The Game of Competitive Spending

Why do we feel we have to fill our homes with shiny new things? Lynda Moore, the Money Mentalist, says we’re being hijacked by our emotions and by keeping up with the Joneses.

The magic moment when you walk through the door into your first home is very special and you can rightly feel proud. But now you have the home – and the eyewatering mortgage that goes along with it – the next question is, what are you putting in it? Whether it’s a shiny new home or a slightly used one, it’s tempting to fill it with lovely new things.

Beer crate innovation

I remember my parents telling me about when they emigrated from the UK as a newly married couple and saved hard to build a new home. “We couldn’t afford new furniture. Our table was a couple of beer crates and a plank. Friends gave us furniture, and we just did without until we could afford more.” Confession time. My parents were telling me this story while sitting on my new lounge suite, after having lunch at my new dining room table because yes, I had succumbed to the temptation of filling my new home with lovely new things. Fast-forward to today, where having everything new and shiny seems to be a must-have. People see rampant expenditure as part of the new-home experience.

We have biases to get over

Why do we do it? There are a few money biases that come into play here. Let’s explore them. “We already owe the bank so much, what’s a few thousand dollars more to get everything else we want?” This is called spending justification bias. It goes like this. If A equals B, then it follows that C equals D, even when A and B have nothing to do with C and D. In other words, if we can afford the mortgage on the house, we can afford the furniture to go into it. But justification is just a form of selfdeception, because it gives us permission to spend money we can’t afford, and it widens the gap between our spending habits and financial reality. “But honey, the new sofa is only $25 a week, so we just won’t buy lunch and use that money to pay for it.” Let me introduce you to spending rationalisation bias. It’s a great way to convince ourselves that we can afford something and rationalise a bad decision with what look like good reasons. It’s about now that our super-sensible partner, friend, or parent says no, it’s not a good idea to spend more money. So, we bring out the big guns and the bottom lip starts to quiver. “But when Jenny and Tim moved into their new house, they had all new stuff, so we should too.” This is ‘keeping up with the Joneses’, a form of competitive spending. This bias is all about competing with your social group for status, or peering over your neighbour’s fence and wanting what they have.

The drive to keep up

So, why do we do this to ourselves? This behaviour is rooted in peer pressure from our friends, workmates, news and social media. Sometimes we simply want to have the newest and the best. Plus, it’s human nature. We love to show off and we want to be seen as successful. The easy availability of credit lets us do this, tempting us into debt. The drive also comes from deep within ourselves, stemming from our own level of self-esteem. We feel that to be happy, we need to look and behave a certain way and have the toys to impress others. There’s another catch. Before you start keeping up with the Joneses and potentially getting into more debt to do it, first ask yourself, what if the Joneses are faking it? What if the Joneses are broke?

Reframe your thoughts

So, here you are, proudly opening the door to your new home. What do you want to see after you’ve unpacked all the boxes? What is your style? What is ‘enough’ stuff? Often we’re so focused on buying a house that our plans stop there. Start to visualise the environment you want to create in your home and how you’re going to achieve it. • If you really do want a house full of brand-new things, plan for this cost now as part of your house-buying fund, rather than justifying that spending later. • Maybe you could be happy with just one lovely new piece of furniture now. You can get the rest from the flat or the op shop, and use friends and family hand-medowns until you’ve saved for replacements. • If you have a creative flair, make your home charming by painting, reupholstering and upcycling old bits and pieces you find or are given. The important thing is not to let yourself head down the pathway of justifying, rationalising or competitive spending. Pause. Take a step back and decide what’s important for you. Not anyone else.

When Tenants are Happy, Everyone Wins

The Rental Bureau is a small agency that punches above its weight, winning a prestigious property management award.

A business that started in its founder’s garage has just become the REINZ’s Best Property Management Company of the Year (Small Office). Owner Victoria Heyes says the winning principles of The Rental Bureau in Titirangi were based on her own experiences renting. “I thought tenants deserved better than they were currently getting, and that most property owners wanted that too. “When I started in early 2015, I had zero clients, but a firm belief that I had something new to offer.” She’s passionate about her vision to overcome the “us versus them” philosophy that she says seems entrenched in the industry. “I simply thought that there was a better way for everyone,” she says. “Tenants deserve good service, and owners want to know that good service is being given – but it felt that something was being lost in translation.”

Heyes says the flexibility of being her own boss has been appealing, because she’s also raising two young children. “I work long hours and the journey has been anything but smooth sailing, having to be available day and night for my customers and clients.” She recalls the stress of signing up her first client.

“After five miserable viewings on rainy days, I had failed to get a tenant, and the client decided to take their business elsewhere.

“I cried. I nearly quit then and there then – but I didn’t. I learned from the experience that rainy days do not show properties at their best, and I made a vow to keep learning from every single stumble.” As her client base grew, Heyes built a loyal team of five and moved to an office space in 2019.

She credits her ‘amazing’ team with The Rental Bureau’s recent success.

“Our fully qualified team excels in outstanding property management, uses the most up-to-date technology, and most of all, works together as a close-knit team to provide first-class customer service to our tenants and property owners.” Heyes’s original belief shows strongly through the bureau’s work. “The truth is that unhappy tenants are the worst thing for a property owner’s business, so we make sure that all our clients understand that prioritising looking after tenants is actually the best way to look after their business, too.”

“Our tenants are our customers, and our goal is to give them great customer service.”

For more information, go to www.therentalbureau.co.nz. Or call the agency on 09 887 7420.

Booster Private Land and Property Fund

If you can’t afford a vineyard or an orchard, you can still invest in one. Amy Hamilton Chadwick reviews this agricultural and horticultural fund.

If you like the idea of sitting back and celebrating with a glass of Marlborough sav blanc, knowing that you had a share in the grapes that produced it, the Booster Private Land and Property Fund (PLPF) might be for you.

What does PLPF invest in?

The fund buys freehold New Zealand agricultural land that generates an income from either selling its crops or leasing the land. The crops range from grapes to kiwifruit to hops to citrus, and the fund owns property in Northland, Hawke’s Bay, Nelson and Marlborough. The aim of the fund is to offer Kiwis an accessible, diverse way to invest in our agriculture, viticulture and horticultural sectors. To buy, say, a gold kiwifruit orchard, you’d need to spend somewhere in the vicinity of NZ$$1.5-1.75 million a hectare. PLPF lets you have a fraction of the ownership, plus more diversity, at a much more appealing starting price. The minimum investment directly through Booster is NZ$1000, or you can buy shares in the fund on the New Zealand Stock Exchange (NZX), which on October 30 were trading for around NZ$1.20 each. Some examples of properties owned by the fund include: • Vineyards in Marlborough which supply grapes to Awatere River Wines and Sileni

Estates. • Vineyards in Nelson leased to Waimea

Estates. • Kiwifruit orchards in Kerikeri leased to

Seeka Limited. • Hop-producing properties in Nelson which supply to New Zealand Hops Limited. “Our investors do enjoy buying a bottle of wine that probably contains our grapes, or slicing up a Yen Ben lemon for their G and T which came from one of our orchards,” says Duncan Wylie, General Manager, Strategic Development, for Booster. “Wine is such a New Zealand export success story, why wouldn’t you want to participate? But for me, I’m most excited about the hop industry – it’s a really interesting crop with solid returns, plus the ability to quickly adapt varietal mix to changing consumer demand, without losing years of production. “New Zealand hops are the cream of the crop when it comes to premium hops, and within two years we expect to have over 100 hectares of mature crops. It’s really quite exciting.”

What are the risks?

There is one unavoidable risk when you invest in any agricultural business or product: Mother Nature. Although the diverse locations within the fund’s investments help reduce risk, your investment could still be hit by adverse weather, a fall in global demand, low yields, diseases or pests. Other risks also apply, so you should read the fund’s Product Disclosure Statement found on its website for a comprehensive analysis.

What are the fees?

The annual fund fees are estimated at 1.19 per cent, with some potential variation in property operating expenses. If you buy into PLPF directly, withdrawal fees apply if you take out more than NZ$50,000 in a single year. If you buy PLPF on the stock exchange, there are no withdrawal fees; however, you will need to pay any fees that apply through your share trading platform or broker.

What are the returns likely to be?

The fund aims for returns of 6.5 per cent per annum (pre-tax), although you should expect results to fluctuate. Wylie says the fund has returned 10.6 per cent per annum (pre-tax) since inception. He believes the size of the fund will grow by at least 50 per cent this year, which will allow for more diversification of crops and locations. “The fund is at a fraction of its potential; we see this as a half-billion-dollar fund in the future – we’re short of investable properties rather than funds. “That’s because we don’t feel the need to invest in assets that are only just good enough. We want sustainable commercial enterprises that have a light environmental touch on the land.”

Who does this fund suit?

This fund will be ideal for investors who want some exposure to New Zealand’s commercial agricultural sectors, as part of a wider balanced portfolio. It’s important to understand all the risks, so take your time to read all the information available about the fund before you invest. You’ll also need to weigh up the pros and cons of direct investment versus buying on the NZX. Because agriculture is a long-term business, this is best approached as a longterm investment, particularly if your funds are subject to withdrawal fees. “I’ve worked in the investment industry for 40 years and this is most fun job I’ve ever had,” Wylie says. “When I visit one of our sites and look out at 100-plus hectares of vineyards, I think, ‘This is something is that has enduring value and there’s just no substitute for owning a piece of it’.”

FUND FACTS: PLPF

• Capitalisation: Around

NZ$87 million • Minimum investment:

NZ$1000, or via NZX • Fund fees: Around 1.19 per cent a year • Return: Forecast at 6.5 per cent a year • Share price (30 October 2021): NZ$1.18

Call 0800 40 40 50 for investment documents or visit www.booster.co.nz

Booster Investment Management Limited is the manager and issuer of the Booster Investment Scheme 2, Private Land and Property Fund. The Fund’s Product Disclosure Statement is available at www.booster.co.nz