Author Topic: New investor in New Zealand, please check my options  (Read 4060 times)

Shykiwi

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New investor in New Zealand, please check my options
« on: September 22, 2014, 06:46:53 PM »
Hi,  I haven't posted much but I have read the  MMM blog plenty.

I am just getting started on getting our money to work harder for us,  but I'm not in the US so I
have to cobble things together a bit.  I have read on here about the virtues of passive funds,
and I found that my husband can get a Vanguard fund on his superannuation at work so that
part is fine. For those of you that love Vanguard, no he can't increase his payments into this
fund and I cannot access Vanguard outside of it.

For home,  I found I can buy into an index fund that covers the biggest 50 shares on our
local sharemarket.  The fund charges 0.75% each year to manage it, there is a one-off
$30 fee to start up,  and each time they convert any dividends into more shares for you there is
a 0.75% charge on the amount handled, which happens twice a year. These are ETFs, is that bad?

I was interesting in the "Top ten" index fund but later thought perhaps it wasn't a broad enough
base.  Ideally I would get a fund that covers the whole local NZ sharemarket, but at least
the 50 one I have found covers 53% of the sharemarket.

I can also buy into the top Australian shares if I choose, what do you think?  It's just
that NZ is actually doing a bit better than Australia at the moment.

PS  We don't say "stocks" here, they are called "shares" but it's the same difference.

Thanks for reading :)
PPS  We are in our early 50s, so have about 15 years to official retirement.

zb3

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Re: New investor in New Zealand, please check my options
« Reply #1 on: September 22, 2014, 07:57:28 PM »
You can access vanguard, check out VTS on the ASX.  Although its not FIF exempt like a lot of Australian shares, it has the very low Vanguard fees.  You can also access the US Vanguard ETFs but the FIF regime does make investment outside NZ rather unattractive.

In regards to NZ exposure, if I were you I would check out some actively managed funds.  Milford asset management is very good.  The Smartshares fees are just too high at the moment in my opinion.

Shykiwi

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Re: New investor in New Zealand, please check my options
« Reply #2 on: September 22, 2014, 08:00:42 PM »
Thank you ZB3

I looked for Vanguard but it seemed you had to have 500,000 to invest before you
could get in, if you were in NZ.   I'm just entry-level.

How low a fee should I be aiming for?  I thought 0.75% was at the low end of
the scale, is it not so?

zb3

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Re: New investor in New Zealand, please check my options
« Reply #3 on: September 22, 2014, 08:07:42 PM »
They are exchange traded funds, there is virtually no minimum.  I only have 11k in VTS.  Vanguard also offers services to high net worth individuals (i.e. 500k plus) so perhaps that is how you got confused.

0.75% is relatively low but its very high for an ETF.  Vanguard ETFs charge 0.05% pa.  Milford charges higher fees than smartshares but its performance is a lot better also.  Its really up to you.  If you aren't a believer in active management then your lowest fee option for NZ expsore is smartshares.

Shykiwi

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Re: New investor in New Zealand, please check my options
« Reply #4 on: September 22, 2014, 08:47:05 PM »
No I am not a believer in active management at present, so thank you for the confirmation.
I will look into how to get onto the ASX now that you have shown it's possible.

Thank you ZB3 :)

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Re: New investor in New Zealand, please check my options
« Reply #5 on: September 22, 2014, 09:47:30 PM »
I am a kiwi and use asb share trading.  I have not yet purchased any ASX vanguard shares but can confirm it's possible.  Also apparently getting a foreign currency account can be good as you can ride the exchange and market fluctuations independently.






Shykiwi

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Re: New investor in New Zealand, please check my options
« Reply #6 on: September 23, 2014, 04:53:24 PM »
I looked into this yesterday but I don't want to do it anymore because of possible currency fluctuations.
It's no use to me if the shares rocket up in value but our currency plummets in value, long term.

I prefer to stay in New Zealand with the broadest range and the lowest fees possible, buy and hold.

zb3

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Re: New investor in New Zealand, please check my options
« Reply #7 on: September 23, 2014, 08:28:05 PM »
It is not wise to put all your life savings solely in the NZ market.  The NZ dollar is very strong at the moment so I think now would be a wise time to diversify overseas. 

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Re: New investor in New Zealand, please check my options
« Reply #8 on: September 23, 2014, 09:29:05 PM »
Yeah the foreign currency account means you can buy ausi dollars now which will hedge you against our currency dropping.

zb3

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Re: New investor in New Zealand, please check my options
« Reply #9 on: September 23, 2014, 10:17:41 PM »
You don't even need a foreign currency account to buy shares in currencies outside NZ.  The foreign currency account just allows you to store foreign currencies and convert them at a time you deem favourable.  Ie if I sold Aus shares without a foreign currency account, the proceeds would be converted to NZD immediately.  With a foreign currency account, I could sell Aus shares but leave the proceeds in Aus dollars and convert when I deemed fit.

flashpacker

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Re: New investor in New Zealand, please check my options
« Reply #10 on: October 12, 2014, 01:14:03 AM »
I second the recommendation for Milford Asset. When we lived in NZ we had our NZ/AU based investments with them. Watch their youtube videos and download the past fund updates off their website.