Frequently asked questions

I envisage this as a lively nitty-gritty place for questions that might arise at the upcoming Event in Wellington, and further afield.

So here goes, here is my first juicy question:
Do my CoHOP shares attract income Tax through personal or company taxes, and at what rate?
If I sold part of my house into shares, how would I declare the capital gain aspects of my asset?
Bless!
Barbara

OK: next juicy musing:
CoHOP FAQ 2015

In designing the CoHP website, I come across text that states "we want to cut out the banks, getting rid of interest".

I feel this is an anomaly, and an area that we will have to tread creatively, and here are my reflections for the following reasons;

• we have a golden opportunity to be a pioneer, walking the talk of collaboration.

• CoHOP represents a bridge between an old way of thinking, and a new co-creative way of think-actioning money-power. Any change of these fundamental money-entrenched-values will encounter friction, both at the personal & institutional levels. I believe we need to recognise this, and be more upfront/pro-active about this in our public-focus. I have some ideas about how to do this, you will too!

• as a company, we need to hold a reserve for prudent repayment of share capital, on demand. At any one time, we may decide that this is up to a third of our available funds. We have to invest that securely on call or short term-where? As I see it, we have two options: with a conventional bank or with a savings pool. Which will look more secure to our newer conventional-system-thinking financial savers?

• I believe we need to work with the conventional banking system, having one foot in the system, and the other modelling a new way of thinking. This has a benefit: Joe and Jane Bloggs see us being prudent, while also demonstrating creativity with money.

• we have chosen Kiwibank as our banker, as the best 'fit' thus far. As we grow a relationship with our bank (rather than a confrontational position), there may be future opportunities to re-create the ethical investment portfolios that we lost with the demise of Prometheus, just through ongoing customer modelling and demand. As our concept starts to fire people's "money-imagination", funds and membership grows, we'll have more "voice", I foresee the banks becoming more interested in us. We need to be ready-what does readiness look like?

Another thought: our members gather no interest on their savings, yet the company does with it's reserves, by investing collectively, for bigger amounts, for better terms, thus returning the best returns to and on behalf of all members. We will always have to be utilising conventional banking systems, until there is an alternative system growing up. Let us demonstrate that alternative with goodwill and neighbourly-ness. Bless!

Barbara, what you say about keeping a % of savings pool funds in reserve for repaying share capital on demand is reassuring - this addresses one of my concerns.

Re. 3-comments up Barbara's Musing.
Let's compare the phrasing:
- “we want to cut out the banks, getting rid of interest”.
with
- CoHOP is about people being in control of their own finances. Part of that is striving to live without interest-payments keeping us down financially, and being independent of non-personal banking institutions
OR
- We want to offer people the opportunity to live without interest, and to be able to use or to bypass the banking industry as they choose
I strongly believe that the wording we use, reflects our initial attitudes but also forms our attitudes, so it is important to get the wording right. Also because of who we attract, and who we scare off, on first contact (first impressions count, whether I like it or not)
Is statement one the same as 2 or 3? No. 1 is more exclusive. 2 or 3 give some flexibility for transition periods and arrangements.
So, reflection: In my opinion, if you take attitude one, and insist on it, you could achieve a more pure path away from banking, being at your idealistic-quality level of what you pursue immediately, BUT with less (probably many less) individuals willing to engage in the project, and also taking certain financial risks.
With attitude two/three you have one foot in the ideal-system, for those who are ready to be that progressive, whilst offering some conventional financial safety to those who are not ready/willing yet. (some would say 'perceived safety', or even 'mistakenly perceived safety', but that doesn't matter). The real challenge then comes to keep pushing the ideals that you have to become more 'pure' and banking-system independent, and not settle into a complacent semi-alternative fait-accompli ('situation you are now stuck in').

Any organisation I would fully give my time and support and also money to, should offer a range of individuals of different (financial) belief systems a way to participate that suits them. Not to push them into a certain mould they are not happy with.
I am convinced we can offer several streams, several path ways, and that this doesn't diminish, but encourages and grows the value of what we are doing together.
Essential to use careful and clear phrasing and robust discussions. Thanks Barbara for your juicy musing.

ok, here is the next musing:

How do we explain to potential 'financial savers', the difference and upsides to shares in CoHOP vs shares in other companies?

Or the scenarios in story-form that will clarify why low interest rates are not accruing "returns", in the conventional sense. (This will be for folk who are still thinking in the "making my $$'s work for me mindset")

Hah! mulling on this one for a diagram for our upcoming event.

One idea I have been thinking about for my own savings, both as a non-resident and possible future resident.
1) Do I put my money into company shares, the bank, diversified shares with a stockbroker or Kiwi saver retirement funds??.
Or
2) Do I put my money into Share ownership in land and buildings such as CoHOP??.
My rational
1) By putting my money into market shares

I have the opportunity of earning income from interest, providing the companies are profitable and successful. So therefore I could improve my lifestyle by increasing my income and meet the expenses of living.

2) By putting my money into CoHOP I will be
-building a nest egg for myself and my family in a self sustainable and resilient investment,
- Probable capital gain as land and building development increases.
- Opportunity to become a resident in a home with decreased expenses through solar power (no power costs), community food production, Shared community recourses,
Community support, and shared risk, etc.
- Ability to sell or draw on my shareholding if I need to.
- Leave a living legacy for future generations demonstrating healthy and resilient lifestyles and financial resilience.
- Have an opportunity to share the risks, responsibilities, and celebrations with others.

I guess for me the question of my choice of investment has been a matter of do I try to increase my income with all the risks and responsibility I carry on my own.
or
Do I join with others to invest in land and buildings that are unlikely to collapse and share the risks and responsibilities with others.
I like the idea of giving and sharing support with others in a financial investment. Instead of relying on share investments outside of myself that I have no control over.

I'm interested in this question about why low interest rates are not accruing "returns".

Here's an example ...

If someone has for example, $40K invested with the bank for a three year period, they'll receive $400+ each month in interest.

If they are not receiving any other income, this might cover their food bill.

That $400 may not be all the money they have, but it's attractive.

And they may be open to a mindset shift, so what would we tell them?

Vicky

OMG. Your example Vicky is making me wonder too.

So this is what I am thinking about the above example:
If one deposited 40k for 3 years on term deposit the average interest rate today may be 4.5%py
= $150pm less 17.5 tax = nett income $123.75pm
= $150pm less 10.5 tax = nett income $134.25pm
Compared to this Senario
If you were to purchase $40k shares in CoHOP and be a part owner in Land and Buildings. On the assumption that as CoHOP expanded and values increased your shares would increase. At this time you could withdraw a monthly amount down on your share capital possibly without loosing your original capital investment.