The beginners struggle

[Snoopy]

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