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  1. #81
    Aspiring to be an Awesome Bear
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    Quote Originally Posted by justakiwi View Post
    (Moved from the Heartland thread as don’t want to hijack that one.)


    As a beginner I struggle so much with threads like this one. I’m constantly asking myself “if all of these experienced investors have such vastly different perspectives/opinions on a particular company, how on earth am I ever going to get my head around it to the point where I can make good decisions about my investments?”


    I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!

    You started a great thread justakiwi, there are lots of interesting posts on here

  2. #82
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  3. #83
    Guru justakiwi's Avatar
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    This is awesome. Thank you! Signing up for the free courses for sure

    Quote Originally Posted by percy View Post

  4. #84
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    Quote Originally Posted by GTM 3442 View Post
    If you read a single book, and then follow only the ideas in that book, then you will eventually come unstuck. Whatever system you have or follow, there will be a set of circumstances where it will be almost exactly the wrong thing to do.

    The trick is to read everything you can lay hands on, change your ideas as time slithers by, and then diversify among the various ideas you have come across as you read more and more.

    Variety is the spice of life. I think one of the blokes at Mauldin Economics said something like ". . . you should diversify across strategies as well as asset classes. . . ".
    I've read many books in the past. Now, I prefer someone smarter, Warren Buffet already has read the books and what he conveys is smart enough. How many ways does it take to show the people how much of a scam 'salesmanship' has been in the selling investment packages for the newb investor?

    Diversify across all asset classes? Man, if that was true i'm sure many would of outdone Buffet's track record. But I will EAT my own shoe if the markets hold a 'strong form of market efficiency' for which diversification to work well. Market Efficient Hypothesis is just like EBITA - the same BS crap that they teach at business schools.

  5. #85
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    So this Buffet bloke, he just buys the index then?
    om mani peme hum

  6. #86
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    PS: It is EBITD​A
    om mani peme hum

  7. #87
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    Quote Originally Posted by Snoopy View Post
    ..

    I think it is not unusual for capital gains to be taxed at a lower rate than income. When capital gains tax was introduced in Australia it was to be taxed at half the rate that income was taxed at. Why? Because not all of the capital gain was capital gain above the rate of inflation. Taxing capital gain at half the income tax rate was the ATOs way of adjusting the tax take to reflect the capital eroding power of inflation.

    AFAIK Australia and NZ are the only two countries that give individual shareholders credit for tax paid by any company they hold shares in as an entity. Tax has already been paid at the corporate rate by US companies at least, before any dividend is paid to shareholders. I wonder if the lower tax rate paid on Canadian dividends is Canada's way of accounting for this?
    Actually capital gains in Australia was not treated like in Canada in the past. They use to take the full gain less an inflation factor % figure. Early 2000 my uncle in Australia was asking how Canada treated CGT and it was clearly different. But it seems that Australia has gone to the Cdn way as it was more simple to half the gain for taxable income instead of looking at inflation tables for each year in the past.

    With the tax treatment in Canada you have outlined, I can understand why you object to the tax paid under the New Zealand system SBQ! If you pay no tax at all in your Canadian TFSA, even upon redemption, it is hard to imagine any other country being able to compete with that. I guess there must be some restrictions on TFSA though. I presume you can only take money out of it once you hit 65? Is there a limit on the amount of money you can put into a TFSA?
    Hard to imagine? The US has ROTH IRA. The UK has the ISA. All in the form of being tax free investing so this is nothing new. The TFSA came later (only started 10 years ago) only restriction is how much funds transferred in each year. On it's initial introduction it was $5,000 per year, then gradually rising to match inflation (indexed to inflation) to now $6,000 for 2020 contributions. There was 1 year that was $10,000 allowed to be moved in but that was a special year. The restrictions on most part in a TFSA don't really affect the typical investor. Such as say if a person had inside information and bought a penny stock and it grown to like 10,000% fold. Well such penny stocks aren't eligible for TFSA as they don't trade on a reputable stock exchange. So TFSA limit certain equities around the world and I believe the NZX is not allowed (who would?) but most trade the TSX and NASDAQ/NYSE with no issues.

    NO restriction when you can sell up and withdraw regardless of age AND the gains are locked in. That is say you had $100,000 balance and like $40,000 of gain, well you don't lose that $100K balance in the following year. You withdraw the full $100K this year, then wait next year and can put BACK that $100K + (the annual contribution of that year) and resume investing.

    But here's the real reality. How many people do you know who can put aside $6,000 in savings per year out of their wage / salary? This is the real deal because MOST people can't and when Justin Trudeau came in as PM, he criticised that TFSA was only an investment vehicle for the RICH. The only reason we have Kiwi Saver is simple, people don't know how to save so by taking a portion off their weekly / monthly pay essentially forces them to save ; (same deal in Canada's RRSP).

    As a matter of interest, the max contribution you can put into an RRSP is 18% of the annual income. Many high income earners do this in Canada despite their employer would only match 8% or less. But there are some companies that do.

    Now going back to TFSA, well say if you wanted to open one up now but never invested before. If you were over 18 in 2009, you do not LOSE the past contributions. The total of those years $69,500 which means you could move in THAT amount to start investing, and this 'contribution amount' continues to grow in future years that you do NOT contribute savings to. So what the gov't is saying that you're not restricted because you don't have funds to invest in 1 year or another; they're giving you the break that in future years you may come across some large sum of savings and you can apply that amount to the past years that you didn't use up.

    The sad reality is clear. The NZ investor is going to have less of an AFTER-TAX share investment than the Canadian in the many decades to come.

  8. #88
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    Quote Originally Posted by Snow Leopard View Post
    So this Buffet bloke, he just buys the index then?
    Upon his death, for what is left after he's gifted all his wealth, he's instructed to invest only in the index ETF.

    https://www.marketwatch.com/story/wa...nds-2014-03-13

    "
    My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers."

    Why? Because as he's explained before, there exists no fund manager that can prove otherwise of consistently beating the index return.

    Also some of you may ask why has Buffet been able to beat the market index for MOST of the years since he took over Berkshire? I mean it's like he's speaking in contradiction to himself. It's because his caliber to investing differs to managed fund. For eg. brokering deals for merger and acquisitions, being able to led out cash at obscene rates, the list goes on and you can bet NONE of the Kiwi Saver funds would be in any position to make such deals. During the GFC, Goldman Sac needed $$... so they went to Buffet, in return he demanded 10% on the $ + with warrants and options. You can bet the strike price on the options deal with GS was to his terms. So all these gravy incomes come into Berkshire that benefit the shareholder. As his right hand man said to Buffet at the at their AGM some years ago, "Why are you telling the audience this?.. they've essentially done better than the index ETF by buying Berkshire".

  9. #89
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    Quote Originally Posted by SBQ View Post
    Actually capital gains in Australia was not treated like in Canada in the past. They use to take the full gain less an inflation factor % figure. Early 2000 my uncle in Australia was asking how Canada treated CGT and it was clearly different. But it seems that Australia has gone to the Cdn way as it was more simple to half the gain for taxable income instead of looking at inflation tables for each year in the past.
    Yes the Howard government overhauled the Australian CGT system in 1999. The previous system that was introduced in 1985 had a CGT linked to gains above inflation. The 1999 changes meant that taxpayers paid their capital gains at rate equivalent to 50% of their marginal income tax rate. There was a transition period as well where taxpayers could choose whether they paid their CGT under the new or old systems.

    SNOOPY
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  10. #90
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    Quote Originally Posted by SBQ View Post
    The US has ROTH IRA. The UK has the ISA. All in the form of being tax free investing so this is nothing new. The TFSA came later (only started 10 years ago) only restriction is how much funds transferred in each year. On it's initial introduction it was $5,000 per year, then gradually rising to match inflation (indexed to inflation) to now $6,000 for 2020 contributions. There was 1 year that was $10,000 allowed to be moved in but that was a special year. The restrictions on most part in a TFSA don't really affect the typical investor. Such as say if a person had inside information and bought a penny stock and it grown to like 10,000% fold. Well such penny stocks aren't eligible for TFSA as they don't trade on a reputable stock exchange. So TFSA limit certain equities around the world and I believe the NZX is not allowed (who would?) but most trade the TSX and NASDAQ/NYSE with no issues.

    NO restriction when you can sell up and withdraw regardless of age AND the gains are locked in. That is say you had $100,000 balance and like $40,000 of gain, well you don't lose that $100K balance in the following year. You withdraw the full $100K this year, then wait next year and can put BACK that $100K + (the annual contribution of that year) and resume investing.

    But here's the real reality. How many people do you know who can put aside $6,000 in savings per year out of their wage / salary? This is the real deal because MOST people can't and when Justin Trudeau came in as PM, he criticised that TFSA was only an investment vehicle for the RICH. The only reason we have Kiwi Saver is simple, people don't know how to save so by taking a portion off their weekly / monthly pay essentially forces them to save ; (same deal in Canada's RRSP).

    As a matter of interest, the max contribution you can put into an RRSP is 18% of the annual income. Many high income earners do this in Canada despite their employer would only match 8% or less. But there are some companies that do.

    Now going back to TFSA, well say if you wanted to open one up now but never invested before. If you were over 18 in 2009, you do not LOSE the past contributions. The total of those years $69,500 which means you could move in THAT amount to start investing, and this 'contribution amount' continues to grow in future years that you do NOT contribute savings to. So what the gov't is saying that you're not restricted because you don't have funds to invest in 1 year or another; they're giving you the break that in future years you may come across some large sum of savings and you can apply that amount to the past years that you didn't use up.

    The sad reality is clear. The NZ investor is going to have less of an AFTER-TAX share investment than the Canadian in the many decades to come.
    One area where NZ seems to differ to the UK and Canada at least is that income earners in the latter two jurisdictions have a choice between contributing to a government regulated 'investment scheme' or a government regulated 'pension scheme'.

    https://www.moneysavingexpert.com/sa...lifetime-isas/

    In the UK if you invest in a 'pension scheme', then at age 55 (rising to 58) you can only take out 25% of your pension scheme as a lump sum. The rest is paid to you as income and you pay tax at your marginal rate on that. Pension scheme contributions are made from pre-tax income. So with a pension scheme you do pay tax eventually but at normally at a lower rate because your income is lower in retirement. Furthermore employers are required to top up any employees pension scheme at a rate of 3% of salary.

    However with the ISA which is more an 'investment scheme' your contributions are made after paying income tax. With the pension investment scheme ISA, the LISA, The maximum amount you can save per year is £4,000 (c.f. ten times that for a pension scheme). There is no top up from employers and you have to wait up to five years longer (at age 60) to access it. Why should you need to access your LISA early? You will have to pull money from your LISA before getting access to any pre-retirement age benefit entitlements. Having to do that could decimate your retirement savings.

    Both schemes have a state contribution of 25% to top them up. However, if you have to access your LISA early this must be paid back. Higher-rate taxpayers get tax relief at 40% in a pension. So to contribute £100 only costs them £60 – easily beating a LISA.

    Is that SBQ 'Pension vs LISA comparison, somewhat akin to the difference between the Canadian TFSA and RRSP?

    It looks like the good old Kiwi taxpayer does have some advantage over the UK saver at least.

    1/ Kiwisavers can take out all of their savings in a lump sum if they want to once they reach the qualifying age. There is no tax to pay at that point.
    2/ No government subsides have to be paid back if the Kiwisaver is reclaimed early due to hardship.
    3/ You can go on a benefit without being forced to withdraw your Kiwisaver.
    4/ There is no limit to annual contributions
    5/ No restrictions on Kiwisaver providers on markets they can invest in.

    So really the average punter with a Kiwisaver account is not as badly off relatively as you make out?

    SNOOPY
    Last edited by Snoopy; 20-01-2020 at 08:59 AM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

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