Share pickers respond to my doubts. Even as I typed it, I thought a certain sentence in my last column was bound to cause trouble. “Lots of research,” I wrote, “shows that an individual investor who researches companies doesn’t tend to do any better than someone who chooses shares at random.” Sure enough, a man who describes himself as “a paid-up member of the share pickers guild” emailed me.
Q&As: Grandparents don’t need a trust to save for their grandchildren; New Zealand’s tax on capital gains is confusing; Depreciation on rental property.
Is it dumb to diversify shares or property? Diversification is not all it’s cracked up to be, according to a man who read my last column, which praised the spreading-your-risk idea. “Bill Gates didn’t diverse much, and it didn’t do him much harm,” he writes. “The fact remains that the richest people on the planet have become that way because they haven’t diversified.
Q&As: Should a youg woman put her savings into her rental mortgage or diversify?; How to get through to Inland Revenue; Take care when depreciating rental property.
Q&As: Risky to buy shares while waiting to buy a house; Is the gain on excess shares in an IPO taxable?; Rental property depepreciation and Inland Revenue.
One bad apple — New Zealanders are bad at diversifying. Most New Zealand shareholders are frighteningly undiversified. About 24 per cent of share investors own shares in just one company, and another 36 per cent hold shares in two to five companies, according to recent research by the stock exchange, NZX, and sharebrokers ABN AMRO Craigs.
Q&As: 18-year-old should wait a bit before buying a house; Saving for the grandchildren — how much risk is good?; Rental property depreciation risks.
Q&As: What chattels can be depreciated separately in a rental property?; Share trading and tax on capital gains.
Keeping financial advisers on their toes — good for the rest of us. A warning to financial advisers: You’d better give good, unbiased advice to your next new client. And the one after that. And the one after that. You never know which one might be a “mystery shopper” working undercover. If you do serve a mystery shopper, they will report on a website whether the advice you gave “is truly in the best interests of the individual client” — something that Joe and Joanne Blow often find hard to judge.
Q&As: Pay off rental property mortgage as you approach retirement; When is a capital gain taxable?