sharetrader
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  1. #1
    Junior Member
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    Oct 2014
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    Default low bank interest rates,...didveneds

    with the low rates of inrerest form the banks, who "trades" shares for dividends, .or is it better the buy and hold for a year or so?

  2. #2
    FEAR n GREED JBmurc's Avatar
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    Sep 2002
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    Central Otago
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    6,962

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    If your after yield you can't go wrong buying a diverse set of companies on the NZX .... likes the banks -retail-industry is what I would do if I was after a lower risk 6%+ income.. could even lend funds against property equity @ 3.5% to gross yield profit= 2.5%+
    People don't have ideas, ideas have people

  3. #3
    Member
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    Nov 2018
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    Christchurch
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    Quote Originally Posted by alliswell View Post
    with the low rates of inrerest form the banks, who "trades" shares for dividends, .or is it better the buy and hold for a year or so?
    Without taking on more risk? You're talking an entirely different approach and a different asset class. Chasing dividends as buying and selling the stock according to when they pay the dividend? Can't say for NZ listings but dividend payment highly depends frequency of payments and how long the record date and ex-dividend date are recorded. Some exchanges have very strict requirements for ex-dividend date (ie 1 business day before the ex-date). Again i'm uncertain what NZX requirements would be?

    Then there's a transaction cost where the NZ broker will hit you buying and hit you again when selling. Personally i'm not a fan of dividends and prefer assets with tax free capital gains. While some dividends can be fully imputed credit by IRD, they're rarely the case.

    Don't forget fund managers need to get paid, so any NZ base ETF you pick will also have gobs of fees. They won't be along the lines of the US Vanguard ETFs that run on avg 0.10% fee pa (with over $5 Trillion USD under mgt). I also find the NZ funds even the likes of Sharesies are not 100% transparent in their fee structure. They need to disclose their monthly portfolio trades (as a cumulative for all their clients) and net out the math so they are really achieving that kind of annual % returns like all Kiwi Saver funds etc. claim to return.

    Another issue is currency risk - just holding the NZD for the past 3 or 4 years would net you more loss than what the banks would of paid you in term deposit. As of today NZD not looking happy around the 0.63 range.

  4. #4
    Ignorant. Just ignorant.
    Join Date
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    Irresident
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    Quote Originally Posted by alliswell View Post
    with the low rates of inrerest form the banks, who "trades" shares for dividends, .or is it better the buy and hold for a year or so?
    Interest from bank deposits and dividends from shares are two different beasts.They have different risks, just as they have different advantages.

    Why would you limit yourself to only one or the other?

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