Digging your way out of the big hole. You’re never in debt so deep that you can’t get out again. At least one reader of this column will be reassured by this message from Raewyn Fox, chief exec of the Federation of Family Budgeting Services.
Direct share holding often not the best way. A sentence in a recent speech by Reserve Bank Governor Alan Bollard caught my eye. “New Zealanders invest about twice as much in equities (shares) directly compared with managed funds,” he said.
Help for those in debt. Repaying high-interest debt is sometimes called the best investment. And there’s a way to do it that, I suspect, many people don’t know about.
It’s the same old song. New data confirm the same old messages about share investing: hang in there, and diversify.
The investment games people play. Let’s say you’re playing a game in which everyone has been given $20. In each round, you choose whether or not to put in $1, and a coin is then tossed. If it’s heads, you get back $2.50. If it’s tails, you lose your $1. How often would you put in a dollar?
Look beyond the dividends: In share fund investing, keep your eye on the prize — the over-all return, not just the fees and dividends.
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!”
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?”
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.
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?