I imagine it works similar to kiwisaver etc, where any income generated from the units held are used to buy more units. Think of it as an enforced DRP.
Printable View
I imagine it works similar to kiwisaver etc, where any income generated from the units held are used to buy more units. Think of it as an enforced DRP.
As unhuman says any dividend and interest income would probably be reinvested. Not sure the distinction you are making regarding a managed fund and an index fund and the 28% flat rate. Leaving the whole dividend/growth question as I would assume most investment funds would have a mix of both and that mix of dividend/capital gain(growth) would differ depending on their investment strategy.
Just considering Portfolio Investment Entities (PIE) and individual Prescribed Investor Rates (PIR), my understanding is that if you are investing in a PIE you make a declaration regarding your PIR which can be 10.5%, 17.5% or 28% depending on your income level.
Generally PIE income is excluded income so you do not include it in your income tax return. The tax is paid by the PIE fund. If you use a PIR rate that is too high IRD keeps the overpaid tax, if you use a PIR rate that is too low you are supposed to include the PIE income in your income tax return and pay the shortfall. Pretty rude. As long as your kids total income is less than $14,000 10.5% would be correct in any PIE fund. I would not use the 28% rate as my understanding is you are not supposed to be able to claim back the overpayment of tax.
Thanks for your reply Aaron. The distinctions I was making is that on sharesies the managed funds are PIR so yes I have her at 10.5%, where as if I buy her an index fund they charge 28%, so from a tax perspective the managed funds are the way to go.
Got an email back and the dividends by some of them are keep, not reinvested as such in that you don't get more units, but the unit price increases. So it should increase at each dividend payment.
http://investmentnews.co.nz/investme...eline-for-nzx/
Sharesies working with NZX to introduce direct share investing. Will be interesting to see the pricing model for this in Sharesies. A break away from their target market of set & forget investors. Single stock investing involves a bit more research.
It will be nigh on impossible to trade shares via sharesies is my initial thought. If they are not a broker they will have to deal through one. So they will still only put the orders through once per day (or maybe some increased frequency) but it will be bulk orders and not your order when you place it at your limit. Then they will just have to charge what the current brokers do to remain competitive. But for buy/hold pundits this will be great.
Sharesies released a beta of their share trading functionality yesterday and i wrote a review here https://moneykingnz.com/buying-share...irect-broking/
I'll personally be sticking with Direct Broking. I like having the shares in my own name so i can participate in DRPs, and i hold long term so wanna avoid the account fee that Sharesies charges
As I said elsewhere Sharesies is not really designed for investors with large amounts of money to invest. It was set up to provide an avenue for small investors to get investing now, with small, regular investments, at no/very little cost. It is the best thing since sliced bread for me right now. Yes, there are some additions that could be made such as DRP, but I believe those things will come down the track. The individual companies trading is seamless and simple. I put an order in around 9.30 am and it processed and confirmed by lunchtime. From what I remember bulk orders are put through several times a day - not just once. I’m too tired to go check that so don’t take my word for it.
It is is an ideal platform for beginners to get started.
I see my initial synopsis was wrong and that sharesies are a NZX participant. Their brokerage is a lot cheaper than ASB or DB and once they allow limit orders I can see them decimating the likes of DB and ASB. I am placing a $1,000 this morning. It is going to cost $30 via DB or via Sharesies I pay $5.
I know where I am going, I am buying this one at market.