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View Full Version : Investment Vehicles - What is best?



Glaxstar
23-02-2005, 12:32 PM
My partner and I both grew up in families that where not adverse to taking risk for return. I have no exception to this, but I do not want to put myself or my family through the sleepless nights that were assocoiated to it at the time. I believe you can manage your way through this and as a result I'm looking for info on the "best way" to set up an investment portfolio. Any info on ideas/experiences would be much appreciated ...

Winston001
23-02-2005, 01:04 PM
The accepted means of insulating your personal assets from risk is to establish a Company for the risky activity. However if the Co borrows money from a bank, then your personal guarantee will be required, thus making you personally liable anyway.

Also you are liable to creditors as a Director if the Co trades while it is insolvent, or recklessly.

Another method is to transfer your assets to a Trust, leaving just cars, chattels etc in your own hands. Some people use both a Trust and a Company. Trusts are safer holding passive assets ie. where there is no or little income flow.

The ideal situation is to be personally poor, but to have assets held out of your hands but available for your beneficial use. Essentially this is what a Trust does.

To deal with business risks and trading, you should use a company. The shares could be mostly owned by the Trust.

duncan macgregor
23-02-2005, 01:09 PM
GLAXSTAR, Educate yourself first with an open mind. The most important tool is an exit strategy. and only do it in a very small way at the start to learn from your mistakes. Devise half a dozen systems on paper and find what works and what dousnt. MACDUNK

Halebop
23-02-2005, 01:58 PM
Hi Glaxster,

Most of the regulars to this website have an interest in business and finance and so investing is a passion or hobby for many as well as a means to an end. This approach doesn't suit everyone. In fact, I think it suits very few at all!

If you want to mitigate volatility risks and the risk of permanent capital loss but you want to invest in shares without spending time and effort on research and reading there are several options, all of which come at a cost...

The Costs:

Management Fees and Loss of Control - You must pay for someone else to make decisions for you via some sort of managed fund mechanism, be it superannuation, unit trusts/mutual funds or any of the various investment hybrids out there.

Average Returns: Few fund managers perform above average. They are handicapped by their own fees and often not particularly disciplined or talented themselves, so make bad choices or charge high fees to simply match the share indices.

The best and easiest solution in these circumstances (Mary Holm will love me for this) is to invest in a/some low fee index fund(s). Returns will broadly track share indices, underperforming by just the management fee. This should be lower than an actively managed fund because there is very little buying, selling and associated administration involved. For a New Zealander there are usually tax advantages both home and abroad.

You will be very unlikely to earn stellar returns that an actively managed and concentrated portfolio earns but neither will you earn the awful losses that some actively managed and concentrated portfolios earn. You will have the added benefit of having the process managed for you - just requiring a regular direct debit or similar. Over time, an index fund could well earn 10 to 12% per annum.

There are however statistics for certain extended periods where shares underperformed. This was where actively picking winners was by far the best solution (and where Warren Buffet and a select group of value investors made their reputations). If you are comfortable with reading balance sheets, cashflow statements and analysing relative value or technical charts and enduring periods of volatility by all means do it yourself. I think if this was the case you probably wouldn't be asking here though.

Placebo
23-02-2005, 02:34 PM
Damn! I thought this would be about cars that appreciated in value.:(

is there such a thing?

Actually I sold my first bike (a Yamaha RX125) for more than I bought it for -- cost me $800 off a mate and I traded it for $1200 a year or so later. The cost of owning a performance two-stroke soon wiped the smile off my face though...

milker
03-07-2005, 09:48 PM
Can anyone advise on methods of transferring a UK locked in superannuation fund to NZ AND getting control of it.
1. I want to invest it myself.
2. I dont want to end up having to purchase some measly annuity at retirement.
Please feel free to make your suggestions as devious as necessary.