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  1. #41
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    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    Bye Bye BUy

  2. #42
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    Totally disagree. Even with only $5000 invested, diversification is still important. I have just under that figure and hold 1 fund and 6 companies. No plans to add any more, but what I have, gives me global and sector spread, the value of which is currently very apparent.

    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.

  3. #43
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    I disagree also. Too many "great" picks have fallen by the wayside over the years, others have survived but failed to achieve the heights forecast by their supporters. The principle of diversification has been well demonstrated over the years - I would suggest at least 2 stocks in unrelated sectors for $5k, 3 or 4 for $10k of $15k. I won't bore you with a list of the great picks I've made in over 50 years of investing but CBL heads the list!

  4. #44
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    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    Before you even think about investing in ANY stock; you better be sure you know the business inside and out. This is the problem with active fund managers in that they are pretty much clueless on the shares they buy for their clients because they simply, don't spend (or know where to look or how) the time doing real research on the business. So if it's that difficult for these so called expert investors, what chance do you have? Perhaps a lot more as many investors have done very well just by understanding the business model without a bother of understanding fundamentals or technical analysis charts blah blah etc.

    The amount to invest where diversification becomes an issue doesn't really matter until you're working with super large amounts like $1M + Why? Because it all has to do with the investor's appetite for risk. To lose $5K is not so bad, but to lose $500K or $1M is a horse of a different colour. Generally those with significant sums want to be sure to get a 'high' probable return on the amount invested - like 5%. But to make 5% on something like $5K is kinda like a waste of time. I got this impressed at a local Chch investment seminar where Jarden Investments was doing a presentation. They were "Looking for clients with liquid assets in excess of $500K" because of the key reason being, to make the returns 'decent' enough for the investor. To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time. Sure you got to start somewhere but then again, look at how difficult it is to buy a house in Auckland? No pity to those that can't afford to get in one. The same applies to share investments IF you INTEND this to be the vehicle for your retirement.

  5. #45
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    Wow. your arrogance is really showing this time.

    Quote Originally Posted by SBQ View Post
    .... But to make 5% on something like $5K is kinda like a waste of time......
    Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.

    To the investor that puts up $5K, well, they may be better at the casino because buying stocks, no matter how well diversified it may be, it's kinda a waste of time......
    Absolute BS.

    The same applies to share investments IF you INTEND this to be the vehicle for your retirement.
    Again, absolute BS.

    This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.

  6. #46
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    When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.
    Quote Originally Posted by NOCASH View Post
    I have a question for you all, how much $ is enough to think of diversifying, spreading risk.

    My thought is $100k, I have been telling my friends if you have $5k,10k,15k to invest in the share market, pick one company and buy.
    www.dividendyield.co.nz
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  7. #47
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    Quote Originally Posted by justakiwi View Post
    Wow. your arrogance is really showing this time.

    Not to me it’s not. 5% is a hell of a lot better than I can get from the bank.

    Absolute BS.

    Again, absolute BS.

    This is the kind of attitude that puts beginners off and makes them feel stupid for even considering investing. Is this the same advice you would give your child or grandchild if they had $5000 saved and wanted to get started in the share market? I sure hope not.
    You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

    The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

    Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

  8. #48
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    Quote Originally Posted by BIRMANBOY View Post
    When I first started out I would wait until I had $1000 available and put it into one share...doing this over a period of time and picking different shares until I had 6 or 7 different. This can be scaled up or down depending on financial capacity. Diversification is important not only to spread risk but also it trains you to look at different companies and industries and build up some knowledge. I find the comfortable number (for me ) is about a dozen, but my father in law had hundreds (US shares where he was talked into getting far too many by a dodgy broker). After the initial bunch I started looking more closely at any of those which looked worthy of putting more money into..either they were doing well or the SP was right or dividends were good or whatever. So over a period of time, depending upon individual circumstances, you can "grow into" a portfolio. Start small and build at your own pace. Also as a responsible person I suggest its not a good idea to offer advice to anyone as to what the "best" thing is to do. Let them make there own plan/decision regardless of how much you want to help them. Good luck in your journey.
    I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

    Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

    I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.

  9. #49
    Advanced Member BIRMANBOY's Avatar
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    The reality as you have stated below is not THE reality it is simply YOUR or A reality. Like any endeavour in life different people are in different circumstances and have differing levels of capacity. I find its better to encourage people rather than discourage them so that they will not just give up because "someone with heaps of experience" makes them feel like its just all too hard and they are wasting their time. The best teachers and coaches are the ones that support everyone and not just the top 20%. This forum should be one for an exchange of opinions and ideas, but also supportive and encouraging to newbs and those less experienced. Stating that things should be done this way or that way, or shouldn't be done is not recognising individual differences.
    Quote Originally Posted by SBQ View Post
    I use to believe that way about diversification when I was studying finance at uni. The text books and profs showed us the impact how risk is reduced when you diversify. However mathematically, the risk levels are irrelevant when you get over 100 different shares because as we've seen recently, virtually every asset class in the stock market has been hammered. Anotherwords, what finance has taught us at school is there is no level of diversification that can avoid a 'broad market' financial collapse, and hence is why we have these large hedge fund managers that play the game with a different theory. What they taught us in school about EBITBDA and diversification was thrown out the window when you read how winning fund managers beat the market index return. That's because market efficiencies are not a "strong form". Information regarding investments is not efficient (or widely spread to everyone at a timely matter).

    Warren Buffet's success has not been about diversification at all. His way of beating the market was all about "Making Deals" just like Donald Trump. You can bet your boot right now he's negotiating deals with cash strapped corporations for the benefit of his shareholders. You're not going to get that kind of action with NZ based managed funds. Also Buffet is not afraid to clearly say he doesn't have the competencies about certain sectors of an industry or so and so company. As what i've seen in Buffet's approach to investing, certainly diversification has not aided him into looking at other areas of investments (into different asset classes or sectors like high tech).

    I'm not trying to thumb down the small investor but rather, i'm trying to show the reality about share market investing. The small investors will always be at a disadvantage to the large 'institutional' investors in all areas such as, timely of corporate information, gov't influences, insider trade information, you name it. Certainly not something you should put $5K into something and hope it would double next year.
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  10. #50
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    Yes, I still say pretty much all of what you said in your previous post is arrogant and BS.

    You seem to think that every person who chooses to invest, is trying to get rich. I daresay there are plenty out there who are, but some of us are simply trying to improve our financial situation (whatever that may be), for the future. How many times do I have to remind you of my situation before you get it?

    *I am 59
    *I am divorced and live alone
    *I work part time for an annual income of probably no more than $26,000 (my shifts vary)
    *I live in my caravan - my choice as it was a better option than being stuck in a post divorce rent trap for the rest of my life
    *I have no house, no boat, no flash car - I have my caravan, my hail damaged/written off car, my KiwiSaver (currently sitting at only $25,000 but I am not worried about it), some savings, and my pathetic (in your eyes) share portfolio.
    *If there are any eligible sugar daddies in my area, they must knocking on someone else’s door, cause they sure aren’t knocking on mine

    I am not trying to get rich. I’m not stupid enough to even dream of that possibility.
    I am trying to build a small “safety net” or “emergency” investment portfolio - with regular, small (in your eyes) investments, so that by the time I need it, in 5-10 years maybe, it will be a small supplement to my govt super payments and my KiwiSaver. I live a minimalist, pretty frugal life and that won’t change. I am being proactive. So, your constant, monotonous implications that I am wasting my time, piss me off. For the most part, I ignore you, but when you post stuff like you do, that other beginners might take as gospel, I will call you out. You are wrong to impose your opinions on others. You are wrong to judge the way others are investing or managing their finances. You have tunnel vision based on your own world view and beliefs about money, and you seem unable to even attempt to see things from someone else’s situational perspective.

    So once again - bull**** on pretty much everything you use as an argument when you are trying to put me down for the efforts and decisions I am making for myself.

    Quote Originally Posted by SBQ View Post
    You want to refer to arrogance? Consider the investment presentation I went to last year hosted by the NZ Shareholders Assn where public speaker Jarden Investments made their pitch. Questioned their arrogance when hunting for new clients in the $500K+ of liquid assets? It's very clear these NZ brokerage firms don't care about the small or new investor. Those are for Kiwi Savers who take their $ to the bank and a key reason why such managed funds accept small time investors because it's well reflected in their high mgt/administrative fee structure these funds charge.

    The advice I give to my child is simple. 5% of $5,000 is $250 - I would ask, would you wait a whole year to earn $250? You know for most families, that would only be a weeks worth of groceries so the significance of this investment does come with a prerequisite of having sufficient assets to make the risk level worth while. The question should not be "well you got to start from somewhere". The question should be, "Is investing into shares sufficient for the level of risk and outcome on the amount invested?" How about some real world examples. The person with $5K per year contributing into a Kiwi Saver is never going to end up wealthy compared to the person that has leveraged themselves by mortgaging @ 80% into a house which can pay absurd low level interest rates. So to my children, the 1st advice I give them in terms of investment ; "Get into your OWN home 1st and use the bank's money to do it!" Land is something that can't be made more of so if the banks trust this asset class enough, then there should be all the incentive for any person starting out to get into their own home. Call this complete BS?

    Last year I watched a video of Gareth Morgan (you should know him) doing a presentation in class in front of a bunch of primary school students. They asked him "How do you get rich?" Mr Morgan didn't say oh you should invest your money into some asset like shares or buy a house. Instead, he told the children that it's very simple. Step 1) Find something that is in demand and sell it to someone that wants it. The profit is shown at this amount as he wrote on the chalk board. He stressed, the next step as being the most important Step 2) Do it again and again and again!!! I believe the example he used was 'wagons' or 'trailers' to sell to people wanting them. Still think this is complete BS?

  11. #51
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    Quote Originally Posted by BIRMANBOY View Post
    The reality as you have stated below is not THE reality it is simply YOUR or A reality. Like any endeavour in life different people are in different circumstances and have differing levels of capacity. I find its better to encourage people rather than discourage them so that they will not just give up because "someone with heaps of experience" makes them feel like its just all too hard and they are wasting their time. The best teachers and coaches are the ones that support everyone and not just the top 20%. This forum should be one for an exchange of opinions and ideas, but also supportive and encouraging to newbs and those less experienced. Stating that things should be done this way or that way, or shouldn't be done is not recognising individual differences.
    Teachers and coaches in the field of finance? Let's be real, investing is far from the examples we see in sporting, school education, your boss, etc. There is simply no field that is more biased and skewed than the field of investments in finance. They don't teach much of this subject in schools, no different to the subject of economics, for the simply reason? To the layman they're all very boring subjects.

    IMO and to many in this forum, it's not boring. But what i'm not appreciative is the lack of transparency in the field of investment. For eg. you have a whole investment scheme backed by the NZ gov't in the area called Kiwi Saver. While looking over at the asset class of owning residential houses as an investment class, the NZ gov't doesn't want to touch that with a 10m pole. Investments and Finance is a complex field but it doesn't have to be. Gurus like Warren Buffet have time and time again made the same statement that individuals don't need to believe in the hoo haa that investment advisors and various gov't regulatories spell out. All you have to do is stay invested and look at the long term ; or basically, "Forget about the investment and let American businesses do their charm".

    But this is not what we have in NZ. Individuals can't simply put their $ into share investments so easily or the NZ gov't has restrictions such as the FMA on where you can invest or can't. These 'distortions' to the investment field make it very hard to any new person to understand and so by making things complicated, new investors feel they need "professional advice", yet getting that kind of advice costs dearly to the person investing with them or with their managed fund.

    I can understand justakiwi being offended with my statements. I can also assure justakiwi that meeting with any financial advisor, they will be quick to show you what you can do with the savings but in the back of their mind, they're rubbing their hands collecting the commissions and mgt/admin fees. They certainly won't talk a lot about buying a house using leverage and make the comparison with buying so and so Kiwi Saver Funds and the tax advantages of owning your own home. By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this.

  12. #52
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    Lets keep this simple. You say, and I quote, "
    I can understand justakiwi being offended with my statements." But do you actually understand? It would appear not
    because you seem intent on pushing forward your version of what you term the "hard facts". And then you continue on with diversions into buying property.???. You say, "
    By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this." So you have somehow felt the need to to defend your position, as well as shift into a new category, and all without any consideration for her position and how your comments were deemed to be arrogant. If you are a seasoned investor you will know that this investing knowledge doesnt happen overnight and regardless of whether you actually are right or wrong, it just doesnt seem right to be making new investors uncomfortable. Helping people learn in a supportive way is always going to be accepted more graciously than telling then what they should or shouldnt be doing. At the end of the day not everyone will be interested in your view of the world. I know that may be hard for you to comprehend and accept but there it is. Sometimes genius is just not appreciated PS if you wish to continue this discussion you can pm me but lets remove it from this thread since it has diverted away from its original intention.
    Quote Originally Posted by SBQ View Post
    Teachers and coaches in the field of finance? Let's be real, investing is far from the examples we see in sporting, school education, your boss, etc. There is simply no field that is more biased and skewed than the field of investments in finance. They don't teach much of this subject in schools, no different to the subject of economics, for the simply reason? To the layman they're all very boring subjects.

    IMO and to many in this forum, it's not boring. But what i'm not appreciative is the lack of transparency in the field of investment. For eg. you have a whole investment scheme backed by the NZ gov't in the area called Kiwi Saver. While looking over at the asset class of owning residential houses as an investment class, the NZ gov't doesn't want to touch that with a 10m pole. Investments and Finance is a complex field but it doesn't have to be. Gurus like Warren Buffet have time and time again made the same statement that individuals don't need to believe in the hoo haa that investment advisors and various gov't regulatories spell out. All you have to do is stay invested and look at the long term ; or basically, "Forget about the investment and let American businesses do their charm".

    But this is not what we have in NZ. Individuals can't simply put their $ into share investments so easily or the NZ gov't has restrictions such as the FMA on where you can invest or can't. These 'distortions' to the investment field make it very hard to any new person to understand and so by making things complicated, new investors feel they need "professional advice", yet getting that kind of advice costs dearly to the person investing with them or with their managed fund.

    I can understand justakiwi being offended with my statements. I can also assure justakiwi that meeting with any financial advisor, they will be quick to show you what you can do with the savings but in the back of their mind, they're rubbing their hands collecting the commissions and mgt/admin fees. They certainly won't talk a lot about buying a house using leverage and make the comparison with buying so and so Kiwi Saver Funds and the tax advantages of owning your own home. By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this.
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  13. #53
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    Quote Originally Posted by BIRMANBOY View Post
    Lets keep this simple. You say, and I quote, "
    I can understand justakiwi being offended with my statements." But do you actually understand? It would appear not
    because you seem intent on pushing forward your version of what you term the "hard facts". And then you continue on with diversions into buying property.???. You say, "
    By all means, my comments were never to offend or push down the new person wanting to learn. But in this day of age where gov'ts regulate things and distort tax laws in different asset classes, the best thing a person wanting to learn is to know the hard facts. Sometimes these hard facts are too rude to handle. I can assure you they're not BS because the examples you can see with those that leveraged and bought multiple houses over the past 30 or so years have done far better than those who invested in NZ equities over the same period. Nothing BS about this." So you have somehow felt the need to to defend your position, as well as shift into a new category, and all without any consideration for her position and how your comments were deemed to be arrogant. If you are a seasoned investor you will know that this investing knowledge doesnt happen overnight and regardless of whether you actually are right or wrong, it just doesnt seem right to be making new investors uncomfortable. Helping people learn in a supportive way is always going to be accepted more graciously than telling then what they should or shouldnt be doing. At the end of the day not everyone will be interested in your view of the world. I know that may be hard for you to comprehend and accept but there it is. Sometimes genius is just not appreciated PS if you wish to continue this discussion you can pm me but lets remove it from this thread since it has diverted away from its original intention.

    Sorry, not interested in doing private PM with you about this issue and quite clearly, the more that people become aware of the differences, the better. Have a read in the past posts i've made on this topic where I made the clear distinction for the vast majority of people in NZ, they made their wealth from buying real estate and for those having new born babies, the investment strategy of owning real estate in NZ has worked very well (as the parents invest so much into owning their home or rental property to the day when their child grows up to wanting to buying their own place).

    Hold on there. No one on any investment forum should be taking investment tips without doing their own research themselves. I've done my own research and come to 'my own' conclusions and that is my opinion. If it comes across as being arrogant, I can assure you it's far from the arrogance you see from those who are real financial advisors or working in industry. All I expressed was in NZ we have a unique tax structure on investments, compared to the rest of the world. If being sympathetic is an issue, consider the events in 2008 of so many share investors that walked into their financial advisor's office, asking why their portfolio lost over 50% in value ; for many, spending 10 years into a managed fund scheme to see all those gains disappear in a few months? Many of my friends, middle class working 9 - 5 made the mistake of withdrawing their retirement funds in 2008 because they felt their financial advisor had let them down? Anotherwords their financial advisor was being sympathetic... but it still didn't change the fact that they lost money for their clients.

    Let me tell you my experience (and I know by now you probably would care less). When I first started my studies in finance at college and uni, I thought being a fund manager was a pretty decent job - or someone working at the bank doing investment advice. I was completely new and learning AND looking for a mentor or someone to guide me / teach me in the investment industry. But as I carried on with my studies into my last year of uni taking higher level courses, I realised that what I learned became 'unethical'. The person working as an investment advisor was no different to a car salesman. greasy, and out to pad their pay from all the commissions they take off their clients. I didn't like this one bit and taken the liking of Warren Buffet who has been openly against the whole investment industry how they ripoff investors (small and large) for merely only breathing air. You could say i'm no friend of anyone in this industry. Anyways what i'm getting at is this, to the new investors wanting to learn, the problem is the more they begin to learn about finance and how the industry works, the more they become to hate it. You find things like why the rich get richer and the poor have nothing. If you're being supportive, how else can you say otherwise? If I knew there was a different way for people like justakiwi's situation, then I would say it. But unfortunately this is not the case here in NZ. In other places like Canada, she would have a better chance as their gov't makes it advantageous for low income earners to invest than the wealthy. For eg. low income earners have access to all sorts of tax free investment plans that the high income earners would be exempted out. Recently, the Cdn gov't bridge the gap between those that can't meet the minimum deposit to mortgage on a their FIRST HOME by going in joint venture (gov't puts up max 10% value of the home together with the home owner; ie if 20% by the bank was required deposit and you only had 10%, the govt would meet the rest). Payback comes when the house is sold or in 25 years time. Oh and being divorced? Yep coming out of a divorce also qualifies for the FIRST HOME despite owing one previously in a previous relationship. Anyways this is a bit off topic but NZ could look at something like this for low income earners wanting to buy a house. I could go on the many ways the low income or those with minimal assets can get ahead vs raising taxes on the rich has effectively done nothing.


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  16. #56
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    Basically, my strategy is to sign up my kids to some of the most highly aggressive KS funds out there and set them both up with fairly hefty sums for adulthood - Hopefully by then KS rules are changed as well to allow more investment flexibility and fluidity.
    I have 2 kids both signed up with Kiwisaver - Voluntary contributions of $21 per week.

    My older child's current account balance is sitting at just short of $15,000 - The older child is currently 7 1/2 years old. We received the $1000 KS kickstart bonus but I didn't start Kiwisaver with our older child until they were 3 years old, so I've missed about $2000 there.

    My younger child's current account balance is sitting at just over $5000 - They're 3 1/2 years old, No $1000 KS kickstart as it was removed for new KS members a few years back.

    Current 12mth return for both of their KS accounts is sitting at just over 30%p.a, after fees and tax.
    Both of them are averaging 12-15%p.a returns over the whole life of their KS.

    I remember back when I got my first $1000 saved up in my own bank account I was 10 years old, had my bank account from back in the days when ASB would sign up kids at 5 years old.

    If I had access to the sort of funds in my teenage years as my kids have currently I reckon it would have opened up so many options for me.
    For example all throughout my high school years I've been interested in stock markets. When I had just finished high school Apple was considered a joke of a company at the time (around 2002-2003), they had yet to launch the very first iPods, iPhones didn't even exist at that time.

    I wanted so badly to invest in those sorts of companies MS/Apple and the likes but only limited due to lack of funds. I know for certain that if I had like $20k or $30k I would have done the young, dumb thing and invested in both of those.
    instead I invested in the likes of HGD/NTL... but making up for it nowadays via ASX stocks.

  17. #57
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    Quote Originally Posted by Stumpynuts View Post
    Basically, my strategy is to sign up my kids to some of the most highly aggressive KS funds out there and set them both up with fairly hefty sums for adulthood - Hopefully by then KS rules are changed as well to allow more investment flexibility and fluidity.
    I have 2 kids both signed up with Kiwisaver - Voluntary contributions of $21 per week.

    My older child's current account balance is sitting at just short of $15,000 - The older child is currently 7 1/2 years old. We received the $1000 KS kickstart bonus but I didn't start Kiwisaver with our older child until they were 3 years old, so I've missed about $2000 there.

    My younger child's current account balance is sitting at just over $5000 - They're 3 1/2 years old, No $1000 KS kickstart as it was removed for new KS members a few years back.

    Current 12mth return for both of their KS accounts is sitting at just over 30%p.a, after fees and tax.
    Both of them are averaging 12-15%p.a returns over the whole life of their KS.

    I remember back when I got my first $1000 saved up in my own bank account I was 10 years old, had my bank account from back in the days when ASB would sign up kids at 5 years old.

    If I had access to the sort of funds in my teenage years as my kids have currently I reckon it would have opened up so many options for me.
    For example all throughout my high school years I've been interested in stock markets. When I had just finished high school Apple was considered a joke of a company at the time (around 2002-2003), they had yet to launch the very first iPods, iPhones didn't even exist at that time.

    I wanted so badly to invest in those sorts of companies MS/Apple and the likes but only limited due to lack of funds. I know for certain that if I had like $20k or $30k I would have done the young, dumb thing and invested in both of those.
    instead I invested in the likes of HGD/NTL... but making up for it nowadays via ASX stocks.
    First of all - it's great you are taking interest in their children's future by setting up a plan for investing. I do feel finance in NZ is a subject that has little discussion; more importantly, real discussion of how finance works. To this day I still do not understand why NZ brokers and NZ investors have this fascination that "dividends" must be paid despite having a tax liability, when if the company keeps the profits year after year in retained earnings, the book value per share goes up, and thus the share price will go up = a tax free capital gain. Warren Buffet has said, dividends trigger a tax liability which is not ideal. If you want annual income, just elect to sell a portion of the shares and being in NZ, for NZX shares the gains are tax free. But go figure the people want dividends for some strange reason.

    I'll admit, i've set nothing up for my 2 children in terms of investment planning in NZ for them. My reasons have been explained before that under Kiwi Saver, we have an uneven taxing between NZ shares vs foreign shares. It's so warped that the financial advisors won't care to explain the difference. For eg. you rave how you wanted to buy stock in Apple. But the fact being is owning AAPL under KS scheme attracts FIF tax - for which PAPER GAINS are taxed at the individuals RWT or under a PIE fund, 28%. If the individual invests directly through a broker, FIF does not apply until it hits $50K in portfolio value. Many of these KS funds do nothing more than buy the overseas ETF such as Vanguard's VOO S&P500 (which you can buy directly). Yet they're privy to charge a massive fee on top of Vanguards low 0.08% administration fee. Sure the may say they have paperwork and taxation issues but there's no reason to have fees in excess of 0.5% - 2 or 3% pa that I see in many of the KS prospectus.

    Don't get me wrong, I have a solid plan for my children and unfortunately, that is not to be in NZ. Our long term sights will be to retire back in Canada. But since living in NZ for well over 20 years (self employed) i've learned that US equities outperform NZ / ASX ones by a long shot and for the whole time, the majority of my wealth has been held under my father's name who is a resident in Canada. Can you imagine my accountant's unusual thought when I told her that "it is ME that is gifting my wealth to my father" because what she understood was the common arrangement is, the father running the small business in partnership with the son, gives his wealth to the next generation. I said no no, I had to clarify that where my dad resides in Canada (despite being a non-resident in NZ but a partner to the business we have in NZ), investments there are treated more equitable in terms of taxation than here in NZ. At the end she said that's a bold move and not something she has ever seen. (but then no one ever plans that far ahead wanting to live in another country? or do they?)

    I've worked out the #s on spreadsheet. I've calculated the taxation year after year under NZ FIF vs 0% taxation in Canada year after year (as CGT only applies when the shares are sold). After a 30 or 40 year compound interest, it was clear that the same person living in Canada with the same return of investment would considerably have a much larger portfolio value at the end. But what really sealed the deal was the issue of deferred taxation and that is at retirement age, taxation on CGT is far less to a pensioner than to a person in their 30s to 50s as their incomes are MUCH higher in this age group. See this is a problem with KS, they're taxing individuals who are at the peak of their income earning ability - and thus are at the high tax bracket because a person can't contribute more to KS if they don't have a higher income level. But the more they contribute, the more they lose in tax. Very different to in Canada where their comparable pension scheme to the KS is the RRSP and all gains within the fund grow 100% tax free. Then at retirement age, the shares are sold and naturally the pensioner will be unemployed and would only be taxed at the low income levels (unless they choose to sell big and buy the new boat or motorhome etc.).

    Oh by the why, Warren Buffet again has been a major critic of loss of compound interest due to how much adminstration / mgt fees these managed funds take. If you complain how much 1 or 2% takes per year, then consider how much IRD gets to take under FIF of up to 5% per year? Because essentially the net result under FIF is a robbing of future compound returns.

    and as always, hind sight is always 20/20.

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