Would appreciate some advice for a newbie

[justakiwi]

At the age of 55 (female, divorced, no children at home, working four days a week but renting) I've been seriously looking at my financial situation. I don't have a huge potential to save but I do have a regular savings plan set up and around $7000 of savings, currently sitting in the bank earning pathetic interest. I looked at the option of putting some into term deposit but the rates for those are also pathetic unless you have a significant amount of money. I have Kiwisaver but was a late starter with that so right now the balance is only around $16,000.

I have come to realize that I need to be more proactive and find a way to make what little money I do have, work better for me. I've made a decision (and have run this past an authorized financial advisor) to leave my Kiwisaver as it currently is - contributing 3% until I retire. I will just let it take care of itself but will probably change my plan (currently 50% balanced 50% growth) as I get closer to age 65. In the past I've tried to make extra manual payments to it as funds have permitted, but I no longer believe this is the best option. I think I am now better to look at alternative investment options to run alongside my Kiwisaver (that won't tie me in until I'm 65).

So ... I took the plunge yesterday and purchased my first 1000 shares (Kingfish Ltd). I am definitely a newbie to this (owned some shares many years ago but it was more for fun than as a serious investment) but I have spent the last few weeks researching companies, seeking advice from some trusted friends who have been investing in shares for many years, and generally trying to build a better understanding of how all this might work for me. I am looking at this holding as a long term investment focusing on growing my holding via dividend reinvestment, and will look to buying additional shares as funds permit, with the aim of building up to maybe 5000 shares. Alongside that the plan is to continue with regular savings and every time I accumulate another $1000 - invest that in additional shares with different companies (thinking maybe next time something outside of NZ).

As I said, the aim of this is to make what money I am able to save, produce (long term) better results for me than leaving it in bank deposits would. On top of that, I'm looking to diversify (both in terms of geographically and types of stocks). I would hope that as I build up a portfolio I will see some growth over the next 10 years until I reach 65.

I could really do with some advice or feedback on this as I'm flying solo with it. I am on my own making decisions for myself so it is really good to get some input from others with more experience than I have, as a way of seeing whether or not I'm on the right track. I would also be interested to hear opinions on ETF as an option for the next step in my plan, to stand alongside my Kingfish shares.

Thanks in advance for any comments! :)

[stoploss]

Congratulations on your savings ethic justakiwi and welcome .
There is a world of good advice on here and informative threads .
so you can do a lot of research , I would also recommend searching out some investment books at the public library .
One thing did alarm me " seeking advice from trusted friends" - and the best they came up with was Kingfish ?
IMO if you spend some time on here reading the history of various stocks and posters, you will be able to do a better job yourself . Good luck out there .

[justakiwi]

Re your alarm bells - I wouldn't say my friend told me to go with Kingfish. What she said was that she has invested with them for a number of years now (contributing to her overall portfolio) and she has been very happy with their performance over that time, particularly in terms of their dividend policy. She is aware that I only have a very small amount to invest right now, and she believed Kingfish would be a good way for me to build my holding via dividend reinvestment. I read through their policies and looked over their past performance and I made a calculated decision to "give it a go." As I said, I'm looking for long term growth that will (at the very least) beat what bank deposits could provide me. So I get what you're saying - no doubt you would have recommended something else, but the unfortunate reality for newbies is we have to throw ourselves in the deep end with that first trade and figure it out as we go along. I'm pretty sure most people have learned by trial and error and I'm prepared to do that - at least initially. Right now I can't afford to buy into companies with high share prices - which is why I'm considering going the ETF way next time. Maybe that is a better way to get a slice of the better companies for someone like me?

What are your thoughts on that idea?

P.S - my previous dabbling in shares was over 25 years ago. I had a couple of thousand shares in Brierley - at the time considered one of the companies to buy into. Needless to say that theory backfired on me ;)

[stoploss]

Share prices that are high often go higher ...AAPl @ 10 dollars circa 2000, then $ 50 , then $ 100, then $ 200,300,400,500,600,700 , ........
I'm don't know a lot about ETF's , but search on here I am sure there is a thread . Re KFL have a read of the thread , take note post 266 ....

http://www.sharetrader.co.nz/showthread.php?3048-KFL-discount-to-diluted-NAV/page18&highlight=KFL

[777]

Bear in mind that some posters have certain vendettas against some people. That post 266 on the above thread is by such a person. He pops up in a number of threads with a similar stance.

[justakiwi]

Thanks. I had actually already stumbled across that discussion while researching KFL. Who knows, maybe I made my first bad decision but I'm not going to stress about 1000 shares. I'll take whatever dividends come my way, in extra shares and will see what happens with them over the next year or so. The money I spent on them was making me nothing in the bank so I took the gamble.

Having said that, I've been browsing these forums for a while (before I joined up) and it is clear that there are some people here whose passion in life seems to be based around dissing other people's choices in shares. Often without offering any actual constructive advice on alternatives. I'm not referring to anybody who has posted in this thread - just making an observation based on what I've seen while browsing these forums. I guess over time hopefully I will be able to sort the wheat from the chaff and figure out which posters here are genuinely here to help newbies, and which ones are just here to stir ****/rant about particular companies. I'm a self confessed newbie who is here to learn. I am sure I will make mistakes along the way but sitting back watching my savings languish in the bank is no longer a viable option.

Thanks for the input everyone :)

[King1212]

Reading from your background, I think you be better off with managed fund. ANZ offers growth fund, u can set up a direct debit forthnigthly or monthly to your your unit trust. I done the same with my son saving...the unit price is fluctuated depend on the share market condition. Overtime, it return around 5-7% capital growth. Remember, share market is harsh. Your share value that u invested could double or burst....

[cyclist]

The other thing to consider, in addition to how you wish to invest, is to see if you can find ways to get your savings rate up a little. A higher saving rate, particularly while you have relatively little capital, will make a huge difference to your outcomes.

I'm not sure if you have discovered the financial independence blogging community yet, but it is worth reading some of the blogs out there. Making changes particularly around your living arrangements (housing) and cars, can make a big difference to how much you can save.

My favourites:

livingafi.com (http://livingafi.com) This explores the psychology behind wanting to save and become financially independent. I find his writing very entertaining and thoughtful.

http://www.mrmoneymustache.com/ This is a mix of life philosophy, plus nuts and bolts ideas for saving while still enjoying life. The writing style is probably a bit polarising, but the messages are well worth considering.

http://bravenewlife.com Dormant now, but the historical stuff is well worth looking at. Another one that is less nuts and bolts and more philosophy, with a very accessible writing style.

If you have some spare time, I'd start with bravenewlife from the beginning (earliest posts first). For each of these sites, some of the very early posts are a bit light, but they all hit their stride quite quickly.

[artemis]

I think Kingfish is fine for dipping a toe in the water. Investing is like learning French - add a little knowledge every day and fluency will increase over time. Once you have shares, suddenly they and their sector get a lot more interesting.

One thing you could do is look at sectors, eg retirement, retail, infrastructure. Set up a mock portfolio on ASB or ANZ Securities and watch the companies and their announcements for a while.

A question - are you looking to buy a property? That might change what you do. However, renting even forever might be a good option - you sound like an excellent tenant who will usually be top of a landlord's list. Plus rent is probably cheaper than home ownership, with no maintenance hassles.

[justakiwi]

Reading from your background, I think you be better off with managed fund. ANZ offers growth fund, u can set up a direct debit forthnigthly or monthly to your your unit trust. I done the same with my son saving...the unit price is fluctuated depend on the share market condition. Overtime, it return around 5-7% capital growth. Remember, share market is harsh. Your share value that u invested could double or burst....

I am also considering managed funds. I bank with ASB and RaboDirect both of which have managed funds. I haven't ruled these out but so far none of them have grabbed my interest. I am still researching all options, particularly ETF (the financial advisor I saw suggested these would be a good "next step")

It would be really easy to convince myself I don't have what it takes for this. It would be easy to just put it in the "too hard" basket and give up, but I feel like I need to get my head around this stuff and give myself a chance. I had hoped to find a NZ based online/distance course that I could do to build a better level of knowledge and understanding, but there is nothing. NZSA runs courses in the NI but nothing down my way. They are working on setting up an online option but this is still some way off. Other than that, I haven't been able to find anything in NZ. None of the tertiary institutions seem to run anything either, which is a real shame as I'm sure there are many people out there who would be keen to learn.

[justakiwi]

I think Kingfish is fine for dipping a toe in the water. Investing is like learning French - add a little knowledge every day and fluency will increase over time. Once you have shares, suddenly they and their sector get a lot more interesting.

One thing you could do is look at sectors, eg retirement, retail, infrastructure. Set up a mock portfolio on ASB or ANZ Securities and watch the companies and their announcements for a while.

A question - are you looking to buy a property? That might change what you do. However, renting even forever might be a good option - you sound like an excellent tenant who will usually be top of a landlord's list. Plus rent is probably cheaper than home ownership, with no maintenance hassles.

Sadly I am not in a position to now ever be able to own my own home. I don't have enough earning capacity to save the required deposit, and I don't have enough working years left to service a large enough mortgage to purchase a house (a mortgage broker and my bank have confirmed this). So I have to face the reality that I'm stuck renting. Having owned my own home in the past (with my ex pre divorce) I have to say renting sucks but facing the reality of one's situation is, I think, the first step in any financial planning process. Miracles do happen but I'm definitely not banking on one!

Thank you for the comment re Kingfish - "dipping my toes" is exactly how I'm looking at it.

[justakiwi]

The other thing to consider, in addition to how you wish to invest, is to see if you can find ways to get your savings rate up a little. A higher saving rate, particularly while you have relatively little capital, will make a huge difference to your outcomes [SNIP}


Thanks for the links. I will definitely check them out :)

[Hectorplains]

Bear in mind that some posters have certain vendettas against some people. That post 266 on the above thread is by such a person. He pops up in a number of threads with a similar stance.

'Vendettas' is an emotive term. I appreciate some balance to the rah-rah-ramping. It's not substantiated, as he points out KFL has underperformed by over 130% against NZX50 since listing in 2004. That's a 12 year time frame - not much more than the 10 year one that op is working to. What odds a repeat performance in the next decade?

[justakiwi]

'Vendettas' is an emotive term. I appreciate some balance to the rah-rah-ramping. It's not substantiated, as he points out KFL has underperformed by over 130% against NZX50 since listing in 2004. That's a 12 year time frame - not much more than the 10 year one that op is working to. What odds a repeat performance in the next decade?

Yes, I get what you're saying. But for someone who has very little to invest (on the scale of things) Kingfish is performing well enough for me to make some growth on my investment. While I might make a better growth on NZX50 I don't really have enough to invest to take advantage of that better performance - can I buy enough shares for the amount I spent on Kingfish, to make any real headway?

Plus for me, the regular dividend policy made this an attractive way to achieve further shares to build my holding.

Is my thinking wrong?

[stoploss]

Hi justakiwi,
I suggested reading for education , you mentioned online courses etc . If you are unable to get books from a library hopefully percy will forgive me for this .
But from ukbookdepositry.co.uk ( free postage ) could I suggest 2 books
Market Wizards- ( the original one not new mw)
How to make money in stocks - William J O'neil

Pay particular attention to the discipline each trader has ,this is key to success in the market imo.

Best money you will ever spend Stoloss will even give you a money back guarantee on them :)

[justakiwi]

Hi justakiwi,
I suggested reading for education , you mentioned online courses etc . If you are unable to get books from a library hopefully percy will forgive me for this .
But from ukbookdepositry.co.uk ( free postage ) could I suggest 2 books
Market Wizards- ( the original one not new mw)
How to make money in stocks - William J O'neil

Pay particular attention to the discipline each trader has ,this is key to success in the market imo.

Best money you will ever spend Stoloss will even give you a money back guarantee on them :)

Thank you! Will check these out too :)

There seem to be a number of different versions (slightly different titles) of "How to make money in stocks" - any one in particular?

Actually there are multiple versions of both books - can you tell me which version of both you would recommend please? Thanks!

[artemis]

Try some of Martin Hawes books (library) - I liked his Twenty Good Summers.

Broker sites usually have good info on investing, eg anzsecurities.co.nz, under Client Services at the bottom of the page.

This is from the NZX site:

Information on Investing
You can find a number of helpful introductory information sources online. The independent Retirement Commission provides information on different strategies for saving and investing, including in securities. See www.sorted.org.nz for more information.

Additionally, the Financial Markets Authority provides information specific to investing at www.fma.govt.nz/consumers/investment-basics .

[BDL]

Hi Justakiwi,
Investing is hard, discipline and research is essential.
Buffet recommends people invest in ETF's instead of trying to pick winners. You may not beat the market but you will beat most fund managers.
Only 15% of people can consistently beat the market.
Combine these with some TA will put you on the right path I think.
Good luck and all the best.

[BIRMANBOY]

Utilizing dividend re-investment plans is a good way to compound your growth and with four dividends a year this also helps. One thing you will find on this forum is a broad spectrum of views and it will be obvious that many posters will be in a different position and circumstances to yourself so wise to read everything with a judicial viewpoint. My only comment would be to try and achieve some variety in your choices so you have a good diversified portfolio. How diversified ? Maybe not more than 10% in any one share. Since your circumstances require you to be a bit conservative, this could even out the chances of having a dud. If you are careful with your choices and timing you should be able to do several percentage points better than a TD without too much risk. As others have said keep researching and learning.
Yes, I get what you're saying. But for someone who has very little to invest (on the scale of things) Kingfish is performing well enough for me to make some growth on my investment. While I might make a better growth on NZX50 I don't really have enough to invest to take advantage of that better performance - can I buy enough shares for the amount I spent on Kingfish, to make any real headway?

Plus for me, the regular dividend policy made this an attractive way to achieve further shares to build my holding.

Is my thinking wrong?

[justakiwi]

Utilizing dividend re-investment plans is a good way to compound your growth and with four dividends a year this also helps. One thing you will find on this forum is a broad spectrum of views and it will be obvious that many posters will be in a different position and circumstances to yourself so wise to read everything with a judicial viewpoint. My only comment would be to try and achieve some variety in your choices so you have a good diversified portfolio. How diversified ? Maybe not more than 10% in any one share. Since your circumstances require you to be a bit conservative, this could even out the chances of having a dud. If you are careful with your choices and timing you should be able to do several percentage points better than a TD without too much risk. As others have said keep researching and learning.

Yes figuring out how to create diversity is a bit of a "head scratching" activity right now. Given the small amount I have to invest (which will grow but still be small compared to most) - I really have no idea what the best option is from here on. Am I better to focus on building my Kingfish holding to (say) 5000 shares, before I look at alternatives? Or should I be looking at company no:2 for my next saved $1000-2000? As per my previous posts I like the concept of ETF but there are so many to choose from - hypothetically, if I were to go with Smartshares, how do I decide which fund to go with? (SmartLarge, SmartSmall, SmartDividend etc; and then NZ, AUS, US etc). Right now I'm leaning towards SmartDividend (assuming dividends can be reinvested) as that seems like a good way to grow my small holding.

Lots to think about and lots more learning needed. Thanks for the help - really appreciate it.

[BIRMANBOY]

I started by investing $1000 at a time...so chose something to invest in and then while I was getting ready/saving up for next choice did more research and kept doing that until I had 10. (or whatever you feel comfortable with) By this time I had been watching and evaluating previous buys and saw some that had been better than others so started adding to those positions. Its like a good garden..has to be maintained and tended to if you want it to flourish. Smartshares are good but you wont learn as much if you hand control over to someone else.
Yes figuring out how to create diversity is a bit of a "head scratching" activity right now. Given the small amount I have to invest (which will grow but still be small compared to most) - I really have no idea what the best option is from here on. Am I better to focus on building my Kingfish holding to (say) 5000 shares, before I look at alternatives? Or should I be looking at company no:2 for my next saved $1000-2000? As per my previous posts I like the concept of ETF but there are so many to choose from - hypothetically, if I were to go with Smartshares, how do I decide which fund to go with? (SmartLarge, SmartSmall, SmartDividend etc; and then NZ, AUS, US etc). Right now I'm leaning towards SmartDividend (assuming dividends can be reinvested) as that seems like a good way to grow my small holding.

Lots to think about and lots more learning needed. Thanks for the help - really appreciate it.

[kiora]

A useful site to check out prospective share investments
http://www.4-traders.com/
eg http://www.4-traders.com/INFRATIL-LTD-6494631/consensus/
Infratil 19 % pa on average including appreciation & dividend.Diversified with airports,Retirement homes,Electricity Generation,Data Storage,Accommodation Units
https://infratil.com/

Milford Active Growth Fund 13% over 5 yrs.Diversified.Advantage it is all PIE so you won't have to declare any income from them.Tax is already paid and you can pay in a weekly/monthly amount
https://milfordasset.com/performance/fund-performance/
https://milfordasset.com/performance/fund-updates/


ETF 's returns appear low
http://www.morningstar.com.au/ETFs/PerformanceTab

[RGR367]

You seemed to have a fair understanding of ETF right now so ask yourself, what companies made up those funds? And if you're to buy a bit of the companies on those ETF, what will it be? Will a Food company interest you? What about a company that manages real estate properties? Will you be happy having a bit on a financial instution? Would you put your money on Telecommunications Services or Utility generating company? What about one serving the Health sector? Etc.etc. Once you've answered what interest you then DYOR on companies making up a sector and decide. A portfolio of just 2 companies from different sectors would be a good start after you've done appreciating ETF.

[artemis]

I started by investing $1000 at a time...so chose something to invest in and then while I was getting ready/saving up for next choice did more research and kept doing that until I had 10. (or whatever you feel comfortable with) By this time I had been watching and evaluating previous buys and saw some that had been better than others so started adding to those positions. Its like a good garden..has to be maintained and tended to if you want it to flourish. Smartshares are good but you wont learn as much if you hand control over to someone else.

Agree. Also Birmanboy's dividend yield site is very useful.

I would add though that tax may be payable on dividends, but not on capital gain. Suggest add dividends. imputation credits, PIEs, and tax to your reading list. Though not a pressing issue right now as the amounts are small.

[justakiwi]

Agree. Also Birmanboy's dividend yield site is very useful.


It really is - thanks for the heads up :)

[huxley]

If you're thinking about the Smartshares ETF's you may want to check out Superlife's funds (also owned by the NZX)

https://www.superlife.co.nz/investments/investment-options

I've been using them for Kiwisaver and recently their super investment vehicle to get passive exposure to international shares and have found them to be pretty good. (the super funds are not tied up till till retirement like Kiwisaver).

[justakiwi]

If you're thinking about the Smartshares ETF's you may want to check out Superlife's funds (also owned by the NZX)

https://www.superlife.co.nz/investments/investment-options

I've been using them for Kiwisaver and recently their super investment vehicle to get passive exposure to international shares and have found them to be pretty good. (the super funds are not tied up till till retirement like Kiwisaver).

Thanks! I just had a look and discovered they are running a Seminar here in Timaru in September on "Building Financial Confidence in your Retirement." I've registered as I think it could be really helpful (hopefully I won't be too out of place as a total newbie/very very very small investor ;))

[justakiwi]

I've just been reading this thread from the ASX forum:

http://www.sharetrader.co.nz/showthread.php?7265-Paragon-Care-Ltd-(-quot-PGC-quot-)-Healthcare-upside!!/page14

Not rushing into anything but wondering if this might be a good option for me (say 500 shares) as something to add to my mini portfolio that would appear to have real potential for growth (plus a DIRP).

I am trading through ASB Securities, which automatically sets you up with a CHESS account (sponsored by Commonwealth Securities). From what I can tell this makes it easy to trade on the ASX but I haven't yet got my head around how this works in terms of exchange rates, tax, fees etc.

[stoploss]

Thank you! Will check these out too :)

There seem to be a number of different versions (slightly different titles) of "How to make money in stocks" - any one in particular?

Actually there are multiple versions of both books - can you tell me which version of both you would recommend please? Thanks!

http://www.bookdepository.com/Market-Wizards-Jack-D-Schwager/9781118273050?ref=grid-view

http://www.bookdepository.com/How-Make-Money-in-Stocks-Winning-System-in-Good-Times-and-Bad-William-J-ONeil/9780071614139?ref=grid-view

http://www.bookdepository.com/One-Up-on-Wall-Street-Peter-Lynch-John-Rothchild/9780743200400?ref=bd_recs_1

[stoploss]

I've just been reading this thread from the ASX forum:

http://www.sharetrader.co.nz/showthread.php?7265-Paragon-Care-Ltd-(-quot-PGC-quot-)-Healthcare-upside!!/page14

Not rushing into anything but wondering if this might be a good option for me (say 500 shares) as something to add to my mini portfolio that would appear to have real potential for growth (plus a DIRP).

I am trading through ASB Securities, which automatically sets you up with a CHESS account (sponsored by Commonwealth Securities). From what I can tell this makes it easy to trade on the ASX but I haven't yet got my head around how this works in terms of exchange rates, tax, fees etc.

If you can , set up a foreign currency account with ASB $ AUD attached to your share account . This way if you purchase Australian shares now they will probably take the Kiwi dollars out of your account . However when you come to sell you will then be able to have the AUD go direct to the account . So basically you will save yourself paying away the FX spread each time you transact ( once you have the funds in Aussie $$) Not sure if ASB do it , but out of my ANZ securities Aud ac , I pay for Cash issues , SPP etc , and I send them dividend cheques and they bank them into the account . No fees on these accounts :)
The brokerage for the Aud trade will be much same as you pay for NZ , so min of something like $ 30.00 for first 10 K.
Tax is something you will need to get advice from the right channels on . However if you are investing a small amount of money for retirement from what I have read on here it will not be an issue .

[justakiwi]

I just want to say a huge thank you to everyone who has posted in this thread or messaged me privately. Everyone has been hugely helpful and I truly appreciate it. I have taken note of every recommended link, book or other reference and will be following them all up. There will no doubt be plenty more questions so thanks in advance for your patience and support! :)