Smartshares - a good place for a begninner to srart ? pros cons ?

[toast2success]

Finally getting myself to that point *after many many years) where I can look to invest a small amount. At this stage the entry in to Smartshares looks the most realistic as I can drip feed it weekly, and I will investigate further,but it looks to only have an initial entry fee of $500 as a minimum (i.e I havent seen any indication of a brokerage fee to enter).

What are the pros and cons of enetreing inot the world of Smartshares ?

Any one had experience with them ?

TIA

[huxley]

Hi there

This link contains a reasonable summery of the pros/cons of smartshares (I've included their summery of of the other well known passive NZ options as they're also quite good as a starting point)

http://forum.mrmoneymustache.com/meetups-and-social-events/new-zealand-mustachians/

"Also I’ve jotted down a few thoughts on investing in the sharemarket in New Zealand. We are a little unlucky in that there are not many quality passive options, and those we do have are over-priced. These are just off the top of my head, so correct me if I've made a mistake.

Smartshares (NZX owned):
Pros: Offers passive exposure to a range of NZ and Australian stocks. Can set up a drip-feed savings plan and avoid paying brokerage, units are also tradeable on the market.
Cons: Management fees are “expensive”- approaching the lower end of what you’d pay for an actively managed fund. Not a good range of international or sectoral options.

Superlife:
Pros: Cheaper than Smartshares with many of the same advantages, such as drip-feeding savings plans. Now also owned by the NZX which adds a certain layer of credibility.
Has a much broader range of investment options which you can customise at will, including domestic and international bonds, property, shares etc.

Cons: Somewhat confusing application process. Still essentially acts as a middleman for Vanguard etc, and thus clips the ticket along the way.

Vanguard/iShares/other passive overseas managers:
Pros: Much, much cheaper- sometimes 10 basis points management fees, which is about five times cheaper than most NZ options.

Cons: Application process can be confusing, opens up foreign exchange risk, and has important tax implications. You will come under the FIF rules: www.ird.govt.nz/forms-guides/number/forms-400-499/ir461-guide-fif-fair-dividend-rate.html (http://www.ird.govt.nz/forms-guides/number/forms-400-499/ir461-guide-fif-fair-dividend-rate.html)
Unlike NZ equities, there are no imputation credits attached to stocks which basically mean you pay tax twice (at the company level and personal income tax)."

[huxley]

Just letting you know I use Superlife for passive investing as you can easily get the overseas exposure as well and as its not an ETF theres no brokerage to exit.

All the best!

[toast2success]

Hi there

This link contains a reasonable summery of the pros/cons of smartshares (I've included their summery of of the other well known passive NZ options as they're also quite good as a starting point)

http://forum.mrmoneymustache.com/meetups-and-social-events/new-zealand-mustachians/

"Also I’ve jotted down a few thoughts on investing in the sharemarket in New Zealand. We are a little unlucky in that there are not many quality passive options, and those we do have are over-priced. These are just off the top of my head, so correct me if I've made a mistake.

Smartshares (NZX owned):
Pros: Offers passive exposure to a range of NZ and Australian stocks. Can set up a drip-feed savings plan and avoid paying brokerage, units are also tradeable on the market.
Cons: Management fees are “expensive”- approaching the lower end of what you’d pay for an actively managed fund. Not a good range of international or sectoral options.

Superlife:
Pros: Cheaper than Smartshares with many of the same advantages, such as drip-feeding savings plans. Now also owned by the NZX which adds a certain layer of credibility.
Has a much broader range of investment options which you can customise at will, including domestic and international bonds, property, shares etc.

Cons: Somewhat confusing application process. Still essentially acts as a middleman for Vanguard etc, and thus clips the ticket along the way.

Vanguard/iShares/other passive overseas managers:
Pros: Much, much cheaper- sometimes 10 basis points management fees, which is about five times cheaper than most NZ options.

Cons: Application process can be confusing, opens up foreign exchange risk, and has important tax implications. You will come under the FIF rules: www.ird.govt.nz/forms-guides/number/forms-400-499/ir461-guide-fif-fair-dividend-rate.html (http://www.ird.govt.nz/forms-guides/number/forms-400-499/ir461-guide-fif-fair-dividend-rate.html)
Unlike NZ equities, there are no imputation credits attached to stocks which basically mean you pay tax twice (at the company level and personal income tax)."

thanks for this.

Would the cheaper fees of the Vanguard counter the FIF tax implications ? (in general)

[toast2success]

Do Superlife lock you in for a min amount of time ?

I started in somethign similar when I was 20 and teh slaes person told me teh minimum amount of time for contribution was 2 yrs. After 2 years I stopped contributing, not realising that fees woudl make it go backwards...lesson learnt.

[Pump]

thanks for this.

Would the cheaper fees of the Vanguard counter the FIF tax implications ? (in general)

One thing word noting is that FIF tax only kicks in above 50k investement cost.

Do the international Superlife options avoid the FIF tax?

[huxley]

Not if you join yourself (if you contribute as part of an employee scheme there are some limitations). Check this page for the ins and outs http://www.superlife.co.nz/benefit-payments-and-options.html

Essentially you fill in a form and they DC your account in three business days.

[p2r]

Their kiwisaver is locked in till 65 or buy first house but they have the same funds in non kiwisaver which are not locked in if you want. I contribute the minimum to kiwisaver ie 3% of my wage for a year then went on contribution holiday and put in $1040 a year.
They are PIR so less tax but depending on how much shares, bonds etc some is capital gains and some is taxable income. They work it out, you just have to be on the right PIR.

[Harvey Specter]

I contribute the minimum to kiwisaver ie 3% of my wage for a year then went on contribution holiday and put in $1040 a year.Depends. Some employers pay their 3% (2% after tax) ontop of your wage so it actually increases your income. If you employer takes it out of your hourly rate or salary, then what you have done is a good option.

[PSE]

Toast - dollar cost averaging is the right idea, markets are a bit pricey.
I prefer STW and VAS on the ASX200/300 to OZY and MZY as they have half the fees and greater liquidity when you come to buy or sell. Or at least that was the case a few years ago.

[AppleCrumble]

Anyone have any experience with the smart shares dividends fund http://smartshares.co.nz/types-of-funds/smartdividend/nz-dividend or the ozy version?
Just wondering what the dividends is like? How often is it paid? And does the unit value grow also?

0.54% mgmt fee seems cheap enough also. It's mentioned earlier that vanguard ,might be cheaper, by 10 basis points, does that mean 0.44%?

[Harvey Specter]

Anyone have any experience with the smart shares dividends fund http://smartshares.co.nz/types-of-funds/smartdividend/nz-dividend or the ozy version?
Just wondering what the dividends is like? How often is it paid? And does the unit value grow also?

0.54% mgmt fee seems cheap enough also. It's mentioned earlier that vanguard ,might be cheaper, by 10 basis points, does that mean 0.44%?It only started in April this year so it has no history. Send them an email as they might be able to give you modelled returns for the past few years.

[AppleCrumble]

Do Superlife lock you in for a min amount of time ?

I started in somethign similar when I was 20 and teh slaes person told me teh minimum amount of time for contribution was 2 yrs. After 2 years I stopped contributing, not realising that fees woudl make it go backwards...lesson learnt.

Surely if you had built up enough over 2 years, the costs would be minimal? But I suppose you have to be making above the costs for it to grow? I guess u need to know exactly how the charges work then.