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Tim
26-01-2007, 07:58 PM
My daughter is saving her student loan and wish to buy some shares ($4000) every 6 months.
I do not want to recommend high risk shares but solid blue chip. Should one be looking at a fund to get a spread or stick to a single share. If a single share should one say look at best in NZ like AIA then choose a blue chip in Aussie. Helpful ideas appreciated.

zyreon
26-01-2007, 08:30 PM
If she's studying finance then let her make her own decisions, I've found share investing to be very valuable experience for university study (general business also) in terms of interest in the theory and real world examples.

Otherwise you'd probably best stick to income oriented stocks, but of course it depends how long she's studying and whether or not she wishes to cash up and pay it all back at the end of studies.

Another approach is to think of it as a buy now pay later thing i.e. build up a share portfolio with student loan monies over the course of studies and then make the minimum payments upon starting work, eventually paying off the loan but keeping the stock portfolio. In that case you can be a lot more agressive, or at least look to more growth oriented stocks, or even a few small caps :)

Of course you could always just spread it over a couple of active or passive funds e.g. KFL,SAM vs FNZ,MZY (and take advantage of the savings plan with the smart shares)

Halebop
26-01-2007, 09:02 PM
Good on your daughter! ...Hmmm even if my tax dollars are helping fund her portfolio. If she has no interest in investing then letting someone else do it for her may be the go. If she's got an inkling to learn something about sharemarkets then why not DIY? Even if she lost the lot, $4,000 is a pretty cheap price to pay for an education.

There are a couple of key factors to determine first:

Her goal (what's the eventual money for? How much does she want?)
Her timeline
Her Risk Profile

...These will help answer investment destinations better than anyone offering a few picks on the ASX or NZX.

If the timeline is short then equities are only useful if her risk profile is higher than normal, particularly if her experience is nil.

Experimenting with a dummy portfolio could be useful although I think you can only learn how to make an omelette with real eggs and I prefer to get on with job anyway - time is after all money.

Australian and New Zealand markets are at cyclical highs and as time goes on the probability of eventual disappointment must increase. Buying direct shares with $4,000 precludes diversification. Buying shares outside Australia and New Zealand may result in negative cash flow if the mooted wealth tax is introduced. In the short term in a toppy market, takeover prospects might generate better returns.

This might include:

Cheaper than their peers media companies in Australia (I haven't been looking lately to know who).
RBD in New Zealand - modest franked dividends, limited "new tax regime" risk, the sort of cash flow business performing poorly that private equity likes and a sniff of a turnaround (not too much evidence of this yet though!).

In the longer run any large company with longevity that delivers higher than average return on assets and equity, higher than average dividend growth, lower than average debt, trades at a discount to intrinsic value and dominates their markets. There are always these sorts of companies around - banks, insurance companies, casinos, breweries, supermarkets, media companies etc. (My pick in the insurance sector is QBE except that American F&G business isn't for the faint hearted).

...also Tomorrow's Big Companies: Look for demographic plays. Who benefits from an aging population? Who benefits from increased global trade? Who benefits from both? What other long term demographic factors? Hospitals, Logistics, Ports, Retirement Care, Mobility equipment, Medical Equipment? Difficult to buy cheaply and volatile due to $US/$NZ cross rate but I like F&P Healthcare as a demographic share.

Really outsized returns comes from identifying these companies and having the patience (and dry powder) to buy them in those brief times they become fallen angels - accounting problem, sales glitch etc. Aristocrat Leisure was a great example in recent years. Bad Sales decision into South America and a very public loss of CEO saw a fundamentally sound and growing business selling at a fraction of intrinsic.

Good luck!

Tim
26-01-2007, 09:11 PM
Thanks Halebop and zyreon, points much appreciated. Daughter is doing an accounting and finance degree and this should be a learning experience so you are right she should be making the decisions. Medium term horizon, A bit hard to know where to start and what to focus on, diversification, future trends etc

Halebop
26-01-2007, 09:14 PM
Should also add I wouldn't buy QBE at current prices - they don't meet my value criteria. But they do meet qualitative criteria.

easy money
26-01-2007, 09:20 PM
cer is looking good

Halebop
26-01-2007, 09:25 PM
quote:Originally posted by easy money

cer is looking good


Now there's a surprise.

FTG
27-01-2007, 07:26 AM
Then of course there is another angle to consider. A philosophical angle.
If she has the means should she really be investing your or my taxpayers dollar? I suggest not. Despite the obvious temptation in having an Interest free loan from the taxpayer and turning it into more money for herself A) that's not in the spirit of the what student loans are for B) What is for the "greater good" surely should prevail over what is good for ones own pocket regardless of cost to all in sundry.

I can understand the financial argument for doing what you are proposing but I urge you/daughter to peel back a few more layers and consider the hidden costs to us all.

Just think, if we all had the "hand in the till" like this, the whole system would collapse and we would certainly all be worst off financially let alone in other ways too.

Tim
27-01-2007, 08:11 AM
Interesting comments FTG, situation is not as simplistic as revealed.
Burdens to tax payer, it is amazing how many students getting the living allowance at university because parents income is so low, but usually this is not the case, parents are asset rich and able to write income down thru various structures to make it look like they are poor. The poor guy on $40000 struggling with 4 kids is classified as wealthy compared to many who hide behind trusts or have the facilityto write down incomes

FTG
27-01-2007, 09:24 AM
I understand your response as it is a common one used. Another common justification used is "I have paid so much tax over the last few years and I'm just getting my own money back" As suggested earlier the system only continues to function because fortunately not everyone thinks this way.
Going back to your daughter, the fact that she/you are considering what shares to invest the student loan money into, tends to indicate that this money is not needed to deal with a "struggling situation". Whilst it is nice to see she wants to invest in a responsible fashion - rather than wasting it on Beer etc, it is still a want rather than a need.
Remember there is NO free lunch!
If all the NZers who had "their hands in the till" (and didn't really need to) took their hands out, think of how much more money we ALL would have, including the "poor guy on $40K with 4 kids"

Halebop
27-01-2007, 10:35 AM
FTG I don't see the situation being different to the residential real estate rort that many have been enjoying recently - paying lower tax despite earning high capital gains. The number of people in this category would far exceed the numbers like Tim's daughter (and the values would be skewed too).

If I had 2 investment properties worth $600,000 in total, the difference between my depreciation deduction and actual depreciation related maintenance spend could be $6,000. But the depreciation doesn't exist because actually my houses increased in value by 8% this year. So my $6,000 deduction at a marginal tax rate of 39% is far more expensive than that 7% interest the taxpayer pays on the $4,000 loan.

In my world university tuition would be paid for by the tax payer and students would receive a cost of living allowance. No need to pay for an education loan administration infrastructure or worry about debt defaulters. Residential property investors would only get to deduct actual maintenance spend. All investors (property and otherwise) would pay a nominal capital gain tax at time of sale - say 10% of profits (lower than income tax to allow for inflation and recognise risk but simpler to manage than an indexed capital gains system). The outcome: A fairer tax system and a higher tax base to pay for equal and universal education - the same sort of education the Baby Boomer, property investing tax (less) payers got and then voted out (almost to the day) once they'd finished with learning.

fundir
27-01-2007, 04:11 PM
If the government is stupid enough to offer free money as a matter of policy then people would be silly if they didn't take it.

If you have a problem with the current loan policy, which I do, take it up with the government not those that are bright enough to benefit from the policy.

The loan policy was only topped by the labours other large election bribe in stupidity, the 20 hours free preschool care.

Anyway to answer the original question, I would either buy an index fund or one blue chip dividend paying share with each six months funds.

duncan macgregor
27-01-2007, 04:54 PM
quote:Originally posted by Tim

My daughter is saving her student loan and wish to buy some shares ($4000) every 6 months.
I do not want to recommend high risk shares but solid blue chip. Should one be looking at a fund to get a spread or stick to a single share. If a single share should one say look at best in NZ like AIA then choose a blue chip in Aussie. Helpful ideas appreciated.
I would have a good look in the mirror your standards seem to be very low. I have two well educated daughters who were told dont rip the system off, no drugs, amongst other things. They did know the boundaries i made sure of that, and let them get on with living their own life. Whats wrong with you as a father?, set the boundaries, support them pay for their education if you can, but above all give them the moral and finacial support dont talk about shares. macdunk

zyreon
27-01-2007, 06:41 PM
"the worst vice is advice"

Ricardo
27-01-2007, 08:20 PM
Tax evasion is illegal.
Tax minimization is not.
Taking advantage of the benefits available to your daughter through the student loan scheme is just good financial practice, and essentially is tax minimization.

If your daughter is to be successful in accounting she will soon learn failure to minimize tax paid by her clients will be considered by many of them as negligence.

I am not familiar with the detail of the scheme, so my comments above are on the assumption she does not need to tell any lies to qualify.
If she has to make false declarations as to the purpose of the loan I then side with FIG and macdunk.

Tim
27-01-2007, 09:00 PM
Anyone at a tertiary institution has access to the scheme. The scheme loans $150 a week for living expenses, but the total cost is much greater than this which is usually funded by part time work or and parents. Accommodation cost alone is $200. This thread is not meant to be about the ethics of borrowing money but advice on how to invest a set amount every 6 months by a young person. Thanks for the points that have been helpful.

axion
27-01-2007, 11:56 PM
It's not as if it's the student allowance where it's free money, this is money that his daughter will ultimately have to pay back. I'd much rather someone do this than see what my brother has been doing with his, which is mainly paying off speeding tickets, buying takeaways whenever he feels like a snack, funding the petrol for trips backwards and forwards to Masterton, just generally frittering it away (Mum pays for pretty much everything for him, the $150 is essentially his 'entertainment' account.)

So perhaps it's ethically wrong to be profiting of tax payers money, but, it will eventually be paid back, and then she will also be paying tax on any earnings from her portfolio, so society wins overall?

I plan to perhaps do this same sort of thing this year, but I'm still not sure. ;p

Crypto Crude
28-01-2007, 04:36 AM
HI Tim, I am a student and I have been taking the student allowance for the first 2 years of my degree...(saving it all, and investing in shares on the ASX)
last year I worked full time, (for part year) and I was wrongly informed that I couldnt get the $150, but through a friend in study link found out I could... this year I will again be topping up on the 150 per week (7k per year)... and 1k in course related costs also....

The benefits of a zero interest rate are far too great for me to ever want to pay more than minimum payments....
7k*3=21k ....... 7k for 3 years
if you can get 10% return per year after fees, tax etc then 21,000%.1= $2100 profit after the first year....
21,000 (1.1)^10= $ 54,468..... this should pay for the student loan after ten years compounding at 10% reinvested..... (my returns are so far much greater than 10%)

new legislation means that as long as your daughter stays in NZ then she willnot pay any interest... if she moves overseas then 7% interest per year kicks in...

Over time wages rise, and inflation means that in 30years the 30,40 k loan is merely a drop in the hat....

The only downfall with the whole saving the allowance situation.... I know of many others that planned to save the $150... but just ended up spending it.... good money management is required... if shes studying finance then I'm sure she realises the importance on compounding.... good luck to her and you...
[8D]
.^sc

duncan macgregor
28-01-2007, 07:51 AM
SHREWD CRUDE, You are quite right to exploit your business opportunities by borrowing money to make money. However later on in life it is up to you to instill honesty, and fair dealings into your offspring. It was up to me to pay for their education, if i cant do that, then it shows what a stupid person i am. I worked six and seven days a week to make sure that they started their careers as honest well educated people, debt free, with a sound business understanding. I look down on a person that allows their offspring to accumulate debt, if they themselves have money in the bank. I did that for my kids, i expect them to do it for my grand kids. To talk about shares in the same breath as student loans from a parent, shows me what a sick society we live in. macdunk

Halebop
28-01-2007, 09:23 AM
Macdunk it just shows me that you belong to a different generation and have different values. You have no qualms about maximising the tax advantages of your property holdings (this removes income from the education and health systems) but someone maximising the (much smaller) advantages of the student loans scheme is part of a "sick society"? Like my father, in your younger days the cost of university tuition was almost free beyond nominal registration fees. Your yardstick is probably 40 years out of date. Once the Baby Boomers finished educating themselves, they promptly voted a nominal education cost out of existence in the name of "market efficiencies" towards the greater goal of "commercialising education". Actually they got rid of it because they didn't care - the children of Boomers weren't old enough to be going to Uni yet and they had finished with it themselves. Government needed to make spending cuts and played on the politics of self interest while trying to sell the "benefit" of a competed, user pays education system.

But at the end of the day if you take more money up front to attend a course, there is less money left to live on. The student loan schemes recognized that you can't divide 1 into 2 and have two 1's again. That some people don't need the money to live on but have access to it is just the product of a badly designed system - much like our taxation system and residential property investment ;P

In the end its simply a process of semantics. What if I said they were living off the student loan and saving their part time wages instead? How finely do you want to split these moral hairs to meet your own standards?

Steve
28-01-2007, 09:54 AM
quote:Originally posted by Shrewd Crude

HI Tim, I am a student and I have been taking the student allowance for the first 2 years of my degree...(saving it all, and investing in shares on the ASX)
last year I worked full time, (for part year) and I was wrongly informed that I couldnt get the $150, but through a friend in study link found out I could... this year I will again be topping up on the 150 per week (7k per year)... and 1k in course related costs also....

If you receive the student ALLOWANCE of $150, then it does get income tested and abated over a certain level.

If you receive the student LOAN living costs of $150, then there is no income testing.

SC, how do you get paid out all year (50 weeks @ $150 = $7k)? Normally you only get paid during term time ie:Mid Feb to Mid Nov!!!

duncan macgregor
28-01-2007, 10:14 AM
HALETOP, Different generation or not a father should feed educate set their children up in life with a set of values at his own expence. To see your offspring saddle themselves with debt if you have money in the bank shows me what a greedy self centred person you must be. SHREWD CRUDES situation is different, he is maximising his opportunities as an individual, as we all do in good business.
The other situation is a father asking us what shares a daughter should buy with a student loan [what an example of a caring parent].
My own situation was i made sure that my offspring borrowed nothing for their education as long as i had a dollar in the bank. I worked as an apprentice earning stuff all, but my parents made sure i had the best set of tools plus a taxi fare to and from night school.
macdunk

FTG
28-01-2007, 11:35 AM
Halebob, rather than get bogged down on the intricate economic rights and wrongs of claiming depreciation on a rental property I would urge you to consider the following: There are two philosophical "camps" here. 1) The camp of taking individual responsibility for ones own destiny - individuals in this camp will be quite comfortable in working within legal frameworks to minimise the amount of money (tax) they put into the PIG TROUGH. On the other hand, the other camp will also justify/be comfortable with TAKING money from the Pig Trough - regardless of their circumstances.
For every extra individual who joins the 2nd camp the individuals in the first camp have to work just that little harder/smarter to keep their heads above water. Just think, a "Joe Average" hard working individual is already working to about May each year before any of the money he earns becomes "his".
Hence it's not suprising that an individual on the average wage (probably earning a lot more than Tim's daughter) has no show in putting $6K + a yr into shares (interest free!).An just to add insult to injury, not only is Joe Average's money being given to Tim's Daughter but he also will have to pay for the admin and interest costs of the money each yr until the original monies are paid back (assuming it ever is!).

Halebop
28-01-2007, 12:41 PM
quote:Originally posted by duncan macgregor

HALETOP, Different generation or not a father should feed educate set their children up in life with a set of values at his own expence. To see your offspring saddle themselves with debt if you have money in the bank shows me what a greedy self centred person you must be. SHREWD CRUDES situation is different, he is maximising his opportunities as an individual, as we all do in good business.
The other situation is a father asking us what shares a daughter should buy with a student loan [what an example of a caring parent].
My own situation was i made sure that my offspring borrowed nothing for their education as long as i had a dollar in the bank. I worked as an apprentice earning stuff all, but my parents made sure i had the best set of tools plus a taxi fare to and from night school.
macdunk


MaCant,
You are projecting your values on everyone else. Tim's daughter will simply be learning the mechanics of investment. Quite rationally she will be using borrowed money with no personal interest cost. Just as rationally you deduct depreciation against an appreciating asset. We all have our little rorts of flawed systems. Like all haves, the biggest gains go to those who make a business of it. There is an irony that you find some odium here.

Halebop
28-01-2007, 01:09 PM
quote:Originally posted by FTG

Halebob, rather than get bogged down on the intricate economic rights and wrongs of claiming depreciation on a rental property I would urge you to consider the following: There are two philosophical "camps" here.

I thought the "intricate economic rights and wrongs" was a philosophical camp. :)


quote:Originally posted by FTG
[b] 1) The camp of taking individual responsibility for ones own destiny - individuals in this camp will be quite comfortable in working within legal frameworks to minimise the amount of money (tax) they put into the PIG TROUGH. On the other hand, the other camp will also justify/be comfortable with TAKING money from the Pig Trough - regardless of their circumstances.
For every extra individual who joins the 2nd camp the individuals in the first camp have to work just that little harder/smarter to keep their heads above water. Just think, a "Joe Average" hard working individual is already working to about May each year before any of the money he earns becomes "his".
Hence it's not suprising that an individual on the average wage (probably earning a lot more than Tim's daughter) has no show in putting $6K + a yr into shares (interest free!).An just to add insult to injury, not only is Joe Average's money being given to Tim's Daughter but he also will have to pay for the admin and interest costs of the money each yr until the original monies are paid back (assuming it ever is!).

"Pig trough" in both examples put "both" your arguments into a single philosophy. That the system is flawed is obvious. That someone shouldn't avail themselves to the system as equally as everyone else is not. (For a start, a stupid and broken system won't get fixed until it is exposed as flawed). Because I am careful, worked a part time job during varsity and took holiday jobs, was lucky at one point to have a parent who could house me (the same parent whose personal income would preclude me from other benefits) ...I should not borrow what other people can? That would be wealth distribution of a very socialist kind, not the bootstraps kind you believe you are championing.

Joe Average is a baby boomer and "earned" his free education off the back of his parents labours and sacrifices. Once he'd finished with it but started paying taxes himself, he wilfully voted the same level of subsidised education away. So Joe Average, bunkered down in the 'burbs, has earned everything his apathy and greed gets. If you don't like it, get rid of it. Moralizing is for church, not economics. The student loans system is stupid, not what people do with it. Tim's daughter is a very rational example. Far more rational that borrowing to live which is its actual purpose.

duncan macgregor
28-01-2007, 01:14 PM
HALETOP, I dont inflict my values on all and sundry beleave it or not. To pay as little tax as allowed is completely different to rorting the system. Student loans for families with no money i am all for. I would have it that higher education is free for people that pass exams, the lazy and stupid pay. To set a kid up rorting the system is a great way to teach them how to have a happy good life. We owe it to them to do the best we can. macdunk

Crypto Crude
28-01-2007, 01:51 PM
quote:Steve Posted - 28/01/2007 : 10:54:03 AM
quote:
SC, how do you get paid out all year (50 weeks @ $150 = $7k)? Normally you only get paid during term time ie:Mid Feb to Mid Nov!!

I guess I could have been more clearer.... the 150 per week is a series of payments which can be used to calculate a future value on an annuity schedule...

FV=A( (1+i)^n-1/i) ....a=annuity value (150) i= annual interest rate 10%/37=.0027027 n=number of periods (37 weeks) ..... FV equals future value
FV=150((1.0027027)^37-1/.0027027)
=$5828

$1000 for the year in course related costs....
FV=PV*(1+k)^n
FV =1000(1.1)^(37/52)
FV=$1070
$5828+$1070
=$6898
this is the value of all allowable allowances by mid november....at a weekly reinvested rate of 150 plus interest recieved.... and the value of $1000 invested at 10%
steve.....you are correct...I worked it out that weekly 150 payments total 37 weeks (plus or minus 1 week)..... so its not 7k as I said.... but with investment it is....
[8D]
.^sc

Crypto Crude
28-01-2007, 02:26 PM
quote:
FTG
Junior Member
New Zealand
11 Posts
Posted - 27/01/2007 : 08:26:14 AM
1......I can understand the financial argument for doing what you are proposing but I urge you/daughter to peel back a few more layers and consider the hidden costs to us all.


1.....rational consumers do not value externalities in their decision making process....

Tim.... it is not your responsibilty to pay for your daughters student loan... My dad never payed for mine and now im well up... I only know of a small handful of lucky ones... In NZ culture it is the students responsibility.... Tim, if you are a chinese man then that is a different story...
I would have never found my own niche strategy if it wasn't for the fact that I was creating debt for the first time in my life...
I have alot more hope now than I would have if It was given to me like some rich spoilt kid...
But I do agree that the shares should be your daughters decision making...
I absolutely recommend (highly recommend) sending money offshore... (australia).... in a few years she will be able to bring the money back on a falling exchange rate and be much better off...
I cannot recommend which shares for her to pick because I have high tolerance towards risk...
[8D]
.^sc

Steve
28-01-2007, 02:33 PM
Getting back to the question at hand, give your daughter a basic rundown on sharemarket investment and/or speculation then let her make her own decisions and learn from her own mistakes.

While you obviously wouldn't want your daughter to loose her hard-earned government handout, it could be the best 'investment' in her education.

PS:I took out my student loan when they first started (back in the days when you got the living component as a lump sum) and it all went into the sharemarket. At the time I was earning $300/week so I didn't need it to survive.

Zaphod
28-01-2007, 02:41 PM
Morals aside (if they do infact have a place in either finance or politics), I did something similar to what Tim is proposing for his daughter. I invested any surplus cash left over after accomidation + tuition costs were removed into the stock market, and over the period of two years doubled my investment.

Immediately after I had finished University, I then sold the shares and paid back the student loan (both the tuition and accommodation components) in it's entirety.

I may be criticised for "rorting" the system, but remember that I paid back my entire student loan immediately following my graduation, thus benefiting the taxpayer ;)

Crypto Crude
28-01-2007, 03:45 PM
quote:Zaphod Posted - 28/01/2007 : 3:41:00 PM
I may be criticised for "rorting" the system, but remember that I paid back my entire student loan immediately following my graduation, thus benefiting the taxpayer

you probably paid back your student loan because interest payments would have kicked in... I'm sure you would have not paid it back if it was interest free as it now is....

www.asx.com.au/research/companies/index.htm (mailto:)
What your daughter could do is, find a sector she is interested in, or one that she thinks will boom... and then search for a company with the set criteria...
[8D]
.^sc

cantab
28-01-2007, 06:09 PM
quote:Originally posted by Tim

Thanks Halebop and zyreon, points much appreciated. Daughter is doing an accounting and finance degree and this should be a learning experience so you are right she should be making the decisions. Medium term horizon, A bit hard to know where to start and what to focus on, diversification, future trends etc


Tim, what is your daughter planning to do once she graduates?

Westie
02-02-2007, 09:46 PM
quote:Hence it's not suprising that an individual on the average wage (probably earning a lot more than Tim's daughter) has no show in putting $6K + a yr into shares (interest free!).An just to add insult to injury, not only is Joe Average's money being given to Tim's Daughter but he also will have to pay for the admin and interest costs of the money each yr until the original monies are paid back (assuming it ever is!).

Clearly there is a show for old "average joe" to put $6k into shares interest free. All he needs to do is go get himself an "education". It is a universal student loan scheme. Perhaps it's Joe's lack of education that's making him so "average" so he stands to benefit from an education by more than just the free loans :)


quote:What is for the "greater good" surely should prevail over what is good for ones own pocket regardless of cost to all in sundry.

Yeah, it's for the greater good that all our students have huge debts and decide to go overseas to earn more dollars to pay them off faster......oh & what exactly is meant by that amorphous term "the greater good"?:)


quote:Just think, if we all had the "hand in the till" like this, the whole system would collapse and we would certainly all be worst off financially let alone in other ways too.


Just think, if we all had the "hand in the till" like this then Tim's daughter would be a complete idiot to not have her "hand in the till" too. :)

Westie
02-02-2007, 10:34 PM
quote:A bit hard to know where to start and what to focus on, diversification, future trends etc


Don't put the cart before the horse. Suggest your daughter starts from the beginning.

1) identify those investors in the public domain with the best long term records (15 years of outperformance minimum). The Brierleys, Buffetts, Neffs, Millers, etc. AFter all, if they can do it consistently, there must be something to it. No point reinventing the wheel.

2) Research them & their strategies across their lifetimes. Articles, books, shareholder letters

3) identify common themes, strengths, weaknesses, triumphs, mistakes in investing both as an analytical process & investing as a psychological discipline. If there are no commonalities then it is pure luck. Don't bother with the stockmarket. If there are commonalities, you're onto something.

4) Assess your own strengths & weaknesses (establish your circle of competence & competitive/natural advantages)

5) Use the commonalities from the great investors to establish the framework to be followed for successful investing. From your own strengths & weaknesses put your own touch to your style and draw the boundaries around your circle of competence.

6) start investing.....cautiously.

People talk about "risk profiles" but in reality risk comes from not knowing what you are doing. If your daughter isn't planning on doing much research on the psychology of investing, investment strategy & the history of the markets before she starts, then she should just bank the money.

I say that because if she's not going to put in the work to learn from successful investors, then she doesn't have the logic to learn from her mistakes should she lose her money in the markets. If you don't learn from your mistakes and the mistakes of others, then the whole exercise is redundant. She runs the risk of losing her money, having a student debt & not having learnt anything except "stockmarket = gambling". That's counterproductive.

The above sounds impractical and like a lot of hard work but it isn't. Generally just involves a lot of reading. I managed to read up on investing while studying for something completely different.......and still had an "A" average at postgrad level. The bonus is, by following the successful investors you end up with an education in logic, economic rationality, & business horse sense, as well as investing. It stays with you your lifetime. Following the easy advice "buy an asx blue chip paying an x% dividend" generally doesn't teach you anything.

In summary:
A wise person learns by the experience of others.
An ordinary person learns by his or her own experience.
A fool learns by nobody’s experience.
Anonymous

Tim
03-02-2007, 08:32 AM
Thanks for all the constructive pointers. Westle totally agree about the education side. The ethics is not the issue Duncan as I have said the situation I put forward was a very simplistic view compared to the than the real situation. The same argument could be put forward for national super. I am sure those not needing it are not giving it back to the Govt. The student loan has to be paid back.

duncan macgregor
04-02-2007, 11:55 AM
quote:Originally posted by Tim

Thanks for all the constructive pointers. Westle totally agree about the education side. The ethics is not the issue Duncan as I have said the situation I put forward was a very simplistic view compared to the than the real situation. The same argument could be put forward for national super. I am sure those not needing it are not giving it back to the Govt. The student loan has to be paid back.
The people getting super have paid into the system you want your daughter to bleed the system before she even starts out is a very different kettle of fish. MACDUNK

Cooper
04-02-2007, 01:05 PM
Hey Tim,

I agree with what Westie has said (in fact Westie has said it better than I could) but I just want to expand on the point he made about your daughter's motivation to research her investments.

It's a bit of a catch-22 situation. I understand you'd be anxious for your daughter not to lose money in the market, get disheartened etc, but from an outside point of view I would suggest you take more of a guiding role than a direct role in stock selection. My father has given me a lot of advice over the years, but its not until I confirm some of that advice by making my own mistakes that I begin to understand and appreciate the wisdom.

So, instead of telling her to select stocks X, Y and Z, I'd agree with Westie's sentiments and just point her towards "point A", guide her through the process of making stock selections, and let her deduce where you're trying to get her to go subtly. If she invests in a company you're not happy with it's probably easier and better in the long run if you let her know you disagree with her selection, tell her why, and then sit back and wait for things to eventuate as you believe they will.

The reasoning is that everyone who invests (either as a hobby or as a living) have only one thing in common; they want to invest. In the short term I can see the value in feeding your daughter all the info she needs but in the long run I'm assuming you want to instill a desire to save and invest... stating the obvious I know, but it's better for that desire and the patterns of behaviour which come with them to come from your daughter herself. She has to be happy with both the processes and reasoning behind any investments made. She'll probably make mistakes, I made plenty (still do) but if you're there to explain why and how she went wrong, then it may be a case of losing in the short term to gain in the medium and long terms.

The fact that she is saving at such an early age (a success story in itself!) indicates that she has a clear understanding of the importance of money, so she may be immune to some of the more stupid financial decisions that I had to make to learn.

Finally... the ethics of using your student loan for investment. Firstly, an Economics lecturer, in a conversation on "moral hazard" (ie what some believe is the situation occurring with interest free student loans), insists there is no such thing as moral hazard; it's simply a case of individuals responding to incentives. I would argue this is the case here. As your daughter would be aware, the loans are only interest free as long as she remains in NZ, so essentially the government has created incentives for graduates to remain in NZ. If your daughter contemplates leaving NZ, she now faces higher monetary penalties for leaving; income differences between NZ and overseas have been narrowed by this incentive. Essentially, the government are trading off interest costs now for more tax in the future. I challenge anyone to argue this point with me.

Secondly, after a couple of years on this site I've noticed that the bleating from the usual suspects on this site is consistent only in that if it doesn't benefit them, they go on about the immorality of it all, whereas if it does, they stay strangely quiet. Best treated with a dose of salt.

Good on you for what you're doing... good luck to your daughter... as I've said, that desire to save is half the battle.

Crypto Crude
04-02-2007, 03:48 PM
best advice me old man ever gave me was to not invest in feltex...
he was adament... and afterwards he never once gave me stick about it... I was interested in Feltex, but never invested into it....
he has offered be alot of advice, he got me interested in commodities and silver about 4 years ago... He thinks that silver, and gold is only at the start of a 40 year boom...
Its important to be able to talk to someone you trust... :)


quote:
Cooper Posted - 04/02/2007 : 2:05:53 PM
1....the ethics of using your student loan for investment. Firstly, an Economics lecturer, in a conversation on "moral hazard" (ie what some believe is the situation occurring with interest free student loans), insists there is no such thing as moral hazard; it's simply a case of individuals responding to incentives.

2....I would argue this is the case here. As your daughter would be aware, the loans are only interest free as long as she remains in NZ, so essentially the government has created incentives for graduates to remain in NZ. If your daughter contemplates leaving NZ, she now faces higher monetary penalties for leaving;

3....income differences between NZ and overseas have been narrowed by this incentive. Essentially, the government are trading off interest costs now for more tax in the future. I challenge anyone to argue this point with me.

1....Govt could reduce the effects of moral hazzard by paying a fair allowance to all which don't need to be paid back... some get it some don't, thats balony....

2.....I totally agree... the interest savings is a dangaling carrot...without the 3k in interest charges I will save per year, then I would be gone... by keeping skilled workers in NZ, the economy will benefit far greater than the it otherwise would....

3....in fact, saving the money is far better for the economy than spending it... saving it creates good habits, is not inflationary, increases individual wealth, and therefore betters our standards of living...
[8D]
.^sc

Tim
04-02-2007, 04:54 PM
Thanks Cooper, I totally agree with you and Shewd Crude good points. Daughter is doing a finance and accounting degree and it is important she is in control of any decisions.

Westie
05-02-2007, 09:46 AM
For your daughter Tim.

From the world's most famous investor to some business students. A short tour de force in investment advice & also covers some politics & investing "morality" issues

http://www.vinvesting.com/permanent_value_the_teachings_of_warren_buffett

pickle_master
10-02-2007, 07:03 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by Tim

Thanks for all the constructive pointers. Westle totally agree about the education side. The ethics is not the issue Duncan as I have said the situation I put forward was a very simplistic view compared to the than the real situation. The same argument could be put forward for national super. I am sure those not needing it are not giving it back to the Govt. The student loan has to be paid back.
The people getting super have paid into the system you want your daughter to bleed the system before she even starts out is a very different kettle of fish. MACDUNK


Hi all
I don't want to get into an arguement but thought I would share my views...
Macdunk, perhaps the daughter has been working part-time since she was 15 (like I had), thereby having put something into the 'system' already...
My parents have been excellent parents and very supportive of me. However, they were not in the best position financially to support me through university, so I paid for uni myself by working part-time through the 4 years. I received a student allowance for 1 year and took a student loan in my final year (which I paid back 6 months after finishing my studies). I too bought some shares during my studies (2k). I didn't feel that I was "bleeding the system"
I would not have expected my parents to work 6 or 7 days to support me through uni. I would rather have had them around the house and spending time with the rest of the family.
Tim, I think you should let your daugther look at investing herself and making her own decisions. She can read the papers, forums etc...
All the best,
PM

Tim
10-02-2007, 09:06 PM
Thanks PM and Westie, helpful comments

Crypto Crude
11-02-2007, 07:07 AM
It is really easy for those to go against the 'bleeding the system argument'
when it is not in their favour....
give them an opportunity to benefit themselves at others expense, and there becomes a quiet aroma in the air on their behalf....
.......It is only a select select select group of individuals whos parents pay there way through Uni....
I personally know only of less than 1 kiwi who's parents paid their way at uni...

last night I was out in town.... had a few beers....
came out of a club with a half empty bottle.... got arrested... red my rights... going to court on wednesday..... luckaly I have a diversion and won't get annalised by the court....
im pretty annoyed... I wanted to save that diversion for something important....
"bleed the system or let the system bleed you!"
[8D]
.^sc

duncan macgregor
11-02-2007, 07:24 AM
All very nice but would you advise your offspring to screw the system. Most decent people want there kids to grow up with better morals than they did[:I]. My kids would not pay for their education if i had money in the bank. I never allowed my kids to cheat the system go on the dole tried to support them in whatever path they followed. So you got drunk SHREWD one and got run in:D:D:D.
Do you good my man you have a lot of catching up to do before you reach my level. macdunk

Tim
11-02-2007, 05:44 PM
duncan how is it screwing the system, anyone can apply for it. Maybe it is not a good idea to have a partime job at university to help yourself. How is going on the dole if you have no job cheat the system.

Sideshow Bob
11-02-2007, 06:18 PM
I am amused at the moral discussions, mainly raised by McDunk on this thread. Ironically I am starting back at uni this year, while working, and while have shares to pay for the fees, I am taking out a student loan.

I will start paying this back immediately through salary deductions, but the system is there, open and available.

I have had a student loan in the past, which I paid off. It started at over 8% on my first day of uni, so the first year fees cost me over 25% extra with interest by the time I left uni. I made additional payments, and I also made payments while overseas. The government almost bent over backwards to make the cash available, even 0800 numbers available on Thursday nights while down at the pub......I paid for 85% of what it cost myself, as didn't expect my parents to pay.

While 1-2 others might question my morals, I have absolutely no problems with borrowing the money while having assets I could liquidise to pay for it. I see no difference in that than having spare cash after finishing uni and not making voluntary repayments.

End of the day, can question morals of students, but the system is there and has been flawed since the very start.

Steve
11-02-2007, 07:34 PM
Playing by the rules is all that you can expect the average person to do...

Crypto Crude
12-02-2007, 12:34 PM
quote:duncan macgregor
Do you good my man you have a lot of catching up to do before you reach my level. macdunk
..... YET to come visit you I would have to take the stairs..... down a couple of levels....
mackdunk, I'm way above your level for my age....[8D]

my core holding stock is now NWE.... up a lazy few percent in early trading....
check it out.... watch this stock because its about to KaBOoM....
[8D]
.^sc

duncan macgregor
12-02-2007, 01:04 PM
I feel quite sure SHREWD CRUDE that when the time comes in later life you will pay for your kids education, and even your grandchildrens education rather than see them get into debt or encourage them to beat the system. Pleasantly surprised that you got run in for kicking your heels up, shows that you are not a woofter after all. :D:D. I was in the army serving 3years in KENYA in a paratroop regiment fought more poms in the main street of Mombassa in drunken Skirmishes than anything else. Thats the reason i said you have a lot of catching up to do. macdunk

Crypto Crude
12-02-2007, 01:44 PM
the strip in CHCH city is way more SaVaGe than any drunken skirmishes in Kenya...

quote:...I feel quite sure SHREWD CRUDE that when the time comes in later life you will pay for your kids education


Ask me that question in 25 years... I cannot be totally sure that it will be that way...
it is not embeddered in NZ culture to do so...

'Had my way been payed for'.. then I would have never discovered shares... or sharetrader...or you.... I would have not made 10k plus profits.... I would still hold NZ dollars... and I would have still totally been against property... markets, exchange rates, arbitrage may have meant nothing to me...
I wouldnot be thinking about CFD's... I would be much worse off...

....just got to make the best out of every situation....this debt has put my assss into gear and changed me forever.... even if I do loose my shirt with the shares....
[8D]
.^sc

duncan macgregor
12-02-2007, 02:13 PM
SHREWD, Thats where teaching them honesty finance and money management come into it. You educate them at a very young age to manage their own money. Twelve years of age give them an allowance to pay board, buy their own clothes etc. Watch them bank and spend money it teaches them to make their own decisions at a very early age. Most NZ kids have never been taught money management. To show them how to screw the system tells me that a person has failed as a parent. Explain the sharemarket to them, start them papertrading explain how your gst works. macdunk

Serpie
12-02-2007, 10:00 PM
Interesting thread. Good to see the passion.

My 2c worth:

My wife and I are due for a baby in 6 weeks (thank you!).
My job, as a father, is to give my kids all of the tools that they need to make their way in life, impart all of the knowledge that I have, and then shuffle off. Their job is then to be a fraction of a percent better than me, and do the same for their kids. It's not exciting - it's just evolution.

We will spend whatever it takes to make sure that our kids have the best possible education (primary, secondary, tertiary or trade) to allow them to make their own way. We will meet their needs - they can meet their own wants.

If I had gone to university I would have just finished before the user-pays system fully kicked in. I want my kids to have the best education, but I dont want them to have to pay for it for years to come - even at low interest rates. Give them the best tools, and a clean slate. Then it's up to them. Be there to catch them if they fall, and offer advice when needed.

I personally wouldn't be too keen on my kids borrowing money on a student loan to invest in the sharemarket. It may be smart, but is it responsible? Student loans are easy money - does a young person have the experience to respect money when it comes so easily, or will it be "easy come - easy go"?

My god - I sound like my father! But, I completed an apprenticeship, and I am (was)a registered tradesman, so have a tradesman's view about finance.

Work hard, and earn as much as you can. But pay your tax, and don't abuse the system. Buying shares with borrowed funds - is it investing, or is it more akin to gambling?

Thank you for listening to the ramblings of a Gen X'er.

And go NWE!

Serpie
12-02-2007, 10:26 PM
Gen X Ramblings - Appendix A:
There are exceptions. Our friend Shrewd Crude, and other students on the boards, work as hard on sharetrading as any "tradesmen" do in their chosen fields. The hours that these students devote to the market is impressive, and their work ethic is evident and proven.

Crypto Crude
12-02-2007, 10:57 PM
whatup Serpie....!

quote:
1....I personally wouldn't be too keen on my kids borrowing money on a student loan to invest in the sharemarket. It may be smart, but is it responsible?
2....Student loans are easy money - does a young person have the experience to respect money when it comes so easily, or will it be "easy come - easy go"?
3......Buying shares with borrowed funds - is it investing, or is it more akin to gambling?
4......And go NWE!

1......yes it is smart.....is it responsible, yes.... way more responsible than taking that dosh and spending it up........ about 3 years ago I had zero dollars to my name, and I had a student loan starting to grow ... since I bought shares everything has changed....(my savings patterns, my outlook on life, my goal-(to turn my portfolio into 100k by year end) ....I never had goals!...... My first trade I lost 2.5k. lost an arm off my shirt.. that arm eventully grew back and became a long sleeve :D nowadays I pop my collar :D
2......depends on who that person is....society is full of spend aholics... You can generally look at any cross section of society and see this... as long as your prepared to put that money into shares, and consider it untouchable... or worthless....
3.....depends what you are investing the money in.... NWE is hardly gambling, whereas MSC,BUY,BAS,EBR,EPE,LKO,LIO are.... gambling is where you have no control over the outcome...
surely there is no gambling with AED, its in the bag buddy...
4....amen to that...
serpie... PS....we sould become NWE public relations officers..
today was the first day of many great days to come
catchya round....
[8D].....[8D]
^sc ...^serpie....

kura
13-02-2007, 02:44 PM
Interesting discussion this, I was having a chat with one of my nieghbours boys (university student) the boy was incredulous when I told him that my university education was entirely free and on top of that I received a "standard tertiary bursary" which went towards living costs. This is plain discrimination in an intergenerational sence.

Also discriminatory is the question of retirement, the current working generation is told they need to provide for their own retirement, as well as funding the super of current retirees.

If anyone sees an opportunity which the system exposes itself, and fails to grab it with both hands, then they would need treatment for thier problem. Ask anyone who ownes a rental property, why ? and the invariable answer comes back to a gaping hole in our tax system (lack of capital gains tax)

In conclusion, I see no difference between exploiting a loophole in tax laws, and getting an interest free loan to play the market, they are merely different sides of the same coin. (ie creating personal wealth with an effective govt subsidy)

Ricky99
13-02-2007, 05:54 PM
Shrewd Crude just remember nothing is in the bag if the market has a melt down. And while a number of people think AED is in the bag, its still got some development risk yet.

In saying that though you seem to be very similar to me but I reckon I'm 10-15 years older.

I did a very similar thing in 1990 / 1991 took all the studnet loans they would give me over two years, took it to the bank said it was mine, got a mortgage based on part time jobs and bought a house.

In my view if its legal (which taking student loans is) then there is nothing wrong with it!

R2
13-02-2007, 08:19 PM
I have 2 kids at uni and pay their fees each year on the basis that they pass and don't have a student loan.

Reason is to teach them how to manage a cashflow and appreciate the value of money,rather than educate them to take on debt. i.e. they both work part time to fund their social life.

If they were over 25 and hopefully financially savvy in their own right, I would encourage them to take a student loan rather than pay for it themselves initially as it is essentially free money.

bambi
13-02-2007, 10:02 PM
R2, why 25? What makes 25 a good age?
Also how are the appreciating the value of money when it is given to them?

I don't understand why people don't take a year off after high school and work. That way they would have saved a bit of money to pay for their fees when they go. It also helps people to mature and decide what they really want to study.

FTG
13-02-2007, 10:21 PM
Ahhhh..... Ricky99, you have encapsulated a key premise of a few of the punters here perfectly.

"If it's legal then there is nothing wrong with it!"

A premise that, even after glib inspection, clearly lacks any ability to stand up in a moral backbone test. Even at a simple level, regardless of our position on the political spectrum we ALL can identify with law(s) that we simply don't agree with and wouldn't allow ourselves to support.
Of course there are always those you regardless of knowing a law is not "right" will justify their own circumstances in supporting it - a bit of a "the ends justify the means".........Just like the Gestapo justified taking the millions to the gas chambers, because they had the "legal" authority to do so.

Kura; in regards to your comment on there being "no difference in minimising tax and taking interest free loans". There are some subtle yet significant differences. Tax is very simply a legalised redistribution of YOUR hard earned money to other people/resources that a government decides(rightly or wrongly) is appropriate. You have every right to seek to minimise the amount of money that is taken from YOU to be disbursed elsewhere........ On the other hand, taking the interest free loan, DPB, Dole etc etc, you are now going to the Government and asking them to take more hard earned money from ME and everyone else (and yes a little bit of it will even be yours).
So yes there are two sides to the coin, but each side look very different. One side will ultimately encourage and foster a society to take individual responsibility and strive for sustainable success........the other side will slowly but surely pervert even hard working "average Joe" into a "getting as much as possible for as little effort as possible" attitude, regardless of the long term costs to himself and others.

Crypto Crude
13-02-2007, 10:57 PM
quote:Ricky99
1.....Shrewd Crude just remember nothing is in the bag if the market has a melt down. And while a number of people think AED is in the bag, its still got some development risk yet.
2......In saying that though you seem to be very similar to me but I reckon I'm 10-15 years older.

1.... you are completely right.... I am a complete risk taker, so the development risk doesn't bother me like it would others.... AED reeks of undervaluation.... I am confident that it will do me well...
2.... so you are a king pin aswell:D.... I am 22yrs.... looking at my first CFD trade this week aswell....
[8D]
.^sc

Crypto Crude
13-02-2007, 11:16 PM
quote:bambi
1....I don't understand why people don't take a year off after high school and work. That way they would have saved a bit of money to pay for their fees when they go.
2.....It also helps people to mature and decide what they really want to study.

1....I took half a year off highschool and worked at a bank.... worst job I had ever had....
went to uni mid term.... finished the year not behind any of my friends... yup really good idea....
2.....I never decided what I wanted to study until I was at Uni....
I had all these ideas, got to uni, and found that they completely changed....

TIM...in my opinion, the most important thing for your daughter is that she has alook into what jobs there are for her degree...what type of job she could expect, work conditions etc...careerservices is an awesome place to start (www.careers.govt.nz).... its a free service that provides info and advice about jobs, training, and careers... I would even recommend going to a few businesses and sitting in and seeing just what the work is like for her degree. ..eg.. I once went to a foreign exchange dealership....
I know of, and there are so many people that get degrees with no jobs... If chch UNI's are spitting out 100 economists a year and there are 5 pure economics jobs... then your out of luck...
if shes doing finance, then her classes will be full of foreign students (80% of her class plus)
in particular asian students (no offence, but they are loyal...I could trust my asian friends with my money greater than that of my kiwi friends,).... anyway....her job prospects will be strong if she has clear english... she will have an added advantage...
[8D]
.^sc

Ricky99
14-02-2007, 07:17 AM
Shrewd Crude you will be an interesting lad to keep in touch with as this market progresses through 07, especially if we have a reversal like quite a few of us think it will. While you are going harder and harder to make money by taking risks, a number of us are moving back into safe havens including cash to preserve what we have and then wait while the market takes a breather.

I'll be keen to follow you as you trade CFD's as they are another game all together and I think only for the big boys who really know how to manage risk.

Crypto Crude
14-02-2007, 07:37 AM
Ricky I have given my view of the world economy on Robbos thread...."while I was away"
pg3 top 1/3....

-Profit growth (earnings)
-liquid markets
-World growth rates of 5% picked by IMF
-China
-Baby Boomers....
all set for this to continue, which will keep markets strong for a few more years....
yes there is a correction coming.... not yet....

If the market doesn't crash then I will be fine... I don't play index averages... my shares potential can easily go against a falling market...

I am weary of CFD's.... am only making a 2-3k trade this week (20-30k position)...
will start small.... I willnot be opening up positions willy nilly...
[8D]
.^sc

R2
14-02-2007, 07:54 AM
Hi Bambi, answer is that, my understanding is that when over age 25 student loans are far more automatic in terms of access as payment is not related to parental support in anyway, under that age the paperwork and reconcilliation of repayments are more than I wish to oversee in any case

I am paying their fees which must be paid for but not their addidional costs, meaning they need to work for additional money if they want a life; and need to manage this extra income to achieve this.

Both are saving and have infact built up a few grand extra each - so it all works for me at least.

duncan macgregor
14-02-2007, 02:03 PM
Some very interesting insights to other peoples view points. We have if its legal nothing wrong with it brigade. So is homosexuality[V]. We have young SHREWD CRUDE taking advantage of his situation to speculate with our tax money on the share market. Incidentely i think he is doing the right thing. We have another poster in singapore, who teaches his kids honesty, money values, and pays for their education, as is his parental obligation. If lady luck had not smiled on me, i would have worked twice as hard to improve my kids chances. I could have built leaky homes, stuck one nail in when two required. i might have screwed the system with my tax returns, i might have made a lot more money if i had. In the end its what you see in the mirror that counts, nothing else matters. I know the CRUDE one will end up paying for his kids education i just know that.:D:D macdunk

Crypto Crude
14-02-2007, 11:55 PM
quote:duncan macgregor Posted - 14/02/2007 : 3:03:18 PM
We have young SHREWD CRUDE taking advantage of his situation to speculate with our tax money on the share market.
Yes I am here to speculate...
1.....I speculate that AED will be $10 by year end
2.....I speculate that NWE will be 25cents in a month...
3.....I speculate that NZO will be much better off starting in a few months...

It has been nice to meet you mad mad dunk.. you are a savage cat :D... one that is worthy of another star on your profile...as ricky said, nothing is in the bag.... but these picks surely feel damn close...follow my picks.... don't be surprised when they unfold as expected... (especially number 1 and 2)
see you all in a few weeks...
[8D]
.^sc

Ricky99
15-02-2007, 01:55 PM
He's not speculating with our tax money.

He's speculating with his own money
The Tax man is speculating that SC will one day earn enough to pay the loan back.

The two are seperate things.

SC If one comes true then No2 does by default. I'm invested in No2

Crypto Crude
26-02-2007, 04:00 PM
"SC If one comes true then No2 does by default. I'm invested in No2"
... to a certain degree yes...abit of a fall today on no2 I see.... but yet no1 rising....
so not quite a perfect correlaton I guess...
but number 2 has much much more to offer than with the no1 link alone...
good choice with no2 rick... catch you on the holy grail of rich NWE holders....
oh well back to study tomorrow... those weekly payments arent far off now
[8D]
.^sc

thereslifeafter87
27-02-2007, 02:15 PM
quote:Originally posted by R2

I have 2 kids at uni and pay their fees each year on the basis that they pass and don't have a student loan.

Reason is to teach them how to manage a cashflow and appreciate the value of money,rather than educate them to take on debt. i.e. they both work part time to fund their social life.

If they were over 25 and hopefully financially savvy in their own right, I would encourage them to take a student loan rather than pay for it themselves initially as it is essentially free money.

R2, if you want to teach your kids the value of money, you should let them take out a student loan to pay for their course fees, then give them the money to pay it off once they pass. With the money you give to them they can either pay the loan off, pay for next years fees, invest the money, or spend the money.

Encourage them to invest it.

Student loans are a fantastic tool for making money because they are interest free, and unlike real debt, unless you're earning money you don't have to pay them back.

Also, your compulsory annual repayments are capped at 10% of your gross income - so effectively it's just like an extra tax on people that decide to go to university.

Anyone that goes to university and doesn't take out a student loan is IMO not at all financially savvy.

Steve
27-02-2007, 09:03 PM
quote:Originally posted by thereslifeafter87

Anyone that goes to university and doesn't take out a student loan is IMO not at all financially savvy.

BINGO!:)

R2
03-03-2007, 10:35 AM
Possibly agree with you LA87, I just like the idea of helping them to become as highly capable of manageing what comes in what goes out first, cashflow effectively. Of the successes and failures I have seen and been involved in have hinged on cashflow.

Other cause was I didn't mind paying their fees and friends of mine had had administrative issues whereby payments on a loan were not credited correctly and they had a battle on their hands, I just don't need the problem.

But, I agree, the most efficient thing to do would be to draw down a loan and invest it.

thereslifeafter87
06-03-2007, 06:24 PM
quote:Originally posted by R2

Possibly agree with you LA87, I just like the idea of helping them to become as highly capable of manageing what comes in what goes out first, cashflow effectively. Of the successes and failures I have seen and been involved in have hinged on cashflow.

Other cause was I didn't mind paying their fees and friends of mine had had administrative issues whereby payments on a loan were not credited correctly and they had a battle on their hands, I just don't need the problem.

But, I agree, the most efficient thing to do would be to draw down a loan and invest it.


In terms of teaching your kids responsibility, telling them to get a student loan might be just the ticket.

It taught me a lot about organisation of my personal dealings and also about dealing with a government bureacracy.