Investment strategies for newborn

[Jamesw]

Hi guys

New to the forum and just wanted to get a bit of advise.
We have an 8 month old and I wanted to get her saving early so she could start investing. My wife and I opened her an account under her name and started putting $25 per week aside.
She now has $800 in her account and we were thinking of making her first investment through smart shares.
Investing the minimum $500 then $50 per month into the same fund maybe FNZ.NZX?. Letting the other $50 per month build up to $500 then investing that.

My wife and I are new to investing but with the small portfolio we have in the stock market we have been very impressed with the results.

As our daughters investments will be over a long period 20+ years before it will be touched I would love if any thoughts or other ideas on investing for her future.

Thanks

[iceman]

Your daughter will be very thankful for you one day if you do this. With the situation and plan you describe, I think it would be very hard to beat regular investments into the S&P500 through Smartshares https://smartshares.co.nz/, Sharesies https://www.sharesies.nz/ or Hatch https://www.hatchinvest.nz/

[Pipi]

I would go for sharesies. You can invest as little as $5 with no start up fee. You could get huge diversification for her. They do have fees but is it only .75 cents a month for kids. I do it for my daugther.

[BeeBop]

ETF tracker....or trackers....can't predict the future and there will be at least 20 yrs before she needs anything. Countries and economies can move drastically, companies can become obsolete, so for that timeframe a regular into three or four ETFs that reflect asset class AND has a global reach. If it were 5 to 10 years, the approach could be a tad more predictable.

[epower]

We do this one for our 7 month old daughter.

Good place for grandparents etc to put gifts too.

https://www.superlife.co.nz/invest-for-children

[PennyPicker]

Congratulations @Jamesw, both on the arrival of your daughter and taking some proactive steps towards giving her a great head start.

Cooperative Bank Youth accounts are I think currently the best available (did require me becoming a member with a zero balance savings acc.) which earn 3% interest on the first $4000 deposited, and 0.75% on anything over $4000. I think it's the best child account around at the moment and it may suit your needs, at least initially. (Youth account is zero fees for anything and is up to the age of 12!)

If you go down the shares route I'd advise against buying in your child's name (e.g. getting them a CSN etc) as it'll just cause grief later if you want to sell quickly, or at all. Nothing in NZ seems well setup for children as the admin is always done under the guise of the guardian's account. A good example is Westpac online term deposit setup, works... but defaults to guardian's tax rate, requiring a phone call and several days to fix.

You didn't mention it, so apologies if you know this already, but the government's BestStart plan is a must have, everyone gets it for the first year and then there's an eligibility requirement after that; https://www.ird.govt.nz/topics/working-for-families/about-best-start

[justakiwi]

Can’t see any details of fund options/fees etc for this. Seems you have to sign up in order to see any of that info.


We do this one for our 7 month old daughter.

Good place for grandparents etc to put gifts too.

https://www.superlife.co.nz/invest-for-children

[SBQ]

In my opinion, with the narrow scope of investment choices for newborns in NZ (compared to places like Canada and abroad), I would not bother. The amounts are too small.

You would be far better to take those funds and use it to invest it into your OWN investments. When the time comes your child is old enough, you can 'gift' part of the proceeds. As in previous posts, the issue of compliance, paperwork, regulation, just doesn't warrant to have another separate dedicated account; especially when the amounts are quite small.

I am biased because the Canadian model for allowing newborns and the young / teens is immense. Such as RDSP and TFSA - all have a focus of TAX FREE compounding. Even relatives and friends can make the gifted contributions for which in some registered plans, the gov't matches the amount to the account holder. Gosh.. there's a LOT of things Jacinda Ardern could learn about how Canada is addressing how people get into their 1st home, tax laws that encourage the poor / low income to invest. Of course we are in NZ so all this is moot interest but would be glad to see something done more in NZ in this area.

[kiora]

By signing them up for Aggressive Kiwisaver when they turn 17 and contributing $1100/year to age 65 then they will have
At age 65, they could have: $200,517.00
From 65 until age 90, this would give them: $250.00 per week

Worth considering IMHO

Try sorted website,see attached

https://sorted.org.nz/tools/kiwisaver-savings-calculator

[SBQ]

By signing them up for Aggressive Kiwisaver when they turn 17 and contributing $1100/year to age 65 then they will have
At age 65, they could have: $200,517.00
From 65 until age 90, this would give them: $250.00 per week

Worth considering IMHO

Try sorted website,see attached

https://sorted.org.nz/tools/kiwisaver-savings-calculator

It's a load of rubbish because they're based on 'static' assumptions. That's not how the finance works in the real world as you have years that are positive and years that are negative. You also have to factor inflation (which the NZ gov't doesn't have a gasp of 'indexing' payments to a CPI figure every year). Then you have to factor administration costs and taxation ; a key issue that is not spelled out well by various Kiwi Saver funds.

What is $250/week going to buy in 47 years time?

[justakiwi]

You are always so down on everything. We live in NZ. We have to work with what we’ve got and make the best we can of it. It’s not a “load of rubbish” actually, and $250 a week will be a damned sight better than nothing. Your constantly negative comments about our financial systems etc, and your impractical investment suggestions are not particularly helpful. We are all aware of your feelings/criticisms. Maybe just give it a rest for a bit.


It's a load of rubbish because they're based on 'static' assumptions. That's not how the finance works in the real world as you have years that are positive and years that are negative. You also have to factor inflation (which the NZ gov't doesn't have a gasp of 'indexing' payments to a CPI figure every year). Then you have to factor administration costs and taxation ; a key issue that is not spelled out well by various Kiwi Saver funds.

What is $250/week going to buy in 47 years time?

[SBQ]

You are always so down on everything. We live in NZ. We have to work with what we’ve got and make the best we can of it. It’s not a “load of rubbish” actually, and $250 a week will be a damned sight better than nothing. Your constantly negative comments about our financial systems etc, and your impractical investment suggestions are not particularly helpful. We are all aware of your feelings/criticisms. Maybe just give it a rest for a bit.

First, my apologies for my negativity. I've found the whole NZ marketing about savings and investing has seem to "pulled the wool over their eyes" because i've never seen such differences on investing abroad.

Second, if you're not reading between the lines, investing should not start with a small sum. Ask any financial advisor and they will agree that you need a decent amount to make it work because of inefficiencies like mgt & administration fees. What's even more blatant is the lack of transparency when financial advisor pitch at you all the scenarios and how much you will get at the end ; yet none will be held accountable in 10 or 40 years time.

It's very reasonable to question what $250 buy you in 47 years time? If we look at $20/week today, have a look at history and figure out what dollar terms would that equate to 50 years ago? If it costs $8 to buy a pie at a dairy today, how much would that same pie be in 1970? The investments you're making HAS to beat inflation, but in your case, dealing in a small amount, you've kinda not even reached the gate before the races can start. The more logical choice is if you want to provide something for your children, do what many others have done... pay off the mortgage, when you reach retirement and move into an elderly group home, and then gift the house to your children. Not to mention they would benefit from tax free capital gains vs Kiwi Saver portfolio ETFs that would be subjected to taxes year after year. This is my hard case, others are more than welcome to run the #s down and prove me wrong.

Yesterday I ran into a financial advisor (who was also and accountant and did some trust planning) at a local neighbourly gathering. My issue was very clear on why NZ's tax field was so different between the individual that invests directly vs the individual giving their $ to a managed fund to what Warren Buffet would say, "essentially buy the SAME thing.. but is allowed to charge a fee". Do I have a problem with this kind of arrangement? You bet I do! and so does Warren Buffet because on most part, they're essentially charging a fee for 99% of the time they're doing nothing. Do some YouTube searches on how Buffet spews all over these fund managers who think they can do better for their clients, then come back to me and tell me what i've said before is wrong. Anyways, going back to the financial advisor I met, I was hitting him hard on by asking why? No other country in the world discriminates their tax payer so much when it comes to investing. Then I started barrelling on about the NZ FMA. It was clear he knew exactly what I was talking about and i'm quite certain he doesn't get customers asking these types of questions. You know he told me about how unique is buying NZ shares that can be fully imputed on dividend credits...(which fuels the craze of NZ share investors wanting dividends over tax free capital gains) and then I explained why the liquidity on the NZX is dwindling which was tied in to NZ's FMA making overseas brokers to close off the NZ market for investments. The he said NZ is a small country - yes I agree.. but so is Singapore and Switzerland.

So going back to investing for a newborn? Buffet would agree, you would be better off using the funds to invest in your child's education as that would have the biggest impact in their entire lifetime than to leave a small pot of $ to them at the end.

[justakiwi]

OK. Got it. As far as you're concerned I am wasting my time even trying to improve my financial situation by investing. I disagree with you 100%.

I do NOT own a house or any other property. I have next to no assets, as you would know if you had properly read my many other posts. I am trying to improve my situation as much as I am able. At 59, I don't have too many options. I don't have any sugar daddies hammering on my caravan door. What bugs me about you and your comments, is your apparent inability to understand MY situation ( and probably other people's too). I am so far removed from everyone else here in terms of pretty much everything - job/income, financial situation, possession of "stuff" and investment. But I am still an investor. Doing the best I can under the circumstances. So sorry, but don't you dare tell me I am wasting my time because I don't have enough money! I have falsely believed that for over 30 years. If I had understood what I do now, I would have started investing back then and would now be in a significantly better position.

You need to encourage people, not make them feel like idiots and failures. People like me are the ones who most need to get into investing and as far as I'm concerned, better late than never.



Second, if you're not reading between the lines, investing should not start with a small sum. Ask any financial advisor and they will agree that you need a decent amount to make it work because of inefficiencies like mgt & administration fees.

The investments you're making HAS to beat inflation, but in your case, dealing in a small amount, you've kinda not even reached the gate before the races can start.

[winner69]

.

So going back to investing for a newborn? Buffet would agree, you would be better off using the funds to invest in your child's education as that would have the biggest impact in their entire lifetime than to leave a small pot of $ to them at the end.

Listener front page says ones DNA has more influence on children’s success than good parenting or education.

[SBQ]

Listener front page says ones DNA has more influence on children’s success than good parenting or education.

Then the explanation why there are so many private schools in NZ? I have cousins that are so staunch at sending their kids to anything but public schools, 1 case all 3 children going to 3 different schools.

But academic success is 1 thing, what Buffet is teaching to little ones in finance is not taught at schools. He points out simple things like what assets appreciate and what assets depreciate ; you don't need to be a rocket science to understand this (even the lowly IQ person can learn the difference), yet the biggest problem we find is the subject of 'finance' seems to be too taboo to talk about in general day to day living vs the All Blacks game.

[GTM 3442]

For what it's worth, I think it's important that your daughter gets the idea that there are more things to do with money than put it in the bank, put it in Kiwisaver, or save up for a house.

Back in the day, when she turned about ten, I set my daughter up with some shares (RNS Renaissance, because iPods were so cool) so that dividend cheques came in twice a year, and with some bonds so that interest cheques came in four times a year. So she learnt about income investing.

She had to do her own tax return every year. She hated it.

But because she had no PAYE income, some of the imputation credits offset the interest income, and some of the imputation credits carried forward. Not exciting for a teenager, but when the first holiday job came along, and she got all indignant about income tax, the first years tax return was a refund due to those imputation credits. So she learnt about the value of doing the paperwork and getting it right.

To teach her how to manage money, she had to have some money to manage, so there was an allowance.

She had two bank accounts. One for spending, one for saving up for things (like playstations, iPods and the like). All in her name, and she could do what she liked with the money, (although she had to buy her own underwear) but there was no "rescue" from the parents if she blew it all on teenage cr*p. So she eventually learned to manage money (although it was quite hard to watch sometimes).

She's no financial genius, but she understands that there are options outside the mainstream.

So yes, education is important, but there's more to education than what they teach in schools.

[SBQ]

OK. Got it. As far as you're concerned I am wasting my time even trying to improve my financial situation by investing. I disagree with you 100%.

I do NOT own a house or any other property. I have next to no assets, as you would know if you had properly read my many other posts. I am trying to improve my situation as much as I am able. At 59, I don't have too many options. I don't have any sugar daddies hammering on my caravan door. What bugs me about you and your comments, is your apparent inability to understand MY situation ( and probably other people's too). I am so far removed from everyone else here in terms of pretty much everything - job/income, financial situation, possession of "stuff" and investment. But I am still an investor. Doing the best I can under the circumstances. So sorry, but don't you dare tell me I am wasting my time because I don't have enough money! I have falsely believed that for over 30 years. If I had understood what I do now, I would have started investing back then and would now be in a significantly better position.

You need to encourage people, not make them feel like idiots and failures. People like me are the ones who most need to get into investing and as far as I'm concerned, better late than never.

The best way of encouraging people to invest is to make them "fully informed" and i'm certain most financial advisors would say investing too small of an amount would produce little or no 'meaningful' benefit. This by all means is not to rain on your situation but simply, the facts of the situation. Another fact of the situation is in order for investing to perform well, you need a reasonable amount of time - i'm speaking decades. At age 59 and the current level of the global market (or how far we've gone), the chances are you may be caught out in a major global stock market crash in the next 10 year. THIS is information that financial advisors won't tell you because they don't get paid unless you buy into their investment scheme.

If you felt you've made wrong decisions in the past with regrets, the same can be said to those that chose to invest at an early age. After finishing highschool, many of my friends were too busy making themselves look good by buying a new car. They took on employment and were full of gloat, while I chose the poor student way by going on to college. I had a family mentor that was very knowledgeable about finance and encouraged me to start investing during that time... Do you understand how 'uncool' that looks like in your late teens and early 20s? You won't get the girl saying you have an investment brokerage account.

[mfd]

It is simply no longer true to say that small sums cannot be invested - over recent years a whole collection of companies has cropped up to cater for small NZ investors, with even more in larger markets. Anyone can invest, and virtually everyone starts small. A meaningful benefit is subjective and in terms of percentage return should be similar regardless of the amount invested.

With respect to the time horizon, perhaps reread the thread title.

[justakiwi]

Just for your information, I had one free consultation with a financial advisor a few years back. Just out of curiosity, to run my ideas past him and see what he thought. I discussed both my KiwiSaver and my investments with him. I explained my "plan" and the thinking behind it and his conclusion was, that I had done my homework, put a great deal of thought into what I was doing, and in his opinion, my plan was sound. He knew upfront that I had no intention of investing via him but he was still happy to provide a free consultation. He had nothing to gain by not being honest with me so as far as I was concerned his comments were genuine.

As far as your "global crash" comments go, I am well aware that there will be a market crash probably before I got 65. I fully understand the implications of that. I went into this knowing I could lose my investment. However, as I have said before, I have no intention of drawing down on either my KiwiSaver or my investment, when I turn 65. So in the event of a crash, I will sit tight, cross my fingers and hope that in time, the markets and my investments will recover. None of us have a crystal ball. Not even you. We either take a chance or we take the safe road and watch our money depreciate sitting in the bank. I will always have "some" money in the bank for emergencies, but my money is never going to grow there. At least now, I stand a better chance of making my money work for me long term. And by the way. I'm 59 - will any luck I will see another 30 years. At least that's the plan.


The best way of encouraging people to invest is to make them "fully informed" and i'm certain most financial advisors would say investing too small of an amount would produce little or no 'meaningful' benefit. This by all means is not to rain on your situation but simply, the facts of the situation. Another fact of the situation is in order for investing to perform well, you need a reasonable amount of time - i'm speaking decades. At age 59 and the current level of the global market (or how far we've gone), the chances are you may be caught out in a major global stock market crash in the next 10 years.

[SBQ]

Just for your information, I had one free consultation with a financial advisor a few years back. Just out of curiosity, to run my ideas past him and see what he thought. I discussed both my KiwiSaver and my investments with him. I explained my "plan" and the thinking behind it and his conclusion was, that I had done my homework, put a great deal of thought into what I was doing, and in his opinion, my plan was sound. He knew upfront that I had no intention of investing via him but he was still happy to provide a free consultation. He had nothing to gain by not being honest with me so as far as I was concerned his comments were genuine.

As far as your "global crash" comments go, I am well aware that there will be a market crash probably before I got 65. I fully understand the implications of that. I went into this knowing I could lose my investment. However, as I have said before, I have no intention of drawing down on either my KiwiSaver or my investment, when I turn 65. So in the event of a crash, I will sit tight, cross my fingers and hope that in time, the markets and my investments will recover. None of us have a crystal ball. Not even you. We either take a chance or we take the safe road and watch our money depreciate sitting in the bank. I will always have "some" money in the bank for emergencies, but my money is never going to grow there. At least now, I stand a better chance of making my money work for me long term. And by the way. I'm 59 - will any luck I will see another 30 years. At least that's the plan.

The financial advisor you met is not there to tell you wrong. Just like the financial advisor I met on Saturday except, the questions I asked were questions that every prospecting client should ask. I'm sure you've heard of the saying, "sometimes the truth hurts too much" and instead of accepting his arrogance (and I must tell you a lot of the people in this industry are arrogant), I was hitting him hard on why the whole NZ financial industry has gone this way? This is no different to discussions in other topics like classic cars, sporting, just the same discussion like sitting in a bar or any social gathering. It's even more disgraceful that the real winners are the ones that handle the $ and not their clients, they have no proven track record because they can always fall back on the same excuse that "oh you're time frame is to invest for the LONG-TERM" so they will never hold themselves accountable on years that under perform. In my view, my hard questions at these advisers should be appreciated by those that don't know much about finance because from the way I see it in NZ, there are not enough questions asked and no one is doing anything about it... because they don't care? Well I certainly care where my $ goes because I pay income taxes on what I earn, I pay consumption taxes when I buy things, it certainly makes sense to understand the tax implication when I want to invest my disposable income.

Let me give you an example of my friend back in 2008 that didn't have a strong knowledge about finance and assumed his financial advisor would handle it all. Well, for over 15 years he invested in RRSPs (Cdn version of Kiwi Saver). Coming up to the 2008 crash, nearly HALF of his invested portfolio was lost. Can you imagine the psychology involved with investors back then? Specifically yourself because i'm sure my friend had felt the same thing as many others; "The FEAR of losing more wealth". The market was in a panic and what he heard was that his portfolio could lose another 20 or 30% again.. again the psychology in his mind was "I need to sell up as fast as I can!!!" and against the advice of his advisors, he liquidated everything. So while it may be easy for you to say today that you intend to keep things for the long term, market crashes cause people to think irrationally. Meanwhile, all along and through the many years, his managed funds was creaming their fees year after year...

It's a bold move to assume you will live to 90. What would be your quality of life in the 10 or 15 years preceding? This is a very valid question as when people age, the cost of medical and care sky rockets. What if you ended up with a medical condition that would drain all your $? What if your children decided to use all their invested $ to go pay for an important operation that you required? These are questions that financial advisors need to address but in NZ, there's very little regard ; particularly the issue on deferring taxes on investments. It makes logical sense not to tax your investment earnings during the year where you're earning a lot of income, and deferring those investment gains to be taxed during retirement time (60s to 80s) for where it's very unlikely the person would have wages or salary income. We don't have this approach in retirement planning here in NZ.

[justakiwi]

It’s a bold move to assume you will live to 90. What would be your quality of life in the 10 or 15 years preceding? This is a very valid question as when people age, the cost of medical and care sky rockets. What if you ended up with a medical condition that would drain all your $? What if your children decided to use all their invested $ to go pay for an important operation that you required?

I prefer to call it “optimistic.” My mother is 84 and my father was 91 when he died. My grandparents lived to 89/90. So genetically, I think my chances are reasonably good. As to my quality of life - who knows. It will be what it will be at the time. I have confidence that our very good public health system will still exist, and will meet my needs at the time. My kids are unlikely to have the ability to fund any major medical costs not covered by public health, and I would have no expectation that they should do so!

I see no point in worrying myself into an early grave, stressing about the “what if’s” of old age. What will be will be. I am doing what I can now, to create additional financial security for myself. It may not be “meaningful” in your eyes, but your idea of meaningful, is vastly different to mine. All any of us can do is our best.



It makes logical sense not to tax your investment earnings during the year where you're earning a lot of income, and deferring those investment gains to be taxed during retirement time (60s to 80s) for where it's very unlikely the person would have wages or salary income. We don't have this approach in retirement planning here in NZ.

I totally disagree. I do not want to be paying tax on my KS or investments, at the other end of my life, when I have no income other than govt super. I would far rather get the tax out of the way now while I am earning. Yes, I do realise paying tax as I go impacts on my investment growth, but I’m ok with that. If and when I need to draw down on my KS/investments, I do not want to be having to draw down extra to pay the tax.

I think we have hijacked this thread enough. Best to get back to helping the original poster with his question.

[SBQ]

I totally disagree. I do not want to be paying tax on my KS or investments, at the other end of my life, when I have no income other than govt super. I would far rather get the tax out of the way now while I am earning. Yes, I do realise paying tax as I go impacts on my investment growth, but I’m ok with that. If and when I need to draw down on my KS/investments, I do not want to be having to draw down extra to pay the tax.

I think we have hijacked this thread enough. Best to get back to helping the original poster with his question.

Deferred taxation doesn't draw down extra to pay at time of withdrawing the investment. The issue of deferring means, you ONLY pay the tax if there's a gain in the future (unlike KS under FIF that taxes on paper returns that go negative during the growth period). The tax deferred account will have a much larger balance than the NZ KS example and that means you would withdraw a smaller portion of the balance. Again, tax is only paid upon withdrawal so there's no other 'out of pocket expense' to pay the tax owing.

https://www.investopedia.com/articles/stocks/11/intro-tax-efficient-investing.asp

"In 2019 the Schwab Center for Financial Research evaluated the long-term impact of taxes and other expenses on investment returns. While investment selection and asset allocation are the most important factors that affect returns, the study found that minimizing taxes also has a significant effect.1
(https://www.schwab.com/resource-center/insights/content/importance-tax-efficient-investing)








There are two reasons for this. One is that you lose the money you pay in taxes. The other is that you lose the growth that money could have generated if it were still invested. Your after-tax returns matter more than your pre-tax returns. It's those after-tax dollars, after all, that you'll be spending—now and in retirement. If you want to maximize your returns and keep more of your money, tax-efficient investing is a must."



Like the financial advisor I met on Saturday, the issue of tax is not part of his role and mentioned that area is for the tax specialist. What utter rubbish as the 2 (investment income and taxation) are intertwined. CFP in N. America are qualified to advise on taxation.. why should NZ financial advisors be not qualified to give advice in the area of taxation?

We're not being off topic as we're speaking on the issue of compounding returns.

[mfd]

You are quite off-topic unless you have advice on how to improve returns in a straight forward way for New Zealanders, rather than simply complaining about the prevailing tax environment.

[justakiwi]

Again, tax is only paid upon withdrawal so there's no other 'out of pocket expense' to pay the tax owing.

So you are saying, if I need to withdraw X amount of dollars from my KS or my investments when I am 70, for example - I will pay tax on that withdrawal. Where is that tax payment coming from? from my KS/investment balance, right? Which is exactly my point. I would rather pay the tax now and nothing at withdrawal. I’m sure you will correct me if I am interpreting this incorrectly.



We're not being off topic as we're speaking on the issue of compounding returns.

Yes we are. This ongoing discussion on the evils of the NZ tax system is of little help to anyone, least of all the original poster.

[SBQ]

You are quite off-topic unless you have advice on how to improve returns in a straight forward way for New Zealanders, rather than simply complaining about the prevailing tax environment.

Previous page I mentioned if funds are sufficient, better to open a direct brokerage account abroad and invest directly. Keep it under the $50K NZD limit (or $100 for joint daddy/mommy account) But no one seems to recognise this as an option???

Kinda like how unaffordable houses are in NZ, complain complain rah rah when there are ways to make houses affordable. It's a matter of having the balls (Trump balls) to change things around but I guess under MMP election, we're never going to get things done? Or can they? How was the FMA and FIF pushed through??

[mfd]

What is the advantage in opening an overseas brokerage account rather than buying international funds through, say, InvestNow?

[SBQ]

So you are saying, if I need to withdraw X amount of dollars from my KS or my investments when I am 70, for example - I will pay tax on that withdrawal. Where is that tax payment coming from? from my KS/investment balance, right? Which is exactly my point. I would rather pay the tax now and nothing at withdrawal. I’m sure you will correct me if I am interpreting this incorrectly.

Yes we are. This ongoing discussion on the evils of the NZ tax system is of little help to anyone, least of all the original poster.

Your tax deferred portfolio would be x times larger as it compound growths more. We don't need to disagree that at the end you will have a much larger portfolio balance. The benefit is the amount is so considerably larger that even you pay the tax portion on ONLY what you want to withdraw, you will still end up with a much larger amount. There's no point in paying taxes on the investment when you're at the highest tax bracket when it can be deferred later at a much lower tax bracket. Likewise, why pay tax under FIF on years when the portfolio goes negative? IRD is short changing you and taken away how you control your investment. When at the end, if you can make it compound tax free, it's entirely UP TO YOU how much tax you want to pay on how much YOU want to withdraw (and this varies between person to person). But under the current KS scheme, there is not distinction to any person on their income - it's blanket take for all tax.

[justakiwi]

Previous page I mentioned if funds are sufficient, better to open a direct brokerage account abroad and invest directly. Keep it under the $50K NZD limit (or $100 for joint daddy/mommy account) But no one seems to recognise this as an option???

You are either deaf or simply incapable of understanding anything I have said.


It's a matter of having the balls (Trump balls) to change things around

slaps head - remembering why it’s always a bad idea to “discuss” pretty much anything with you :glare:

[peat]

newborns should day-trade
without a doubt.

[GTM 3442]

JamesW - here come 2 cents worth

You are investing or saving on someone elses behalf, so you want to be more cautious than if it were your own money. Whatever you choose to do, it should tilt more toward "don't lose the bl**dy stuff" than it would if it were your own money. So whie you want to make a good return, that is not your only criterion.

This means diversifying - diversification is a strategy for avoiding or minimizing losses.

If you decide on shares, then diversify among sectors, diversify among geographies, and diversify among currencies. Once you've decided on what the portfolio should look like, start picking the vehicles which you think will be best for each of your criteria. It's called "making a plan".

You may have (say) an NZ share fund and a global share fund. Buy non-NZ shares when the NZD is strong, buy NZ shares when the NZD is weak. You are thinking in years and decades not in months or years

Set a target or goal, and build up each of your chosen vehicles to it to give yourself the greatest tactical flexibility.

As you build up, do a performance review at regular but not necessarily frequent intervals. That's called "monitoring". As you see things change, change with them.

Good luck, and occasionally keep us posted on what you decide to do

[kiora]

newborns should day-trade
without a doubt.

In for a penny or in for a pound?

[GTM 3442]

Another 2 cents worth, this time for justakiwi.

You're at a stage where you have to weigh returns against risk. You don't have as much time as JamesW's newborn to recover from bad stuff happening, so you have to be more cautious than you would have had to be 20 years ago. So in your shoes I'd be looking at a tilt toward property and infrastructure, and thinking about bland "global" vehicles.

But that doesn't mean you have to be entirely serious all of the time. Each year I throw caution to the winds and splurge $500 on whatever's cheapest on the NZX on April Fools Day.

A couple have worked out really well, some have gone nowhere, and some have gone right down the toilet. But it's been interesting and instructive to watch. and by isolating the rabid speculation it helps prevent me from doing stupid, impulsive things with "real" money.

Good luck, and occasionally keep us posted on what you decide to do

[peat]

Each year I throw caution to the winds and splurge $500 on whatever's cheapest on the NZX on April Fools Day.

That is so random!
But hey if BP's thread on analyst estimates is anything to go by you've got a better chance!

[SBQ]

If you're looking to invest over many decades (in the case of a newborn), here are some thoughts:

https://finance.yahoo.com/news/buffett-bets-america-again-162715418.html

Takeaway: never bet against America

If there's one thing to learn from Buffett's latest investments, it's that investors should look at the long-term view of markets and remain bullish on the prospects for the U.S. economy, regardless of growing risks in the short term. The country has survived multiple recessions and still provided stellar returns to investors who did not panic. In an interview with CNBC in 2017, Buffet said:



"American businesses - and consequently a basket of stocks - is virtually certain to be worth far more in the years ahead. The years ahead will occasionally deliver major market declines, even panics, that will affect virtually all stocks. Widespread fear is your friend as an investor because it serves up bargain purchases. For 240 years, it's been a terrible mistake to bet against America and now is no time to start."

So when you rush to your Kiwi Saver and choose the various actively managed funds, which one should you pick?

[Jamesw]

Hi GMT

Thanks for the reply, sorry it been a while since starting this post.

Update

I have opened an account for my daughter with sharesies.

Glad I was busy with work and only just got around to signing up before the covid announcement.

My daughter had 1000 in her account so I transferred it across and invested in one fund and one company.

500 into smart shares NZX50 FNZ
500 into ryman healthcare

I bought both of these not quite at the bottom, on the way up but they are both ahead to date.

I have also set up an auto invest each week into FNZ & USF

$25 per week.

[kiora]

If you're looking to invest over many decades (in the case of a newborn), here are some thoughts:

https://finance.yahoo.com/news/buffett-bets-america-again-162715418.html

Takeaway: never bet against America

If there's one thing to learn from Buffett's latest investments, it's that investors should look at the long-term view of markets and remain bullish on the prospects for the U.S. economy, regardless of growing risks in the short term. The country has survived multiple recessions and still provided stellar returns to investors who did not panic. In an interview with CNBC in 2017, Buffet said:



"American businesses - and consequently a basket of stocks - is virtually certain to be worth far more in the years ahead. The years ahead will occasionally deliver major market declines, even panics, that will affect virtually all stocks. Widespread fear is your friend as an investor because it serves up bargain purchases. For 240 years, it's been a terrible mistake to bet against America and now is no time to start."

So when you rush to your Kiwi Saver and choose the various actively managed funds, which one should you pick?

The one that is longest on stocks

[GTM 3442]

Another 2 cents worth, this time for justakiwi.

You're at a stage where you have to weigh returns against risk. You don't have as much time as JamesW's newborn to recover from bad stuff happening, so you have to be more cautious than you would have had to be 20 years ago. So in your shoes I'd be looking at a tilt toward property and infrastructure, and thinking about bland "global" vehicles.

But that doesn't mean you have to be entirely serious all of the time. Each year I throw caution to the winds and splurge $500 on whatever's cheapest on the NZX on April Fools Day.

A couple have worked out really well, some have gone nowhere, and some have gone right down the toilet. But it's been interesting and instructive to watch. and by isolating the rabid speculation it helps prevent me from doing stupid, impulsive things with "real" money.

Good luck, and occasionally keep us posted on what you decide to do


This year it turns out to be CRP - Chatham Rise * Phosphate.

No.

This year I'm having a year off.

[BIRMANBOY]

Nothing wrong in saving $500 lol.
This year it turns out to be CRP - Chatham Rise * Phosphate.

No.

This year I'm having a year off.

[SBQ]

The one that is longest on stocks

The one that has managed share investments the longest? If so, that hold true to a certain point. Long ago in the 90s I had investments in Templeton Funds because of John Templeton's approach to value investments. Fortunately I never stayed long and moved it over to Berkshire and since then, that was the most wise move as Buffet has proved the vast majority of these managed funds underperform the index.

Find me a Kiwi Saver fund that adopts the same ethics and approach to investing as Berkshire does? Here's one to offer: How about not charging ANY management fees if the fund does worse than what the person could of done, by simply buying the market index return?

[kiora]

Longest?
Mainly buying & hold,little selling .more buying over time
"Having a “long” position in a security means that you own the security. ... A "short" position is generally the sale of a stock you do not own. Investors who sell short believe the price of the stock will decrease in value. If the price drops, you can buy the stock at the lower price and make a profit."
Yeah same with Templeton. Moved on

[NOCASH]

I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

[justakiwi]

Totally disagree. Even with only $5000 invested, diversification is still important. I have just under that figure and hold 1 fund and 6 companies. No plans to add any more, but what I have, gives me global and sector spread, the value of which is currently very apparent.


I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

[macduffy]

I disagree also. Too many "great" picks have fallen by the wayside over the years, others have survived but failed to achieve the heights forecast by their supporters. The principle of diversification has been well demonstrated over the years - I would suggest at least 2 stocks in unrelated sectors for $5k, 3 or 4 for $10k of $15k. I won't bore you with a list of the great picks I've made in over 50 years of investing but CBL heads the list!

[SBQ]

I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

Before you even think about investing in ANY stock; you better be sure you know the business inside and out. This is the problem with active fund managers in that they are pretty much clueless on the shares they buy for their clients because they simply, don't spend (or know where to look or how) the time doing real research on the business. So if it's that difficult for these so called expert investors, what chance do you have? Perhaps a lot more as many investors have done very well just by understanding the business model without a bother of understanding fundamentals or technical analysis charts blah blah etc.

The amount to invest where diversification becomes an issue doesn't really matter until you're working with super large amounts like $1M + Why? Because it all has to do with the investor's appetite for risk. To lose $5K is not so bad, but to lose $500K or $1M is a horse of a different colour. Generally those with significant sums want to be sure to get a 'high' probable return on the amount invested - like 5%. But to make 5% on something like $5K is kinda like a waste of time. I got this impressed at a local Chch investment seminar where Jarden Investments was doing a presentation. They were "Looking for clients with liquid assets in excess of $500K" because of the key reason being, to make the returns 'decent' enough for the investor. To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time. Sure you got to start somewhere but then again, look at how difficult it is to buy a house in Auckland? No pity to those that can't afford to get in one. The same applies to share investments IF you INTEND this to be the vehicle for your retirement.

[justakiwi]

Wow. your arrogance is really showing this time.


.... But to make 5% on something like $5K is kinda like a waste of time......

Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.


To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time......

Absolute BS.


The same applies to share investments IF you INTEND this to be the vehicle for your retirement.

Again, absolute BS.

This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.

[BIRMANBOY]

When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.
I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

[SBQ]

Wow. your arrogance is really showing this time.

Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.

Absolute BS.

Again, absolute BS.

This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.

You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

[SBQ]

When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.

I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.

[BIRMANBOY]

The reality as you have stated below is not THE reality it is simply YOUR or A reality. Like any endeavour in life different people are in different circumstances and have differing levels of capacity. I find its better to encourage people rather than discourage them so that they will not just give up because "someone with heaps of experience" makes them feel like its just all too hard and they are wasting their time. The best teachers and coaches are the ones that support everyone and not just the top 20%. This forum should be one for an exchange of opinions and ideas, but also supportive and encouraging to newbs and those less experienced. Stating that things should be done this way or that way, or shouldn't be done is not recognising individual differences.
I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.

[justakiwi]

Yes, I still say pretty much all of what you said in your previous post is arrogant and BS.

You seem to think that every person who chooses to invest, is trying to get rich. I daresay there are plenty out there who are, but some of us are simply trying to improve our financial situation (whatever that may be), for the future. How many times do I have to remind you of my situation before you get it?

*I am 59
*I am divorced and live alone
*I work part time for an annual income of probably no more than $26,000 (my shifts vary)
*I live in my caravan - my choice as it was a better option than being stuck in a post divorce rent trap for the rest of my life
*I have no house, no boat, no flash car - I have my caravan, my hail damaged/written off car, my KiwiSaver (currently sitting at only $25,000 but I am not worried about it), some savings, and my pathetic (in your eyes) share portfolio.
*If there are any eligible sugar daddies in my area, they must knocking on someone else’s door, cause they sure aren’t knocking on mine

I am not trying to get rich. I’m not stupid enough to even dream of that possibility.
I am trying to build a small “safety net” or “emergency” investment portfolio - with regular, small (in your eyes) investments, so that by the time I need it, in 5-10 years maybe, it will be a small supplement to my govt super payments and my KiwiSaver. I live a minimalist, pretty frugal life and that won’t change. I am being proactive. So, your constant, monotonous implications that I am wasting my time, piss me off. For the most part, I ignore you, but when you post stuff like you do, that other beginners might take as gospel, I will call you out. You are wrong to impose your opinions on others. You are wrong to judge the way others are investing or managing their finances. You have tunnel vision based on your own world view and beliefs about money, and you seem unable to even attempt to see things from someone else’s situational perspective.

So once again - bull**** on pretty much everything you use as an argument when you are trying to put me down for the efforts and decisions I am making for myself.


You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

[SBQ]

The reality as you have stated below is not THE reality it is simply YOUR or A reality. Like any endeavour in life different people are in different circumstances and have differing levels of capacity. I find its better to encourage people rather than discourage them so that they will not just give up because "someone with heaps of experience" makes them feel like its just all too hard and they are wasting their time. The best teachers and coaches are the ones that support everyone and not just the top 20%. This forum should be one for an exchange of opinions and ideas, but also supportive and encouraging to newbs and those less experienced. Stating that things should be done this way or that way, or shouldn't be done is not recognising individual differences.

Teachers and coaches in the field of finance? Let's be real, investing is far from the examples we see in sporting, school education, your boss, etc. There is simply no field that is more biased and skewed than the field of investments in finance. They don't teach much of this subject in schools, no different to the subject of economics, for the simply reason? To the layman they're all very boring subjects.

IMO and to many in this forum, it's not boring. But what i'm not appreciative is the lack of transparency in the field of investment. For eg. you have a whole investment scheme backed by the NZ gov't in the area called Kiwi Saver. While looking over at the asset class of owning residential houses as an investment class, the NZ gov't doesn't want to touch that with a 10m pole. Investments and Finance is a complex field but it doesn't have to be. Gurus like Warren Buffet have time and time again made the same statement that individuals don't need to believe in the hoo haa that investment advisors and various gov't regulatories spell out. All you have to do is stay invested and look at the long term ; or basically, "Forget about the investment and let American businesses do their charm".

But this is not what we have in NZ. Individuals can't simply put their $ into share investments so easily or the NZ gov't has restrictions such as the FMA on where you can invest or can't. These 'distortions' to the investment field make it very hard to any new person to understand and so by making things complicated, new investors feel they need "professional advice", yet getting that kind of advice costs dearly to the person investing with them or with their managed fund.

I can understand justakiwi being offended with my statements. I can also assure justakiwi that meeting with any financial advisor, they will be quick to show you what you can do with the savings but in the back of their mind, they're rubbing their hands collecting the commissions and mgt/admin fees. They certainly won't talk a lot about buying a house using leverage and make the comparison with buying so and so Kiwi Saver Funds and the tax advantages of owning your own home. By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this.

[BIRMANBOY]

Lets keep this simple. You say, and I quote, "
I can understand justakiwi being offended with my statements." But do you actually understand? It would appear not because you seem intent on pushing forward your version of what you term the "hard facts". And then you continue on with diversions into buying property.???. You say, "
By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this." So you have somehow felt the need to to defend your position, as well as shift into a new category, and all without any consideration for her position and how your comments were deemed to be arrogant. If you are a seasoned investor you will know that this investing knowledge doesnt happen overnight and regardless of whether you actually are right or wrong, it just doesnt seem right to be making new investors uncomfortable. Helping people learn in a supportive way is always going to be accepted more graciously than telling then what they should or shouldnt be doing. At the end of the day not everyone will be interested in your view of the world. I know that may be hard for you to comprehend and accept but there it is. Sometimes genius is just not appreciated :sleep: PS if you wish to continue this discussion you can pm me but lets remove it from this thread since it has diverted away from its original intention.
Teachers and coaches in the field of finance? Let's be real, investing is far from the examples we see in sporting, school education, your boss, etc. There is simply no field that is more biased and skewed than the field of investments in finance. They don't teach much of this subject in schools, no different to the subject of economics, for the simply reason? To the layman they're all very boring subjects.

IMO and to many in this forum, it's not boring. But what i'm not appreciative is the lack of transparency in the field of investment. For eg. you have a whole investment scheme backed by the NZ gov't in the area called Kiwi Saver. While looking over at the asset class of owning residential houses as an investment class, the NZ gov't doesn't want to touch that with a 10m pole. Investments and Finance is a complex field but it doesn't have to be. Gurus like Warren Buffet have time and time again made the same statement that individuals don't need to believe in the hoo haa that investment advisors and various gov't regulatories spell out. All you have to do is stay invested and look at the long term ; or basically, "Forget about the investment and let American businesses do their charm".

But this is not what we have in NZ. Individuals can't simply put their $ into share investments so easily or the NZ gov't has restrictions such as the FMA on where you can invest or can't. These 'distortions' to the investment field make it very hard to any new person to understand and so by making things complicated, new investors feel they need "professional advice", yet getting that kind of advice costs dearly to the person investing with them or with their managed fund.

I can understand justakiwi being offended with my statements. I can also assure justakiwi that meeting with any financial advisor, they will be quick to show you what you can do with the savings but in the back of their mind, they're rubbing their hands collecting the commissions and mgt/admin fees. They certainly won't talk a lot about buying a house using leverage and make the comparison with buying so and so Kiwi Saver Funds and the tax advantages of owning your own home. By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this.

[SBQ]

Lets keep this simple. You say, and I quote, "
I can understand justakiwi being offended with my statements." But do you actually understand? It would appear not

because you seem intent on pushing forward your version of what you term the "hard facts". And then you continue on with diversions into buying property.???. You say, "
By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this." So you have somehow felt the need to to defend your position, as well as shift into a new category, and all without any consideration for her position and how your comments were deemed to be arrogant. If you are a seasoned investor you will know that this investing knowledge doesnt happen overnight and regardless of whether you actually are right or wrong, it just doesnt seem right to be making new investors uncomfortable. Helping people learn in a supportive way is always going to be accepted more graciously than telling then what they should or shouldnt be doing. At the end of the day not everyone will be interested in your view of the world. I know that may be hard for you to comprehend and accept but there it is. Sometimes genius is just not appreciated :sleep: PS if you wish to continue this discussion you can pm me but lets remove it from this thread since it has diverted away from its original intention.




Sorry, not interested in doing private PM with you about this issue and quite clearly, the more that people become aware of the differences, the better. Have a read in the past posts i've made on this topic where I made the clear distinction for the vast majority of people in NZ, they made their wealth from buying real estate and for those having new born babies, the investment strategy of owning real estate in NZ has worked very well (as the parents invest so much into owning their home or rental property to the day when their child grows up to wanting to buying their own place).

Hold on there. No one on any investment forum should be taking investment tips without doing their own research themselves. I've done my own research and come to 'my own' conclusions and that is my opinion. If it comes across as being arrogant, I can assure you it's far from the arrogance you see from those who are real financial advisors or working in industry. All I expressed was in NZ we have a unique tax structure on investments, compared to the rest of the world. If being sympathetic is an issue, consider the events in 2008 of so many share investors that walked into their financial advisor's office, asking why their portfolio lost over 50% in value ; for many, spending 10 years into a managed fund scheme to see all those gains disappear in a few months? Many of my friends, middle class working 9 - 5 made the mistake of withdrawing their retirement funds in 2008 because they felt their financial advisor had let them down? Anotherwords their financial advisor was being sympathetic... but it still didn't change the fact that they lost money for their clients.

Let me tell you my experience (and I know by now you probably would care less). When I first started my studies in finance at college and uni, I thought being a fund manager was a pretty decent job - or someone working at the bank doing investment advice. I was completely new and learning AND looking for a mentor or someone to guide me / teach me in the investment industry. But as I carried on with my studies into my last year of uni taking higher level courses, I realised that what I learned became 'unethical'. The person working as an investment advisor was no different to a car salesman. greasy, and out to pad their pay from all the commissions they take off their clients. I didn't like this one bit and taken the liking of Warren Buffet who has been openly against the whole investment industry how they ripoff investors (small and large) for merely only breathing air. You could say i'm no friend of anyone in this industry. Anyways what i'm getting at is this, to the new investors wanting to learn, the problem is the more they begin to learn about finance and how the industry works, the more they become to hate it. You find things like why the rich get richer and the poor have nothing. If you're being supportive, how else can you say otherwise? If I knew there was a different way for people like justakiwi's situation, then I would say it. But unfortunately this is not the case here in NZ. In other places like Canada, she would have a better chance as their gov't makes it advantageous for low income earners to invest than the wealthy. For eg. low income earners have access to all sorts of tax free investment plans that the high income earners would be exempted out. Recently, the Cdn gov't bridge the gap between those that can't meet the minimum deposit to mortgage on a their FIRST HOME by going in joint venture (gov't puts up max 10% value of the home together with the home owner; ie if 20% by the bank was required deposit and you only had 10%, the govt would meet the rest). Payback comes when the house is sold or in 25 years time. Oh and being divorced? Yep coming out of a divorce also qualifies for the FIRST HOME despite owing one previously in a previous relationship. Anyways this is a bit off topic but NZ could look at something like this for low income earners wanting to buy a house. I could go on the many ways the low income or those with minimal assets can get ahead vs raising taxes on the rich has effectively done nothing.

[kiora]

Innovators
The next big ones
https://finance.yahoo.com/news/listen-jeff-bezos-buy-7-214806509.html

[kiora]

Innovators
The next big ones
https://finance.yahoo.com/news/listen-jeff-bezos-buy-7-214806509.html

[Stumpynuts]

Basically, my strategy is to sign up my kids to some of the most highly aggressive KS funds out there and set them both up with fairly hefty sums for adulthood - Hopefully by then KS rules are changed as well to allow more investment flexibility and fluidity.
I have 2 kids both signed up with Kiwisaver - Voluntary contributions of $21 per week.

My older child's current account balance is sitting at just short of $15,000 - The older child is currently 7 1/2 years old. We received the $1000 KS kickstart bonus but I didn't start Kiwisaver with our older child until they were 3 years old, so I've missed about $2000 there.

My younger child's current account balance is sitting at just over $5000 - They're 3 1/2 years old, No $1000 KS kickstart as it was removed for new KS members a few years back.

Current 12mth return for both of their KS accounts is sitting at just over 30%p.a, after fees and tax.
Both of them are averaging 12-15%p.a returns over the whole life of their KS.

I remember back when I got my first $1000 saved up in my own bank account I was 10 years old, had my bank account from back in the days when ASB would sign up kids at 5 years old.

If I had access to the sort of funds in my teenage years as my kids have currently I reckon it would have opened up so many options for me.
For example all throughout my high school years I've been interested in stock markets. When I had just finished high school Apple was considered a joke of a company at the time (around 2002-2003), they had yet to launch the very first iPods, iPhones didn't even exist at that time.

I wanted so badly to invest in those sorts of companies MS/Apple and the likes but only limited due to lack of funds. I know for certain that if I had like $20k or $30k I would have done the young, dumb thing and invested in both of those.
instead I invested in the likes of HGD/NTL... but making up for it nowadays via ASX stocks.

[SBQ]

Basically, my strategy is to sign up my kids to some of the most highly aggressive KS funds out there and set them both up with fairly hefty sums for adulthood - Hopefully by then KS rules are changed as well to allow more investment flexibility and fluidity.
I have 2 kids both signed up with Kiwisaver - Voluntary contributions of $21 per week.

My older child's current account balance is sitting at just short of $15,000 - The older child is currently 7 1/2 years old. We received the $1000 KS kickstart bonus but I didn't start Kiwisaver with our older child until they were 3 years old, so I've missed about $2000 there.

My younger child's current account balance is sitting at just over $5000 - They're 3 1/2 years old, No $1000 KS kickstart as it was removed for new KS members a few years back.

Current 12mth return for both of their KS accounts is sitting at just over 30%p.a, after fees and tax.
Both of them are averaging 12-15%p.a returns over the whole life of their KS.

I remember back when I got my first $1000 saved up in my own bank account I was 10 years old, had my bank account from back in the days when ASB would sign up kids at 5 years old.

If I had access to the sort of funds in my teenage years as my kids have currently I reckon it would have opened up so many options for me.
For example all throughout my high school years I've been interested in stock markets. When I had just finished high school Apple was considered a joke of a company at the time (around 2002-2003), they had yet to launch the very first iPods, iPhones didn't even exist at that time.

I wanted so badly to invest in those sorts of companies MS/Apple and the likes but only limited due to lack of funds. I know for certain that if I had like $20k or $30k I would have done the young, dumb thing and invested in both of those.
instead I invested in the likes of HGD/NTL... but making up for it nowadays via ASX stocks.

First of all - it's great you are taking interest in their children's future by setting up a plan for investing. I do feel finance in NZ is a subject that has little discussion; more importantly, real discussion of how finance works. To this day I still do not understand why NZ brokers and NZ investors have this fascination that "dividends" must be paid despite having a tax liability, when if the company keeps the profits year after year in retained earnings, the book value per share goes up, and thus the share price will go up = a tax free capital gain. Warren Buffet has said, dividends trigger a tax liability which is not ideal. If you want annual income, just elect to sell a portion of the shares and being in NZ, for NZX shares the gains are tax free. But go figure the people want dividends for some strange reason.

I'll admit, i've set nothing up for my 2 children in terms of investment planning in NZ for them. My reasons have been explained before that under Kiwi Saver, we have an uneven taxing between NZ shares vs foreign shares. It's so warped that the financial advisors won't care to explain the difference. For eg. you rave how you wanted to buy stock in Apple. But the fact being is owning AAPL under KS scheme attracts FIF tax - for which PAPER GAINS are taxed at the individuals RWT or under a PIE fund, 28%. If the individual invests directly through a broker, FIF does not apply until it hits $50K in portfolio value. Many of these KS funds do nothing more than buy the overseas ETF such as Vanguard's VOO S&P500 (which you can buy directly). Yet they're privy to charge a massive fee on top of Vanguards low 0.08% administration fee. Sure the may say they have paperwork and taxation issues but there's no reason to have fees in excess of 0.5% - 2 or 3% pa that I see in many of the KS prospectus.

Don't get me wrong, I have a solid plan for my children and unfortunately, that is not to be in NZ. Our long term sights will be to retire back in Canada. But since living in NZ for well over 20 years (self employed) i've learned that US equities outperform NZ / ASX ones by a long shot and for the whole time, the majority of my wealth has been held under my father's name who is a resident in Canada. Can you imagine my accountant's unusual thought when I told her that "it is ME that is gifting my wealth to my father" because what she understood was the common arrangement is, the father running the small business in partnership with the son, gives his wealth to the next generation. I said no no, I had to clarify that where my dad resides in Canada (despite being a non-resident in NZ but a partner to the business we have in NZ), investments there are treated more equitable in terms of taxation than here in NZ. At the end she said that's a bold move and not something she has ever seen. (but then no one ever plans that far ahead wanting to live in another country? or do they?)

I've worked out the #s on spreadsheet. I've calculated the taxation year after year under NZ FIF vs 0% taxation in Canada year after year (as CGT only applies when the shares are sold). After a 30 or 40 year compound interest, it was clear that the same person living in Canada with the same return of investment would considerably have a much larger portfolio value at the end. But what really sealed the deal was the issue of deferred taxation and that is at retirement age, taxation on CGT is far less to a pensioner than to a person in their 30s to 50s as their incomes are MUCH higher in this age group. See this is a problem with KS, they're taxing individuals who are at the peak of their income earning ability - and thus are at the high tax bracket because a person can't contribute more to KS if they don't have a higher income level. But the more they contribute, the more they lose in tax. Very different to in Canada where their comparable pension scheme to the KS is the RRSP and all gains within the fund grow 100% tax free. Then at retirement age, the shares are sold and naturally the pensioner will be unemployed and would only be taxed at the low income levels (unless they choose to sell big and buy the new boat or motorhome etc.).

Oh by the why, Warren Buffet again has been a major critic of loss of compound interest due to how much adminstration / mgt fees these managed funds take. If you complain how much 1 or 2% takes per year, then consider how much IRD gets to take under FIF of up to 5% per year? Because essentially the net result under FIF is a robbing of future compound returns.

and as always, hind sight is always 20/20. :cool: