It's why I'm in the position I am/I don't follow the sheep.
Good luck with your divies mate.
Don't forget to pay tax on your 5% return.
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I'm afraid to say Mr TeslaGod but both you and I have have something in common. We both hate KiwiSaver.
@BIRMANBOY:
Returns of +20% or 30% in a year is very achievable in an investment retirement fund. What matters is the CUMULATIVE averages of returns and if you looked at what Buffet was ranting about, over a 10 year period, these 'active' managed funds can not beat the market index return. There is simply no way a KS fund, net of taxation (ALL taxation), less of mgt fees etc, can beat a low cost index ETF. KS has done so little for the working class and it will not make them rich at retirement. This is VERY different to the retirement funds in Canada that aim to give tax breaks to the working class, while penalising the rich who over contribute into their pension funds. For eg. Canada has RESP which is an education fund that you start upon the birth of your baby and all the gains grow 100% tax free and after highschool, the disbursements withdrawn are 100% tax free as it pays for tuitions, books, cost of living, etc. Then there's the disability fund RDSP where families who have children with disabilities, can invest in the plan and again, grows 100% tax free. When the child is an adult, the withdrawals can be 100% tax free. Get the picture? In NZ any savings towards retirement makes no distinction between the rich or the poor.
As a matter of discussion on 30% returns in a year. I'm already near +30% return by closing my position in Visa back in Sept and buying ALB at end of Sept. I made a significant stake in ALB representing over 60% of the portfolio in this stock. All the nay sayers and financial advisors screaming that we are at record highs for the past year - never had a game plan like I did. Giving your money in a KS plan where the active fund manager tries to give you better returns is a farce. The minimum they should be doing is on a weekly basis, disclosing their "game plan" to their investors and an ongoing constant review of their past actions if it worked or not. After all if you depend on your hard working money for some guy in KS... there should be more transparency. But that's not how the FMA set things up in NZ. Those that don't take an active role in their own investments deserve to lose most of it in a bad year.
@justakiwi: I'm afraid I must of hit a soft spot? What i'm getting at is the crux of the whole investment system in NZ. The FMA regulations is suppose to make investing in NZ shares on an equal playing field but instead, it's done nothing to education the very customers that put up 100% of the money and is exposed to 100% of the risk. Here's what Jack Bogle had to say:
https://www.youtube.com/watch?v=K4lwJ5aQGlI
and he's only working on an assumed 7% market return but the actively managed fund takes 2%. The difference compounded over multiple decades prove that the investor only gets back 1/3rd of the total returns. Yes and if you think that 2% is a killer, consider how IRD's FIF using the FDR method creams 5% off on the paper gain TOTAL on a portfolio that invests in US shares (assuming the paper gains in a year exceed 5%). Then that 5% of 'taxable income' goes all the way back to the investor and is taxed at RWT rates. Remember, this is excluding active management fees so when you add it all up, you're not getting much in return at the end.
Is it not a surprise to those that were able to save and borrow mortgage on more houses were the ones that really won in NZ? How could you miss when you hold a house for more than 10 years, and all it's capital gains are 100% tax free, and the bank is rubbing it's hands too with ultra low interest rates (leverage). It does seem that Kiwi Saver was nothing but leftover crumbs for the working class of NZ.
What? You havent left yet...still trying to remake the NZ financial systems into the "SBQ" model? Pointless exercise of course but must be frustrating for you to know that you have all the answers and everybody here is too stupid to listen to you. I feel for you but remember Canada has so much more to offer and would probably, no actually, would certainly appreciate your intellectual acumen if you made the move. I would even be happy to start a "give a little" fund to help out with all the expenses.
...perhaps it would be a win-win for both countries, with the IQ of both increasing once SBQ returns to Canada?:cool:
(Sorry SBQ, possibly a bit mean of me. But with you confirming that you are worth 8 figures, I have total confidence that you are resilient & willing enough to take a much needed ribbing now & again.)
A throwback to the Rob Muldoon style, although Muldoon used it in relation to Australia.
The unique regressive NZ tax system certainly encourages over-investment into capital gains producing residential real estate and a poorly-diversified investment portfolio generally. And, Hey presto we have the price of an average home over a million dollars now.
and when people like myself, who are a bit more vocal, try to point this problem out here in NZ, the appropriate response is (well maybe NZ is not your place and you should go back to where you came from). ;)
Again, the typical arrogance I see in NZ fashion. Would you of preferred, my wealth to be achieved through owning NZ houses (like TeslaGod and any rich person in NZ has done so?). I've made an ethical stance that $ invested into businesses is far more productive than owning more houses. NZ's situation is just that - can't change the stripes off a zebra and call it a horse.Quote:
...perhaps it would be a win-win for both countries, with the IQ of both increasing once SBQ returns to Canada?:cool:
(Sorry SBQ, possibly a bit mean of me. But with you confirming that you are worth 8 figures, I have total confidence that you are resilient & willing enough to take a much needed ribbing now & again.)
@BIRMANBOY:
You know leave it to NZ trying to reinvent the wheel. The financial systems I speak of abroad are nothing unique. Canada's RRSP was introduced in 1957. America's 401K plan was introduced in 1978. Is it a wonder NZ did not have all that time to have a look how these retirement schemes worked abroad before finalising Kiwi Saver in 2007? Surely there should be some thought about benefiting the 'working class'? This is not the NZ that I was accustomed to know upon first arriving near 25 years ago. A financial system aimed to benefit IRD and the fund managers more than the individual investors.
Lets lay the blame for million dollar houses where it should truly be placed. Severe housing shortages. Shortage of housing supply will alway drives house prices up and regardless of whether the commodity is houses, cars, kayaks or Kapiti ice cream, if the demand is there and the supply drops, up the prices go. The new builds havent kept up with a growing population for many years so here we are. And here we shall remain until we get to the point where we have enough qualified builders, plumbers, electricians and building supplies, not to mention fewer obstacles like heavy handed and difficult bureacratic processes. Of course you cannot blame people for investing in a good thing...so the quandry we find ourselves in is that there appears to be a concerted lack of political will to reverse this. Follow the money and we have the middle class and political "silent majority" vested in the status quo. Lets be honest no house owner wants to support policies that will see their major asset drop in price. Consequently we have the panorama of successive governments largely ignoring the issue but voicing sincere concerns lol. However all of this has nothing to do with KS. Nowdays being able to afford a house or a mortgage has mostly only been an option for someone with a very well paid job or funds from mum and dad. That is pushing up all the time so wheras in the 50's and 60's and 70's almost all people in decent employment could manage to become house owners, we have arrived at a very difficult place. High housing prices, rapidly increasing rental accomodation and growing disatisfaction in a growing portion of society. So back to KS...this is filling the gap for those disaffected...with help and contribution from the Govt and employers, the relevence of KS is obvious. AS of August 2021 the number of people enrolled in KS was 3.1 million. The demographic breakdown was 0-17 years old 254,000, 18-24 390,000, 25-34 695,000, 35-44 583,000, 45-54 540,000, 55-64 480,000 and 65 plus 190,000. Now this buy-in is a strong vote of approval for the scheme and it also has the obvious benefits of assisting those unable to participate in the housing market become involved and participating in their retirement at a safe and low risk environment. So is it the BEST investment....for many of those with assets and investing experience, maybe not, but for the majority with neither time, inclination or will its superb.
I beg to differ. While housing shortages contribute to rising prices, I would say it is not the major contributing factor. One just has to look over in America and Canada, Australia, etc and see how much house prices has risen (psst. their rates are no where near as high as NZ). Jacinda Ardern pointed out earlier in the year with her speech: (and I was hopeful at the time)
https://www.youtube.com/watch?v=nToXpVvnGkU
1) by year end of 2020, 40% of ALL houses purchases was made by those who already owned multiple properties. (meaning, there's no way a 1st home buyer can compete. Buyers of houses for the sole purpose of renting out and investing will always pay more)
2) and from June to Nov 2020, the level of mortgage borrowing by these 'property investors' had increased by 116%. (no surprise here with record low mortgage rates, I saw as low as 2% last year)
3) From 1991 to 2019, NZ experienced the HIGHEST real growth of housing prices in the OECD !!! (Yes higher than places like Vancouver Canada and my friends are crying there)
4) Since last year, 15,000 houses were purchased by people who ALREADY owned 5 (FIVE) or more houses !!!
Look at the total wealth of NZ composition mix. The riches in NZ have done it through owning NZ houses or some form of real estate. The riches in N. America, have done it through stock ownership in publicly listed companies. (like your RRSP, 401K plans etc). When 2/3rds of the NZ wealth is tied up in hard assets like real estate, that tells me only one, the prices will go up in unprecedented ways.
Remember - in NZ, not ALL ASSET classes are the same (because taxes distort the investment outcome) so your example of a normal good like ice cream or kayaks is irrelevant. Those who are able to opt out of KS and use those funds in a more efficient manner (like investing directly into shares or index ETF), will do far better if they can meet the minimum deposit LVR for buying a house. The proof is there with Jacinda's speech citing how many houses were bought this past year by those who already owned multiple properties. That my friend is NOT HOW KIWI SAVER was suppose to be marketed as. The reality is KS never had a chance. Owing houses did far better. Even if they made KS as a tax free compounding scheme comparable to 401K plans, it would still not beat the performance of owning houses because in my previous post, a 2% cut out of the 7% annual market return results in only the investor seeing 1/3rd of the profits after 50 years of compound returns. The person that owns a rental house, uses the income streams to pay off rates and maintenance and gets the full tax free benefit of capital gain.
Let me put it in another way. If the top 10% income earners of NZ focus their investments in residential properties, what % is left for KS? The remaining 60% (as bottom 30% are too poor to be in KS)? The demographic figures mean nothing. They need to attach how much of their total earnings is going into the scheme (6% of their annual minimum?). Think about it, how is it the best option for a person making $100K a year that only sees $6,000 going into their KS? In Canada, RRSP contributions can be high as 18% of the person annual income (and those unused limits are carried forward so the working class person will have gobs of incentives to contribute more if they feel ie 3rd week March 2020 was the bottom of the market).
Is it just me (older white male) or is Kiwi wealth massively overreacting.
https://www.stuff.co.nz/business/ind...a-lim-comments
The comment was that the My Food Bag IPO lacked substance compare to DGLs IPO and he said Nadia Lim in a low cut top was indication of this. He described her as Eurasian fluff (whatever that means)
Kiwiwealth has now blacklisted the company. I know which IPO I would have rather invested in and between the two companies which one I would prefer to be invested in currently.
Admittedly what he said was dumb and unnecessary and possibly hurtful to Nadia who as far as I know has said nothing about this but Kiwi Wealth chief executive Rhiannon McKinnon said it was in the process of adding DGL to its exclusions list in response to Henry’s “derogatory comments”.
I am not sure where Rhiannon has her retirement savings invested but I am not happy she is taking this stance with my savings. It doesn't sound like the actions of a thoughtful investor but a kneejerk reaction, not sure what that says about the rest of her team.
Thoughts on which Kiwisaver to switch to.
I was thinking lowest fees from a larger provider with better systems.
Ironically this is an emotional kneejerk reaction from me so maybe both me and Rhiannon should not be making long term investment decisions.
Simplicity is also out as managing director Sam Stubbs said it would blacklist DGL until Henry had retracted the comments and “made amends”.
Maybe if there are enough social justice warriors running kiwisaver funds my decision for new fund manager might get easier.
I don't think much of Henry's statements but don't think they are that big a deal. If it was a company run or owned by Ron Brierley then I would definitely be on board.
I wonder if Kiwiwealth and Simplicity invested in MFB.
I guess if Henry had just said that he brought his company to market to invest and grow the business and the people bringing MFB to market were cashing out and in hindsight may have ripped off the idiots who invested in MFB, he might have come off better.
@Aaron:
I'm not in a Kiwisaver scheme and never will be. But if I was forced to, I would pick the fund that has the absolute LOWEST, PASSIVELY managed fund there is. One that just does nothing but buy Vanguard's S&P500 ETF ticker VOO or VOOG. It sounds like the fund you are in with such a person like Ms Rhiannon, is an ACTIVELY managed fund; if you say how she manages your investment in their portfolio. As Charlie Munger always reiterates, 'there shall be no compensation scheme to pay these fund managers for merely doing the same as everyone else... by choosing an overly diversified portfolio because they're too scared and too lazy to actually learn what companies they want to invest'. A person investing in KS does not need to be invested in 1000s of different companies and asset classes for the sake of 'DiWORSEsification'.
Thanks for that pretty much my way of thinking as well.
I wonder if the advice to sit tight is valid if you are turning 65 in the next year or two and we are like Japan in the 1990s. The actions of the central banks are historically extreme from what I understand and every action has an equal and opposite reaction.
https://www.nzherald.co.nz/business/...Y553ERPW7J2HA/
Doesn't effect me but does my kids. I'm interested to know if some of you have jumped into cash in kiwisaver. Markets not looking to hot currently.
Hindsight is 20/20. To sell stock (or equity holding in a Kiwi Saver scheme) would be selling at a markets much lower and the lesson to that can be you may lose out on potential future gains on a market rebound. No one knows where the bottom will be as going into a cash position, you are saying you can buy LATER on at a LOWER price.
The whole idea of Kiwi Saver is to give your money to a KS provider, who is suppose to know how to 'navigate' market volatility and provide long term returns. They charge a fee for the administration of your investments and for their professional advice, they should be the ones making the decision when to buy or sell stocks or when to sit on cash etc. However this is rarely done as majority of managed fund providers do not do better than the index market return. Why do people pay KS administration / mgt fees to these managed funds for doing what the rest of others do? They obviously do no know when to go cash and buy at the lows or when to sell high. The excise 'non-performance' by just taking weekly contributions and buying the an index ETF or a certain stock that is in favour. They certainly are not in the business of timing markets like a hedge fund would do.
Therefore if it's in your decision to decide when to sit on cash and try and time the market, you best to do so OUTSIDE of any KS scheme. You owe the mistake to yourself if you timed when to buy in the worse way or by missing out gains when the market returns violently. I've seen this happen back during the 2008 GFC when many investors thought they could wait it out to buy lower but after a few years, they end up doing worse by buying at prices much higher.
If we were in Australia our KiwiSaver or equivalent might be this high. This comes courtesy of the weekly Barefoot Investor email.
I was above my age group average but I'm with Juno KiwiSaver, so I'm down 24% from my early September high and now below my age group average. They have a weird way of showing the shortfall through, they instead show what I have gained (or lost in this case) since I joined them almost two years ago. So despite the big gains in 2020 and 2021 I am down despite 14% of my salary going in a month. WOW!
Attachment 13858
I was in a conservative unit from before Covid but am now in a balanced growth unit. It is worth less than the Kiwico posted Australian male average for my age group (early 50s) though.
According to sharesight my KS has returned 1.5% pa after tax and fees since January 1st 2020….!
NZHerald does a pay subscription or registration block so can't read the article. But regarding on the effect of central banks, I would say the RBNZ vs the US Fed central bank would be a world of difference in terms of impact on the share markets. When interests rates go up in the US, it's usually the 'growth / tech' stocks that have NO earnings or massive losses that get punish the most. US stocks that are long well established with proven earnings regardless of the interest rate outcomes will weather the storm fairly. To illustrate this, just look at the the DOW Jones index which over 33,000 recently vs the crash of March 2020, it was around 18,000.
I can't really comment much on the Kiwi Savers that are solely invested on the NZX because all that convinces me to not touch any NZ companies is the fact that the NZ investment environment tends to prefer 'dividend payments' to shareholders instead of maintaining profits on the balance sheet which -> increases book value per share -> increase share price (which the capital gains are tax free ; note most NZ companies don't get the full 100% imputed dividend credit!! Guru investor Peter Lynch has said "over the long term there's a 100% correlation for a company's stock price to go up if their earnings continue to be booked in on the balance sheet". But pay those profits out and you will simply deflate the shareholder's equity.
The benchmark metric should be based on the market index return. So again, take the Dow Jones index today and compared to it back in 2020. It is still WAY HIGHER now than it was at the peak of 2020. There should be NO excuse for any fund managers that can't book a massive gain over the past 3 years. If they have managed to lose most of the gains in 2020 and 2021, then they must be invested in highly speculative stocks with no earnings. Many of the tech stocks on the Nasdaq have lost 70% of their value and on average, say 50% for the big common name tech stocks that have no earnings. Look at Roblox for eg that had a peak of $140 earlier in the year to be around $30 these past weeks.
@Bjauck: 1.5% since Jan 2020 to now??? That is a complete fail and your $ would have been better in the bank. The idiots in these fund managers always get their cut. As Buffet says, "The helpers help themselves"