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  1. #106
    Advanced Member
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    Sep 2009
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    Plus
    8)Interest on borrowing for dividend paying shares is tax deductible for investors
    9)The difficulty of being an investor is that there is only less than 10 companies listed in NZ that I would invest in & put in the bottom drawer
    10)The management team of the company is top priority.Are they aligned with investors?.Is there good succession planning?Has the company got a long history of lifting turnover while maintaining margins? Any doubt ,stay out.
    11)Investors benefit from compounding returns

    12)Conversely a trader should be seeking volatility.Any share/company could do.

  2. #107
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    364

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    I may of mentioned this before on a different thread but the facts are clear about traders and day traders back when I was studying Finance at uni as they are relevant today.

    Day traders are those on average that trade everyday and follow purely on 'technical analysis (charting)'. In the US the SEC has plentiful of data on every brokerage account of individuals that trade (this is to maintain regulations so no particular individual gets away with insider trading etc.). Anyways the data shows 2/3rds of the day traders lose money. Of the 1/3rd that can show a profit, maybe 1% can show a decent level of profit over the year. That's a high turnover. The traders that are less hyperactive say once a week or month, again, fall into a less extreme category. However, this group tends to lose the most in 'potential loss gains' ; that is thinking they sold at the high but the share price goes higher, so they're stuck buying at a higher price to get back in. Yet they're still on some profit, they could of made far more by not trying to buy and sell. From the NZ perspective, frequent trades = taxing of the gains. I highly doubt on a net basis, a person with peculiar stock picking or luck would maintain a higher gain than the long term investment approach that could go tax free. I mean right off the bat the tax rate of 10% - 33% + ACC tremendously eats into the gains on an annual basis.

    Those that invest, look to 'fundamental analysis' which is the looking of the company's financial statements and business outlook. If you follow Warren Buffet's advice, he says no one can 'consistently' pick stocks well enough to know they will beat the avg index market return ; consistently over a multi-year decade. That is why after his death, what ever is left after he's gifted most of his wealth away, the remainder will go into an index ETF like the Vanguard S&P500. Because to be able to pick individual stocks is really no different than gambling at the roulette table. Just look at all the Kiwi Saver actively managed fund trying to do the same gamble. They market themselves as having privy knowledge or inside info that gets them the better bet but at the end, the biggest losers are the clients.

  3. #108
    Advanced Member
    Join Date
    Sep 2009
    Posts
    1,503

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    Plus
    13)Inheritance:What share portfolio will be in your inheritance?
    An investment portfolio with set & forget companies
    OR a trading portfolio.Good luck with something only you can manage
    14)Diversity in a portfolio is the antithesis of returns.The more "spreading the risk" there is, the lower the expected return long term .The averaging out effect on returns
    Having cash,bonds TD in a portfolio over the long term(which is expected for retirement savings to lower volatility) lowers the returns by a considerable margin and increase the risk of lower returns long term

  4. #109
    Senior Member
    Join Date
    Apr 2008
    Location
    Kerikeri
    Posts
    1,394

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    Thought provoking posts SBQ.
    Thanks for taking the time.

    Quote Originally Posted by SBQ View Post
    Canada's choice of pension is a many but TFSA and RRSPs are not mandatory. I recall some years ago the Finance Minister of NZ wanted to make it compulsory for ALL workers in NZ to go into Kiwi Saver. In Canada RRSP is entirely up to you but most choose so because of the ability to defer tax and REDUCES the person's taxable income. I'm not sure if this is done for Kiwi Saver because the small 3% employer matching would make much difference to the person in NZ. I question, if the wage earner were to contribute 8% of their pay into Kiwi Saver, does THAT 8% lower their taxable income? Does IRD recognise you earned say $100K and can take $8,000 off that so your actual taxable income would be $92,000? In Canada they have RRSP contribution limits that you can carry forward if not used so you can have situations where 1 year a person pays so little income tax as they keep lowering their taxable income. I know the carry forword and back for contributions is not allowed in NZ.

    ....... etc

  5. #110
    Dilettante
    Join Date
    Mar 2010
    Location
    Down & out
    Posts
    3,283

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    I would like to suggest to any "newbies" (Ive been one for 25 years in this game) reading this thread, that they read Percys post 726 on the PAZ thread on the "Unlisted" section. It describes how millionaires are made in this game.

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