I think it's generally accepted in investing circles that diversification is a good thing. It can be argued this is especially true for NZ which is a tiny blip on the world economic radar and our whole economy could be devastated by a single event e.g foot & mouth outbreak, Auckland volcano eruption, China problems etc

I'm still in my 20's and hopefully have many years investing ahead of me and it would not be out of the question for NZ to have some problems along the way, so it would make sense to have overseas investments.

But then we have the FIF rules. I've read you shouldn't make long term investing decisions based on tax as tax law can change and that the benefits of a well diversified portfolio should outweigh tax disadvantages over time. It might work well for some traders but for buy and hold investors I can't help but think, why bother?
It seems the dividends you receive would barely cover the tax in a year your FIF portfolio goes up. How can you create an income stream like that?

No wonder Kiwis stick to NZ/OZ stocks and property.

So does anyone have FIF investments (excluding Kiwisaver)? Do you think it's worth having them or not? or do you think NZ/Aussie is diversified enough?