Harmoney

[nztyke]

20% is year to date as stated. Last couple of years are similar however i agree it's short term in the scheme of things.
My point was that I don't think the harmoney returns are that great for an unsecured investment, particularly now we have v1.5.

Anyone who thinks that a 20% return on equites is sustainable is living in cloud cuckoo land. Myles is right, you have to look at shares as a long term investment. For example in from my own experience for the year to 10th May 2006 my share investments made a whopping return of 39.6% but in the year to 28th October 2008 I suffered a calamitous loss of 42.2% on my portfolio. Over the last 15 years (which is the sort of time frame you should look at) I have made an average of 9.8% per annum after tax which is about what one would expect. Since the GFC low interest rates have created a huge asset bubble in shares and property; it is all going to come crashing but unfortunately I don't know whether it is going to happen next week, next year or in five years time. In the meantime one can only diversify, including Harmoney, and keep cash reserves to take advantage of the buying opportunities that the next GFC will bring. Sorry to be so gloomy.

[joker]

Anyone who thinks that a 20% return on equites is sustainable is living in cloud cuckoo land. Myles is right, you have to look at shares as a long term investment. For example in from my own experience for the year to 10th May 2006 my share investments made a whopping return of 39.6% but in the year to 28th October 2008 I suffered a calamitous loss of 42.2% on my portfolio. Over the last 15 years (which is the sort of time frame you should look at) I have made an average of 9.8% per annum after tax which is about what one would expect. Since the GFC low interest rates have created a huge asset bubble in shares and property; it is all going to come crashing but unfortunately I don't know whether it is going to happen next week, next year or in five years time. In the meantime one can only diversify, including Harmoney, and keep cash reserves to take advantage of the buying opportunities that the next GFC will bring. Sorry to be so gloomy.

You're not being gloomy but being realistic. You're quite right - the bust is coming but we don't know when. Never before have we seen quantative easing on such a grand scale. It's driving asset prices up but not workers' incomes. House prices, commercial property and shares are all driven up in value as a result of demand fueled by plentiful money to borrow at historically low interest rates. It all has to unwind sometime but it's never been done before so no one knows how to or what to expect.

[RMJH]

At least we didn't go the quantitative easing route in NZ, not that we are insulated from it of course. I do worry where we are heading with all this borrowing but have felt this way for at least two decades! What promoters of equities nearly always fail to acknowledge is that with shares the returns are inflated by gearing to the extent that the companies have debt. If you take out the impact of gearing and then take a long term average the returns will be much lower. If things get to the state of losing money on consumer credit portfolios I'd be picking losses on shares would be considerably greater.

[alistar_mid]

knowledge.

agree with everything you have said.

we are sitting on a big bubble and I have been in a cycle of not reinvesting in harmoney and paying down revolving credit for if (and when) things "crash' i can buy in.

In saying that though I still have AP's each month into managed and index funds, as yes I know they will probably be effected when the markets suddenly turns after this bull run, but like you say, when?

You try and time it and pull the money out, then you miss out on potential returns, and if you leave it in then invariably you will get beat up a bit.

I'm going to keep paying down debt, but also just going to keep AP'ing into my funds. I trust my fund manager (milford) to minimize the effect of a downturn (for reference one of their higher risk funds, the trans tasman, did -9.9% in 2009, whilst the index did -24.9%), if it drops, I might even up the AP's or drop a lump sum in.

[Fisherking]

Anyone who thinks that a 20% return on equites is sustainable is living in cloud cuckoo land. Myles is right, you have to look at shares as a long term investment. For example in from my own experience for the year to 10th May 2006 my share investments made a whopping return of 39.6% but in the year to 28th October 2008 I suffered a calamitous loss of 42.2% on my portfolio. Over the last 15 years (which is the sort of time frame you should look at) I have made an average of 9.8% per annum after tax which is about what one would expect. Since the GFC low interest rates have created a huge asset bubble in shares and property; it is all going to come crashing but unfortunately I don't know whether it is going to happen next week, next year or in five years time. In the meantime one can only diversify, including Harmoney, and keep cash reserves to take advantage of the buying opportunities that the next GFC will bring. Sorry to be so gloomy.

I never suggested in any way that 20% was sustainable longer term, however if you're careful about where you invest I think 10 - 15% is achievable longer term in a mix of shares/ funds. I've been able to do so across ~12yrs and i have no great knowledge anyone else doesn't have or can't obtain albeit my risk profile is possibly higher than many. To be fair, the last 12 yrs have been fairly bullish, particularly NZ except GFC and agree a fall will come at some stage, though i don't see it being imminent.