The beginners struggle

[justakiwi]

(Moved from the Heartland thread as don’t want to hijack that one.)


As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!

[iceman]

Everyone has different goals, situations and investment methods. It is not about being right or wrong but about finding out and deciding what suits your personal circumstances. I feel much better informed when I see debates like we've seen recently on the HGH thread for example, agree with some and not others. But in the end make my own decision based on what I belief suits my investment style and goala

[Snow Leopard]

....how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”

This is the very same question I ask myself regularly even though I have been investing longer than I care to remember and it is our only source of income.



I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!

It can be as easy as making regular payments into a fund or range of funds through good times and bad.

But I take the hard road and do my own and it can be fun.

Forums such as this and the opinions on them have very little influence on my decisions.
Sometimes the chatter alerts me to companies I should take a look at, but they are mainly just part of the fun, especially when you are in cafe because it is raining cats & dogs outside.

[JBmurc]

One must always take comments on all forums and even media plus Company mgmt. with a grain of salt ... you must make up your own viewpoint why you want to ,or not invest in "said" company and what your target price is to sell(+stop loss point) or are you happy to hold for the Long term for the yield etc ...

Coming up 15yrs trading the market and I look back on myself as a much more emotional investor when I started always caring what other though of what I was invested in .. companies I really liked and put to others I just didn't want to sell even when they look to be on the wrong path ... emotional attachment the hunt for peer approval is the worse path to take in investing/trading

[couta1]

(Moved from the Heartland thread as don’t want to hijack that one.)


As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard! The beginners struggle is a marathon not a sprint and should not be shortchanged, by learning from your mistakes you will become a better investor or trader, most on forums like this are quick to announce all their successes but few are willing to admit their mistakes openly. The market is a complex beast and will always have a new lesson to teach you so always stay humble and be thankful for your succeses, be wary of greed driven hype. PS- I call trading fun not investing, the former is like a double espresso and the latter like a flat white, I do both.

[Beagle]

A good idea for starting out might be to simply tap into the collective wisdom of others.
https://sites.google.com/view/nzsharepicks/2020-commentary
Top 15 shares picked by people on here is probably more likely than not to give you very close too, or slightly better than market performance.

Reality as a newbie is any shares you pick yourself is unlikely to beat the collective wisdom of some very experienced investors on here.

Add additional picks you like during the year as funds allow.

[JBmurc]

A good idea for starting out might be to simply tap into the collective wisdom of others.
https://sites.google.com/view/nzsharepicks/2020-commentary
Top 15 shares picked by people on here is probably more likely than not to give you very close too, or slightly better than market performance.

Reality as a newbie is any shares you pick yourself is unlikely to beat the collective wisdom of some very experienced investors on here.

Add additional picks you like during the year as funds allow.

Yes 15 NZX shares make up 50% of the picks ..shows how tiny the NZX is..

I see the ASX our closes market is 14x times larger in value (yet Aus population is only around 5x times larger than NZ)

[Snoopy]

(Moved from the Heartland thread as don’t want to hijack that one.)

As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!

I think that if you are looking for investments that everyone can agree on as a 'good' investment at a 'good' price then you might be looking for while. A market requires a buyer and a seller on either side of a transaction. If everyone agreed, then as a buyer you would have no-one willing to sell to you!

Both Beagle and I make assumptions when we came up with our own fair valuation of Heartland. We both document what these assumptions are. But assumptions require some degree of judgement. It is up to you to decide if you believe in the judgement of that poster on the day. If you have a different assumption then take out whatever figure(s) the poster has put in their modelling and put in your own figure(s). Then crank the handle of the valuation model and see what comes out.

As you continue to read that Heartland thread, you will no doubt find that Beagle's and my position on a fair value for Heartland shares are not as different as you might have thought.

SNOOPY

[justakiwi]

Yep. Already beginning to see that. Thanks everyone for your input.


As you continue to read that Heartland thread, you will no doubt find that Beagle's and my position on a fair value for Heartland shares are not as different as you might have thought.

SNOOPY

[SBQ]

(Moved from the Heartland thread as don’t want to hijack that one.)


As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!

Investing is not hard. The problem with investing (for most part in NZ), is the misinformation spread among the masses and the way the NZ gov't taxes it. They spread the myth that share investment is difficult and should only be left to the experts ; and therefore you should look only at Kiwi Saver funds and not invest directly abroad individually. This is very different to the models overseas (for which are more transparent).

Warren Buffet for decades reminds investors that all you have to do to win the investment retirement game is buy a low cost S&P500 index fund and wait, and "just forget about it". However, he has a big problem with those 'active or managed' funds that claim to have superior returns when the stats show nearly all of them do worse than the benchmark index return.

In his Berkshire Hathaway fund he's done exceptionally well over a typical person's retirement time frame, and as he explains in this interview that they don't have any need to wanting to swing (or make a move to buy or sell shares):

https://www.youtube.com/watch?v=qsV3NPGqBgY

and this is an older video but his principals still apply today. Of course for the NZ perspective, you would be a fool to limit your investment only to the NZX. But because the way the NZ tax is structured, there 'may' be a tax incentive for buying NZ shares. I disagree with this incentive as the investment environment in NZ is geared towards dividend payments for which is taxed no different than dividend payments received on foreign shares.

Following link Buffet reiterates the importance of keeping management fees down (and indirectly from the NZ perspective, keeping taxes down). Unfortunately for the NZ residents, we are stuck with FIF which imposes a 5% FDR on the entire fund portfolio value - effectively acting the same as a 5% management fee as you lose compound returns):

https://www.cnbc.com/2017/05/12/warren-buffett-says-index-funds-make-the-best-retirement-sense-practically-all-the-time.html

Of course most people have the instinct that they can do better returns than the index. They have an inclination to believe pick this stock is good, and after a year later when it shows that move is not looking so well, they tweak it, because they don't want to make themselves look bad year after year, and the same pitch keeps going on while investors are not fully understanding what's going on. Few years ago i asked some local financial advisors on the implication of taxation on such NZ managed funds etc. and they all say I need to look to a tax specialist. I mean get real, I want to know how much of the FIF / FDR each managed fund is paying and how much of their claimed % return on their prospectus accounts for taxation?

[Snoopy]

Following link Buffet reiterates the importance of keeping management fees down (and indirectly from the NZ perspective, keeping taxes down). Unfortunately for the NZ residents, we are stuck with FIF which imposes a 5% FDR on the entire fund portfolio value - effectively acting the same as a 5% management fee as you lose compound returns):


SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

0.3 x 5% = 1.5%

This is less that one third of the figure that you were bandying about.

SNOOPY

[SBQ]

SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

0.3 x 5% = 1.5%

This is less that one third of the figure that you were bandying about.

SNOOPY

Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).

[Snow Leopard]

Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).

Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?

[whatsup]

Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?

Snowwy, that is a total B S comment, grow up !!!

[Snow Leopard]

Snowwy, that is a total B S comment, grow up !!!

Canada not a wonderful place then?

You could be right, a friend of mine in big trouble with his family because he & his wife want to spend time there.

[justakiwi]

Can we please get back on track. Anyone else have anything helpful to contribute on my “beginners struggle?”

[Snow Leopard]

Sorry ma'am, won't do it again. :blush:

Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

You see how it goes and adapt with experience.


*If I remember correctly you can buy small $$ of shares with low brokerage

[Tronald Dump]

However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).

SBQ, to be clear, there is NO capital gains tax on PIE funds, whereas there definitely is a tax on investment property gains if you sell within 5 years. You also (of course) pay income tax on the rental income from property, just like you pay income tax on dividends from shares or funds.

[justakiwi]

I suppose I did sound a bit like a (school) ma’am ;)

Yes, I’m investing $40 a week via Sharesies currently, which is small bikkies for most people, but I’m feeling pretty good about what I’ve achieved so far in terms of building my little portfolio. At just under 19% returns for 2019 (calendar year) my money is working a heck of a lot better for me than it was sitting in the bank. I am an investor - not a trader, so happy to be patient and see how it all unfolds. Doing heaps of reading, listening to podcasts, learning from others in various forums and so on. I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand. It’s a learning curve. I thought there might have been some online courses available, but so far, I haven’t been able to find any.



Sorry ma'am, won't do it again. :blush:

Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

You see how it goes and adapt with experience.


*If I remember correctly you can buy small $$ of shares with low brokerage

[blackcap]

I suppose I did sound a bit like a (school) ma’am ;)

I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand.

Do a major in accounting and you will be all au fait with it. I completed a finance degree many moons ago but it was once I had finished an accounting major that I really got to understand financial statements and more importantly the notes to the statements.

[SBQ]

Sorry ma'am, won't do it again. :blush:

Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

You see how it goes and adapt with experience.


*If I remember correctly you can buy small $$ of shares with low brokerage

I'm speaking for both sides of the fence which is relative to the topic in discussion. The novice NZ investor is simply at a disadvantage to investing shares when compared to those living abroad. Furthermore the investing approaches abroad differs to NZ and a lot of that is due to taxation. Another is NZ preference to dividend income on share investment vs overseas prefer capital gains. If you can't get past this distinction, then you'll find all the effort put into investing shares (from a NZ perspective) would of gone to a waste of time and I mean you can study up all the fundamentals on a NZ listed company or try to look smart by using technical analysis on NZ shares and at the end of the day, you're worse off than buying a 2nd house. Sure there are winners and losers in any game... but you simply can't have a 'fair' game if the playing / (investing environment) is not on a fair level playing field. Earlier in the year I applauded for the WTG in NZ to tell the NZ gov't that capital gains tax should be brought in to NZ. It was the single only chance to level the playing field. But oh no, you have politicians (especially in the NZ 1st and National Party camp) that have huge investments in real estate and frankly, they're not going to welcome a CGT on their investments.


SBQ, to be clear, there is NO capital gains tax on PIE funds, whereas there definitely is a tax on investment property gains if you sell within 5 years. You also (of course) pay income tax on the rental income from property, just like you pay income tax on dividends from shares or funds.

You realise why the PIE funds came about? It was to address the tax inequality that managed funds faced when they were trying to roll out Kiwi Saver. We don't have to mention the absence of CGT because in the NZ share investment field, portfolios are subjected to something worse which is the FIF regime I keep describing. Look at the significance of share investing in NZ when you see companies like Xero leaving the NZX saying they want a wider market exposure ; while during this process, NZ investors holding Xero shares would be wacked with FIF. Is this the example we should be looking at for existing NZX companies - 'pick a winner where the long term result is they go off shore' ?

I do not believe there is much data showing those that have sold houses in less than the 5 year brightline test. You know investment criteria for retirement planning is not 5 years and certainly no one has lost a lot of $ in real estate if they held longer than 5 or 10 years.

The PIE funds do give investors in the top income tax bracket a 5% break ; pity it leaves nothing of a benefit to the small guy.

@ justakiwi : Since you're dealing with small sums, I welcome you to keep looking at high quality stocks with long future potential, typically those on the S&P500. If you can return a decent sum on your investment, be sure to keep it under $50,000 NZD which is the threshold before FIF kicks in. Hopefully you cash out the gains and put them towards something better like into your 1st home mortgage. FYI, in 2019 my portfolio did over 30% which is inline with the returns that the S&P500 and DOW index did last year:

https://dqydj.com/2019-sp-500-return/

What is the the NZ gov't doing to boost the NZ share market? The only thing I see being boosted in NZ is prices in the NZ real estate.

[percy]

Here we go Justakiwi.
Read the latest annual report.
Should the chairman's outlook sound poor read no more.If you can not understand what the chairman is saying,read no more.
Should it be positive read the balance sheet.
Look to see current assets are twice current liabilities.
Take out intangibles and goodwill from assets.
Then see what the equity ratio looks like.That is shareholders equity divided by total assets [less intangibles and goodwill]
Some business such as a retailer or manufacturer you want the equity ratio near 50%.
Finance company,bank. or property company an equity ratio of 13% to 30%.Note each industry has different requirements,so compare apples with apples,ie companies in the same sector.
Cash flow from operations should [must] be positive.
At the very end of the annual report you will find a list of major shareholders.Check the directors have sizeable shareholdings.
Make a record of why you are investing in the company.If the reasons change decide whether to hold or sell.
Buffett says he gets 6 out of 10 right.So hang onto winners and sell losers.
Jim Slater "The Zulu Principle" says sell at first bit of bad news......Google The Zulu Principal by Jim Slater and read about it.[investing]
Always read company presentations and compare what they achieve against them.
Invest only in companies that do as they say they will do.
Take responsibility for all your investment decisions.Ignore Sharetrader noise.
Buy to hold forever.
I try to base my own decisions on facts ie announcements.February I will be watching announcements closely.And will decide my course of action accordingly.
If I do not understand anything in a company's announcement, I ring and seek clarity.CEOs CFOs are happy to talk to you so long as you ask sensible questions.

[Snow Leopard]

I suppose I did sound a bit like a (school) ma’am ;)

Yes, I’m investing $40 a week via Sharesies currently, which is small bikkies for most people, but I’m feeling pretty good about what I’ve achieved so far in terms of building my little portfolio. At just under 19% returns for 2019 (calendar year) my money is working a heck of a lot better for me than it was sitting in the bank. I am an investor - not a trader, so happy to be patient and see how it all unfolds. Doing heaps of reading, listening to podcasts, learning from others in various forums and so on. I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand. It’s a learning curve. I thought there might have been some online courses available, but so far, I haven’t been able to find any.

No worries :).

Investing regularly is a good bit of discipline and no amount is to small.
So that $2080 per year is being invested in what? (sorry if you have already said somewhere) Index funds or individual shares?
Is the 19% your calculation or sharesies?

Not sure that you need to do a major in adding up to read the accounts.
I doubt most people read the small print but you should learn the basics of P&L, Comprehensive Income, the Balance Sheet and the Cash Flow Statement.

[justakiwi]

At the risk of embarrassing myself/looking like an idiot ... I currently hold:

KFL - my largest holding as I purchased these in 2016.
BRM
MLN
HGH
USF
BLT (yes, I know I shouldn’t have, but I did anyway ;) - my only “take a chance” highly speculative holding, which I won’t be adding to for now)

Total portfolio value is just under $5000. Not planning to buy anything new now. Focusing on building on what I have for now. And before the anti-Fisher/Carmel brigade get onboard - yep, I know their fees are high, but their dividend frequency and DRP have been awesome for me. I have not purchased any new shares in KFL since I bought them (although I did exercise warrants last year), but my holding has increased considerably simply because of DRP. It is a very good way for small investors to increase their holdings without spending any further capital.

I use Sharesight to monitor everything in one place - the 19% is their return (most of that return is KFL for obvious reasons)

Feel free to rip it to shreds ;)

No worries :).

Investing regularly is a good bit of discipline and no amount is to small.
So that $2080 per year is being invested in what? (sorry if you have already said somewhere) Index funds or individual shares?
Is the 19% your calculation or sharesies?

Not sure that you need to do a major in adding up to read the accounts.
I doubt most people read the small print but you should learn the basics of P&L, Comprehensive Income, the Balance Sheet and the Cash Flow Statement.

[Joshuatree]

Here we go Justakiwi.
Read the latest annual report.
Should the chairman's outlook sound poor read no more.If you can not understand what the chairman is saying,read no more.
Should it be positive read the balance sheet.
Look to see current assets are twice current liabilities.
Take out intangibles and goodwill from assets.
Then see what the equity ratio looks like.That is shareholders equity divided by total assets [less intangibles and goodwill]
Some business such as a retailer or manufacturer you want the equity ratio near 50%.
Finance company,bank. or property company an equity ratio of 13% to 30%.Note each industry has different requirements,so compare apples with apples,ie companies in the same sector.
Cash flow from operations should [must] be positive.
At the very end of the annual report you will find a list of major shareholders.Check the directors have sizeable shareholdings.
Make a record of why you are investing in the company.If the reasons change decide whether to hold or sell.
Buffett says he gets 6 out of 10 right.So hang onto winners and sell losers.
Jim Slater "The Zulu Principle" says sell at first bit of bad news......Google The Zulu Principal by Jim Slater and read about it.[investing]
Always read company presentations and compare what they achieve against them.
Invest only in companies that do as they say they will do.
Take responsibility for all your investment decisions.Ignore Sharetrader noise.
Buy to hold forever.
I try to base my own decisions on facts ie announcements.February I will be watching announcements closely.And will decide my course of action accordingly.
If I do not understand anything in a company's announcement, I ring and seek clarity.CEOs CFOs are happy to talk to you so long as you ask sensible questions.

Thats a fab condensed nugget in a nutshell percy, i shall endeavour to repost it every now and then like i do KW's basic charting posts about when to buy and sell.

[percy]

Thats a fab condensed nugget in a nutshell percy, i shall endeavour to repost it every now and then like i do KW's basic charting posts about when to buy and sell.

Wasn't bad considering the wife kept reminding me to come out and do the dishes.!!..lol.

[Snow Leopard]

At the risk of embarrassing myself/looking like an idiot ... I currently hold:

KFL - my largest holding as I purchased these in 2016.
BRM
MLN
HGH
USF
BLT (yes, I know I shouldn’t have, but I did anyway ;) - my only “take a chance” highly speculative holding, which I won’t be adding to for now)
...

NZ diversified -- check
OZ diversified -- check
US diversified -- check
diversified diversified -- check

As for HGH & BLT -- well I hold both.
Doubt you went wrong with HGH.
Question is why did you buy BLT? Because everybody else was or do you believe it has legs?

[Snoopy]

Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.


If you are taxed at 33% in NZ, that rate applies only top the incremental amount of your income over $70k. So it isn't really accurate to say that anyone earning over $70k is paying tax at 33%. You would need to earn around $700k per year to really be paying income tax at a rate close to 33%. You say that your FIF income is taxed at 33%. But you could equally say your income from other sources was taxed at 33% and your FIF income is taxed at a lesser rate.



Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age.


Yes you are right about this. It is not uncommon for overseas countries to have a different tax regime for superannuation schemes that are locked in until retirement. The NZ system taxes superannuation earnings as you go. Since I don't have the option of going to live in the USA or Canada I haven't researched the numbers myself. I suspect you have SBQ. So it would be informative if you were to tell us what happens to 'your' North American pension fund, in tax terms, once you hit retirement.



One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).


You are assuming that the ability of NZ property to grow in capital value is the same as the ability of the likes of the NYSE to grow. Even if the tax on NZ property will be lower after 5 years than owning NYSE shares, that doesn't necessarily mean you will be better off investing in NZ property!

SNOOPY

[justakiwi]

To be honest, I hadn’t even heard of them until recently when there was discussion about them on the Sharesies Share Club and the NZX stock Market Investors, Facebook groups. I then saw the discussion here. I had no clue what they were about so spent some time looking over their website, read all the info I could find there, and pretty much typed BLT into Google and read everything that came up. I also emailed them to ask if I there was somewhere I could access/read their published research. They sent me back a long bibliography list of everything that has been published. From there I had to manually search online to locate the full articles - bloody huge job I can tell you! So far I have only had time to find and read about three of them. I would have thought they might be much more easily accessed via the investor centre section of their website, but they told me they can’t provide them there for general (or even investor) access due to rules about promoting their products as “medicines” etc. Still not entirely sure I believe their explanation but have given them the benefit of the doubt.

Having done that research I feel they may be “onto something” with their products. I’m not necessarily someone who would be their customer, but I do know people are becoming much more interested in seeking out alternative products/probiotics, so I think there will definitely be a market for them, if they can be competitive price-wise. Funnily enough, I went to give one of our rest home residents a cuppa just the other day, and as I sat it on the tray of his walking frame for him, I noticed a sheet of tablets on the tray. I had a look to see what they were (we need to be aware if residents are taking any medications that we don’t know about) - and the first thing I saw was the word “BLIS” - such a coincidence but I thought it was really interesting as it shows that the general public is aware of the products. This fellow is 92, and his family obviously brought them for him. So the market is there and may well be wider than we might think, in terms of the age spread of users.

Anyway, I tried to talk myself out of it because speculative stock is not really a wise investment for someone like me, but hey .... you only live once and I think it’s worth a punt. Only 5000 shares so never going to make me a fortune, but if it makes me something long term I’ll be happy enough ;)


NZ diversified -- check
OZ diversified -- check
US diversified -- check
diversified diversified -- check

As for HGH & BLT -- well I hold both.
Doubt you went wrong with HGH.
Question is why did you buy BLT? Because everybody else was or do you believe it has legs?

[Snow Leopard]

To be honest, I hadn’t even heard of them until recently...

...Anyway, I tried to talk myself out of it because speculative stock is not really a wise investment for someone like me, but hey .... you only live once and I think it’s worth a punt. Only 5000 shares so never going to make me a fortune, but if it makes me something long term I’ll be happy enough ;)

Wow :t_up:.

I am very impressed with the effort and thought you have put into this investment decision.

Whether you make money on this one or not is a different matter, but I reckon you have the right approach on which you can build your skills and confidence.

[blackcap]

To be honest, I hadn’t even heard of them until recently when there was discussion about them on the Sharesies Share Club and the NZX stock Market Investors, Facebook groups. I then saw the discussion here. I had no clue what they were about so spent some time looking over their website, read all the info I could find there, and pretty much typed BLT into Google and read everything that came up. I also emailed them to ask if I there was somewhere I could access/read their published research. They sent me back a long bibliography list of everything that has been published. From there I had to manually search online to locate the full articles - bloody huge job I can tell you! So far I have only had time to find and read about three of them. I would have thought they might be much more easily accessed via the investor centre section of their website, but they told me they can’t provide them there for general (or even investor) access due to rules about promoting their products as “medicines” etc. Still not entirely sure I believe their explanation but have given them the benefit of the doubt.

Having done that research I feel they may be “onto something” with their products. I’m not necessarily someone who would be their customer, but I do know people are becoming much more interested in seeking out alternative products/probiotics, so I think there will definitely be a market for them, if they can be competitive price-wise. Funnily enough, I went to give one of our rest home residents a cuppa just the other day, and as I sat it on the tray of his walking frame for him, I noticed a sheet of tablets on the tray. I had a look to see what they were (we need to be aware if residents are taking any medications that we don’t know about) - and the first thing I saw was the word “BLIS” - such a coincidence but I thought it was really interesting as it shows that the general public is aware of the products. This fellow is 92, and his family obviously brought them for him. So the market is there and may well be wider than we might think, in terms of the age spread of users.

Anyway, I tried to talk myself out of it because speculative stock is not really a wise investment for someone like me, but hey .... you only live once and I think it’s worth a punt. Only 5000 shares so never going to make me a fortune, but if it makes me something long term I’ll be happy enough ;)

One other thing to add. Its nice to see you do good homework and research. But market theory (taught at universities) states that there are millions of other investors doing exactly what you are doing (including some smarter ones than you) and that consensus of views is what forms the market price at any one time. So the best thing you can do is buy an index and save yourself all the hassle and time. The academic view is that you the individual investor cannot outperform the market index over a long period of time. Whether you subscribe to that theory or not is up to you, but if you look at fund managers world wide who are active investors you will find that half outperform the market, half underperform and once fees are taken out, most underperform.

[percy]

I made reference to "The Annual report".
Most probably the easiest simple one to start with is PAZ Pharmazen on NZ Unlisted market.
Go to www.usx.co.nz
enter PAZ.
announcements.
4th April Annual report.
Note the chairman's report,in particular the outlook statement.
Also note directors' shareholdings,balance sheet and cashflow statements,and equity ratio.
I think once you have sorted this annual report out, you can venture onto more complex reports.
Perhaps it is best to print it off.

[justakiwi]

I absolutely know this, and agree with you. My first purchase was KFL back in 2016. I knew nothing back then and bought for the wrong reason - a friend had them. But, I have been very happy with their performance since then, and as I have said before, their quarterly dividends, DRP with discounted SP, has been a huge plus for me. I pretty much just sit back and watch my holding grow, without having to spend any additional capital on them. I recently added BRM and MLN to complete the trio. At this moment in time, they are providing me with decent diversification and good returns. As long as they continue to do that I’m not concerned that can’t beat the index. I’m not investing to build wealth. I have started way too late and have insufficient capital to realistically achieve that. My focus (hope) is simply to build my overall portfolio value, over the next 6 years and into retirement, to give me a little more financial security down the track. It will sit alongside my KS (which will also never be huge as again, I was a late starter to KS). My reality is I will be dependent on government super when I retire, but I live a minimalistic and reasonably frugal life. When I retire my KS and my portfolio investment will just sit there doing their thing. I have no intention of cashing either of them up when I retire. I will access them if and as needed, to supplement my super.

Having said all that, who knows if I’m doing this the right way? Everything is a gamble but at least now, I feel I’m being proactive and even if it all turns to custard, I am really enjoying this. I have always been a “learner” and have always liked to challenge myself. In the past, it was mostly related to computers - I had to always be learning new things and figuring out how things worked “under the hood.” I was never a geek but used to do dumb things like install Linux from command line, just for fun. Learning just for the sake of it I guess. So now I’m learning about investing, and trying to prove to myself that I can do it - even if only on a very minuscule scale!


One other thing to add. Its nice to see you do good homework and research. But market theory (taught at universities) states that there are millions of other investors doing exactly what you are doing (including some smarter ones than you) and that consensus of views is what forms the market price at any one time. So the best thing you can do is buy an index and save yourself all the hassle and time. The academic view is that you the individual investor cannot outperform the market index over a long period of time. Whether you subscribe to that theory or not is up to you, but if you look at fund managers world wide who are active investors you will find that half outperform the market, half underperform and once fees are taken out, most underperform.

[blackcap]

I absolutely know this, and agree with you. My first purchase was KFL back in 2016. I knew nothing back then and bought for the wrong reason - a friend had them. But, I have been very happy with their performance since then, and as I have said before, their quarterly dividends, DRP with discounted SP, has been a huge plus for me. I pretty much just sit back and watch my holding grow, without having to spend any additional capital on them. I recently added BRM and MLN to complete the trio. At this moment in time, they are providing me with decent diversification and good returns. As long as they continue to do that I’m not concerned that can’t beat the index. I’m not investing to build wealth. I have started way too late and have insufficient capital to realistically achieve that. My focus (hope) is simply to build my overall portfolio value, over the next 6 years and into retirement, to give me a little more financial security down the track. It will sit alongside my KS (which will also never be huge as again, I was a late starter to KS). My reality is I will be dependent on government super when I retire, but I live a minimalistic and reasonably frugal life. When I retire my KS and my portfolio investment will just sit there doing their thing. I have no intention of cashing either of them up when I retire. I will access them if and as needed, to supplement my super.

Having said all that, who knows if I’m doing this the right way? Everything is a gamble but at least now, I feel I’m being proactive and even if it all turns to custard, I am really enjoying this. I have always been a “learner” and have always liked to challenge myself. In the past, it was mostly related to computers - I had to always be learning new things and figuring out how things worked “under the hood.” I was never a geek but used to do dumb things like install Linux from command line, just for fun. Learning just for the sake of it I guess. So now I’m learning about investing, and trying to prove to myself that I can do it - even if only on a very minuscule scale!

To be fair, I did not add in my post that I took have an "active" part of my portfolio which I manage myself. Like you say its all about learning and becoming a more informed investor. Whether I outperform, I do not know, but if I do it is not by much. One small addition, they do say that NZ fund managers in NZ can outperform the NZ 50 index because they have better information than the overseas funds that play in our market and are more able to exit and enter when required. Not 100% sure on the data on this but I did hear it from a reputable source. That would also apply then to us retail investors as we know the market here in NZ better than our overseas counterparts.

Percy speaks a lot of sense with his suggestions and ratio's. But for me to fully get through an annual report, some form of accountancy training will be your best help.

[RGR367]

justkiwi, nice to know about your struggle learning and hope that this struggle of yours is the only "tuition fee" you'll be paying to the Sharemarket Goddess on your lifetime endeavour to know her. But worry not, you're on the right track :cool:

[SBQ]

One other thing to add. Its nice to see you do good homework and research. But market theory (taught at universities) states that there are millions of other investors doing exactly what you are doing (including some smarter ones than you) and that consensus of views is what forms the market price at any one time. So the best thing you can do is buy an index and save yourself all the hassle and time. The academic view is that you the individual investor cannot outperform the market index over a long period of time. Whether you subscribe to that theory or not is up to you, but if you look at fund managers world wide who are active investors you will find that half outperform the market, half underperform and once fees are taken out, most underperform.

Perhaps the best advice a new investor should accept because at the end of the day, the so called experts may claim they beat the market returns but the poor investor pays a cost for that service... a BIG cost in the form of management fees. Furthermore the taxation in NZ is not at level playing under FIF. That is the individual that invests directly abroad can choose the 'Comparative Method' on years that their portfolio gets a negative return and pay no tax for the year. However for managed funds in NZ, they can't use this method and have to pay FDR.

On a side note @ Snoopy's reply: Does it make a difference if a person earning over $70K annual income from wages / salary pay any different level in tax when he/she invests in a fund under FIF? Even more discriminant, PIE funds give the top income earners a tax advantage than the low income earners in the lower tax brackets.

The view that NZ fund managers have an advantage to investing on the NZX is a fallacy. That would be to say the same view as US fund managers having the inside edge (hence, inside information) when they invest on the NYSE or Nasdaq. Stats show this is not the case. The more relevant problem with the NZX is the diminishing level of liquidity; a trend that more and more investors are not investing in the NZX. Since the FMA came into force, international funds have shunned this FMA regulation forcing overseas firms to comply with NZ regulation. I've read US brokers have simply blacklisted the NZX. The end result is over time, those who a large position of shares on the NZX will have a tough time selling without drastically affecting the share price.

Again, Fundamental Analysis only goes so far and paints a rough picture. For eg. in NZ I have a tough time finding the EPS figure in NZ listed companies in their glossy annual reports. When they make bold claims of meeting some dividend target %, I wonder what impact does that have on the balance sheet. In many cases, some borrow funds to meet a dividend payment while in previous years, they had the profits that should of been held in retained earnings, but instead, were pushed to pay dividends. It only tells me that in NZ, investors expect some annual payment on their investment without considering the capital gains on the share price is tax free.

Those using Technical Analysis, again I see no point of that on NZX listed companies. The liquidity is the problem.

[peat]

The more relevant problem with the NZX is the diminishing level of liquidity;

The end result is over time, those who a large position of shares on the NZX will have a tough time selling without drastically affecting the share price.

The liquidity is the problem.

True for fund managers but actually a potential source of reward for smaller investors who may be able to accept less liquidity.

[Snow Leopard]

In the real world away from academic hypotheses and monotonous uniformed posts there are those who long term outperform the market and those who underperform it and all those in between.

To discover if you can be a star then you have to give it go and put some effort in.
To give up before you start is not how you succeed.

As Peter Lynch once said. "You do not outperform the index by buying the index".

And for the benefit of SBQ the EPS figure is always at the end of the statement of P&L/Comprehensive Income which is usually the first item in the Financial Statements which is often in refered to in an index near the front of the report.

[kiora]

In the real world away from academic hypotheses and monotonous uniformed posts there are those who long term outperform the market and those who underperform it and all those in between.

To discover if you can be a star then you have to give it go and put some effort in.
To give up before you start is not how you succeed.

As Peter Lynch once said. "You do not outperform the index by buying the index".

And for the benefit of SBQ the EPS figure is always at the end of the statement of P&L/Comprehensive Income which is usually the first item in the Financial Statements which is often in refered to in an index near the front of the report.

Wise words.The simpler the better for investors starting out otherwise they will be overwhelmed.There is no right or wrong way and no need to follow the herd.An investor can not out perform the market by doing what every other investor is doing.But that is not the human psyche.
Others might reason I am doing something wrong but I rarely read or analyse the full financial report.Usually just the end numbers & CEO report.My view is for those starting out, KISS

[macduffy]

I really read or analyse the full financial report

I assume you meant "rarely read...…", kiora?

Personally, I reckon percy's annual report checklist is about right. There's a few key numbers and ratios to be found in the balance sheet!

[kiora]

I assume you meant "rarely read...…", kiora?

Personally, I reckon percy's annual report checklist is about right. There's a few key numbers and ratios to be found in the balance sheet!

Oops thanks McD Now corrected.Percy's checklist about right for experienced investors but majorly off putting to new investors.They would likely just end up procrastinating.
The first check on the checklist should be checking on daily volume versus average volume.Shows up if an investment should be sold or bought(GTK ,I have never owned but stayed interested,daily volume signal yesterday)

[blackcap]

The first check on the checklist should be checking on daily volume versus average volume.Shows up if an investment should be sold or bought(GTK ,I have never owned but stayed interested,daily volume signal yesterday)

That is the biggest nonsense I have read so far on this thread. Especially considering the initiator of this thread is talking about long term investing and portfolio building.

[justakiwi]

As a beginner, I 100% disagree. Percy's words of wisdom, including this checklist, have been absolutely invaluable to me. We might be beginners, but we aren't stupid. We are more than capable of developing our understanding of "all things investing" with the help of checklists like his. As for your comments on volume - that makes absolutely no sense to me whatsoever!


Percy's checklist about right for experienced investors but majorly off putting to new investors.They would likely just end up procrastinating.
The first check on the checklist should be checking on daily volume versus average volume.Shows up if an investment should be sold or bought(GTK ,I have never owned but stayed interested,daily volume signal yesterday)

[macduffy]

I'd agree with checking variations in the daily volume traded, but not so sure that it indicates a buy or a sell without also noting the trend in the shareprice. Remember, every share sold is bought by some other party. Which side is the pressure coming from?

[SBQ]

In the real world away from academic hypotheses and monotonous uniformed posts there are those who long term outperform the market and those who underperform it and all those in between.

To discover if you can be a star then you have to give it go and put some effort in.
To give up before you start is not how you succeed.

As Peter Lynch once said. "You do not outperform the index by buying the index".

And for the benefit of SBQ the EPS figure is always at the end of the statement of P&L/Comprehensive Income which is usually the first item in the Financial Statements which is often in refered to in an index near the front of the report.

No it's not. My aunt receives annual reports from her NZ holdings and on odd occasion, the 1st thing I look at is EPS. I remember decades ago with The Warehouse Group pushing their dividend policy as front page achievement in their glossy annual reports. Only to be disgusted that EPS was not a figure to be found - my aunt said you have to calculate that. So no I strong disagree. What is a fact is NZ's obsession of dividend payment on shares and that's why we have brokers like MacQuires NZ pushing the same rubbish and NZ listed companies having the same expectation to paying dividends.

As a rebuttal for Peter Lynch, a reference to Warren Buffet's spew again those (active fund managers, individuals investors actively trading, the whole shebang!): Who's the better investor Peter Lynch or Warren Buffet? you decide...

https://realbusiness.co.uk/warren-buffett-more-money-made-by-wall-street-through-sales-abilities-than-investment-skills/

and for those that don't care to click on the link, i'll post most of it here:

“It seems so elementary,” he said, “but people just can’t believe that because they have billions of dollars to invest that they can’t go out and hire somebody who will do better than average. I hear from them all the time. Supposedly sophisticated people, generally richer people, hire consultants, and no consultant in the world is going to tell you ‘just buy an S&P index fund and sit for the next 50 years.’ You don’t get to be a consultant that way. And you certainly don’t get an annual fee that way.

“So the consultant has every motivation in the world to tell you, ‘this year I think we should concentrate more on international stocks,’ or ‘this manager is particularly good on the short side.’ So they come in and talk for hours, you pay them a large fee and they always suggest something other than just sitting on your rear end and participating in business without cost. Those consultants then in turn recommend other people who charge fees, which cumulatively eats up capital like crazy.

“I’ve talked to huge pension funds, and I’ve taken them through the math, and when I leave, they go out and hire a bunch of consultants and pay them a lot of money,” he said. “It’s just unbelievable, and the consultants always change their recommendations a little bit from year to year. They can’t change them 100 per cent because then it would look like they didn’t know what they were doing the year before. So they tweak them from year to year and they come in and they have lots of charts and PowerPoint presentations and they recommend people who are in turn going to charge a lot of money and the flow of money from the ‘hyperactive’ to what I call the ‘helpers’ is dramatic.”


Buffett also didn’t hide his resentment for their lack of abilities when it comes to investing.

“There’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities,” he said. “There are a few people out there that are going to have an outstanding investment record. But very few of them. And the people you pay to help identify them don’t know how to identify them. They do know how to sell you.”

Now are you trying to tell me that there exists some NZ actively managed fund that will outperform what Buffet has claimed? Get real, 1st let's start with their true % returns on their prospectus working through the math and taxation directly to the individual. They don't. There's no need; he won the Protégé Partners bet.

As for some checklist? What kind of check list do active fund managers use when they look to buy or sell stocks? Complete utter nonsense and to the novice investor, the best the NZ gov't does is tell them to go into Kiwi Saver, for which, who is really getting rich?

[Snow Leopard]

No it's not. My aunt receives annual reports from her NZ holdings and on odd occasion, the 1st thing I look at is EPS. I remember decades ago with The Warehouse Group pushing their dividend policy as front page achievement in their glossy annual reports. Only to be disgusted that EPS was not a figure to be found - my aunt said you have to calculate that...

Pretty sure I will be in trouble with justakiwi for this.

But I think that this is the most appropriate response:

https://www.youtube.com/watch?v=tTv5ckMe_2M

[justakiwi]

Not this time :laugh:


Pretty sure I will be in trouble with justakiwi for this.

But I think that this is the most appropriate response:

https://www.youtube.com/watch?v=tTv5ckMe_2M

[voltage]

SBQ, so in summary what is your conclusion, appreciated.

[SBQ]

SBQ, so in summary what is your conclusion, appreciated.

The conclusion being for the vast majority of NZ residents, they would be better off buying a 2nd home and i'm speaking purely from the tax free capital gain perspective & the ability for the owner to increase the value of the home by DIY improvements which adds to the tax free capital gain (and please, don't remind me about the 5 year brightline test, only a fool sells a house within 5 years or leads IRD on that they intend to sell the house for a profit). In terms of share investments, what the NZ gov't has essentially done is pushed people into Kiwi Saver for which the largest benefit going to IRD & the managers that operate these funds. I'm not looking for an agreement from other forum members here so this is just my stark conclusion.

@Snow Leopard: I also find it amusing that investors spend so much time on fundamental analysis and little regard on taxation and i'm speaking with the NZ perspective. I mean if it's as bad overseas on the ways you can twist figures on a financial statement around, what chance would the NZ investor wanting to learn will have? When I looked at the financial statements of various listed NXZ companies, it's very clear their reporting standards are wide open and manipulative and certainly not in best interest of the shareholder, yet you have all these Kiwi Saver fund manager painting picture that to understand such documents you need a phD on account of some sort. Watch the video in the link below as an example. Particularly at 4:35 where Charlie Munger rants at how EBITA is "BS earnings" yet it's taught at business schools even here in NZ uni classes.

https://finance.yahoo.com/video/ebitda-wall-street-horror-squared-211547259.html

So the question i've put before is why the obsession of dividends? I'm not saying dividends are bad but they're entirely different investment objectives. In NZ there appears to be zero distinction on the asset when it comes to paying dividends. Abroad, dividends are a last resort for a business if there are NO growth or expansion. Why is that not adopted here, yet we have NZ brokers continually pushing the 'dividend' sale? Why are they not pushing for capital gains which are tax free in NZ? (domestic shares that is), and when overseas markets that promote share value via capital gain, the NZ gov't believes IRD will miss out on tax so instead, they brought in FIF. What kind of double standard is? No other country in the world uses this kind of tax approach that I can think of. No wonder US brokers have shut the door on the NZX on their clients after NZ's FMA came into effect late last year.

I'm not saying dividends are bad. Hell Buffet is a big fan for dividends but they don't understand why Berkshire has never paid a dividend to it's shareholder. and let's go back to early finance studies and understand 'what is the goal of the CEO'? Is that not to "increase shareholder value"? You certainly don't increase shareholder value by having a dividend paying program to meet some target while trying to expand the company's market share. Countless of great examples in NZ such as TWG; i've seen their annual reports not giving a full explanation why they had to issue more shares for which a portion of that goes back out to be paid as dividends - understand the tax implication that has. But who am I to say? I do know that when I invest in equities, I seek a return ON the investment, and not a return OF the investment in the form of dividends.

[justakiwi]

What you forget is that not everyone who chooses to invest, is a large investor as most people here appear to be. You guys have millions and millions of dollars invested, so your focus is going to be significantly different to mine. People like me, and people with far more than me but nowhere near as much as you, are simply trying to get a better return on what money we do have, than we would if we leave it sitting in the bank. Yes, we too are hoping to make a return ON our investment, but a return OF our investment is a major advantage. As I have already said often, dividends and DRP can really help us build our holdings. I'm not saying every company should necessarily pay a Divi but if they can, I am very happy to take it. If I can get both - even better. There was a time when someone like me had no chance of even getting started with investing. We had no option other than Bank deposits and hoping to win with Bonus Bonds. Now we have the opportunity to be a little proactive and do what little we can to improve our own financial situations. Sometimes I think people forget that investing isn't and shouldn't be, only for the "big boys".

I seek a return ON the investment, and not a return OF the investment in the form of dividends.

[percy]

"Mighty oaks from little acorns grow."
Millions is mostly talk or noise.
Same disciplines required no matter the size of your holdings.
My broker once told me most of their clients had less than $50,000 portfolios.

[mfd]

The ability for NZ companies to use imputation credits makes dividends much more attractive here than in most other countries. For those who are retired, dividends have the benefit of reducing the psychological pain of having to sell your holdings to survive. Also, for many, where they want to live has many inputs which are far more important than how much tax they will pay on their share holdings.

[RGR367]

"Mighty oaks from little acorns grow."
Millions is mostly talk or noise.
Same disciplines required no matter the size of your holdings.
My broker once told me most of their clients had less than $50,000 portfolios.

Yes we all started small. But as your investments become big any dividend is welcome and that's how you eventually get "free shares". And when you've been investing for more than 10 years and got more winners than losers then surely your portfolio should be at least at a mid 7 digit figure. Otherwise I'd say, you've never really learned the Market. As a beginner then, the one thing I struggled hard is how to save enough so I can buy more of the stocks I was trying to accumulate. Margin Lending solved that issue for me.

[Snow Leopard]

Yes we all started small. But as your investments become big any dividend is welcome and that's how you eventually get "free shares". And when you've been investing for more than 10 years and got more winners than losers then surely your portfolio should be at least at a mid 7 digit figure. Otherwise I'd say, you've never really learned the Market. As a beginner then, the one thing I struggled hard is how to save enough so I can buy more of the stocks I was trying to accumulate. Margin Lending solved that issue for me.


Your performance is measured in your percentage return not the absolute size of your portfolio.

Different investors/traders have their own individual circumstances which set the limits on available funds to invest and also there own criteria for the risks they are willing to take.

If you achieve an average return of 10% pa in the long term, you are doing OK.

As a footnote $12,345.67 is a 7 digit figure.

Unity in diversity.

[Brovendell]

Yes we all started small. But as your investments become big any dividend is welcome and that's how you eventually get "free shares". And when you've been investing for more than 10 years and got more winners than losers then surely your portfolio should be at least at a mid 7 digit figure. Otherwise I'd say, you've never really learned the Market. As a beginner then, the one thing I struggled hard is how to save enough so I can buy more of the stocks I was trying to accumulate. Margin Lending solved that issue for me.

Current Principal: $10,000
Annual Addition:$10,000
Years to grow: 10
Compound Interest Rate: 65%
Future Value: $5,200,000

Good luck with your 65% return every year

[macduffy]

Congratulations to those of us who've been invested in the NZ sharemarket these several last years since the GFC. Remember though, that these have been exceptional years with exceptional returns and that we can't expect the good times to continue indefinitely.

Sorry for the reality check.

:mellow:

[Joshuatree]

Dont be sorry, just give us a date:mad ;::scared::D

[RGR367]

Current Principal: $10,000
Annual Addition:$10,000
Years to grow: 10
Compound Interest Rate: 65%
Future Value: $5,200,000

Good luck with your 65% return every year

I said at least mid 7 digit figure so you've just made the grade and I'm happy for you too. But imagine if you were not constrained by not just having $10K as your additional annual investment money. Wouldn't it be nicer :t_up:

[SBQ]

Congratulations to those of us who've been invested in the NZ sharemarket these several last years since the GFC. Remember though, that these have been exceptional years with exceptional returns and that we can't expect the good times to continue indefinitely.

Sorry for the reality check.

:mellow:

Congratulations to those that invested in the US market post GFC because they would of gain tremendous on the NZD/USD exchange rate.


The ability for NZ companies to use imputation credits makes dividends much more attractive here than in most other countries. For those who are retired, dividends have the benefit of reducing the psychological pain of having to sell your holdings to survive. Also, for many, where they want to live has many inputs which are far more important than how much tax they will pay on their share holdings.

In another thread in this forum, I explained the level of imputation credit is a joke because very few listed shares are fully 100% credited. Go across to the ASX and there's virtually none which therefore, the holdings will fall under FIF. Many of the ASX listings require a 'franking' account to be eligible if i'm not mistaken.

As comparing to other countries, tax is everything. Especially in places like Canada where the SMALL investor can invest 100% tax free. For eg. RRSP, RESP, & RDSP offer the ability for the holdings to be sold 100% tax free. All these 'registered' accounts compound returns year after year tax free. RESP (education savings plan) the Cdn gov't matches contribution amounts and when the person is ready for uni education, they can sell the portfolio 100% tax free without having to repay the matching grants. Likewise with RDSP (disability savings plan). And then you have the TFSA (Tax Free Savings Account) where every Cdn resident over 18 can invest $6K (current contribution limit) per year (and the contribution amounts you miss in the pass can be added towards future years) ; ALL gains including dividends are 100% tax free. The USA has similar programs for investment that allow the small investor to be 100% tax free. But for the most compelling benefit for the investor in Canada (and likewise in the US), is they can structure their tax at retirement age to be at the low end of the income by selling the shares when they want to. As I explained before, in NZ you don't have any distinction on tax paid on shareholder income if the person is over $100K salary / wage income or $20K /year, because the income / gains from share investments can not be controlled ; much like dividends, when the board issues dividends it's beyond the control of the shareholder that may be stuck at the high end of the tax bracket. In NZ, the whole idea of deferring tax is alien like to the accountants I speak to but the reasons are clear. Who would not want to pay tax at a lower rate on their investments at a future date when their working income can be low or zero at retirement?

[mfd]

Many NZ companies fully impute their dividends, generally those who do most of their business in NZ. This does not have anything to do with FiF classification - most decent sized Australian companies are excluded from FiF. There is a list somewhere on the IRD website I believe.

If my dividends are fully imputed, I as a high rate tax payer pay an extra 5% compared to the company retaining the earnings. Not so bad. Even better for those on lower tax brackets who can claim the imputation credits back.

Agree some countries have more generous tax exemption, but this is not a deciding factor for me choosing where to live so it's barely relevant to me.

[Snow Leopard]

I went to Canada once.

I was working in the Bay Area, California at the time and rolled up at San Fran Airport international terminal to catch my flight only to be told I had to go to the domestic terminal, but I still had to go through Immigration -- weird!

I visited Vancouver Island & Vancouver which, despite the name, are different places! -- weird!
I had proper Maple syrup which was great, and Canadian wine which was not, indeed it was -- weird!

I also took a photograph of a Raccoon. The're -- weird!




With apologies to all my Canadian friends, especially the Raccoons.

[percy]

Did you see The Moose.?

[jonu]

Did you see The Moose.?

Why is the plural of mouse mice? And the plural of moose moose? Weird!

[jmsnz]

(Moved from the Heartland thread as don’t want to hijack that one.)


As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!
I think that in its own way this thread demonstrates your point perfectly!

FWIIW, I was a beginner investor 15 years ago and still are. I don't post often because compared to all the gurus here my knowledge is just not deep or relevant enough. So I take a slightly odd approach and work along the following lines:
1) My best chance of financial freedom is maximising my skills and opportunities in my day job. I have more knowledge and control there than I will eve get over a companies performance of the NZ tax system
2) It is my money so I am actually best placed to decide where I invest it
3) Point 2 might (actually does) mean I will get it wrong but if I do then I need to understand why and not repeat anything that I had control over
4) Identify industries/companies that you think have a dominance and/or obvious resilience e.g one of the Aged Care providers or Ports of Tauranga etc
5) Invest in companies I like - when you see their logo etc are you happy/proud to say you own part of that e.g Mainfreight - trucks are immaculate & there are lots of them etc
6) Invest in companies that have passionate leaders - people that when you see/hear of then you are proud to be associated with them e.g. Mainfreight again
7) Is their shareprice trending up or down - are other people generally buying or selling?
8) Now start worrying about the noise/detail - what's being posted about them here, which way is their share price heading etc

I am happy with the close to 20% per annum return (according to ShareSight) I have achieved in that time but obviously many other poster will have far exceeded that, but I can't control that.

if I was starting now I would try to follow Percy's list a few pages back - as was pointed out that was gold.

Good luck and keep going - you don't have to be a guru to be successful.

[SBQ]

Many NZ companies fully impute their dividends, generally those who do most of their business in NZ. This does not have anything to do with FiF classification - most decent sized Australian companies are excluded from FiF. There is a list somewhere on the IRD website I believe.

If my dividends are fully imputed, I as a high rate tax payer pay an extra 5% compared to the company retaining the earnings. Not so bad. Even better for those on lower tax brackets who can claim the imputation credits back.

Agree some countries have more generous tax exemption, but this is not a deciding factor for me choosing where to live so it's barely relevant to me.

Yes but should the business model be sacrificed just because it does or does not have imputation credits? They're distorting the picture by trying to prop up investors to favour such NZ companies when in the grand of schemes, abroad, you have far larger and lower risk, and more profitable companies to invest in.

We may be going off track here to the 'beginner's struggle' topic. I'll add to how the person in NZ is better off with buying another house instead of investing in shares. Key benefit being banks have no problems lending on houses at attractive low mortgage rates (leveraging). While you can margin to buy shares, the rates are horrendous and let's not forget, most NZ brokers charge like a 1% fee on the client's entire portfolio value as a 'mgt admin fee' that Buffet cringes about.

[Snow Leopard]

... I was a beginner investor 15 years ago and still are. I don't post often because compared to all the gurus here my knowledge is just not deep or relevant enough....

We are all still beginners in that we should never stop learning and trying to improve.

With a 20% pa long term average then you are indeed a guru and you should post more often as you have a system that works and is worth sharing.

You will have people disagree with you ( like you buy Mainfreight just because the trucks are shiny :scared: ) but most of those gurus actually know no more than you, they are indeed mostly noise that you want to avoid (I exclude myself from that group obviously :p ).

[Joshuatree]

Why is the plural of mouse mice? And the plural of moose moose? Weird!
Goose ,Geese
Moose ,Meese.
Percy ." Did you see the Meese" yeah baby, right on !!!

[Snoopy]

As comparing to other countries, tax is everything. Especially in places like Canada where the SMALL investor can invest 100% tax free. For eg. RRSP, RESP, & RDSP offer the ability for the holdings to be sold 100% tax free. All these 'registered' accounts compound returns year after year tax free. RESP (education savings plan) the Cdn gov't matches contribution amounts and when the person is ready for uni education, they can sell the portfolio 100% tax free without having to repay the matching grants. Likewise with RDSP (disability savings plan). And then you have the TFSA (Tax Free Savings Account) where every Cdn resident over 18 can invest $6K (current contribution limit) per year (and the contribution amounts you miss in the pass can be added towards future years) ; ALL gains including dividends are 100% tax free. The USA has similar programs for investment that allow the small investor to be 100% tax free. But for the most compelling benefit for the investor in Canada (and likewise in the US), is they can structure their tax at retirement age to be at the low end of the income by selling the shares when they want to. As I explained before, in NZ you don't have any distinction on tax paid on shareholder income if the person is over $100K salary / wage income or $20K /year, because the income / gains from share investments can not be controlled ; much like dividends, when the board issues dividends it's beyond the control of the shareholder that may be stuck at the high end of the tax bracket. In NZ, the whole idea of deferring tax is alien like to the accountants I speak to but the reasons are clear. Who would not want to pay tax at a lower rate on their investments at a future date when their working income can be low or zero at retirement?


SBQ, thanks for this insight on how investment taxation works in North America. A couple more questions (OK three) if you don't mind.

1/ The RESP (education savings plan): The government matches your contribution dollar for dollar and you can pull out the money to pay uni fees. But how much money can you put in if you are 17 and want to go to university? Minimum wages in NZ are much higher than in the USA for example (not sure about Canada). So if you have an entry level part time job as 15, 16 year old you aren't going to be able to save that much, even with a 1:1 top up. And tuition fees in the USA (not sure about Canada) are much higher than NZ? So overall aren't you going to be much better off taking a Uni course in NZ (no fees in year one remember) than in North America, even despite a 1:1 government subsidy on RESP contributions?

2/ You say dividends accumulated in these schemes are 'tax free'. But in the USA the company has already paid tax on the money they pay out as dividends. So in this sense the dividends are taxed at the time of payment, even if you as an individual shareholder do not pay the tax yourself. I am surprised in your implication of there being no withholding tax on dividends either!

3/ Once you reach retirement you can cash in your 'tax free' portfolio. But you are taxed once your portfolio is redeemed aren't you? So 'tax free' really means 'deferred tax'. Otherwise you wouldn't be telling us how you can minimise tax by choosing the point at which you cash your superannuation in. So how much tax do you pay when you cash in your portfolio in the end?

TIA

SNOOPY

[jmsnz]

You will have people disagree with you ( like you buy Mainfreight just because the trucks are shiny :scared: ) Well that might depend whether you see a shiny truck or a management system that can send a clear and concise message about the company image and ethos through all levels of the organisation and have it acted on effectively


but most of those gurus actually know no more than you, they are indeed mostly noise that you want to avoid (I exclude myself from that group obviously :p ).Of course I would exclude you from the ones I want to avoid.:D

[Joshuatree]

heres KW's equivilent to percys nugget in a nutshell guide to investing.Her simple T/A can help re when to buy or sell an investment or trade.



https://www.sharetrader.co.nz/images...quote_icon.png (https://www.sharetrader.co.nz/images/misc/quote_icon.png) Originally Posted by KWhttps://www.sharetrader.co.nz/images...post-right.png (https://www.sharetrader.co.nz/images/buttons/viewpost-right.png)
I thought I might start a little discussion on the usefulness of TA for timing. Now I do NOT advocate trading based on TA alone (tried it, lost a lot of money) but if you have used FA to identify a select list of good prospects, TA can be quite useful at knowing when to buy, when to top up, and when to sell. The following are all examples of some of my recent share purchases and sales.

1. When to BUY
I only ever buy companies that are in an uptrend. (Tried buying downtrends, lost a lot of money). The trick is to know when to enter. Get in too early, and the uptrend may turn out to be a dead cat bounce, or fizzle out. Get in too late and you may miss most of the run. My favourite entry point is when the 50 day moving average crosses above the 200 day moving average and the share price is above the 50 day MA. While you miss the early run, the risk of the uptrend not continuing is somewhat abated. I have tried entries based on just the share price crossing above both MA, but 3 out of 4 picks fail to continue on. I confirm the trend by watching the MACD (needs to be in positive territory).

Example: CGF - entry was in early March, when the share price moved back above the 50 day MA and the MACD turned up ($3.64 - $3.81)
Attachment 4517 (https://www.sharetrader.co.nz/attachment.php?attachmentid=4517)


2. When to TOP UP
Companies that are on exponential uptrends often present difficulties in deciding when to jump in. I have found that many pull back to a moving average, providing excellent entry points while the stock pauses and gets ready for the next leg up. Again, I use the 50 day average and MACD to confirm the uptrend is continuing, rather than the price decline being the start of the new downtrend.

MFG - has been in a strong uptrend for ages, but it took a breather and retreated to just below its 50 day MA. Entry point would have been end of April when the MACD went positive, and the stock price crossed back above the 50 day MA ($6.94 - $7.14)

Attachment 4518 (https://www.sharetrader.co.nz/attachment.php?attachmentid=4518)

Another great example is SIV - entry point is end of February ($5.90 - $6.28)
Attachment 4519 (https://www.sharetrader.co.nz/attachment.php?attachmentid=4519)

3. When to SELL
The first warning is when the share price drops below the 50 day moving average and the MACD turns down. This should put the stock on a watch list - its either a good time to top up, or a sell signal is going to be coming up shortly. If the price drops below the 200 day moving average I usually sell (I say usually, because its not uncommon for traders to try to drive the price down that far in order to trigger a bunch of stop losses, so you need to watch out for this little trick as often the share price rebounds immediately. IIN and CSV are good examples of this manipulation). If the "death cross" occurs (where the 50 day moving average crosses below the 200 day moving average, this is a signal that the downtrend is now firmly established).

ALQ - I bought into this thinking it had turned the corner and was heading back into a strong uptrend. Alas it was not to be, and in mid-March an exit was signalled ($10.50 - $10.80). Even though the price has rebounded recently, its still a death cross situation, and its more likely than not that the downtrend will continue for a while.
Attachment 4520 (https://www.sharetrader.co.nz/attachment.php?attachmentid=4520)

I hope others find this useful - its how I make decisions at the moment, its very simple, but pretty effective. Its part of my "get rich slow" investment strategy :-) If anyone else has any examples of when they enter or exit, then please post them.

[SBQ]

SBQ, thanks for this insight on how investment taxation works in North America. A couple more questions (OK three) if you don't mind.

1/ The RESP (education savings plan): The government matches your contribution dollar for dollar and you can pull out the money to pay uni fees. But how much money can you put in if you are 17 and want to go to university? Minimum wages in NZ are much higher than in the USA for example (not sure about Canada). So if you have an entry level part time job as 15, 16 year old you aren't going to be able to save that much, even with a 1:1 top up. And tuition fees in the USA (not sure about Canada) are much higher than NZ? So overall aren't you going to be much better off taking a Uni course in NZ (no fees in year one remember) than in North America, even despite a 1:1 government subsidy on RESP contributions?

2/ You say dividends accumulated in these schemes are 'tax free'. But in the USA the company has already paid tax on the money they pay out as dividends. So in this sense the dividends are taxed at the time of payment, even if you as an individual shareholder do not pay the tax yourself. I am surprised in your implication of there being no withholding tax on dividends either!

3/ Once you reach retirement you can cash in your 'tax free' portfolio. But you are taxed once your portfolio is redeemed aren't you? So 'tax free' really means 'deferred tax'. Otherwise you wouldn't be telling us how you can minimise tax by choosing the point at which you cash your superannuation in. So how much tax do you pay when you cash in your portfolio in the end?

TIA

SNOOPY

@1) It's not dollar for dollar matching! Key factors in RESP is you have a lifetime maximum $50K contribution limit. Cdn gov't match 20% of your contributions to a maximum of $500 per year and a lifetime maximum of $7,200 so you're best to start young like at age 3 or 4 if you intend uni enrollment right after highschool (of course not limited to as it can be any age - many go back to school in their 40s and 60s). The 20% figure is key so to get the most benefit, you should contribute $2,500 a year and if you missed 1 year of contribution, you could on the next year put in $5,000 and you would get $1,000 grant ; note this is limited to 1 year ie can't put in $25,000 and get 10 years of grant. There is ALSO in additional CESG and Canada Learning Bond for those on the low income. All that is invested compound tax free and when the student goes to, the deal is their income would be low or pretty much zero. In Canada the 1st level of income around $12K is tax free - much similar to how Australia does. Keep in mind in Canada, if the RESP is invested in assets to produce capital gain; in Canada ONLY HALF of the gain becomes taxable income. So if they sold $24,000 in shares and had $12,000 in gain; they would report only $6,000 as taxable income which is only half of the $12K exemption threshold.

But what if the student finds uni education isn't what they wanted? No problem. Up to $50K the RESP can be rolled into their RRSP (conventional retirement savings plan similar to Kiwi Saver).

So the RESP is not designed to start at age 17 and go to uni the next year ; at best you would only get the $500 grant. Like any investment plan you have to think in several years or decades.

https://www.greedyrates.ca/blog/resp-canada/

@2) In NZ we have with-holding on everything because of IRD's obsession of taxing accounts before the person can get hold of the funds. In N. America the only withholding you see are for non-residents. Basically when you open up a bank account, if you provide a tax #, the bank assumes "it's YOUR responsibility" as a resident to declare the interest or investment income at tax filing every year. In Canada all banks / brokers etc are required to send tax summary docs to their clients but if you live overseas, well the rules are different and there must be withholding. In NZ, to the wage/salary earner there is no requirement to file a tax return; no tax return means no assessment to get some sort of tax credit back despite there may be a credit if the person overpaid in withholding by being in the wrong tax bracket; unfortunately to IRD's benefit.

Dividends are taxable in Canada but at a much lower rate than general income. However the lowest tax impact is capital gain. But in accounts like TFSA, the broker files in an exemption where the dividend is fully paid with no with-holding. On my father's TFSA account, he received dividends on his BP shares (which is a UK company) in full amount. Interestingly this applied on the international level and not dividends received from Cdn listed companies. How? Because companies that issues dividends do not withhold tax on it. It's entirely up to the INDIVIDUAL to file their tax return and declare their dividend income. Now flip the tables around and how would the foreign investor feel by owning NZ shares that have withholding on the dividends? How would they get that taxed portion back? Perhaps this is why most foreign managed funds have sidestep NZ investments and why we see a dwindling level of liquidity on the NZX.

@3) I assume you're referring to TFSA? Unlike the other registered investment plans RESP, RDSP, RRSP, the TFSA is entirely 100% tax free during the years invested AND when you sell up; really 100% tax free. But likewise, any losses are not allow for claim for credit.

The investment world in Canada has many to suit each individual's situation. Those with disabled children get RDSP. Those into academics look to RESP. Those who are rich and wealthy look to TFSA, well actually all residents can benefit with the TFSA. One thing common in ALL these investment plans is the 'deferral of tax' with exception of TFSA with doesn't matter when you sell up. The oldest program would be RRSP which is similar to Kiwi Saver but much more elegant. What is not elegant to structure your income in years you have low or year income and the ABILITY TO CHOOSE how much you want to have as taxable income? Isn't that what retirement is all about? If i'm 67 and want to buy a new caravan or RV, I would sell the amount of shares I want, pay the capital gain tax enough to cover my living cost and new toy and as you know, most seniors have little or no salary / wage income so they would benefit being at the lower end tax bracket. Whereas in Kiwi Saver, the funds are slammed tax every year on the performance of the fund; with no distinction of the individual's tax situation over their lifetime. So to answer your question, how much tax does a person pay at retirement? Well that's entirely up to you until the day you die, for which the entire account would be deemed sold and tax on the capital gains would apply (fortunately, only 1/2 of the gain is taxable income).

[percy]

https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjjlpXutYnnAhWiILcAHULCDTgQFjAAegQIBBAB&url=https%3A%2F%2Fwww.livewiremarkets.com%2Fwires% 2Fhow-an-everyday-investor-competes-with-the-pros&usg=AOvVaw2t7fjvE64OboC0KJ2RLj6D

[justakiwi]

Thank you! :t_up:


https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjjlpXutYnnAhWiILcAHULCDTgQFjAAegQIBBAB&url=https%3A%2F%2Fwww.livewiremarkets.com%2Fwires% 2Fhow-an-everyday-investor-competes-with-the-pros&usg=AOvVaw2t7fjvE64OboC0KJ2RLj6D

[macduffy]

Yes, thanks, percy!

Not too old to be reminded, "Don't water the weeds and cut the flowers!"

:)

[SBQ]

https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjjlpXutYnnAhWiILcAHULCDTgQFjAAegQIBBAB&url=https%3A%2F%2Fwww.livewiremarkets.com%2Fwires% 2Fhow-an-everyday-investor-competes-with-the-pros&usg=AOvVaw2t7fjvE64OboC0KJ2RLj6D

Who is that person compared to Buffet? For every so called winner there are thousands of those that lose miserably, and millions more that don't beat the market.

As a reminder, the 'Pros' don't beat the market. Buffet has demonstrated this time and time again.. but to no surprise, no one listens just like those pension fund managers that listened to his advice.

It's not different here, and the same thing at the casino ; 'always someone with a chip that thinks they can beat the odds consistently over a decade'.

[SBQ]

https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjjlpXutYnnAhWiILcAHULCDTgQFjAAegQIBBAB&url=https%3A%2F%2Fwww.livewiremarkets.com%2Fwires% 2Fhow-an-everyday-investor-competes-with-the-pros&usg=AOvVaw2t7fjvE64OboC0KJ2RLj6D

Keep in mind, post like this should not be the key to encourage investors on false belief. Anything material that is more is simply just luck.

https://www.marketwatch.com/story/almost-no-one-can-beat-the-market-2013-10-25

"And — are you sitting down? Only 0.6% — you read that right, 0.6% — showed any true skill at beating the market consistently, “statistically indistinguishable from zero,” the three researchers concluded."

But don't let the stats discourage you. Casinos wouldn't exist today if there were more winners than losers.

[Snow Leopard]

Yes, thanks, percy!

Not too old to be reminded, "Don't water the weeds and cut the flowers!"

:)

Weeds & Flowers quote is from Peter Lynch. Warren Buffet asked for permission to use it.

If you have never read Peter Lynch's books I recommend them, especially "One Up On Wall Street".

[blackcap]

Weeds & Flowers quote is from Peter Lynch. Warren Buffet asked for permission to use it.

If you have never read Peter Lynch's books I recommend them, especially "One Up On Wall Street".

Great book that by Peter Lynch. I have it in my library and often loan it out to youngsters wanting to know more about sharemarkets and investing in stocks. Has to be one of the top 10 for those looking to invest in shares.

[Snoopy]

In NZ, to the wage/salary earner there is no requirement to file a tax return; no tax return means no assessment to get some sort of tax credit back despite there may be a credit if the person overpaid in withholding by being in the wrong tax bracket; unfortunately to IRD's benefit.


Well that isn't quite how it works. A wage/salary earner in NZ will still have to file an IR3 if they have other income as well, like NZ shares that are not in a PIE, overseas shares, earnings from trusts etc. etc. But generally the tax system has been redesigned over the years so that pure wage and salary earners do not have to put in a tax return.

Your wording is perhaps better when you say there is no requirement to put in a tax return. But just because there is no requirement to do it, that doesn't mean you should not do it: For exactly the reasons you point out above SBQ.



Dividends are taxable in Canada but at a much lower rate than general income. However the lowest tax impact is capital gain. But in accounts like TFSA, the broker files in an exemption where the dividend is fully paid with no with-holding. On my father's TFSA account, he received dividends on his BP shares (which is a UK company) in full amount. Interestingly this applied on the international level and not dividends received from Cdn listed companies. How? Because companies that issues dividends do not withhold tax on it. It's entirely up to the INDIVIDUAL to file their tax return and declare their dividend income.


I think it is not unusual for capital gains to be taxed at a lower rate than income. When capital gains tax was introduced in Australia it was to be taxed at half the rate that income was taxed at. Why? Because not all of the capital gain was capital gain above the rate of inflation. Taxing capital gain at half the income tax rate was the ATOs way of adjusting the tax take to reflect the capital eroding power of inflation.

AFAIK Australia and NZ are the only two countries that give individual shareholders credit for tax paid by any company they hold shares in as an entity. Tax has already been paid at the corporate rate by US companies at least, before any dividend is paid to shareholders. I wonder if the lower tax rate paid on Canadian dividends is Canada's way of accounting for this?



Now flip the tables around and how would the foreign investor feel by owning NZ shares that have withholding on the dividends? How would they get that taxed portion back? Perhaps this is why most foreign managed funds have sidestep NZ investments and why we see a dwindling level of liquidity on the NZX.


Most NZX companies, when they pay dividends to foreign shareholders, pay a foreign 'Supplementary Dividend' that effectively wipes out the withholding tax on dividends paid to foreigners. There are arrangements with the IRD that allow NZ companies who do this, not to pay more tax than they 'otherwise would' if they had no foreign shareholders.



@3) I assume you're referring to TFSA?


Yes



Unlike the other registered investment plans RESP, RDSP, RRSP, the TFSA is entirely 100% tax free during the years invested AND when you sell up; really 100% tax free. But likewise, any losses are not allow for claim for credit.

The investment world in Canada has many to suit each individual's situation. Those with disabled children get RDSP. Those into academics look to RESP. Those who are rich and wealthy look to TFSA, well actually all residents can benefit with the TFSA. One thing common in ALL these investment plans is the 'deferral of tax' with exception of TFSA with doesn't matter when you sell up. The oldest program would be RRSP which is similar to Kiwi Saver but much more elegant. What is not elegant to structure your income in years you have low or year income and the ABILITY TO CHOOSE how much you want to have as taxable income? Isn't that what retirement is all about? If i'm 67 and want to buy a new caravan or RV, I would sell the amount of shares I want, pay the capital gain tax enough to cover my living cost and new toy and as you know, most seniors have little or no salary / wage income so they would benefit being at the lower end tax bracket.


With the tax treatment in Canada you have outlined, I can understand why you object to the tax paid under the New Zealand system SBQ! If you pay no tax at all in your Canadian TFSA, even upon redemption, it is hard to imagine any other country being able to compete with that. I guess there must be some restrictions on TFSA though. I presume you can only take money out of it once you hit 65? Is there a limit on the amount of money you can put into a TFSA?



So to answer your question, how much tax does a person pay at retirement? Well that's entirely up to you until the day you die, for which the entire account would be deemed sold and tax on the capital gains would apply (fortunately, only 1/2 of the gain is taxable income).


Half the capital gain being taxable in Canada is equivalent to the Australian system of paying tax on all of your capital gain but at half the income tax rate.

SNOOPY

[GTM 3442]

Keep in mind, post like this should not be the key to encourage investors on false belief. Anything material that is more is simply just luck.

https://www.marketwatch.com/story/almost-no-one-can-beat-the-market-2013-10-25

"And — are you sitting down? Only 0.6% — you read that right, 0.6% — showed any true skill at beating the market consistently, “statistically indistinguishable from zero,” the three researchers concluded."

But don't let the stats discourage you. Casinos wouldn't exist today if there were more winners than losers.

If you read a single book, and then follow only the ideas in that book, then you will eventually come unstuck. Whatever system you have or follow, there will be a set of circumstances where it will be almost exactly the wrong thing to do.

The trick is to read everything you can lay hands on, change your ideas as time slithers by, and then diversify among the various ideas you have come across as you read more and more.

Variety is the spice of life. I think one of the blokes at Mauldin Economics said something like ". . . you should diversify across strategies as well as asset classes. . . ".

[RupertBear]

(Moved from the Heartland thread as don’t want to hijack that one.)


As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!


You started a great thread justakiwi, there are lots of interesting posts on here :)

[percy]

https://www.raskfinance.com/

[justakiwi]

:ohmy::t_up:

This is awesome. Thank you! Signing up for the free courses for sure :t_up:


https://www.raskfinance.com/

[SBQ]

If you read a single book, and then follow only the ideas in that book, then you will eventually come unstuck. Whatever system you have or follow, there will be a set of circumstances where it will be almost exactly the wrong thing to do.

The trick is to read everything you can lay hands on, change your ideas as time slithers by, and then diversify among the various ideas you have come across as you read more and more.

Variety is the spice of life. I think one of the blokes at Mauldin Economics said something like ". . . you should diversify across strategies as well as asset classes. . . ".

I've read many books in the past. Now, I prefer someone smarter, Warren Buffet already has read the books and what he conveys is smart enough. How many ways does it take to show the people how much of a scam 'salesmanship' has been in the selling investment packages for the newb investor?

Diversify across all asset classes? Man, if that was true i'm sure many would of outdone Buffet's track record. But I will EAT my own shoe if the markets hold a 'strong form of market efficiency' for which diversification to work well. Market Efficient Hypothesis is just like EBITA - the same BS crap that they teach at business schools.

[Snow Leopard]

So this Buffet bloke, he just buys the index then?

[Snow Leopard]

PS: It is EBITD​A

[SBQ]

..

I think it is not unusual for capital gains to be taxed at a lower rate than income. When capital gains tax was introduced in Australia it was to be taxed at half the rate that income was taxed at. Why? Because not all of the capital gain was capital gain above the rate of inflation. Taxing capital gain at half the income tax rate was the ATOs way of adjusting the tax take to reflect the capital eroding power of inflation.

AFAIK Australia and NZ are the only two countries that give individual shareholders credit for tax paid by any company they hold shares in as an entity. Tax has already been paid at the corporate rate by US companies at least, before any dividend is paid to shareholders. I wonder if the lower tax rate paid on Canadian dividends is Canada's way of accounting for this?


Actually capital gains in Australia was not treated like in Canada in the past. They use to take the full gain less an inflation factor % figure. Early 2000 my uncle in Australia was asking how Canada treated CGT and it was clearly different. But it seems that Australia has gone to the Cdn way as it was more simple to half the gain for taxable income instead of looking at inflation tables for each year in the past.



With the tax treatment in Canada you have outlined, I can understand why you object to the tax paid under the New Zealand system SBQ! If you pay no tax at all in your Canadian TFSA, even upon redemption, it is hard to imagine any other country being able to compete with that. I guess there must be some restrictions on TFSA though. I presume you can only take money out of it once you hit 65? Is there a limit on the amount of money you can put into a TFSA?


Hard to imagine? The US has ROTH IRA. The UK has the ISA. All in the form of being tax free investing so this is nothing new. The TFSA came later (only started 10 years ago) only restriction is how much funds transferred in each year. On it's initial introduction it was $5,000 per year, then gradually rising to match inflation (indexed to inflation) to now $6,000 for 2020 contributions. There was 1 year that was $10,000 allowed to be moved in but that was a special year. The restrictions on most part in a TFSA don't really affect the typical investor. Such as say if a person had inside information and bought a penny stock and it grown to like 10,000% fold. Well such penny stocks aren't eligible for TFSA as they don't trade on a reputable stock exchange. So TFSA limit certain equities around the world and I believe the NZX is not allowed (who would?) but most trade the TSX and NASDAQ/NYSE with no issues.

NO restriction when you can sell up and withdraw regardless of age AND the gains are locked in. That is say you had $100,000 balance and like $40,000 of gain, well you don't lose that $100K balance in the following year. You withdraw the full $100K this year, then wait next year and can put BACK that $100K + (the annual contribution of that year) and resume investing.

But here's the real reality. How many people do you know who can put aside $6,000 in savings per year out of their wage / salary? This is the real deal because MOST people can't and when Justin Trudeau came in as PM, he criticised that TFSA was only an investment vehicle for the RICH. The only reason we have Kiwi Saver is simple, people don't know how to save so by taking a portion off their weekly / monthly pay essentially forces them to save ; (same deal in Canada's RRSP).

As a matter of interest, the max contribution you can put into an RRSP is 18% of the annual income. Many high income earners do this in Canada despite their employer would only match 8% or less. But there are some companies that do.

Now going back to TFSA, well say if you wanted to open one up now but never invested before. If you were over 18 in 2009, you do not LOSE the past contributions. The total of those years $69,500 which means you could move in THAT amount to start investing, and this 'contribution amount' continues to grow in future years that you do NOT contribute savings to. So what the gov't is saying that you're not restricted because you don't have funds to invest in 1 year or another; they're giving you the break that in future years you may come across some large sum of savings and you can apply that amount to the past years that you didn't use up.

The sad reality is clear. The NZ investor is going to have less of an AFTER-TAX share investment than the Canadian in the many decades to come.

[SBQ]

So this Buffet bloke, he just buys the index then?

Upon his death, for what is left after he's gifted all his wealth, he's instructed to invest only in the index ETF.

https://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13

"
My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers."

Why? Because as he's explained before, there exists no fund manager that can prove otherwise of consistently beating the index return.

Also some of you may ask why has Buffet been able to beat the market index for MOST of the years since he took over Berkshire? I mean it's like he's speaking in contradiction to himself. It's because his caliber to investing differs to managed fund. For eg. brokering deals for merger and acquisitions, being able to led out cash at obscene rates, the list goes on and you can bet NONE of the Kiwi Saver funds would be in any position to make such deals. During the GFC, Goldman Sac needed $$... so they went to Buffet, in return he demanded 10% on the $ + with warrants and options. You can bet the strike price on the options deal with GS was to his terms. So all these gravy incomes come into Berkshire that benefit the shareholder. As his right hand man said to Buffet at the at their AGM some years ago, "Why are you telling the audience this?.. they've essentially done better than the index ETF by buying Berkshire".

[Snoopy]

Actually capital gains in Australia was not treated like in Canada in the past. They use to take the full gain less an inflation factor % figure. Early 2000 my uncle in Australia was asking how Canada treated CGT and it was clearly different. But it seems that Australia has gone to the Cdn way as it was more simple to half the gain for taxable income instead of looking at inflation tables for each year in the past.


Yes the Howard government overhauled the Australian CGT system in 1999. The previous system that was introduced in 1985 had a CGT linked to gains above inflation. The 1999 changes meant that taxpayers paid their capital gains at rate equivalent to 50% of their marginal income tax rate. There was a transition period as well where taxpayers could choose whether they paid their CGT under the new or old systems.

SNOOPY

[Snoopy]

The US has ROTH IRA. The UK has the ISA. All in the form of being tax free investing so this is nothing new. The TFSA came later (only started 10 years ago) only restriction is how much funds transferred in each year. On it's initial introduction it was $5,000 per year, then gradually rising to match inflation (indexed to inflation) to now $6,000 for 2020 contributions. There was 1 year that was $10,000 allowed to be moved in but that was a special year. The restrictions on most part in a TFSA don't really affect the typical investor. Such as say if a person had inside information and bought a penny stock and it grown to like 10,000% fold. Well such penny stocks aren't eligible for TFSA as they don't trade on a reputable stock exchange. So TFSA limit certain equities around the world and I believe the NZX is not allowed (who would?) but most trade the TSX and NASDAQ/NYSE with no issues.

NO restriction when you can sell up and withdraw regardless of age AND the gains are locked in. That is say you had $100,000 balance and like $40,000 of gain, well you don't lose that $100K balance in the following year. You withdraw the full $100K this year, then wait next year and can put BACK that $100K + (the annual contribution of that year) and resume investing.

But here's the real reality. How many people do you know who can put aside $6,000 in savings per year out of their wage / salary? This is the real deal because MOST people can't and when Justin Trudeau came in as PM, he criticised that TFSA was only an investment vehicle for the RICH. The only reason we have Kiwi Saver is simple, people don't know how to save so by taking a portion off their weekly / monthly pay essentially forces them to save ; (same deal in Canada's RRSP).

As a matter of interest, the max contribution you can put into an RRSP is 18% of the annual income. Many high income earners do this in Canada despite their employer would only match 8% or less. But there are some companies that do.

Now going back to TFSA, well say if you wanted to open one up now but never invested before. If you were over 18 in 2009, you do not LOSE the past contributions. The total of those years $69,500 which means you could move in THAT amount to start investing, and this 'contribution amount' continues to grow in future years that you do NOT contribute savings to. So what the gov't is saying that you're not restricted because you don't have funds to invest in 1 year or another; they're giving you the break that in future years you may come across some large sum of savings and you can apply that amount to the past years that you didn't use up.

The sad reality is clear. The NZ investor is going to have less of an AFTER-TAX share investment than the Canadian in the many decades to come.

One area where NZ seems to differ to the UK and Canada at least is that income earners in the latter two jurisdictions have a choice between contributing to a government regulated 'investment scheme' or a government regulated 'pension scheme'.

https://www.moneysavingexpert.com/savings/lifetime-isas/

In the UK if you invest in a 'pension scheme', then at age 55 (rising to 58) you can only take out 25% of your pension scheme as a lump sum. The rest is paid to you as income and you pay tax at your marginal rate on that. Pension scheme contributions are made from pre-tax income. So with a pension scheme you do pay tax eventually but at normally at a lower rate because your income is lower in retirement. Furthermore employers are required to top up any employees pension scheme at a rate of 3% of salary.

However with the ISA which is more an 'investment scheme' your contributions are made after paying income tax. With the pension investment scheme ISA, the LISA, The maximum amount you can save per year is £4,000 (c.f. ten times that for a pension scheme). There is no top up from employers and you have to wait up to five years longer (at age 60) to access it. Why should you need to access your LISA early? You will have to pull money from your LISA before getting access to any pre-retirement age benefit entitlements. Having to do that could decimate your retirement savings.

Both schemes have a state contribution of 25% to top them up. However, if you have to access your LISA early this must be paid back. Higher-rate taxpayers get tax relief at 40% in a pension. So to contribute £100 only costs them £60 – easily beating a LISA.

Is that SBQ 'Pension vs LISA comparison, somewhat akin to the difference between the Canadian TFSA and RRSP?

It looks like the good old Kiwi taxpayer does have some advantage over the UK saver at least.

1/ Kiwisavers can take out all of their savings in a lump sum if they want to once they reach the qualifying age. There is no tax to pay at that point.
2/ No government subsides have to be paid back if the Kiwisaver is reclaimed early due to hardship.
3/ You can go on a benefit without being forced to withdraw your Kiwisaver.
4/ There is no limit to annual contributions
5/ No restrictions on Kiwisaver providers on markets they can invest in.

So really the average punter with a Kiwisaver account is not as badly off relatively as you make out?

SNOOPY

[justakiwi]

Thank you for this explanation. I have never understood the apparent contradiction until now.


Also some of you may ask why has Buffet been able to beat the market index for MOST of the years since he took over Berkshire? I mean it's like he's speaking in contradiction to himself. It's because his caliber to investing differs to managed fund. For eg. brokering deals for merger and acquisitions, being able to led out cash at obscene rates, the list goes on and you can bet NONE of the Kiwi Saver funds would be in any position to make such deals. During the GFC, Goldman Sac needed $$... so they went to Buffet, in return he demanded 10% on the $ + with warrants and options. You can bet the strike price on the options deal with GS was to his terms. So all these gravy incomes come into Berkshire that benefit the shareholder. As his right hand man said to Buffet at the at their AGM some years ago, "Why are you telling the audience this?.. they've essentially done better than the index ETF by buying Berkshire".

[SBQ]

One area where NZ seems to differ to the UK and Canada at least is that income earners in the latter two jurisdictions have a choice between contributing to a government regulated 'investment scheme' or a government regulated 'pension scheme'.

https://www.moneysavingexpert.com/savings/lifetime-isas/

In the UK if you invest in a 'pension scheme', then at age 55 (rising to 58) you can only take out 25% of your pension scheme as a lump sum. The rest is paid to you as income and you pay tax at your marginal rate on that. Pension scheme contributions are made from pre-tax income. So with a pension scheme you do pay tax eventually but at normally at a lower rate because your income is lower in retirement. Furthermore employers are required to top up any employees pension scheme at a rate of 3% of salary.

However with the ISA which is more an 'investment scheme' your contributions are made after paying income tax. With the pension investment scheme ISA, the LISA, The maximum amount you can save per year is £4,000 (c.f. ten times that for a pension scheme). There is no top up from employers and you have to wait up to five years longer (at age 60) to access it. Why should you need to access your LISA early? You will have to pull money from your LISA before getting access to any pre-retirement age benefit entitlements. Having to do that could decimate your retirement savings.

Both schemes have a state contribution of 25% to top them up. However, if you have to access your LISA early this must be paid back. Higher-rate taxpayers get tax relief at 40% in a pension. So to contribute £100 only costs them £60 – easily beating a LISA.

Is that SBQ 'Pension vs LISA comparison, somewhat akin to the difference between the Canadian TFSA and RRSP?

It looks like the good old Kiwi taxpayer does have some advantage over the UK saver at least.

1/ Kiwisavers can take out all of their savings in a lump sum if they want to once they reach the qualifying age. There is no tax to pay at that point.
2/ No government subsides have to be paid back if the Kiwisaver is reclaimed early due to hardship.
3/ You can go on a benefit without being forced to withdraw your Kiwisaver.
4/ There is no limit to annual contributions
5/ No restrictions on Kiwisaver providers on markets they can invest in.

So really the average punter with a Kiwisaver account is not as badly off relatively as you make out?

SNOOPY

Canada's choice of pension is a many but TFSA and RRSPs are not mandatory. I recall some years ago the Finance Minister of NZ wanted to make it compulsory for ALL workers in NZ to go into Kiwi Saver. In Canada RRSP is entirely up to you but most choose so because of the ability to defer tax and REDUCES the person's taxable income. I'm not sure if this is done for Kiwi Saver because the small 3% employer matching would make much difference to the person in NZ. I question, if the wage earner were to contribute 8% of their pay into Kiwi Saver, does THAT 8% lower their taxable income? Does IRD recognise you earned say $100K and can take $8,000 off that so your actual taxable income would be $92,000? In Canada they have RRSP contribution limits that you can carry forward if not used so you can have situations where 1 year a person pays so little income tax as they keep lowering their taxable income. I know the carry forword and back for contributions is not allowed in NZ.

@1) and that's entirely the point i'm hitting hard at. Kiwi Savers are being hit hard with tax every year without the ability to future plan your tax outcome in retirement. No consideration to the high income earners or the low income earners throughout their lifetime. For RRSPs, I should add that all of it must be converted to RRIF before age 71. Basically the gov't does not want the person to compound their investment forever so the conversion to an 'income fund' so they can get taxes on it. Keep in mind when the person dies, deemed disposition kicks in so the whole portfolio will be taxed. Under RRIF, there's a minimum amount of income that MUST be drawn from it but the investments stay compound tax free.

@2) same with any gov't grants in Canada. The only time they do have to be paid back is if the person doesn't play by the rules and over contributes, withdraws too early, etc but rarely the case. In 2020 the Cdn gov't has introducted the FTHBI (1st time home buyer incentive) which the gov't will lend 5% (or 10% on a newly constructed home) for amounts up to $500K. That loan has no annual repayment but instead, adds as part equity stake to the person buying their home. Either 25 years or when the person sells, that capital gain that results is when the person repays the gov't ; a WIN : WIN because the person doesn't pay interest on the loan and the gov't of Canada shares part of the capital gain.

@3) same deal in Canada as laws prevent the sale/withdrawals from the RRSP ; but generally speaking people on welfare or on the dole don't have much of a savings plan.

@4) only limit on the RRSP is 18% of your total annual income. But as I mentioned before, the more you contribute, the lower your taxable income becomes.

@5) as i've hammered before, there lies a huge tax disparity between NZ shares vs overseas share that fall under FIF. The small investor up to $50K NZD is better off investing abroad as the FIF doesn't kick in until over that threshold. You have a disparity between Kiwi Saver funds and the individual in this respect ; why? and as I mentioned before in other threads, the individual that invests abroad directly owning the shares can pay no FIF on years of loss ; why the fund manager is stuck paying FIF regardless on years if they profit or lose % return on their clients.

So when you look at all the complexities and differences, it's no wonder why people keep investing in real estate instead of the sharemarkets. IMO the average person in NZ is better off getting a mortgage from the bank to leverage their investment in another house.

FYI, Canada has a mandatory pension scheme called CPP (Canada Pension Plan) where a portion of the pay cheque is paid into. We don't have this in NZ and it's not to be confused with the gov't superannuation scheme; Canada has that too called OAS (Old Age Security) pension that everyone gets; and if OAS is not sufficient say you earn below income threshold ; you can claim the 'supplementary benefit'. So when you look at Canada at the various pension plans and schemes they have, it's no wonder why very very few exPat Kiwis living in Canada would ever reside back to NZ. Why would they when FIF will hit them so hard and if they had to sell up their portfolio, the tax on the gains would hit them hard. End result being, who in their right mind would move from a deferred tax scheme to an inequitable tax scheme we have in NZ (FIF/no tax on NZ share gains etc) ?

[mfd]

Out of curiosity, why did you move here? I came from the UK for the lifestyle, not the tax system, and have no regrets. Now I play the tax hand I am dealt here, and find it reasonably easy to save and invest. Tax certainly doesn't stress me out, happy to help out the less fortunate and pay my share.

[SBQ]

Out of curiosity, why did you move here? I came from the UK for the lifestyle, not the tax system, and have no regrets. Now I play the tax hand I am dealt here, and find it reasonably easy to save and invest. Tax certainly doesn't stress me out, happy to help out the less fortunate and pay my share.

There are 2 things in life you can not get away from. One being taxes & the 2nd, being part of a family. The latter is what brought me to NZ and the former was what took me away from Canada. Now i'm confident to say the table has turned around when comparing both places.

Family relations that are close to me know my displeasure in the direction that NZ is going (or has gone in the past 10 years). It never use to be that way when I first arrived in 1996. Back then NZ never had Kiwi Saver, taxes on foreign investment or any form of regulations like the NZ FMA, OIA, & AML. GST was 10% More people owned their homes and newly uni grads and trade workers had better prospects of landing a decent job.

I recall some years ago waiting in the airport lounge before boarding talking to an older man how he believed NZ was still the land of the milk and honey. I questioned him about home affordability why it's so expensive in Auckland. How do normal jobs like teaching can afford to live in places like Auckland when their pay is not reflective to the cost of living. His response was well... not very convincing and this is what I find with most of the view in NZ. No one questions and no one seems to care until it goes way way out of control that you can't fix it. No different when I spoke to an architect here in Chch from one of these major group builders. I was asking about lifting the building standard like we do in Canada. Issues like solar PV, thicker walls, air tight construction with balanced pressured HRV, etc and the guy's face had the same look as the guy I spoke to at the airport. His response was, "well you may think these are great ideas but unfortunately, the people in NZ don't think this way and the reality is they really don't care about the price of electricity over the long term. Instead what they feel is they accept the small gradual increases in electricity pricing annually and adjust their lifestyle / income towards that". He also said you're never going to get a payback on these improvements and certainly the insurance companies don't care for it. With no surprise, i'm seeing the same views in NZ finance too because so little of this subject is talked about in general public ; perhaps need to look at the schools for a lack of teaching in this subject, because in Canada, finance is such an integral part in living ; on the TV news, talk shows, etc. So what I learned here in NZ is people don't care about money and therefore the ignorance of not knowing would lead them to less stress in life. Perhaps question why 25% of NZ's global population lives abroad? Why are few senior expats moving back to NZ? There are a lot of questions to be asked but no one in NZ seems to want to hear the real answers.

Canada use to have this kind of attitude towards taxation and finance to the point that the PM had to address brain drain and a flight of capital leaving the country. The US health care system was continually draining the skilled doctors and nurses from Canada (I know 1st hand of close friends that left Canada during the time I left and you know... they are NOT going back). So if you question about being "happy to help out the less fortunate and pay my share" well there's a rude awakening about this view. What happens is the gov'ts realise there isn't enough $ to go around and people's life and liberty begins to erode. They bring in new taxes, elevate the cost of living, and keep things highly regulated (gee sounds the opposite of what Donny Trump is trying to do in the US). All while we are lead to believe 'Yes it's OK if i'm paying more taxes and taking a huge cut on my standard of living' while we see the skilled leave NZ. As I told my wife, the 2 of us have no problems and financially we've already made it and it would not matter where we live. However, when I speak about my children? Whoa daddy that's an entirely different story. How acceptable that it becomes cultural that the only way the next generation can buy their 1st home is to rely on their parent's wealth to make it affordable? and to think how that man at the airport says NZ is the land of the milk and honey?

So you may ask again, why am I still living in NZ if the grass is greener in Canada? Again, you can't run away from family. But 1 day my relatives can't live forever and 1 day my children will grow up and will need jobs. So until that time comes we are pretty much stuck here.

[GTM 3442]

I've read many books in the past. Now, I prefer someone smarter, Warren Buffet already has read the books and what he conveys is smart enough. How many ways does it take to show the people how much of a scam 'salesmanship' has been in the selling investment packages for the newb investor?

Diversify across all asset classes? Man, if that was true i'm sure many would of outdone Buffet's track record. But I will EAT my own shoe if the markets hold a 'strong form of market efficiency' for which diversification to work well. Market Efficient Hypothesis is just like EBITA - the same BS crap that they teach at business schools.

Yeah well, if you and Warren Buffet share the same goals and the same timeframe, then why not?

Diversification is a strategy to reduce risk. It's obverse is concentration. They are both valid strategies - indeed I'd imagine that they're probably complementary.

[SBQ]

Yeah well, if you and Warren Buffet share the same goals and the same timeframe, then why not?

Diversification is a strategy to reduce risk. It's obverse is concentration. They are both valid strategies - indeed I'd imagine that they're probably complementary.

Of course, we learn lowering risk in elementary stats class and it's sold on to everyone in portfolio theory. But it's by no where near a proven strategy for outperforming the market. You should know the more you diversify, the less return you get as you get closer the level of averages (kinda like the limit function in calculus on the x/y graph where the line gets closer and closer but never gets to the line)

The whole investment community has been lead to believe everything has to be diversified. You have the gov't embracing it, schools embracing it, and who are the real losers? The real winners are the fund managers that make themselves look good (who spend a lot of time doing nothing) because they don't know how to produce exceptional returns with skill. The losers are the investors because as I said before, more $ is robbed from them in the form of administration fees, taxation, and making bad investment choices, than showing real returns. I recall some years ago the NZ Superannuation fund was trying to sue some bank in Spain because they took a bad stake in a poison pill venture. Like who was the goon that OK this kind of deal? - and you can be sure no one was held accountable. The markets are not efficient enough to make diversification a relevant AND reliable form of investing to depend on. Yet, financial advisors still push this hopeless strategy to their clients. I see over diversification all too often. You have a newb investor that says I have $10,000 to invest and instead of picking key performing stocks in an index, they're compelled to believe diversification is the key and buy like 30 stocks over the 5 years they stay invested. Or they feel that so and so Kiwi Saver fund is good and puts $10,000 to them for which the aggressive fund allocation has like 200 different shares invested. Then the investor comes back after several years saying how come my investment returns are so little? Well the financial advisor will always say something like, "Investing is a LONG TERM plan and you should ignore the times when the market is doing very bad". They all seem to have the right excuses...

That's why in Canada, the gov't realise that for the vast majority of 'small' investors looking to save, they brought out TFSA, RESP, RDSP, etc aimed specifically for the low and middle class people that would struggle to save $2K to $6K a year. By leaving them with a tax free status on those registered investment plans, it gives a HUGE incentive for the general public to get knowledgeable about finance, when in the past, it was only the big boys with large 7 figure accounts that would make the money. The small guy doesn't have to seek to pay lofty fees for some 'financial advisor'; there's already plenty enough information online about investing; so they can invest directly in a low cost discount brokerage account that doesn't charge moronic fees like 1% per year on total account balance that i've seen with some NZ brokerage firms.

[GTM 3442]

"You should know the more you diversify, the less return you get as you get closer the level of averages. . . "- I'm inclined to think that how and what you diversify is also important. Conversely, the more you concentrate, the further away from the level of averages you can get. Out of idle curiosity, what do you benchmark yourself against?

"I recall some years ago the NZ Superannuation fund was trying to sue some bank in Spain because they took a bad stake in a poison pill venture. Like who was the goon that OK this kind of deal? - and you can be sure no one was held accountable." - Context can be quite important - should it turn out that your goon made 5 good calls for each one bad one, what then?

But in general, I suspect the broad thrust of your comments about the New Zealand retail financial services industry is sure to strike a chord with many.

[SBQ]

"You should know the more you diversify, the less return you get as you get closer the level of averages. . . "- I'm inclined to think that how and what you diversify is also important. Conversely, the more you concentrate, the further away from the level of averages you can get. Out of idle curiosity, what do you benchmark yourself against?

"I recall some years ago the NZ Superannuation fund was trying to sue some bank in Spain because they took a bad stake in a poison pill venture. Like who was the goon that OK this kind of deal? - and you can be sure no one was held accountable." - Context can be quite important - should it turn out that your goon made 5 good calls for each one bad one, what then?

But in general, I suspect the broad thrust of your comments about the New Zealand retail financial services industry is sure to strike a chord with many.

How and what, and concentrate? You can pick narrow base fund that concentrate in a certain segment but then they should be measuring their performance their relative index. ie. relevant commodity index, relevant emerging market index etc. The same rules apply, the more you diversify, the more you become average to that index. Personally i'm only interested in a broad market index so I look at the S&P500 or the DOW index. That is the same benchmark that Buffet refers too and so should most managed funds when they are choosing a broad base diversification for their clients.

As for the NZ Superannuation Fund, the link in question is here:
https://www.stuff.co.nz/business/industries/66416001/nz-super-fund-to-sue-the-bank-of-portugal-over-200m-loss
That goon needs to measure his performance to OTHER superannuation funds around the world just like you would with an index fund. So if he's picked 1 bad one (re: the Portugal bank loss), then his other 5 good calls need to be compared to the good calls by other gov't pension funds in other countries. Perhaps there is no benchmark if the NZ Superfund holds most of it's assets in NZ. But I can assure you no pension fund would limit their investment in a narrow base investment if they choose to hold investment mostly in their native country. But going back to the bank investment in Portugal. You have to question how was this goon sucked into this investment by GS? Why couldn't GS suck in some other managed fund in another country? My guess.... the NZ Superfund didn't know better because they never had better information outlining the risks they were getting into. Because it certainly sounds very fishy to lose that $ in 1 or 2 months time frame. Certainly, it's an issue of lack of information for all investors and if you don't have a strong form of market efficiency, then there's little point of pushing the diversification button.


But in general, I suspect the broad thrust of your comments about the New Zealand retail financial services industry is sure to strike a chord with many.

Why would it? Is it not because the truth hurts too much? Just like the NZ building industry we're timber prices are 3 times the price in NZ than what the American can buy at Home Depot? HUGE barriers of trade and HUGE levels of regulations. How about that FMA the NZ gov't dished out last year? You know how stupid NZ looks when they impose a NZ regulation abroad saying for eg. to US brokerage firm, if you're providing services to a NZ resident, that you must comply to our NZ regulation by banning the client access to derivatives and futures / options and forex? What are the repercussions over this? I tell you, the foreign markets will just exclude the NZ market and then you wonder... why is it the NZX experience dwindling liquidity? Here's what I see, the NZ equity market is gonna dry up like a deep fried potato chip and the only people holding the bag are the poor NZ investors.. stuck in schemes like Kiwi Saver all while you have FIF that distorts the tax issue when you want to invest abroad. Other developed nations like Sweden, I know for fact opens the door wide open. Their residents and their pension funds allow full access to foreign markets with no regulation or restriction and certainly not such tax disparity like FIF.

[justakiwi]

At the risk of pissing people off, can I just say, this thread is getting off track again, and the current debate is really not helping me with my original question, or anything else for that matter. Maybe the thread has run its course and we should all move on to something else.

[macduffy]

At the risk of pissing people off, can I just say, this thread is getting off track again, and the current debate is really not helping me with my original question, or anything else for that matter. Maybe the thread has run its course and we should all move on to something else.

I second that, justakiwi. If there is something else to air, others should start the appropriate thread/s and leave your original question for relevant comments.

[nevchev]

Been an interesting read on a wet sunday morning.I agree that a background in accounting or at least a basic understanding of it is invaluable but i think some knowledge of those running the company and pulling the strings can give a great indication to its possible success or failure.Easily researched in this modern world.Good luck.

[Not The Chosen One]

Not sure if this is the right thread for my question but here goes....

I invested small amounts a couple of years ago in the sharemarket to basically test the waters without worrying about losing my life savings - don't put in what you can't afford to lose, right?

I've noticed a few comments on various threads about traders vs investors and it seems like the investors look down on the traders or am I missing something here?
How do you even define a trader? ie hold something for a month, 6 months, a year?

My first share of POT I kept for 2 years before selling with a 20% gain recently while a purchase of shares in ABA during lockdown got me a 110% gain in a little over a month.
It may very well climb further but I'm more than happy with that, as should most people.

Investors who may hold for a very long time may never see that gain so is one better than the other? I mean, it's as simple as making money as far as I can see. Don't investors see it that way?

Curious to see if any long term investors here have thoughts to share

Thanks

[peat]

My first share of POT I kept for 2 years before selling with a 20% gain recently

Possibly an investors behaviour depending on your thoughts at the time of purchase



while a purchase of shares in ABA during lockdown got me a 110% gain in a little over a month.



Definitely a trade , even if you bought with the best of longer intentions. Although weirdly enough you might get away with this to the tax department (once or twice only) if you were somehow able to demonstrate your intentions.

But I think you're asking more about sentiment and why some people hold for ever. The best answer would be that its the way to get stupendous gains (in some cases) and that one or two huge winners could change your life. The downside to selling even when you make a good profit is that you might miss out on those 10,000% gains that some talk about with shares like XRO or Netflix or ATM etc etc. And the reason I say this is because I did it today, taking a good profit with a company that I strongly suspect will go ballistic! Haha but of course it might not - who knows.

[Not The Chosen One]

Thanks for the reply.

Yes, it was probably more about the investors holding for as long as they do. It certainly makes sense when you get those massive gains from the likes of XRO which I did hear from a couple of people who invested in them and did bloody well - an element of luck must come into play in some of those instances I would have thought.

I guess the one's I researched and looked at to see how they performed over the last 5 years got me thinking why invest for that long when in some cases, they were basically flat or losing money the whole time.

There's probably a lot of novices like myself who saw some big drops in mid March and decided to buy like I did with ABA, for example. The harder test may be to come when I can't simply look for someone that's had a huge drop in the space of a few weeks or few days to jump on to.

This site definitely helps when you can get so many perspectives from everyone that makes you think a little bit more.

[kiora]

I typically invest because
1)I don't want to be taxed on gains
2)I don't wish to be a hypochondriac worrying about about osculations in daily/minute share price movements
3) traders need to be on their game all the time with fancy graphs to tell them when to buy/sell ie I'm a lazy investor :)
4) I find if you don't own a particular share on 12 days/365 days you tend to miss the gains
5) Trends are your friend.Over the last xxxx years the market has always gone up over the long term
6) I'm happy to gear up the portfolio when the time is right to maximize the return on capital in what I perceive a low risk/reward company( pays a dividend,low/well managed gearing,growing profitability)
7) I don't wish for a full time job trading,more set & forget

[kiora]

Plus
8)Interest on borrowing for dividend paying shares is tax deductible for investors
9)The difficulty of being an investor is that there is only less than 10 companies listed in NZ that I would invest in & put in the bottom drawer
10)The management team of the company is top priority.Are they aligned with investors?.Is there good succession planning?Has the company got a long history of lifting turnover while maintaining margins? Any doubt ,stay out.
11)Investors benefit from compounding returns

12)Conversely a trader should be seeking volatility.Any share/company could do.

[SBQ]

I may of mentioned this before on a different thread but the facts are clear about traders and day traders back when I was studying Finance at uni as they are relevant today.

Day traders are those on average that trade everyday and follow purely on 'technical analysis (charting)'. In the US the SEC has plentiful of data on every brokerage account of individuals that trade (this is to maintain regulations so no particular individual gets away with insider trading etc.). Anyways the data shows 2/3rds of the day traders lose money. Of the 1/3rd that can show a profit, maybe 1% can show a decent level of profit over the year. That's a high turnover. The traders that are less hyperactive say once a week or month, again, fall into a less extreme category. However, this group tends to lose the most in 'potential loss gains' ; that is thinking they sold at the high but the share price goes higher, so they're stuck buying at a higher price to get back in. Yet they're still on some profit, they could of made far more by not trying to buy and sell. From the NZ perspective, frequent trades = taxing of the gains. I highly doubt on a net basis, a person with peculiar stock picking or luck would maintain a higher gain than the long term investment approach that could go tax free. I mean right off the bat the tax rate of 10% - 33% + ACC tremendously eats into the gains on an annual basis.

Those that invest, look to 'fundamental analysis' which is the looking of the company's financial statements and business outlook. If you follow Warren Buffet's advice, he says no one can 'consistently' pick stocks well enough to know they will beat the avg index market return ; consistently over a multi-year decade. That is why after his death, what ever is left after he's gifted most of his wealth away, the remainder will go into an index ETF like the Vanguard S&P500. Because to be able to pick individual stocks is really no different than gambling at the roulette table. Just look at all the Kiwi Saver actively managed fund trying to do the same gamble. They market themselves as having privy knowledge or inside info that gets them the better bet but at the end, the biggest losers are the clients.

[kiora]

Plus
13)Inheritance:What share portfolio will be in your inheritance?
An investment portfolio with set & forget companies
OR a trading portfolio.Good luck with something only you can manage
14)Diversity in a portfolio is the antithesis of returns.The more "spreading the risk" there is, the lower the expected return long term .The averaging out effect on returns
Having cash,bonds TD in a portfolio over the long term(which is expected for retirement savings to lower volatility) lowers the returns by a considerable margin and increase the risk of lower returns long term

[RTM]

Thought provoking posts SBQ.
Thanks for taking the time.


Canada's choice of pension is a many but TFSA and RRSPs are not mandatory. I recall some years ago the Finance Minister of NZ wanted to make it compulsory for ALL workers in NZ to go into Kiwi Saver. In Canada RRSP is entirely up to you but most choose so because of the ability to defer tax and REDUCES the person's taxable income. I'm not sure if this is done for Kiwi Saver because the small 3% employer matching would make much difference to the person in NZ. I question, if the wage earner were to contribute 8% of their pay into Kiwi Saver, does THAT 8% lower their taxable income? Does IRD recognise you earned say $100K and can take $8,000 off that so your actual taxable income would be $92,000? In Canada they have RRSP contribution limits that you can carry forward if not used so you can have situations where 1 year a person pays so little income tax as they keep lowering their taxable income. I know the carry forword and back for contributions is not allowed in NZ.

....... etc

[iceman]

I would like to suggest to any "newbies" (I´ve been one for 25 years in this game) reading this thread, that they read Percy´s post 726 on the PAZ thread on the "Unlisted" section. It describes how millionaires are made in this game.

[SBQ]

Thought provoking posts SBQ.
Thanks for taking the time.

Not particularly meant to be thought provoking but to give NZ readers the idea how investing and retirement planning and estate planning is done overseas. Yet when this subject comes about at dinner time table, it's either they don't know enough about finance or investing or economics or to even trying to educate the listeners. I often say like I do in this forum, 'why is it NZ real estate treated so different than NZ equity investments? Real estate has a far lower risk and attracts little or no taxes on the gains vs an investor that buys shares takes a huge gamble (more so if invested abroad) and attracts all sorts of taxes (by the managed fund portfolio paying tax on gains annually), on top of the mgt etc.

The real beginner's struggle is to first get educated about different asset classes and then look at the tax implication. Financial advisors and accountants I speak to in NZ are clueless in advising BOTH areas (taxation and financial advice?) whereas where I come from, it's mandatory for any CFA or financial planner to have a thorough knowledge about taxation from their client's point of view. The rubbish I hear in NZ is these advisors 'won't advise on anything on the issue of taxes' and say we can gladly arrange a tax specialist for a proper assessment. This is so wrong when at the end of the day, what matters to the client that invests their hard earn money is "what's their REAL return", and not some fudged figure people can see in a prospectus saying they would have sum $x,xxx,xxx.xx in 20 or 40 years.

https://www.sharetrader.co.nz/showthread.php?8378-PAZ-Pharma-Zen&p=818260&viewfull=1#post818260


https://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by percy https://www.sharetrader.co.nz/images/buttons/viewpost-right.png (https://www.sharetrader.co.nz/showthread.php?p=343736#post343736)
What I should have mentioned is that these initiatives are being funded by the company's strong balance sheet and excellent cashflow,WITHOUT having to come to shareholders for further funds.I take this as very positive,means management are looking to make profits to fund growth.Most small company's think the only way they can grow is to fund growth with more money from shareholders.This dilutes your shares,and takes management's mind off making real profits.So well done PAZ.
My second post on this thread.My third post on 23-04-2011 I stated I brought 80,000 PAZ at 3.5 cents.
Reflecting back on the years,I think I kept doing the right things.ie.
1] Buy a few shares to get to know the business.
2] Make sure the balance sheet is strong,mainly cashflow positive, and current assets far exceed current liabilities.
3]Watch the company to see if they do as they say they will do.
Then I just kept adding to my/our holding on each positive announcement.
A good lesson to me that we all know;And KW always told us:Sell your losers and add to your winners.That usually means buying your winners at higher and higher prices.
Our last purchase of PAZ was 50,000 at 25 cents, for the wife, on 15th April.At lot higher than the original 3.5 cents I paid.So added to our big winner,and have sold other shares in other companies over the years,some at a profit and a few at a loss.Whenever the story, or the reason you brought a share changes,SELL.
Thank you to all of you who have thanked me, and joined the fun.I guess we are all "well positioned."..lol.
I think most Sharetraders will realise our PAZ holding far exceeds what I expected our total share portfolio would be.

re: iceman " It describes how millionaires are made in this game. "

Doing some simple math in Percy's position in PAZ (now I must admit, he lucked out and I can't speculate how many shares he owns in this company). But from what he's mentioned in that post, it's certainly not how millionaires are made.

80000 shares @ $0.035 = $2,800
50000 shares @ $0.25 = $12,500

As a general rule I do not follow NZX listings and the last time I did ever look at any particularly company listed on that exchange, the biggest problem I found is the lack of volume for any person with a large position to move in or out. So when you say in this game that's how millionaires are made, the first thing that comes to my mind is if a person had $1M in cash, what impact on the price of the shares would it have by buying that much? Likewise if you had $1M in PAZ shares, what impact would the share price have if you tried to move it all out at once? Because the way I look at how NZ brokers operate, they cream you by doing frequent trades, they get more commissions from buy / selling in tranches.

If you had $1M in any S&P500 listed company in the US exchanges, ALL 100% of $1M would be bought or sold in a blink of an eye and not a bat would happen to the share price. Just set your limit order and you're away.

BTW, from an investment point of view, the millionaires i've met in NZ have all done it by owning NZ real estate. (i'm not speaking of those that made their wealth from owning a successful business). Yet, i've yet to come across 1 person that has made millions purely by investing on the NZX (and let's not speak about those that started with a huge position).

[percy]

You missed "Then I just kept adding to my/our holding on each positive announcement."
So brought from 3.5 cents up to 25 cents.
I would suggest you read the whole PAZ thread.

ps.The more research I do the luckier I become..lol.

[iceman]

SBQ, you are completely wrong in your highlighted criticism of my post. I'm not guessing. I'm stating a fact that was meant as an interesting reading for "newbies" this thread was started for.

[winner69]

SBQ, you are completely wrong in your highlighted criticism of my post. I'm not guessing. I'm stating a fact that was meant as an interesting reading for "newbies" this thread was started for.

Seems some are their own worst enemy

[RGR367]

.........................

BTW, from an investment point of view, the millionaires i've met in NZ have all done it by owning NZ real estate. (i'm not speaking of those that made their wealth from owning a successful business). Yet, i've yet to come across 1 person that has made millions purely by investing on the NZX (and let's not speak about those that started with a huge position).

I can assure you that I know several members of the NZSA have got millions due to their NZX investments. And you don't need to question whether you can really make millions by investing on just NZX alone.

[kiora]

You missed "Then I just kept adding to my/our holding on each positive announcement."
So brought from 3.5 cents up to 25 cents.
I would suggest you read the whole PAZ thread.

ps.The more research I do the luckier I become..lol.

Great effort for a book seller :)

[Snow Leopard]

....whereas where I come from....

I really wish that you would go back there.

[justakiwi]

:t_up::t_up::t_up:


I really wish that you would go back there.

[blackcap]

Where SBQ comes from is absolutely irrelevant in this discussion. And if you want immigrants to go back "home" there are other websites you can pontificate on.

As to his/her argument about tax it certainly is valid. Financial advisors should know tax laws (even in NZ) and be able to advise clients on tax implications. People underestimate the effect that poor tax planning has on portfolios and wealth. To be fair though, I studied tax and estate planning at postgrad level so the qualifications are out there. Whether these are mandatory for financial advisors is another matter but some rudimentary knowledge certainly IMHO should be.

[justakiwi]

It’s not about actually wanting SBQ to go home, and you know that. I welcome anyone into this country, as a visitor or a permanent immigrant, regardless of race or culture or gender or whatever else. But SBQ is constantly running down my country, and criticising our tax systems. He doesn’t have to like how we do things here, but he knew what he was getting into when he came here. So, I make no apologies for sometimes feeling and voicing “if you don’t like it here, maybe you should go back to the country you were apparently much happier in.”


Where SBQ comes from is absolutely irrelevant in this discussion. And if you want immigrants to go back "home" there are other websites you can pontificate on.

As to his/her argument about tax it certainly is valid. Financial advisors should know tax laws (even in NZ) and be able to advise clients on tax implications. People underestimate the effect that poor tax planning has on portfolios and wealth. To be fair though, I studied tax and estate planning at postgrad level so the qualifications are out there. Whether these are mandatory for financial advisors is another matter but some rudimentary knowledge certainly IMHO should be.

[SBQ]

You missed "Then I just kept adding to my/our holding on each positive announcement."
So brought from 3.5 cents up to 25 cents.
I would suggest you read the whole PAZ thread.

ps.The more research I do the luckier I become..lol.

What if the announcements were negative? That's why I said you got lucky and certainly not a method new investors should have 'hopes' on. I certainly wouldn't encourage it just like I don't encourage hope to those that buy lottery tickets under the basis of "You never know..." What if you were working with far larger sums like 6 or 7 figures in PAZ and at what impact would it have on it's liquidity?

I'm not saying you were wrong in your investment. I'm saying that to assume a statement "That's how millionaires are made" is completely wrong to the person wanting to get rich from share investing. I have very little experience trading "penny stocks" because the studies in finance i've done at school specify share prices that fall under this category come at different regulations and on all parts, do not meet 'listing requirements' on major stock exchanges (ie. NYSE & Nasdaq delists stocks that fall under $1/share if traded more than 30 day period). They're normally OTC types where their financial statements go unaudited and hence, why they say it's basically gambling instead of investing. So having said this, my explanation is all about liquidity and that's something the NZX doesn't have a lot of ; so it's a poor statement to imply people can make millions of the NZX (look at the behaviour? i've seen actions such as larger NZX companies like TWG issuing new shares to dilute existing share ownership or issue new shares to pay off loans just to prop up their balance sheet or pay dividends (what? issue new shares to pay dividends? isn't that like robbing Peter to pay Paul just so Paul wouldn't feel so bad that his share holdings got diluted a bit?).

I've been living in NZ for over 20 years, the locals that tell me about sharemarket investing tell me that it's a scam and they recall the days of the NZX crash in '86 and how so and so Brierly Investments scammed investors to how Hanover Finance scammed cash deposit investors... yet when they point me to the examples of buying real estate, they keep telling me "At least you can drive by and see it!" Maybe i'm in the wrong circle but i've found the subject of finance is not often talked about at dinner time table. It's rarely spoken about in detail on TV Morning News or on any time slot on NZ TV. Very different to the daytime TV I see in Canada where financial literacy is routinely talk about day and night.. and more so into the schools for children to learn. What is the NZ gov't doing about teaching financial literacy? Leaving it to Uni? Even then it's not taught much.

I won't comment on the attitude that "This is NZ and if you don't like it, you can move back".

[kiora]

Yes NZX is very rarely talked over the dinner table.
My acquaintances also mostly think of it as a scam,risky investment etc etc
If I mention how much the portfolio is up they go,SELL,if it sounds to good be true,then its not true
Why ? Mostly harks back to 1987 etc
A bit of it may come down to Kiwi attitudes about talking about money
Investors have been living in the past & not looking past property.
I sense this is/will slowly changing when they realize the issues with liquidity in property versus the share market
Luck doesn't come in to investing,investors make their own luck.
There is enough liquidity in the NZ share market if you are an investor.

[percy]

When you buy a share in a business you become a part owner of that business.There are a great number of very good businesses in NZ.
If the business is sound, and in a sector that has good prospects, and is well managed,usually with directors and management with large holdings, the chances of success is good.This research in finding these companies is where millionaires are made.
I followed Blackmores in Australia in the early 90's and was attracted to PAZ as I saw the importance of "ingredients".Particularly "pure" NZ ingredients.
I have owned other companies who have not done as they said they would do.Sold them . Add to your winners,sell your losers.If you can't pick winners stay away from the sharemarket,or place your funds with a fund manager that has a record of success.
As PAZ kept doing as they said they would do, I kept adding to my holding.
I have a wide circle of very financial literate friends.There are hundreds of thousands of NZders who own their own business.
I am 71 years of age and have had the sharemarket as a hobbie since I was 18 .So over 50 years of knowledge.
Anyone with over 50 years of knowledge/experience will do well in whatever field they choose,whether vintage cars,stamps,coins,art,or property.
I happen to have chosen the sharemarket.

[macduffy]

As another with over 50 years' knowledge of, and experience in investing in the NZ and Aust sharemarkets I second percy's observations. Of course, it takes time and study to be successful but there's plenty of us around. As a generalisation, Kiwis don't flaunt their success and many feel uncomfortable talking too specifically about money, especially their own. There may be a subtle change starting here with the growing prominence of Kiwisaver?

[SBQ]

Yes NZX is very rarely talked over the dinner table.
My acquaintances also mostly think of it as a scam,risky investment etc etc
If I mention how much the portfolio is up they go,SELL,if it sounds to good be true,then its not true
Why ? Mostly harks back to 1987 etc
A bit of it may come down to Kiwi attitudes about talking about money
Investors have been living in the past & not looking past property.
I sense this is/will slowly changing when they realize the issues with liquidity in property versus the share market
Luck doesn't come in to investing,investors make their own luck.
There is enough liquidity in the NZ share market if you are an investor.

Not if there's without a change in NZ's tax laws that favour ownership of multiple rental properties (where all can be sold off without paying capital gains tax). I hate to keep sounding like a tape recorder on repeat but nearly every OECD nation has taxation that is heavily slated against profiting off real estate, while having little or NO tax on gains from investments in equities or a savings / investment plan portfolio.

Yet we often hear the complaint by NZ gov't and critics saying NZ needs to diversify investment away from real estate. It's all very contradicting when I see attempts to make housing affordable such as a ban on foreign buyers acquiring NZ residential properties? Com'on, let's be real here... the politicians themselves are stuck into that game of profiting from real estate ventures, why is it not good enough for the public? It's been cited by the OECD org that NZ's housing prices are excessively unaffordable -> but nobody is listening.

To the issue of liquidity, I ask, well look at other countries and see what % of assets is contained into real estate vs the % value contained in equities? Anotherwords, what % of wealth does the NZX represent in comparison to the % value of ALL real estate in NZ? This is a problem because for many decades, the NZ gov't has expressed people need to diversify away from holding too many houses and look elsewhere to diversify such as in the NZX. What they misunderstand is the NZX simply does not have the assets or listed companies to support such a move. Just imagine if all the rental properties switched hands to principle resident home owners while the proceeds would go into the NZX? What impact would that have? It would be insane. The reason why other exchanges won't have this problem is they attract companies world wide. When the NYSE displays their banner "Where the whole world trades" they mean it because every major foreign company you can think of lists in the US exchanges. They're not going to come to NZX and if there are NZ companies that grow large enough... such as Xero, they end up leaving. So if it's so easy for a NZ company to leave, then why would it be so difficult for NZ investors to move their $ abroad? This is how complex the situation is and it doesn't matter how many years you've invested in the NZ market, one should know it has major limitations.... and you should certainly not advise beginners that the NZX is the be all end all place to buy shares.

[Snow Leopard]

Where SBQ comes from is absolutely irrelevant in this discussion. And if you want immigrants to go back "home" there are other websites you can pontificate on.
...

I have absolutely nothing against immigrants per se, indeed some of my best friends have spoken to one.

For a large portion of my life I have been and currently I am an immigrant.
I think it great to go live in another country and culture and learn from that experience, enjoy the diversity and open you mind up to new perspectives and approaches.

I have a lot against posters who continually spout the same narrow minded ill informed drivel day after day after day ad infinitum.

[blackcap]

I have absolutely nothing against immigrants per se, indeed some of my best friends have spoken to one.

For a large portion of my life I have been and currently I am an immigrant.
I think it great to go live in another country and culture and learn from that experience, enjoy the diversity and open you mind up to new perspectives and approaches.

I have a lot against posters who continually spout the same narrow minded ill informed drivel day after day after day ad infinitum.

So you would want "certain types" of immigrants (those that opine drivel ad infinitum) to go back home? Or am I reading that wrong too :P

This is an open forum, SBQ can say what he likes, you do not have to read it or even respond. The world is very simple in that regard. He does make interesting points about the tax situation in NZ that it is not conducive to equity investments compared to other jurisdictions.

To be fair in my humble opinion, 1987 was the worst thing that could have happened to NZ. Thankfully we now have the likes of sharesies allowing all and sundry to participate in our capital markets. I just hope the timing is not off and another generation of investors are turned away.

[kiora]

My view is their is nothing to put me off investing in shares vs property
Neither have capital gains tax for investors.
Gearing can be used to buy both.
The advantage of share investing is there is continual evaluation of capital values and liquidity in the market if one chooses to sell
Compared to property .......

[Snow Leopard]

...Or am I reading that wrong too....

Yep, big time.

But just for you & both my fans here is a picture of me at my cutest:

11652

And if you ask really nicely I may tell you how through continuous pure luck and despite having to pay taxes in several countries I made my many* millions.

PS: Image from here (https://imgur.com/gallery/aSxU8)

*For many read one

[kiora]

Yep, big time.

But just for you & both my fans here is a picture of me at my cutest:

11652

And if you ask really nicely I may tell you how through continuous pure luck and despite having to pay taxes in several countries I made my many* millions.

PS: Image from here (https://imgur.com/gallery/aSxU8)

*For many read one

Pretty cute SL :)
I could also add something about the other figure but great stuff.We all make our own luck don't we.

[artemis]

Yep, big time.

But just for you & both my fans here is a picture of me at my cutest:
...

And I thought you were named after the vodka. That probably says more about me ....

[Snow Leopard]

And I thought you were named after the vodka. That probably says more about me ....

How the hell did you find out that my paw-name is Stolichnaya (known as Stoli by my friends)?

But here is me again on one of my many modelling assignments:

11658
Buy Some (https://www.snowleopardvodka.co.uk/)

anyone else feel that this thread is getting off topic?

[iceman]

This new initiative may be of interest to investors https://www.interest.co.nz/nzx50
I applaud www.interest.co.nz for it

[Snow Leopard]

I thought the make-up of the NZX indicies were supposed to be top secret information and kept from the masses at all costs!

Revolution :scared:

[blackcap]

I thought the make-up of the NZX indicies were supposed to be top secret information and kept from the masses at all costs!

Revolution :scared:

I think you are right. I tried to call the NZX and ask them what the make up of their FNZ fund was but they put me through hoops etc. The lady on the phone did direct me to an older document which was quite difficult to find, but that gave a rough approximation of the composition and weighting of FNZ. Good to see interest.co.nz offer some transparency.