaps this could apply to them should i pay off my mortgage quicker or is it better in the long run to pay it off in increments i mean if you can pay it off quicker no that's a good idea because you'll save yourself money the question is i know that if you you can pay it off quicker, nah, that's a good idea because you'll save yourself money. The question is I know that if you try and pay it off too quickly

though, the banks can sometimes charge you. So figure out where that sits before you just plough some money into it. Final spin of the wheel? You got jammed. Investing slash shares. Is it smart? Is it a smart time to be investing in shares?

Should I change my kiwi saver plan two questions from tom okay let's deal with the kiwi saver one because this got a lot of people in a lot of strife at the early stages of covid a lot of people sort of went the markets were crashing everyone was worried and they sort of moved from a high risk fund to a low risk fund they locked in those losses and they've never been able to make them back yes whereas i remember my kiwi saver I looked at it in like March 2020 and it was nosediving. It was completely and utterly, you know, dead and on the floor. And now it looks really quite good. And so like, again, I don't need my KiwiSaver anytime soon. I'm not retiring for quite a number of years. I'm not

immediately looking to buy either. If I was looking to buy in the next six months, I'd want to be a little bit more conservative, not let that fund move up and down too much. So I think it depends on this person's risk. Are they looking to retire or use that KiwiSaver anytime soon? In which case, yep, you probably want to have a more conservative fund. If though you're a younger person and you sort of don't have any immediate need for it, you're looking and you're able to wear that risk over the ups and downs, that's probably more where I would think to be. That's where most young people are at but again important advice in terms of investing generally i mean again depends on where your money is have you got your emergency fund have you paid off the likes of your debts if you've got big debts and you're investing probably better to use that investing money to clear your debts

first because you have to assume that your investing returns are better than your interest rate yeah not always the case so if though with all of that fixed you've got a little bit of spare money to play around with, yeah, it might be worth having a look at. We're seeing more and more interest coming forward and I've talked to quite a few people who are moving things around. I'm looking forward, I'm off to the US in a month or so and I'm hoping to have a look around Wall Street and the stock exchange. So that doesn't mean I've got any trading tips, but like, you know, I'll be able to see it. Can we give you a little bit of cash and you can just put it in the right things for us? What are the right things?

So far, Hayley, you seem to be saying that I give mediocre financial advice. The right things is property, right? Increasing the value of your property, right? Nah, that's a long game and I don't blame you at all. I reckon you could sell tickets to the viewing of your house. Yeah, I think I could too, actually. A hundred bucks a pop. Then everybody would know where you live. You'd have to pick them up in a van and put

a sack over their head like a fool. Kidnap a scary animal. Yeah, yeah. A little bit of waterboarding. No, no, put them in the porta-potty. I think it's a little bit of waterboarding. That's dark, man. That's dark. Dark, dark. Well, wise words is always from bad news, Brad.

Do you invest in shares? Absolutely. You do? Yeah, yeah, yeah. Okay. I've got my emergency fund. So here's a little bit of my insight. This is not necessarily the way to do it.

This is how I do it. I've got my KiwiSaver. I've got like an emergency fund serious saver account. And then I've got a bunch of other sort of short-term saving things, like when I want to go travelling, and I'll save that money up over time in a separate bank account. So I can see it and I can let it grow, but then when there's enough in there, I might put it into a term deposit so it'll make even more money. Putting some into various shares

and bits and pieces. I mean, I think the biggest thing there is pretty difficult to pick really good shares. I'm not sitting on the phone, three phones with big laptops in front of me, tracking every part of the stock market. I don't have time for that. Most people don't. So you're looking probably more at some of those index tracker funds and what have you, laptops in front of me tracking every part of the stock market. I don't have time for that. Most people don't. So you're looking probably more at some of those index tracker funds and what have you, unless you've really got the time and inclination to look into it. That's probably the entry-level method. I am invest on gut, and that's why the top trials we've had now are down 92%, 75% and 54%.

That's not good. I've actually made $10 on shares, Ace. Retire now. Mum is shouting lunch. Lunch is on. I've made 66 and all it's cost me is $3,500. Yeah. Jeez Louise.

What am I doing wrong? So you're kicked off this pod now? Yeah. I don't know anything about these shares, Ace. What are they? I do the global something something. Blackwell Global Holdings? What do they do? Do you know anything

about these things? Nope. Well, you just picked them. I do the ethical package. Yeah, I do a lot of ethical packaging. Oh no, I'm all about unethical. I don't care how I make my money. Guns and bombs and whatnot. Bombs and satellites and military devices. Bliss Technologies is a New Zealand-based manufacturer of advanced probiotic strains.

Well, they're good for your gut. I don't know if I was invested in Bliss Balls. I guess the thing here, right, is that once you've invested in them, and let's go back to maybe before investing in them, have a little bit more of a look at bits and pieces, but once you're in there, you've got to make that judgment. Is it worth you getting out at a loss or do you not need the money and you hope that maybe

it's a longer term thing that you're back over time Because I invested in CannaSouth when I felt sure we were going to sneak through the referendum and then the fucking Conservatives rooted me on that one and now I've never bounced back. No. I've got a carbon fund Is that not just your house? They do offsets

of carbon. I do actually. I should sell shares in trees that I have in my property. God. Fisher and Paykel's down. We're a bit lost, aren't we? Pontera's up, but not that much. My food bag's down. See, I shouldn't be in charge of investing.

Peloton. Remember when I said Peloton's going to bounce back? Because Sex and the City almost bankrupted them. Oh, my God. They killed it. They killed it. I can't go down further. It fucking did. I've got go down further, it fucking did!

I've got a friend at the moment who is absolutely binging Sex and the City, I'm waiting for them to sort of say they've made

a purchase like that. Yeah, totally, totally. Well, Brady, thank you so

much for all this information. It is bad as always, but not as bad. Is that the general consensus?

Am I like not as bad news Brad? Yeah, I think so. Thanks Brad. Thanks Brad. Thanks, I think so. Thanks, Brad. Thanks, Brad. Thanks, team.

Thanks, Brad.