Lessons from the Christchurch Earthquake
We have all been Shocked by the Disasters in Christchurch and now Japan
Many of us have friends and family who have been directly affected and our thoughts go out to them and all the other people suffering through the aftermath of these dreadful disasters.
Someone in Christchurch said that the only good thing about the earthquake in September was that it made them realise how unprepared they were and so they took action and were much better equipped to deal with the February earthquake. Events such as these can serve as a warning and reminder to the rest of us to prepare for the worst and hope for the best.
At Bay Financial Partners we are experienced with preparing retirement plans, financial plans and estate plans which are all important strategies for managing the risks we traverse as we go through life. But when it comes to areas outside our area of expertise we go to the experts.
The inside back cover of the Yellow Pages telephone directory is titled "Get Ready Get Thru" read it and have everyone in your household read it and then do what it says. If you have children, or grandchildren, perhaps you could enlist their help to make an emergency plan and discuss it with the family. If they are at school chances are they have discussed it at length in class and could do a very good job with a little assistance.
Don't assume that everyone is going to be at home when disaster strikes nor that you will be able to communicate over distances. If you're at golf and your partner is at bowls and there is a tsunami warning where are you going to meet? Decide where you are going to meet up with immediate family and communicate that to other family, friends and neighbours. Have a number of alternatives, for example "we'll meet on the front lawn of our house, or if that's no good at the top of the hill at the end of the street, or if that's no good in the middle of the local school field".
Don't pay attention to well meaning advice from overseas "experts" doing the rounds on the internet. What is sensible in another country isn't necessarily so in New Zealand.
If you've thought about this and made some basic preparations life will be a lot easier after an emergency and the best advice currently available is in the back of your phone book or at www.getthru.govt.nz.
Have a Plan
Sit down and have a think about what you will do if there is a major emergency. Not just during and immediately after the event but consider the long term ramifications, ask yourself how your life and the lives of your loved ones might be affected a year or five or ten years after the event.
Only you can decide how much risk you are prepared to take, you might decide not to worry about it. You might decide "... if there's an emergency I'll just make the best of it." That's fine but at least think about the impact on you and your loved ones. If you are a rational human being there are a number of things you can do that will cost nothing but a little time, others like insurance will cost money so be sure to get good advise.
Make Sure You Have Appropriate Insurance
Check your insurance cover. You probably have fire, car and house and contents insurance but what happens to your income if your work premises are destroyed? How long can your business or that of your employer continue in an emergency? ANZ employees in Christchurch are being offered jobs in other parts of the country if they want to move. Can your employer do that? You really should insure your most valuable asset, your ability to earn an income.
And it may sound silly but which insurance company do you use? Do you actually know, and in an emergency could you remember or easily find out? You can't make a claim if you don't know who to make the claim from.
Keep Copies of Important Documents
Some who have lost family members in the latest earthquake in Christchurch can't find their wills and other documents. Their lawyer has the only copy and they can't access their premises to recover it, assuming it hasn't been destroyed. No Will can mean considerable delay processing the distribution of an Estate.
Insurance Policies, Wills, Matrimonial Property Agreements, Powers of Attorney, Trust Deeds, Mortgages, and all those other legal documents that we look at once when we sign them and hope to never look at again. It's in emergencies that we need them.
Keep a copy of a bank statement for each account you have and evidence of any other investments.
Write down the names and contact details of your doctor. dentist, lawyer, accountant, financial adviser and who to contact if someone can't contact you.
Make sure that you have your own certified copies of all these important documents stored somewhere safe and accessible in an emergency and have another copy stored with a trusted friend or adviser.
Nowadays it is very easy to make electronic copies of documents, scan them and put them in Cloud Storage, on a DVD or USB drive, email a copy to friends or relations and ask them to keep a copy. Compression programs such as the very popular WinZip or the free 7-Zip almost always contain a facility to put passwords on files. Again children and grandchildren are a good source of expertise in this area.
Geographical Diversification is Important
A couple in Christchurch, lived in the eastern suburbs and had a residential property portfolio consisting of 20 homes, all of them in the eastern suburbs. In their mid forties neither had jobs as their properties provided a very nice income. They lived a very nice lifestyle and were generally regarded as rich.
After the latest earthquake their home and all of their rental properties are uninhabitable and it is unlikely that any will be saved. So they now have no income, but they still have to pay the loans on the mortgages and the insurance on the cars and boat and so on. Insurance will eventually cover much of their loss but If they had bought a few properties in another town or even another part of Christchurch they would now be considerably more comfortable and in the long run far better off.
In the Bay of Plenty many like to invest in the Port of Tauranga and TrustPower, not only because they have both been good investments but because they are local businesses. That's great but don't have too much of your portfolio in these two companies, a tsunami in the Bay of Plenty would not be good for the Port of Tauranga and would no doubt affect TrustPower as well as Infratil which has a significant investment in TrustPower.
What would happen to your portfolio if there was an outbreak of foot and mouth disease in New Zealand? Economically that is probably the worst thing that could happen to our country with massive unfavourable ramifications to our economy, it wouldn't just affect farmers. You should seriously consider investing some money offshore.
Prepare for the worst but hope for the best and "Get Ready Get Thru".
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