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jnoodle
24-01-2011, 07:14 PM
Hi All.


I’m after some advice for choosing the best financial vehicle for share trading. I currently have a family trust with some cash in it, this is either in call accounts or term deposits, but I want to start investing some of this money into the ASX, and possibly NZX. I also plan to buy a rental property investment with this money too.


I should note that I’m currently living in Australia, but about to move back to nz in a few months.


My investment strategy is basically ‘buy and hold’, but I do put stop losses in place if the market crashes or a share underperforms, and if a share shoots up in price I will sell some shares so that I never have more than 10% of my capital in any 1 company. I usually invest in small caps or mid caps. Last year I made about 15 buy and 15 sell transactions, normally I wouldn’t make this many tho, as there was a big drop in the asx at the start of the year, and this triggered lots of my stop losses. A typical year might be 10 trades(i.e. 5 buys and 5 sells).


First question, would making 10 trades per year make my trust a trader?
If not, then if there is another significant drop in prices and I have another year of 30 trades would this then now make my trust a trader?


If the answer to both questions is No, then I assume I’ll be fine with trading directly from my Trust, as this won’t taint rental property if I choose to sell it. But if the answer to either is Yes, then what should I do? Is it best to create another trust for trading, or a company?


Any advice would be greatly appreciated.


I do plan on seeking professional advice from either an accountant or financial adviser when I’m back in nz, so if anyone has any good recommendations around wellington I’d be keen to hear also?


Thanks in advance.