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  1. #1
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    Default The beginners struggle

    (Moved from the Heartland thread as donít want to hijack that one.)


    As a beginner I struggle so much with threads like this one. Iím constantly asking myself ďif 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?Ē


    Iím not criticising or complaining, just making an observation. Investing is really fun but heck itís hard!

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    Everyone has different goals, situations and investment methods. It is not about being right or wrong but about finding out and deciding what suits your personal circumstances. I feel much better informed when I see debates like we've seen recently on the HGH thread for example, agree with some and not others. But in the end make my own decision based on what I belief suits my investment style and goala

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    Quote Originally Posted by justakiwi View Post
    ....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?”
    This is the very same question I ask myself regularly even though I have been investing longer than I care to remember and it is our only source of income.

    Quote Originally Posted by justakiwi View Post
    I’m not criticising or complaining, just making an observation. Investing is really fun but heck it’s hard!
    It can be as easy as making regular payments into a fund or range of funds through good times and bad.

    But I take the hard road and do my own and it can be fun.

    Forums such as this and the opinions on them have very little influence on my decisions.
    Sometimes the chatter alerts me to companies I should take a look at, but they are mainly just part of the fun, especially when you are in cafe because it is raining cats & dogs outside.
    om mani peme hum

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    One must always take comments on all forums and even media plus Company mgmt. with a grain of salt ... you must make up your own viewpoint why you want to ,or not invest in "said" company and what your target price is to sell(+stop loss point) or are you happy to hold for the Long term for the yield etc ...

    Coming up 15yrs trading the market and I look back on myself as a much more emotional investor when I started always caring what other though of what I was invested in .. companies I really liked and put to others I just didn't want to sell even when they look to be on the wrong path ... emotional attachment the hunt for peer approval is the worse path to take in investing/trading
    People don't have ideas, ideas have people

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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!
    The beginners struggle is a marathon not a sprint and should not be shortchanged, by learning from your mistakes you will become a better investor or trader, most on forums like this are quick to announce all their successes but few are willing to admit their mistakes openly. The market is a complex beast and will always have a new lesson to teach you so always stay humble and be thankful for your succeses, be wary of greed driven hype. PS- I call trading fun not investing, the former is like a double espresso and the latter like a flat white, I do both.

  6. #6
    Possum in the headlights Beagle's Avatar
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    A good idea for starting out might be to simply tap into the collective wisdom of others.
    https://sites.google.com/view/nzshar...020-commentary
    Top 15 shares picked by people on here is probably more likely than not to give you very close too, or slightly better than market performance.

    Reality as a newbie is any shares you pick yourself is unlikely to beat the collective wisdom of some very experienced investors on here.

    Add additional picks you like during the year as funds allow.
    Last edited by Beagle; 05-01-2020 at 07:30 PM.
    No butts, hold no mutts, (unless they're the furry variety).

  7. #7
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by Beagle View Post
    A good idea for starting out might be to simply tap into the collective wisdom of others.
    https://sites.google.com/view/nzshar...020-commentary
    Top 15 shares picked by people on here is probably more likely than not to give you very close too, or slightly better than market performance.

    Reality as a newbie is any shares you pick yourself is unlikely to beat the collective wisdom of some very experienced investors on here.

    Add additional picks you like during the year as funds allow.
    Yes 15 NZX shares make up 50% of the picks ..shows how tiny the NZX is..

    I see the ASX our closes market is 14x times larger in value (yet Aus population is only around 5x times larger than NZ)
    Last edited by JBmurc; 05-01-2020 at 08:27 PM.
    People don't have ideas, ideas have people

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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!
    I think that if you are looking for investments that everyone can agree on as a 'good' investment at a 'good' price then you might be looking for while. A market requires a buyer and a seller on either side of a transaction. If everyone agreed, then as a buyer you would have no-one willing to sell to you!

    Both Beagle and I make assumptions when we came up with our own fair valuation of Heartland. We both document what these assumptions are. But assumptions require some degree of judgement. It is up to you to decide if you believe in the judgement of that poster on the day. If you have a different assumption then take out whatever figure(s) the poster has put in their modelling and put in your own figure(s). Then crank the handle of the valuation model and see what comes out.

    As you continue to read that Heartland thread, you will no doubt find that Beagle's and my position on a fair value for Heartland shares are not as different as you might have thought.

    SNOOPY
    Last edited by Snoopy; 11-01-2020 at 10:12 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

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    Yep. Already beginning to see that. Thanks everyone for your input.

    Quote Originally Posted by Snoopy View Post
    As you continue to read that Heartland thread, you will no doubt find that Beagle's and my position on a fair value for Heartland shares are not as different as you might have thought.

    SNOOPY

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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!
    Investing is not hard. The problem with investing (for most part in NZ), is the misinformation spread among the masses and the way the NZ gov't taxes it. They spread the myth that share investment is difficult and should only be left to the experts ; and therefore you should look only at Kiwi Saver funds and not invest directly abroad individually. This is very different to the models overseas (for which are more transparent).

    Warren Buffet for decades reminds investors that all you have to do to win the investment retirement game is buy a low cost S&P500 index fund and wait, and "just forget about it". However, he has a big problem with those 'active or managed' funds that claim to have superior returns when the stats show nearly all of them do worse than the benchmark index return.

    In his Berkshire Hathaway fund he's done exceptionally well over a typical person's retirement time frame, and as he explains in this interview that they don't have any need to wanting to swing (or make a move to buy or sell shares):

    https://www.youtube.com/watch?v=qsV3NPGqBgY

    and this is an older video but his principals still apply today. Of course for the NZ perspective, you would be a fool to limit your investment only to the NZX. But because the way the NZ tax is structured, there 'may' be a tax incentive for buying NZ shares. I disagree with this incentive as the investment environment in NZ is geared towards dividend payments for which is taxed no different than dividend payments received on foreign shares.

    Following link Buffet reiterates the importance of keeping management fees down (and indirectly from the NZ perspective, keeping taxes down). Unfortunately for the NZ residents, we are stuck with FIF which imposes a 5% FDR on the entire fund portfolio value - effectively acting the same as a 5% management fee as you lose compound returns):

    https://www.cnbc.com/2017/05/12/warr...-the-time.html

    Of course most people have the instinct that they can do better returns than the index. They have an inclination to believe pick this stock is good, and after a year later when it shows that move is not looking so well, they tweak it, because they don't want to make themselves look bad year after year, and the same pitch keeps going on while investors are not fully understanding what's going on. Few years ago i asked some local financial advisors on the implication of taxation on such NZ managed funds etc. and they all say I need to look to a tax specialist. I mean get real, I want to know how much of the FIF / FDR each managed fund is paying and how much of their claimed % return on their prospectus accounts for taxation?

  11. #11
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    Quote Originally Posted by SBQ View Post
    Following link Buffet reiterates the importance of keeping management fees down (and indirectly from the NZ perspective, keeping taxes down). Unfortunately for the NZ residents, we are stuck with FIF which imposes a 5% FDR on the entire fund portfolio value - effectively acting the same as a 5% management fee as you lose compound returns):
    SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

    0.3 x 5% = 1.5%

    This is less that one third of the figure that you were bandying about.

    SNOOPY
    Last edited by Snoopy; 12-01-2020 at 11:32 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

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    Quote Originally Posted by Snoopy View Post
    SBQ you are right about the tax payable by NZ holders of 'overseas' shares, because of the NZ FIF regime, being equivalent to an ongoing annual management fee. You are wrong about the rate though. NZ Taxpayers are taxed based on 5% of the capital value of their FIF portfolio at the beginning of each financial year. That 5% of opening capital value is taxed at your marginal tax rate. If your marginal tax rate is 30%, then the tax rate you pay on your opening portfolio balance is:

    0.3 x 5% = 1.5%

    This is less that one third of the figure that you were bandying about.

    SNOOPY
    Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

    Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

    The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).

  13. #13
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    Quote Originally Posted by SBQ View Post
    Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.

    Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

    The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).
    Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?
    om mani peme hum

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    Quote Originally Posted by Snow Leopard View Post
    Canada sounds like a wonderful place, why don't you move there and quit whinging about NZ ?
    Snowwy, that is a total B S comment, grow up !!!

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    Quote Originally Posted by SBQ View Post
    However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age. One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).
    SBQ, to be clear, there is NO capital gains tax on PIE funds, whereas there definitely is a tax on investment property gains if you sell within 5 years. You also (of course) pay income tax on the rental income from property, just like you pay income tax on dividends from shares or funds.

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    Reincarnated Panthera Snow Leopard's Avatar
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    In the real world away from academic hypotheses and monotonous uniformed posts there are those who long term outperform the market and those who underperform it and all those in between.

    To discover if you can be a star then you have to give it go and put some effort in.
    To give up before you start is not how you succeed.

    As Peter Lynch once said. "You do not outperform the index by buying the index".

    And for the benefit of SBQ the EPS figure is always at the end of the statement of P&L/Comprehensive Income which is usually the first item in the Financial Statements which is often in refered to in an index near the front of the report.
    om mani peme hum

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    Quote Originally Posted by SBQ View Post
    Why not list all the individuals' IRD tax brackets? We have 10.5%, 17,5%, 30%, & 33%. IMO at $70K+ the 33% kicks in is a very very low threshold compared to today's cost of living. FYI, in Canada the 33% tax bracket doesn't kick in until about $215K. (The NZ gov't doesn't understand what 'indexing to inflation' means and that's why we have fixed threshold figures set like they were over 10 years ago). Anyways 33% marginal tax rate is a fair figure making an effective FIF tax rate of 1.65%.
    If you are taxed at 33% in NZ, that rate applies only top the incremental amount of your income over $70k. So it isn't really accurate to say that anyone earning over $70k is paying tax at 33%. You would need to earn around $700k per year to really be paying income tax at a rate close to 33%. You say that your FIF income is taxed at 33%. But you could equally say your income from other sources was taxed at 33% and your FIF income is taxed at a lesser rate.

    Now let's question what the managed Kiwi Saver funds pay under FIF? PIE Fund? Then you will understand it's not as simple as saying the effective FIF tax rate is 0.3 x 5% =1.5%

    The most compelling problem with NZ's retirement planning? It's the fact that regardless of the person's age, IRD's taxes on investment hit people the same as they're young or old. For eg. a person's income in their 30s to 50s is a lot higher than a retired person living in their 60s or 70s. It's a known fact seniors earn little or no salary or wage income. However, the investments they make in a managed fund or owning shares are taxed indiscriminately year after year regardless of the individual's earning status. All because the focus for NZ tax is to get the tax 1st and not worry about taxing at the end where the person can simply cash out their pension fund without paying taxes. This is VERY VERY different to retirement planning in Canada and in the US where investing is all about minimising the amount of tax to pay by deferring the income at retirement age.
    Yes you are right about this. It is not uncommon for overseas countries to have a different tax regime for superannuation schemes that are locked in until retirement. The NZ system taxes superannuation earnings as you go. Since I don't have the option of going to live in the USA or Canada I haven't researched the numbers myself. I suspect you have SBQ. So it would be informative if you were to tell us what happens to 'your' North American pension fund, in tax terms, once you hit retirement.

    One thing certain, the cards are stacked in favour for investing in NZ real estate because of the tax savings (or absence of capital gains tax).
    You are assuming that the ability of NZ property to grow in capital value is the same as the ability of the likes of the NYSE to grow. Even if the tax on NZ property will be lower after 5 years than owning NYSE shares, that doesn't necessarily mean you will be better off investing in NZ property!

    SNOOPY
    Last edited by Snoopy; 13-01-2020 at 10:41 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

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    Can we please get back on track. Anyone else have anything helpful to contribute on my “beginners struggle?”

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    Sorry ma'am, won't do it again.

    Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


    Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

    You see how it goes and adapt with experience.


    *If I remember correctly you can buy small $$ of shares with low brokerage
    om mani peme hum

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    I suppose I did sound a bit like a (school) ma’am

    Yes, I’m investing $40 a week via Sharesies currently, which is small bikkies for most people, but I’m feeling pretty good about what I’ve achieved so far in terms of building my little portfolio. At just under 19% returns for 2019 (calendar year) my money is working a heck of a lot better for me than it was sitting in the bank. I am an investor - not a trader, so happy to be patient and see how it all unfolds. Doing heaps of reading, listening to podcasts, learning from others in various forums and so on. I guess for me, the analysis and interpretation of annual reports/financial reports, is where I struggle. Some companies are better than others at putting those things together in a way that novices can understand. It’s a learning curve. I thought there might have been some online courses available, but so far, I haven’t been able to find any.


    Quote Originally Posted by Snow Leopard View Post
    Sorry ma'am, won't do it again.

    Apart from moving to Canada where things are so much easier then at the end of the day you are going to have to invest time into learning and analysing companies from the perspective of your investment or trading style, putting some real money* where you conclusions say good value is and then see how it works out for you.


    Some you will win and some you will lose, both ways you will learn by actually doing it and having money in the market.

    You see how it goes and adapt with experience.


    *If I remember correctly you can buy small $$ of shares with low brokerage

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