Would appreciate some advice for a newbie

[justakiwi]

At the age of 55 (female, divorced, no children at home, working four days a week but renting) I've been seriously looking at my financial situation. I don't have a huge potential to save but I do have a regular savings plan set up and around $7000 of savings, currently sitting in the bank earning pathetic interest. I looked at the option of putting some into term deposit but the rates for those are also pathetic unless you have a significant amount of money. I have Kiwisaver but was a late starter with that so right now the balance is only around $16,000.

I have come to realize that I need to be more proactive and find a way to make what little money I do have, work better for me. I've made a decision (and have run this past an authorized financial advisor) to leave my Kiwisaver as it currently is - contributing 3% until I retire. I will just let it take care of itself but will probably change my plan (currently 50% balanced 50% growth) as I get closer to age 65. In the past I've tried to make extra manual payments to it as funds have permitted, but I no longer believe this is the best option. I think I am now better to look at alternative investment options to run alongside my Kiwisaver (that won't tie me in until I'm 65).

So ... I took the plunge yesterday and purchased my first 1000 shares (Kingfish Ltd). I am definitely a newbie to this (owned some shares many years ago but it was more for fun than as a serious investment) but I have spent the last few weeks researching companies, seeking advice from some trusted friends who have been investing in shares for many years, and generally trying to build a better understanding of how all this might work for me. I am looking at this holding as a long term investment focusing on growing my holding via dividend reinvestment, and will look to buying additional shares as funds permit, with the aim of building up to maybe 5000 shares. Alongside that the plan is to continue with regular savings and every time I accumulate another $1000 - invest that in additional shares with different companies (thinking maybe next time something outside of NZ).

As I said, the aim of this is to make what money I am able to save, produce (long term) better results for me than leaving it in bank deposits would. On top of that, I'm looking to diversify (both in terms of geographically and types of stocks). I would hope that as I build up a portfolio I will see some growth over the next 10 years until I reach 65.

I could really do with some advice or feedback on this as I'm flying solo with it. I am on my own making decisions for myself so it is really good to get some input from others with more experience than I have, as a way of seeing whether or not I'm on the right track. I would also be interested to hear opinions on ETF as an option for the next step in my plan, to stand alongside my Kingfish shares.

Thanks in advance for any comments!

[stoploss]

Congratulations on your savings ethic justakiwi and welcome .
There is a world of good advice on here and informative threads .
so you can do a lot of research , I would also recommend searching out some investment books at the public library .
One thing did alarm me " seeking advice from trusted friends" - and the best they came up with was Kingfish ?
IMO if you spend some time on here reading the history of various stocks and posters, you will be able to do a better job yourself . Good luck out there .

[justakiwi]

Re your alarm bells - I wouldn't say my friend told me to go with Kingfish. What she said was that she has invested with them for a number of years now (contributing to her overall portfolio) and she has been very happy with their performance over that time, particularly in terms of their dividend policy. She is aware that I only have a very small amount to invest right now, and she believed Kingfish would be a good way for me to build my holding via dividend reinvestment. I read through their policies and looked over their past performance and I made a calculated decision to "give it a go." As I said, I'm looking for long term growth that will (at the very least) beat what bank deposits could provide me. So I get what you're saying - no doubt you would have recommended something else, but the unfortunate reality for newbies is we have to throw ourselves in the deep end with that first trade and figure it out as we go along. I'm pretty sure most people have learned by trial and error and I'm prepared to do that - at least initially. Right now I can't afford to buy into companies with high share prices - which is why I'm considering going the ETF way next time. Maybe that is a better way to get a slice of the better companies for someone like me?

What are your thoughts on that idea?

P.S - my previous dabbling in shares was over 25 years ago. I had a couple of thousand shares in Brierley - at the time considered one of the companies to buy into. Needless to say that theory backfired on me

[stoploss]

Share prices that are high often go higher ...AAPl @ 10 dollars circa 2000, then $ 50 , then $ 100, then $ 200,300,400,500,600,700 , ........
I'm don't know a lot about ETF's , but search on here I am sure there is a thread . Re KFL have a read of the thread , take note post 266 ....

http://www.sharetrader.co.nz/showthr...&highlight=KFL

[justakiwi]

Thanks. I had actually already stumbled across that discussion while researching KFL. Who knows, maybe I made my first bad decision but I'm not going to stress about 1000 shares. I'll take whatever dividends come my way, in extra shares and will see what happens with them over the next year or so. The money I spent on them was making me nothing in the bank so I took the gamble.

Having said that, I've been browsing these forums for a while (before I joined up) and it is clear that there are some people here whose passion in life seems to be based around dissing other people's choices in shares. Often without offering any actual constructive advice on alternatives. I'm not referring to anybody who has posted in this thread - just making an observation based on what I've seen while browsing these forums. I guess over time hopefully I will be able to sort the wheat from the chaff and figure out which posters here are genuinely here to help newbies, and which ones are just here to stir ****/rant about particular companies. I'm a self confessed newbie who is here to learn. I am sure I will make mistakes along the way but sitting back watching my savings languish in the bank is no longer a viable option.

Thanks for the input everyone

[777]

Bear in mind that some posters have certain vendettas against some people. That post 266 on the above thread is by such a person. He pops up in a number of threads with a similar stance.

[Hectorplains]

Bear in mind that some posters have certain vendettas against some people. That post 266 on the above thread is by such a person. He pops up in a number of threads with a similar stance.

'Vendettas' is an emotive term. I appreciate some balance to the rah-rah-ramping. It's not substantiated, as he points out KFL has underperformed by over 130% against NZX50 since listing in 2004. That's a 12 year time frame - not much more than the 10 year one that op is working to. What odds a repeat performance in the next decade?

[justakiwi]

'Vendettas' is an emotive term. I appreciate some balance to the rah-rah-ramping. It's not substantiated, as he points out KFL has underperformed by over 130% against NZX50 since listing in 2004. That's a 12 year time frame - not much more than the 10 year one that op is working to. What odds a repeat performance in the next decade?

Yes, I get what you're saying. But for someone who has very little to invest (on the scale of things) Kingfish is performing well enough for me to make some growth on my investment. While I might make a better growth on NZX50 I don't really have enough to invest to take advantage of that better performance - can I buy enough shares for the amount I spent on Kingfish, to make any real headway?

Plus for me, the regular dividend policy made this an attractive way to achieve further shares to build my holding.

Is my thinking wrong?

[BIRMANBOY]

Utilizing dividend re-investment plans is a good way to compound your growth and with four dividends a year this also helps. One thing you will find on this forum is a broad spectrum of views and it will be obvious that many posters will be in a different position and circumstances to yourself so wise to read everything with a judicial viewpoint. My only comment would be to try and achieve some variety in your choices so you have a good diversified portfolio. How diversified ? Maybe not more than 10% in any one share. Since your circumstances require you to be a bit conservative, this could even out the chances of having a dud. If you are careful with your choices and timing you should be able to do several percentage points better than a TD without too much risk. As others have said keep researching and learning.

Yes, I get what you're saying. But for someone who has very little to invest (on the scale of things) Kingfish is performing well enough for me to make some growth on my investment. While I might make a better growth on NZX50 I don't really have enough to invest to take advantage of that better performance - can I buy enough shares for the amount I spent on Kingfish, to make any real headway?

Plus for me, the regular dividend policy made this an attractive way to achieve further shares to build my holding.

Is my thinking wrong?

[justakiwi]

Utilizing dividend re-investment plans is a good way to compound your growth and with four dividends a year this also helps. One thing you will find on this forum is a broad spectrum of views and it will be obvious that many posters will be in a different position and circumstances to yourself so wise to read everything with a judicial viewpoint. My only comment would be to try and achieve some variety in your choices so you have a good diversified portfolio. How diversified ? Maybe not more than 10% in any one share. Since your circumstances require you to be a bit conservative, this could even out the chances of having a dud. If you are careful with your choices and timing you should be able to do several percentage points better than a TD without too much risk. As others have said keep researching and learning.

Yes figuring out how to create diversity is a bit of a "head scratching" activity right now. Given the small amount I have to invest (which will grow but still be small compared to most) - I really have no idea what the best option is from here on. Am I better to focus on building my Kingfish holding to (say) 5000 shares, before I look at alternatives? Or should I be looking at company no:2 for my next saved $1000-2000? As per my previous posts I like the concept of ETF but there are so many to choose from - hypothetically, if I were to go with Smartshares, how do I decide which fund to go with? (SmartLarge, SmartSmall, SmartDividend etc; and then NZ, AUS, US etc). Right now I'm leaning towards SmartDividend (assuming dividends can be reinvested) as that seems like a good way to grow my small holding.

Lots to think about and lots more learning needed. Thanks for the help - really appreciate it.