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Getting your financial ducks in a row

6 April 2023

Author: John Berry, co-founder and CEO of Pathfinder Asset Management

With our world feeling less certain than ever, good financial planning is crucial. Here are some top tips for approaching your finances amid a looming recession from Pathfinder Asset Management.

Have clear goals

If you don’t know where you’re going, you’re unlikely to end up where you want to be. Finances are no different to your career — you need to set goals. Setting goals helps trigger new behaviours, helps guides your focus and helps you sustain that momentum.

If you’re a property professional with uncertain commission-based income, focus on realistic and attainable goals like “I want to save $5,000 in six months for a holiday” (short-term) or “I want my mortgage cleared before I’m 60” (long-term). Have milestones to tick off along the way, as a pathway to success.

Goals help us stay on track and your values will ensure you get there in the right way.

Understand ‘risk’

Weighing up whether to invest in property, shares or bonds is about balancing risk with return. While we get our heads around ‘returns’, many struggle with what ‘risk’ means. 

Professional investors often think risk is volatility (how much an investment value fluctuates up and down over time). Money in the bank doesn’t swing around in value, so it’s low volatility and, on this measure, low risk. Meanwhile, Bitcoin jumps up and down daily, making it more volatile and riskier.

The average investor sees risk differently, not as volatility but as the likelihood of losing money. On this measure, shares in a tech start-up feel riskier than shares in Microsoft. The potential for losses is higher.

Think about how much risk you can take. Consider this both ways: firstly, when does volatility keep you up at night? Secondly, how comfortable are you with the likelihood of loss? 

Understand your personal risk tolerance before figuring out what investments will help you reach your goals.

Make smart investing moves

There are no free lunches in investing, but there are simple rules to improve outcomes:

  • Spread your investments. Diversification across investments reduces overall risk. The theory goes that when one investment goes down, others fare better and hold their value. It doesn’t always work, but diversifying is invariably better than concentrating in a single asset or asset class.
  • Dollar cost averaging. By drip-feeding savings into an investment you won’t have all your money going in at the top or bottom of the market. You’ll end up with an average entry price, particularly relevant to KiwiSaver where you contribute monthly. Spreading investment like this is widely regarded as delivering “the position of least regret.”
  • The miracle of compounding. Investing $100 at a 10% ($10) annual return, you’d think it’d take 10 years to earn $100 and double the investment. However, if you reinvest the returns each year it more than doubles in eight years. Reinvesting returns makes your investment grow faster.
  • Be aware of liquidity: Investments in listed shares and bonds can be sold and converted to cash quickly. These are called ‘liquid’ assets. Residential property, forestry or venture capital investments take longer to convert to cash and have more uncertainty around value. These are called ‘illiquid’ assets. You need to decide your optimum mix of liquid and illiquid assets — and have sufficient liquid investments including cash, as an emergency fund. This is especially true for real estate professionals whose future income may be difficult to plan around.
  • Accept advice: it’s always a good idea to seek professional advice. You’d expect a buyer or seller of a property to seek advice, so do it also with something as important as your financial future.
Make smart debt moves

Resetting mortgage rates that were fixed two or three years ago is tough right now. It could mean the interest cost doubles, and that hurts.

There’s no silver bullet for solving debt problems, however, here are my suggestions:

  • Pay down a little more: Try paying down more than the minimum on your mortgage. Frequent small extra payments may take years off clearing your mortgage. If earning commission, think about directing some as a lump sum payment against your mortgage.
  • Do your research: Review all banks when re-fixing your mortgage (not just your current bank). Some may offer an incentive for switching to them.
  • Avoid costly credit: Your credit card interest rate is much higher than your mortgage rate. Plan your finances to avoid higher rates.
Invest in line with your values

The world of investing is changing, you can now make high-performing returns from investments that don’t harm the world.

At Pathfinder, we believe ethical investments are of higher quality, for example we avoid sunset industries, controversies, and the degradation of resources. We believe ethical companies are likely to be better over the long-term for investors.

The bonus of investing in line with your values is that you’re growing more than your own bank balance — your money can help shape a world you can be proud of.

If you’re wanting more information on how to generate wealth and wellbeing during uncertain times, head on over to

This article was originally published in the autumn/winter 23 edition of Real Estate.