An exceptionally unlucky reader. International index funds, a favourite long-term investment of mine, don’t look good to one reader. “I bought about $2000 worth of WiNZ in 2000,” he writes. “They are now 27 per cent lower (have been for quite a while). Fortunately for me it was not a huge amount. “Twenty years is a long time to wait for the fund to claw its way back up. Hopefully all the investors in index funds can wait that long!”
Q&As: Two on why many rental property investors should pay tax on their gains when they sell. It’s the law!; How to teach teens about budgeting; Allowing for tax when calculating returns on term deposits.
Q&As: A reader finds a flaw in my “avoid the rear-view mirror” argument. Or does he?; Would NZ’s tax revenue actually increase if we all invested offshore?; Inland Revenue says it can’t fix everything at once.
Why some advisers don’t recommend index funds. A while back I wrote that I still think index funds are the best way for most people to invest in shares, even though they are scheduled to lose their tax advantage next year. That has prompted an intriguing question from a reader: “If index funds outperform all other forms of sharemarket investing over a long period of time (10 years?), then why do advisers recommend other forms? Is it simply due to their commission?”
Q&As: Is there an 18-year cycle for industrial and resource shares?; Why index fund of Aussie shares has done much worse than its index; Limited submissions on tax changes not good enough; NZ shares, already favoured, shouldn’t get still more favourable tax treatment.
Q&As: Why I won’t do research on an Aussie resource index fund; Too little time to study the new tax plans for international share investments.
Moving money across the globe is a risky tactic. The situation of a reader may not seem relevant to many others. But there are lessons here for practically everyone.
Q&As: Should you portfolio be regularly serviced? And how do you calculate the return on it?; How to work out which term deposit is better; What’s in a finance company name?
Excerpt from Get Rich Slow. This is the final week in which we are running excerpts from Mary Holm’s bestselling book, “Get Rich Slow: How to grow your wealth the safe and savvy way.” Mary’s regular Q&A column will resume next week.
Australia is not good enough to get the spread. It’s a basic principle of wise investing: Spread your share investments around the world, to spread your risk. But proposed tax changes will increase taxes on overseas share investments beyond Australia. So should we stick with Australasia?