Where to invest?

[couta1]

I don't buy anything that I don't directly control except kiwi saver where I put in the minimum to get the tax credit each year. EFTs are the last place I want to be in a Black Swan event.

[Beagle]

I buy vanguard ETFs on the australian stock exchange, fees are much lower than smartshares ETFs.
I too like to keep things simple but there is a real cost for this in NZ.

What ticker codes do you have for them on the Aussie exchange mate ?

[morphs]

What ticker codes do you have for them on the Aussie exchange mate ?

They are all listed here: http://www.asx.com.au/products/etf/m...oduct-list.htm

[Onion]

I buy vanguard ETFs on the australian stock exchange, fees are much lower than smartshares ETFs.
I too like to keep things simple but there is a real cost for this in NZ.

Presumably there are tax implications for going via ASX. The investment won't be a PIE any more so accounting for income will be more complex.

Does buying direct on ASX bring the investment into the FIF regime? That complexity is something I am happy to avoid.

Using the IRD's FIF Exemption Determination page I couldn't find any EFT that qualified under the Australian share exemption (however many of the ASX codes are not simple 3 character codes and the IRD checker doesn't allow them to be checked).

The IRD page says that the non qualifying "share":

This means income from the shares will generally be taxed under the: fair dividend rate (FDR) method, comparative value (CV) method, cost method (CM), deemed rate of return (DRR)

[Beagle]

Presumably there are tax implications for going via ASX. The investment won't be a PIE any more so accounting for income will be more complex.

Does buying direct on ASX bring the investment into the FIF regime? That complexity is something I am happy to avoid.

Using the IRD's FIF Exemption Determination page I couldn't find any EFT that qualified under the Australian share exemption (however many of the ASX codes are not simple 3 character codes and the IRD checker doesn't allow them to be checked).

The IRD page says that the non qualifying "share":

I believe you are right and that the new exemption for Australian shares does not extend to overseas ETF's listed on the ASX. A LOT of people don't want the complexity of the FIF scheme including me so am happy to invest via a listed PIE here. Further, investment in Australian listed companies through the likes of ANZ securities will still see you clipped for more than 1% each way on the exchange rate plus their discounted brokerage rate. Close to 3% for your average Joe Bloggs using standard ANZ securities exchange and brokerage rates for the complete purchase and sale turnaround, (about 6 years Smartshares fees)...sure there are more efficient ways to handle the exchange rate but again can the average Joe Bloggs be bothered ? On top of that people then have to calculate all the FIF regime stuff...again can people be bothered with all this or do they have to pay a professional to do it for them ? All things to consider in the overall scheme of things.

[Onion]

Another way to invest globally is via Superlife (another NZX company). They, for example, offer investment into the Vanguard Total World Stock ETF.

Fees are 0.56%. PIE tax treatment. Regular and lump sum contributions are possible.

I haven't compared fees with the SmartShares equivalent.

They have other funds and many combinations of funds.

You can switch your investment from one investment option to another investment option at any time free of charge.

[Beagle]

Another way to invest globally is via Superlife (another NZX company). They, for example, offer investment into the Vanguard Total World Stock ETF.

Fees are 0.56%. PIE tax treatment. Regular and lump sum contributions are possible.

I haven't compared fees with the SmartShares equivalent.

They have other funds and many combinations of funds.

Fees are the same as Smartshares...not surprising seeing as Superlife is managed by Smartshares

[morphs]

On top of that people then have to calculate all the FIF regime stuff...again can people be bothered with all this or do they have to pay a professional to do it for them ? All things to consider in the overall scheme of things.

Suppose you have a 100k Investment and the market value is flat or down for the tax year (to 31 March). If held in a Smartshares PIE it will be required to declare FDR income of $5,000 (5%) and pay tax on it at 28% company tax rate, so a tax of $1,400. If held directly, the investor can use the CV method for the year resulting in $0 tax owed.

If the amounts are larger or there are multiple down years, the tax cost to hold via a PIE increases.

[kiwico]

Suppose you have a 100k Investment and the market value is flat or down for the tax year (to 31 March). If held in a Smartshares PIE it will be required to declare FDR income of $5,000 (5%) and pay tax on it at 28% company tax rate, so a tax of $1,400. If held directly, the investor can use the CV method for the year resulting in $0 tax owed.

I agree - that's why I use Interactive Brokers for Vanguard ETFs and buy them on the NYSE - much lower transaction costs and much less lost in the transfer from NZD to USD (and back). Just don't die while holding US held shares/ETFs!

[Beagle]

Suppose you have a 100k Investment and the market value is flat or down for the tax year (to 31 March). If held in a Smartshares PIE it will be required to declare FDR income of $5,000 (5%) and pay tax on it at 28% company tax rate, so a tax of $1,400. If held directly, the investor can use the CV method for the year resulting in $0 tax owed.

If the amounts are larger or there are multiple down years, the tax cost to hold via a PIE increases.

Thanks for your suggestion, one I may look into but one also needs to consider how many years out of say the last 10 the fund has had a lower performance than 5%, (none? ) brokerage and currency costs both ways and the time and effort required to establish a new account with a broker for overseas purchase and sale and whether they have to pay a professional to do the FIF calculations for them. Smartshares on the other hand offer a no brokerage entry in $N.Z. and no FIF hassles. No completely right or wrong answers, just what suits people best.