New Zealanders Hate the Sharemarket

These are eight quotes from real people about the sharemarket in New Zealand.

1) Shares are so risky – only invest what you are prepared to lose.

2) Balanced funds are a mix of shares (risk factor applies) and the management fees will cut into the profit margin. Govt bonds or fixed term deposits are cheaper options for many.

3) Basically there is NO perfect investment. In times of low interest rates, such as now, high returns are not possible unless you are prepared to risk losing your money. Shares are never a good investment for those nearing or at retirement.

4) 1987 crash cost me $62000 & the signs are there again, inflated housing prices, greedy banks, for sure I will take my Bank guaranteed interest and cant get wiped out as here(Aus) Banks are Govt backed and guaranteed.

5) The shares I bought years ago in local companies are now practically worthless. I’d like to get rid of them except it would probably cost me more in fees than I’d get back.

6) Over the years I have tried Shares, Managed funds and property but I have found that those managing the money look after themselves first and the investor second and trying to manage tenants is a nightmare. It is the investor who take all the risks. I have lost money on both shares and managed funds while those managing my money have lost nothing, so now stick to term investments with the trading Banks. Although I receive a pittance of a return, at the end of the day I can sleep at night.

7) Stockmarket is being propped up by cheap money, this doesn’t even include the money Japan is printing. The FED is pumping 85 billion a month into the financial system, kiwisaver also pushes peoples retirement funds into the stock market propping it up further. Amercan 401K’s, more stockmarket propping… This is unsustainable… I give it two to three years at most. Massive crash coming.

8) I believe foreign exchange markets are corrupt on a scale that you and I (the average kiwi) could not comprehend. NZ is a tiny blip on the radar screen of huge foreign exchanges that deal in trillions of dollars. It wouldn’t be the first time corrupt trader/s have taken the system to the brink. I would never put a single cent of my money in the stock exchange … EVER

with time we can learn to forgive the sharemarket

The 1987 crash left a huge impression on several generations of New Zealanders. Quote number one was even passed down to me by my parents and I’m barely old enough to remember 1987. I thought the sharemarket was equivalent to gambling!

It was a bad time for a lot of people, retirement savings were wiped out, people had to sell their homes. There is still a lot of deep pain and fear towards “the sharemarket” as if it were an evil entity in itself.

Just today a coworker told me that you should only use money you can afford to lose in the sharemarket. I then pointed out that 90% of her retirement savings is invested in shares via Kiwisaver. New Zealand retirement providers have not done a great job of communicating exactly what their products are to the general public. Even worse she believed those retirement savings were guaranteed by the government.  Oh dear. Kiwisaver providers, please try harder.

Sure, it can be risky if you buy stocks based on a tip from a random Uber driver whose brother just happens to work in finance, but there are ways to invest in a diversified less risky way. There’s no need to risk everything on a handful of stocks. I use index funds to gain exposure to a wide range of companies operating in different markets. Its pretty unlikely that hundreds of companies in different parts of the world will all go bankrupt.

I still hold a handful of single company shares because its fun and exciting but I’m investing in index funds for the foreseeable future. After all, owning shares is just owning a business without the hassle of having to run it.

 

5 thoughts on “New Zealanders Hate the Sharemarket”

  1. I too am investing in passive index funds. Picking individual stocks can be a lot riskier than getting a basket full of stocks that offset. With that said I too think the market is getting ready for a correction. So it’ll be interesting to see what happens in the future.

  2. Hi there from Argentina!
    I’m a junior-skilled investor from Argentina, and on my last year I was around NZ on my working holiday experience. Now I’m back in my home country.
    I still have my nz bank account with funds and also have my investor number and account in order to buy & sell shares, etf’s and so on.
    But I have some questions, maybe you can help me with:

    1) As an overseas person (non NZ citizen or resident), do I need To pay taxes or need to have a license or special permit in order to invest in nz using my nz’s bank account (with funds) and my ANZ’s securities account?

    2) talking about etf’s :
    I’ve read that those funds pays dividends (TNZ, for example)
    Do you know how they pay you and when? (every year? Every month?)

    Thanks a lot for your help and blog!!

    Regards from Argentina

    1. Hi Matias,

      If you have an NZ account set up and have a common share holder number then it is quite simple to invest, you don’t need a permit. However taxes are another issue. The nz share registers will collect NZ taxes from your dividends as you go, you need to make sure you have declared the correct taxation rate, the IRD could help you with this. As an overseas investor you may also have to pay taxes on foreign income back home so you’d be best to use a tax consultant to find out. I am not an expert just an amateur investor 🙂 Seek professional advice.

      The EFTS I invest in only pay out twice a year. They have recently changed the dates and I think its going to be in December and June from now on.

      Good luck with your investing!

  3. Hi Again from Argentina!

    After a couple of months dealing with IRD & my bank, now I’m ready to start investing, but I have some questions:

    1) Any webpage, forum or fb group related to share market in NZ/AU?
    2) Any suggestion for a begginer? (where start investing, shares, etf’s, etc)
    3) Any advice or market rules do I need to be aware? Experiences?

    Thanks a lot for your time!!

    Matias from Argentina!

    1. Hey Matias,
      http://www.sharetrader.co.nz/ is pretty good for discussions about companies.
      https://www.facebook.com/groups/NZXMarketInvestors/ this facebook group is fairly new but should become more active.
      Market rules? Well you’ll have to look into that. No insider trading lol. I think there are some minimum holding requirements. eg. you can’t just buy one share in a company. Best you look into all that yourself. Hopefully your brokerage website will have some more info for you.

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