Investing for the long term - a wise choice right now?

[Kernel]

To be clear, all NZ PIE funds are required to calculate FIF tax using the Fair Dividend Rate (FDR) method. The end investors balance is not a determinant in the calculation - so no matter how much you invest into an NZ PIE fund with global exposure, you will be paying FIF under the FDR method.

[Kernel]

Exactly, there is a lot more to consider than just the TER/MER. There is also the potential tax leakage to consider when investing offshore, especially if you are buying Aus based products that offer exposure to the US market.

I've looked at ASX listed ETFs but once you take into account broking fees and forex spreads they're not that cheap. The TER can be quite a small part of the total expenses of investing in offshore ETFs. e.g. one of the local online brokers charges up to 1.5% each way for forex trades.

[morphs]

Exactly, there is a lot more to consider than just the TER/MER. There is also the potential tax leakage to consider when investing offshore, especially if you are buying Aus based products that offer exposure to the US market.

Would you mind explaining how the tax leakage arises? Does this still occur if you buy the US ETFs directly rather than via the ASX equivalents?

[Kernel]

Would you mind explaining how the tax leakage arises? Does this still occur if you buy the US ETFs directly rather than via the ASX equivalents?

One of the issues is US withholding tax. Indirect purchases (i.e. the type of products discussed) may be unable to claim back the withholding tax credit, meaning that the US withholding tax on the distributions are taxed at 30% rather than 15%.

[SailorRob]

Great thread. On the topic of Smartshares, does anyone know why the quoted PE ratio of the smartshares NZX 50 fund (NZX FNZ) is only 7? I though the PE of the fund should roughly match the PE of the index which must be far higher than that. Also on the topic does anyone know the mechanics of the NZX 50 PE ratio as commonly quoted, i.e. how is it calculated?

Thanks

[Tronald Dump]

Great thread. On the topic of Smartshares, does anyone know why the quoted PE ratio of the smartshares NZX 50 fund (NZX FNZ) is only 7? I though the PE of the fund should roughly match the PE of the index which must be far higher than that. Also on the topic does anyone know the mechanics of the NZX 50 PE ratio as commonly quoted, i.e. how is it calculated?

Thanks

Basically, the quoted PE on Smartshares ETFs is the last 12 months return in cents (in this case, around 43 cents per share) divided by the current price. It's not the same as the PE on an individual company so is not an indication of 'value'.

[greater fool]

Covid-19 changed everything............

[macduffy]

It's just a teaser before the big election campaign spend-up. Nothing unusual in that.

[Kernel]

Suspect some of you will find this, and our other blogs, worthy of discussion:
https://kernelwealth.co.nz/time-the-stock-market/

[Zeitgeist]

Hi Greater Fool,

Leaving aside the politics, do you not think economies around the world could do with some Keynesian pump prime spending at the moment? Granted, the K word has been a naughty word since the 1980s, but I don't think even the most Ardent(!) supporters of monetarism would say that system has been a roaring success between 2008-2019. I'm in favour of a bit of Government spending at the moment, we've got the balance sheet to do it and a massive backlog of infrastructure projects to complete just to bring it up to first world standards. The key will be in ensuring robust business like decisions are made with the cash and also that the debt/gdp ratio is not breached.

Perhaps in addition to responding to the above you could enlighten us how you would spend say a $20,000 tax cut?