sharesies.nz

[Aaron]

So sharesies kids accounts are up and running now. I'm a bit confused, sos if anyone could advise that would be great.

They have a few investments that are recommended for kids because of the tax advantage being PIR and the tax rate can be 10.5%, but they are managed funds and most of them don't pay dividends, so you are relying on growth. Where if you invest in an index fund they pay a flat rate of 28%. Which from my understanding is you can apply for tax credits, which goes against their tax account and offsets income once they start earning, which for my daughter is a way off, she is only 12.
I personally prefer index funds myself, but are the recommended ones a better option for my daughter?
Also they say for dividends that: "Any distributions paid by the companies are retained by this fund". What does that mean, if there are any dividends paid who gets them. I can understand a business retaining earning so they can grow the business, but a fund is different surely?

As unhuman says any dividend and interest income would probably be reinvested. Not sure the distinction you are making regarding a managed fund and an index fund and the 28% flat rate. Leaving the whole dividend/growth question as I would assume most investment funds would have a mix of both and that mix of dividend/capital gain(growth) would differ depending on their investment strategy.

Just considering Portfolio Investment Entities (PIE) and individual Prescribed Investor Rates (PIR), my understanding is that if you are investing in a PIE you make a declaration regarding your PIR which can be 10.5%, 17.5% or 28% depending on your income level.
Generally PIE income is excluded income so you do not include it in your income tax return. The tax is paid by the PIE fund. If you use a PIR rate that is too high IRD keeps the overpaid tax, if you use a PIR rate that is too low you are supposed to include the PIE income in your income tax return and pay the shortfall. Pretty rude. As long as your kids total income is less than $14,000 10.5% would be correct in any PIE fund. I would not use the 28% rate as my understanding is you are not supposed to be able to claim back the overpayment of tax.

[Pipi]

As unhuman says any dividend and interest income would probably be reinvested. Not sure the distinction you are making regarding a managed fund and an index fund and the 28% flat rate. Leaving the whole dividend/growth question as I would assume most investment funds would have a mix of both and that mix of dividend/capital gain(growth) would differ depending on their investment strategy.

Just considering Portfolio Investment Entities (PIE) and individual Prescribed Investor Rates (PIR), my understanding is that if you are investing in a PIE you make a declaration regarding your PIR which can be 10.5%, 17.5% or 28% depending on your income level.
Generally PIE income is excluded income so you do not include it in your income tax return. The tax is paid by the PIE fund. If you use a PIR rate that is too high IRD keeps the overpaid tax, if you use a PIR rate that is too low you are supposed to include the PIE income in your income tax return and pay the shortfall. Pretty rude. As long as your kids total income is less than $14,000 10.5% would be correct in any PIE fund. I would not use the 28% rate as my understanding is you are not supposed to be able to claim back the overpayment of tax.

Thanks for your reply Aaron. The distinctions I was making is that on sharesies the managed funds are PIR so yes I have her at 10.5%, where as if I buy her an index fund they charge 28%, so from a tax perspective the managed funds are the way to go.

Got an email back and the dividends by some of them are keep, not reinvested as such in that you don't get more units, but the unit price increases. So it should increase at each dividend payment.

[unhuman]

I imagine it works similar to kiwisaver etc, where any income generated from the units held are used to buy more units. Think of it as an enforced DRP.

[Kelvin]

Sharesies released a beta of their share trading functionality yesterday and i wrote a review here https://moneykingnz.com/buying-share...irect-broking/

I'll personally be sticking with Direct Broking. I like having the shares in my own name so i can participate in DRPs, and i hold long term so wanna avoid the account fee that Sharesies charges

[justakiwi]

As I said elsewhere Sharesies is not really designed for investors with large amounts of money to invest. It was set up to provide an avenue for small investors to get investing now, with small, regular investments, at no/very little cost. It is the best thing since sliced bread for me right now. Yes, there are some additions that could be made such as DRP, but I believe those things will come down the track. The individual companies trading is seamless and simple. I put an order in around 9.30 am and it processed and confirmed by lunchtime. From what I remember bulk orders are put through several times a day - not just once. I’m too tired to go check that so don’t take my word for it.

It is is an ideal platform for beginners to get started.

Sharesies released a beta of their share trading functionality yesterday and i wrote a review here https://moneykingnz.com/buying-share...irect-broking/

I'll personally be sticking with Direct Broking. I like having the shares in my own name so i can participate in DRPs, and i hold long term so wanna avoid the account fee that Sharesies charges

[blackcap]

I see my initial synopsis was wrong and that sharesies are a NZX participant. Their brokerage is a lot cheaper than ASB or DB and once they allow limit orders I can see them decimating the likes of DB and ASB. I am placing a $1,000 this morning. It is going to cost $30 via DB or via Sharesies I pay $5.

I know where I am going, I am buying this one at market.

[couta1]

I see my initial synopsis was wrong and that sharesies are a NZX participant. Their brokerage is a lot cheaper than ASB or DB and once they allow limit orders I can see them decimating the likes of DB and ASB. I am placing a $1,000 this morning. It is going to cost $30 via DB or via Sharesies I pay $5.

I know where I am going, I am buying this one at market.

Sharesies no good for trading though unless they can offer live depth charts.

[peat]

Sharesies no good for trading though unless they can offer live depth charts.

or investing, if you wish to own the investment (have it in your name)

[justakiwi]

That bothered me a bit when I first signed up but after reading all the fine print and talking to Sharesies staff, I lam not concerned about that anymore. The shares are mine and processes and protections are in place to ensure that. I am very happy with Sharesies. Cannot fault their customer service and they passion they have for what they have set up. It is a breath of fresh air to find a company that is putting the needs and wants of customers first. They have vision and are constantly seeking feedback on what additional features we would like to see, so I expect we will have options like limit orders, paper/printable contract notes, auto orders for companies, ability to buy warrants and much more, in the not too distant future.

or investing, if you wish to own the investment (have it in your name)

[RTM]

That bothered me a bit when I first signed up but after reading all the fine print and talking to Sharesies staff, I lam not concerned about that anymore. The shares are mine and processes and protections are in place to ensure that. I am very happy with Sharesies. Cannot fault their customer service and they passion they have for what they have set up. It is a breath of fresh air to find a company that is putting the needs and wants of customers first. They have vision and are constantly seeking feedback on what additional features we would like to see, so I expect we will have options like limit orders, paper/printable contract notes, auto orders for companies, ability to buy warrants and much more, in the not too distant future.

That’s what I thought with Halifax to. That the shares were held custodially for me.
Turns out somehow this is not correct.