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  1. #1
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    Default Why do you invest in shares?

    This forum is called “Share Trader” which made me think about why we invest in the share market. I am curious to know why you all invest in shares? Do you consider yourself a “trader” with the aim to make a profit buying and selling? Are you an “investor” looking for long term returns? Someone wanting retirement income? Or just someone looking for a better place than banks to leave your money? Or a mix of some or all of the above?

  2. #2
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    If I had no overseas experience and background and just lived in NZ only knowing about NZ options for investment; then I would only invest in NZ real estate. For the simple reason of tax free capital gains.

    You should see what people do for retirement & investment planning in N. America. It makes NZ look like a joke, seriously Kiwi Saver? A vehicle of retirement planning where the managed funds pay tax on their gains annually + mgt fees? In Canada registered accounts compound TAX FREE every year. Upon drawing funds out of the portfolio / account, then you pay the tax on the gains. Want to sell $20K or $200K of stocks is entirely up to you to reflect your level of income on that year. Because in Kiwi Saver what point is being at age 70 with an account that has grown little despite withdrawals are tax free?

    Hence, the key reason why NZ real estate is still the #1 form of investment for people in NZ. If Jacinda had put in capital gains tax in NZ, then perhaps capital would flee from NZ. She must of figured this out so called off the CGT despite the TWG advising NZ should have CGT.

  3. #3
    Reincarnated Panthera Snow Leopard's Avatar
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    Quote Originally Posted by justakiwi View Post
    This forum is called “Share Trader” which made me think about why we invest in the share market. I am curious to know why you all invest in shares? Do you consider yourself a “trader” with the aim to make a profit buying and selling? Are you an “investor” looking for long term returns? Someone wanting retirement income? Or just someone looking for a better place than banks to leave your money? Or a mix of some or all of the above?
    For me, the short answer is "Yes" to all.

    Historically I have been a long term investor looking for the best total returns of capital growth plus dividends but when time and circumstances have allowed I have engaged in a little trading. Having generally out-performed the markets over the years it has been something worth spending my time on.

    Since the start of this year investing is the sole source of income for my partner and I.
    Given that our primary goal is to travel as much as we can while we can combined with the current environment of low interest rates and generally high stock valuations I am currently of the opinion that it will be necessary to adjust to a different, more short term style of investing/trading, in the next few years and accept that there will times of drawing down on our capital.
    om mani peme hum

  4. #4
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    Started 2011 buying shares through ASB as had too much in term deposits, good % interest tho, and in nothing else. Considered that I had too little spread of money after selling a property. Just in case interest rates dropped!! Ceased working so was more focused on passive income that possibly people still working. Now 62. NZ companies paying good dividends mostly at the time so kept the passive income quite reliable. Currently net wealth spread between house, term deposits and shares equally. Good amount of cash that should cover living for at least 12 months as well.

  5. #5
    FEAR n GREED JBmurc's Avatar
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    I First had a interest in shares couple years after I left school and was enticed to make more than my savings account was giving ... as you did 15yrs+ ago I went to a broker Craig & Co ...

    where I got a taste of the idea of making big capital gains (well thats what I was sold by the broker) fact was the shares he pushed me did woeful , so I pulled the funds and went my own way thanks to "Access brokerage" which was brilliant to give me the trading bug ... ended up doubling my funds first year invested and doing pretty well the second year ... no long after accountant talked me into setting up a company and becoming a tax paying trader.

    I really enjoy share trading and doing my best to reach my 100%pa goal I even use borrowed funds to leverage my returns

    I do plan to build another seperate portofilo of my own capital with the focus of long term investment chasing yield over Cap gains.
    People don't have ideas, ideas have people

  6. #6
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    Definitely consider myself as an investor.I like the liquidity of shares but typically set & forget.
    Trading takes too much time & energy
    I remember the days
    https://www.nzherald.co.nz/indepth/b...-market-crash/

    Dibbled in residential property but again takes too much time & definitely wouldn't consider it for retirement
    Do have rural property but its not liquid and needs very long 20 + years investment horizon.Just as much a hobby as an investment.
    Last edited by kiora; 12-08-2019 at 12:16 AM.

  7. #7
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    Thanks everyone. Really interesting reading all your comments

  8. #8
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    I invest to give myself long term financial security. Long term goal is to have passive income. I started investing into individual shares, some were good some bad. But just don't have the time to spend doing the research. So I now have set AP's that go to Smartshares, Investnow and Sharesies each month. This is working great for me. I make sure there is enough money each month for when the AP's need to go out, so it has been good compulsory savings. My number 1 rule, is to never touch the capital I have put in. I also intend at the next financial dip to put more in.

  9. #9
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    So are you investing in ETFs via these three?

    Quote Originally Posted by Pipi View Post
    I invest to give myself long term financial security. Long term goal is to have passive income. I started investing into individual shares, some were good some bad. But just don't have the time to spend doing the research. So I now have set AP's that go to Smartshares, Investnow and Sharesies each month. This is working great for me. I make sure there is enough money each month for when the AP's need to go out, so it has been good compulsory savings. My number 1 rule, is to never touch the capital I have put in. I also intend at the next financial dip to put more in.

  10. #10
    An Awesome Cool Cat winner69's Avatar
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    There was a woman on the radio the other night who asked her friend why she has a long overseas trip every here - her friend says she has shares

    So the woman said she knew nothing about shares (completely ignorant she said) but rang up a sharebroker and said I need to get some shares so I can have an overseas holiday every year.

    She said she gave the sharebroker $100,O00 to buy shares and rings him up once a year to get $10,000 to go an overseas trip.

    She’s got no idea what shares she has but the main thing is ‘she has shares’ and gets enough cash for an annual overseas trips. One lucky punter

    That’s why that woman invests in shares
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  11. #11
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    Quote Originally Posted by SBQ View Post
    If I had no overseas experience and background and just lived in NZ only knowing about NZ options for investment; then I would only invest in NZ real estate. For the simple reason of tax free capital gains.

    You should see what people do for retirement & investment planning in N. America. It makes NZ look like a joke, seriously Kiwi Saver? A vehicle of retirement planning where the managed funds pay tax on their gains annually + mgt fees? In Canada registered accounts compound TAX FREE every year. Upon drawing funds out of the portfolio / account, then you pay the tax on the gains. Want to sell $20K or $200K of stocks is entirely up to you to reflect your level of income on that year. Because in Kiwi Saver what point is being at age 70 with an account that has grown little despite withdrawals are tax free?

    Hence, the key reason why NZ real estate is still the #1 form of investment for people in NZ. If Jacinda had put in capital gains tax in NZ, then perhaps capital would flee from NZ. She must of figured this out so called off the CGT despite the TWG advising NZ should have CGT.
    SBQ, I think you've been misinformed. You don't pay any capital gains tax on shares in NZ if they're held in a PIE fund (which pretty much all NZ based managed funds, ETFs and Kiwisaver funds are), or if you're classed as a long term investor rather than a trader.

  12. #12
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    Quote Originally Posted by justakiwi View Post
    So are you investing in ETFs via these three?
    Yes I have, only 1 with Smatshares, most of them with Investnow and a few with Sharesies to have a play.

  13. #13
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    I’m pretty impressed with Sharesies so far. Great option for beginners.

    Quote Originally Posted by Pipi View Post
    Yes I have, only 1 with Smatshares, most of them with Investnow and a few with Sharesies to have a play.

  14. #14
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    Quote Originally Posted by justakiwi View Post
    I’m pretty impressed with Sharesies so far. Great option for beginners.
    Yes it is. I find it quite addictive too, you can buy small parcels of shares and have them that day, wow. I also have my 13 year old daughter put $30 out of her pocket money into sharesies once a month. I'm hoping it is something she will get into the habit of and keep doing for the rest of her life.

  15. #15
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    Quote Originally Posted by Tronald Dump View Post
    SBQ, I think you've been misinformed. You don't pay any capital gains tax on shares in NZ if they're held in a PIE fund (which pretty much all NZ based managed funds, ETFs and Kiwisaver funds are), or if you're classed as a long term investor rather than a trader.
    From the individual IRD tax resident's point of view, correct. But from the whole picture point of view, the PIEs and various NZ operated fund managers, Kiwi Savers, etc. pay the tax on their gains and incomes annually. These actively managed funds are essentially 'traders' and by definition, all their short term gains made are taxable. This is a HUGE difference to the managed funds in N. America where under registration, and work in with a employee payment contribution plan (like Kiwi Saver), the daily trades these funds operate do NOT pay any taxation whatsoever. What makes it more compelling is the gains are compounded tax free year after year until the where the client chooses to make a withdrawal, then a sale is made and capital gains is elected to pay tax on. As I mentioned before, it's far more elegant for the senior retired person to choose HOW MUCH they want to pay in tax each year by according to their lifestyle. Not a system where in NZ, investors are stuck indirectly paying tax every year in these managed funds regardless of their financial situation (young or old).

    Now to keep on topic, it's clear that NZ investors into shares directly or in a managed fund, are at a clear tax disadvantage than those living in Canada or in the US. Also it makes it hard to have shares as a great investment when alongside, we have NZ real estate that gets the tax free tick for the long haul investment.

    Again, find me some figures where Auckland real estate has done worse than NZ shares (NET OF TAXES and or mgt / admin fees) in the past 10 years? I've seen some graphs in the past where shares have done better than NZ real estate but none that include taxation on the share gains and the RWT on dividends 'net' of returns. While I often hear those that have gone into Kiwi Saver complaining that they're not getting the expected compounded returns as they intended; mostly on part because they chose the wrong investment category (ie. aggressive / conservative mix with term deposits lol).
    Last edited by SBQ; 12-08-2019 at 02:00 PM. Reason: clarifying

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