nz shares or property

[JBmurc]

As confirmed by JB they will extend revolving credit or OD secured over property for investing for income which may include shares, managed funds or ....
Interest rate will/likely be higher than normal mortgage.

I'm getting Res rates so 2.59% not only for the company loan (business + shares) but Commercial property as well ... but thats with Westpac many banks will try to screw you and charge higher rates

[SBQ]

Maybe you can clarify something for me - how are equities productive?
Buying initial shares in a new venture is productive but after that the company doesn't get a cut from the trading so how do they add to the company?
Sure, if they make another equity raise it helps to have a high share price but that doesn't happen a lot.

A rental property could be considered productive - they produce a lot of ongoing economic activity from property management to repairs and maintenance.

There's a lot of inconveniences owning a rental property ; the maintenance and rates, insurance, expense that eats the return on the rental income. Where does this leave in terms of overall productivity? Not a lot compared to ownership of a business that allocates the wealth in all different areas. Specifically if one that can be exported (no you can't export the land and house it sits on in NZ abroad). So from an economic potential, there's no way a house can out beat the productivity potential of tangible & intangible products that can have a global market exposure.

But don't take my word for it. Have a read below that puts NZ's productivity at the near bottom:

Or, and the economic issue that mostly drove the creation of this blog, New Zealand’s dismal long-term economic performance. In short, productivity growth (and the lack of it), and our continued decline relative to other advanced economies...

Sadly, the only realistic interpretation one can take is that the IMF thinks that over 2019 to 2025, on current government policies, New Zealand’s productivity growth performance – labour productivity and MFP – will be simply shocking. Most probably negative – the only way to square falls in real GDP per capita, unemployment returning towards normal, and a reasonable level of investment – and almost certainly far worse than in almost all other advanced economies, and especially far worse than the performance in the countries that were aiming to close gaps with the OECD leaders.

https://croakingcassandra.com/category/productivity/

Perhaps NZ's huge preference in owning real estate assets is part of the reasons of NZ's low productivity? I would believe so.

[fungus pudding]

There's a lot of inconveniences owning a rental property ; the maintenance and rates, insurance, expense that eats the return on the rental income. Where does this leave in terms of overall productivity? Not a lot compared to ownership of a business that allocates the wealth in all different areas. Specifically if one that can be exported (no you can't export the land and house it sits on in NZ abroad). So from an economic potential, there's no way a house can out beat the productivity potential of tangible & intangible products that can have a global market exposure.

But don't take my word for it. Have a read below that puts NZ's productivity at the near bottom:

Or, and the economic issue that mostly drove the creation of this blog, New Zealand’s dismal long-term economic performance. In short, productivity growth (and the lack of it), and our continued decline relative to other advanced economies...

Sadly, the only realistic interpretation one can take is that the IMF thinks that over 2019 to 2025, on current government policies, New Zealand’s productivity growth performance – labour productivity and MFP – will be simply shocking. Most probably negative – the only way to square falls in real GDP per capita, unemployment returning towards normal, and a reasonable level of investment – and almost certainly far worse than in almost all other advanced economies, and especially far worse than the performance in the countries that were aiming to close gaps with the OECD leaders.

https://croakingcassandra.com/category/productivity/

Perhaps NZ's huge preference in owning real estate assets is part of the reasons of NZ's low productivity? I would believe so.

Are you suggesting that all the houses in New Zealand should not have owners? Obviously that's not possible, so should they not exist at all? Perhaps all house owners should be compelled to own their own business, or be forced at gun-point to buy several thousand dollars worth of shares as well. If you don't think real estate should be preferred by so many, maybe once they have purchased some flats or something, they could be forced to attend a course in learning how to hate residential investments - although it soon comes quite naturally.

[artemis]

Are you suggesting that all the houses in New Zealand should not have owners? Obviously that's not possible, so should they not exist at all? Perhaps all house owners should be compelled to own their own business, or be forced at gun-point to buy several thousand dollars worth of shares as well. If you don't think real estate should be preferred by so many, maybe once they have purchased some flats or something, they could be forced to attend a course in learning how to hate residential investments - although it soon comes quite naturally.

Are you a Labour MP incognito? Maybe even a Minister? If not, please don't give them any more ideas.

[Sgt Pepper]

Are you suggesting that all the houses in New Zealand should not have owners? Obviously that's not possible, so should they not exist at all? Perhaps all house owners should be compelled to own their own business, or be forced at gun-point to buy several thousand dollars worth of shares as well. If you don't think real estate should be preferred by so many, maybe once they have purchased some flats or something, they could be forced to attend a course in learning how to hate residential investments - although it soon comes quite naturally.

Young Sgt Pepper remembers the first tenants who rented my Parents flats in London St Dunedin in the late 60s. A couple of female medical students, completely trashed their flat. My parents were justifiably outraged, certainly put Sgt Pepper off being a residential landlord. Most people are fine, but some are crazy

[SBQ]

Are you suggesting that all the houses in New Zealand should not have owners? Obviously that's not possible, so should they not exist at all? Perhaps all house owners should be compelled to own their own business, or be forced at gun-point to buy several thousand dollars worth of shares as well. If you don't think real estate should be preferred by so many, maybe once they have purchased some flats or something, they could be forced to attend a course in learning how to hate residential investments - although it soon comes quite naturally.

I'm stating in NZ, there's an exceedingly HIGH proportion of landlords (or people owning multiple houses) that serve to the low income earners that have no choice but to rent. The impression I get in NZ - when one speaks of investments, they talk none other than rental properties. That's how the rich get richer. Coming from Canada where their climate is extreme, houses are a necessity issue where the gov't have made it clear; don't turn houses into a commodity of profits but if you do, expect to pay dearly in taxes. Maybe Ms Ardern could learn something about the Cdn tax system as there's no shortage of people owning their OWN home. But certainly no where near as any of the mom & pop / landlords we see here in NZ. That's because the Cdn gov't has made investing for retirement through the share markets and unlike the taxable gains on a house ; pension / retirement plans practice 'deferred taxation'. Something few financial advisors in NZ know about.

Again the issue is simple and i'm not raining down on those owning multiple residential properties as their means for retirement. I ask why is it only the rich in NZ, on most part, get the tax advantage by owning residential properties while for the middle class, the NZ gov't throws them a doggie bone (a la Kiwi Saver) which is taxed more ?? I remembered clearly, Ms Ardern few years ago in her campaign that "NZ needs a more fair tax system". Now her motive has changed to introduce no new taxes (apart from another tax bracket on the higher income earners).

[Bjauck]

Maybe you can clarify something for me - how are equities productive?
Buying initial shares in a new venture is productive but after that the company doesn't get a cut from the trading so how do they add to the company?
Sure, if they make another equity raise it helps to have a high share price but that doesn't happen a lot.

A rental property could be considered productive - they produce a lot of ongoing economic activity from property management to repairs and maintenance.

One gauge of productiveness would be the amount of taxable income produced from your investment.

When you buy a second-hand house or shareholding, your investment is in an established business, and the previous owner then has the settlement money to reinvest into another project.

How much of your purchase price is for the purchase of residential land? High land valuations would mean more of resources would be diverted from productive aspects or improvements.

@SBQ - I agree with your red and green synopsis and post.

[dobby41]

There's a lot of inconveniences owning a rental property ; the maintenance and rates, insurance, expense that eats the return on the rental income. Where does this leave in terms of overall productivity? Not a lot compared to ownership of a business that allocates the wealth in all different areas. Specifically if one that can be exported (no you can't export the land and house it sits on in NZ abroad). So from an economic potential, there's no way a house can out beat the productivity potential of tangible & intangible products that can have a global market exposure.

There is a lot of hassle owning a rental and when you have several you get someone in to manage that hassle - this pays wages for PMs, maintenance, improvements. All this contributes to the productive economy.
Owning a business is something most don't do - they own shares.
This thread is shares verses property - not business verses property.
I buy a share and I have no hassle - I don't have to do a thing. No productive output at all.
If I buy in the IPO I might be helping to get a new business off the ground - useful. But from then on any share sale is just rearranging what already exists.

[dobby41]

One gauge of productiveness would be the amount of taxable income produced from your investment.

When you buy a second-hand house or shareholding, your investment is in an established business, and the previous owner then has the settlement money to reinvest into another project.

How much of your purchase price is for the purchase of residential land? High land valuations would mean more of resources would be diverted from productive aspects or improvements.

@SBQ - I agree with your red and green synopsis and post.

Valid points.
What does 'productive' mean? I was thinking of economic activity rather than tax.

[Bjauck]

Valid points.
What does 'productive' mean? I was thinking of economic activity rather than tax.

Economic activity producing income is usually taxable. A shareholding providing equity in a business engaged in economic activity is a productive investment as without the equity the business would not function.