This article was published on 3 August 2013. Some information may be out of date.


  • Reader’s shareholding success probably more luck than skill
  • There’ll always be renters, but that doesn’t mean we have to love landlords
  • Property investors with big debt take big risk — and why do they brag?
  • Older workers do take jobs from the young to some extent
  • KiwiSaver contributions not taken from redundancy pay
  • On quitting KiwiSaver to start a business

QThe current government seems very anxious to discourage people owning overseas shares. The rules for people holding more than $50,000 of shares overseas are complex beyond belief, which is a trifling amount.

All the same when I was working overseas I dreamed of becoming a shareholder in HSBC, where a late uncle had been one of its bank managers in the East.

The shares were just too expensive until one day the market dropped, as markets will, and I bought as many shares as I could afford. The only other overseas shares I have are Rolls Royce Aero Engines, another lucrative buy.

Anyway, although one is not supposed to put all one’s eggs in one basket, this Eurasian bank HSBC does not either, trading in over 80 countries worldwide.

It makes enormous profits like the oil companies, which have exceeded US $20 billion two years running. What’s more, they pay good dividends, in fact, paying four dividends a year, payable in cash or scrip or a combination.

This enables my wife and me to go on a long overseas holiday every other year. As one French lady once remarked, there is no special achievement in being poor. En passant, we are off on a cruise on the Pacific Pearl shortly.

ALucky you. You might well think I should be saying “clever you”, and I do admire your move to buy the HSBC shares when the market had dropped. Many people lack the courage to do that, worrying that prices won’t ever recover.

However — assuming you are the “amateur” share investor you seem to be — I’m afraid I doubt if you can really take much credit for your choice of shares.

It sounds as if you eyed HSBC because, through your uncle, you saw that the company was performing well. But that doesn’t necessarily mean its shares are a good buy.

If a company’s prospects look good and it’s paying strong dividends, everyone can see that, and many professional investors in financial institutions will buy the shares before you do. That demand will push up the price, so by the time you buy it’s no bargain.

The price won’t grow much more unless the company’s prospects become even better than the professionals expected, so they buy even more shares. It’s not performance that pushes up share prices, it’s newly revealed prospects.

That’s probably what happened with your two shares. They performed better than even the professionals foresaw.

But — dare I say it — you could have bought shares in two companies that had been performing well, but their performance then dropped below expectations. Their business might still be growing heartily. But if it’s not quite as hearty as the professional investors expected, its share price is likely to fall.

The long and the short of it is that it’s probably impossible for an amateur investor to successfully pick shares — unless they have insider information, and it’s illegal to trade on that information. Even professionals often pick shares poorly.

For every success story like yours, there’s someone who also thought he or she was buying wisely but whose two shares are now worth little or nothing. But they’re not going to write and tell us about it.

You’ve taken a big risk putting all your money in just two shares. And while the fact that HSBC operates in lots of countries does help to spread its risk, it’s still a single share. As I said at the start, you’ve been lucky.

Sorry to be a wet blanket. Enjoy your cruise.

QMany people are quick to rubbish property investors. However these very same people forget that their own sons, daughters, grandchildren, nieces, nephews, their parents and even grandparents may at some point need to rent a house to live in. Next week they’ll be bagging “rents are too high”.

P.S. Some people will rent their whole lives or for long periods — irrespective whether house prices dropped 50 per cent tomorrow! Examples: school leavers, uni students and those couples saving for a deposit; families who have separated/divorced; grandparents who did not save for their retirement. This is fact.

AYou’re quite right there will always be renters — even though most in your list don’t stay in that situation for anything like their whole lives. Still, there are always new school leavers, students and so on coming along.

It doesn’t follow, though, that we must all be appreciative of landlords, any more than we must appreciate, say, shopkeepers, who also provide a service — or for that matter any more than landlords must appreciate tenants.

Nobody makes anyone be a landlord, and most of them do pretty well. Some in fact skite about how well they do, which probably leads to the “rubbishing”. See next Q&A.

QI would like to buy another property, but I’m currently just sitting tight. I have friends who brag about how many properties they own but are also unconcerned about their debt level. I currently have zero debt.

My issue is I believe the world economy could go bust like you would not believe.

AI sit somewhere between you and your mates. While economies will always have their ups and downs, I can’t see the whole thing falling apart as long as there are people providing goods and services and buying goods and services.

Still, I share your reluctance to get into much debt. Borrowing a reasonable amount to buy a home or investment property often works well, but it does boost risk. Anyone with big debts should ask themselves how they would cope if they lost their job and were forced to sell assets when prices were down. A scenario like that certainly could happen.

While we’re at it, do you ever wonder why people brag about their properties? I doubt if it makes anyone like them or admire them. Maybe it makes others envy them, but what do they gain from that? Got me!

QLast week you were a little quick to dismiss the possibility that older workers remaining in the workforce might block those entering employment for the first time.

When the labour market is buoyant, this does not matter as new jobs are created and anyway, older workers often do not compete directly with labour market entrants. But since the beginning of the global financial crises, and a much softer New Zealand labour market, the figures for labour turnover have dropped considerably as employers hoard labour (keep their current workers) and workers do not want to take a risk by changing jobs.

This is underpinned by employment trends which have been all over the place, but have often involved the disappearance of full-time jobs to be replaced by, at best, part-time employment. The result is that the number of those in their teens and twenties who are unemployed has gone up significantly; in some cases, the figure has doubled since 2009.

An equally important concern is the fact that the proportion of these age groups who are not participating in any employment at all has also increased. There is evidence to suggest that the current labour market (hopefully it will improve soon) and the lack of worker turnover has impacted on the ability of youth to get employment.

But we should also note that an increasing number of workers have been working past 65 anyway, partly because their skills are in demand and partly because they need the money.

My own view is that these changes to the labour market should not derail the very important discussion about increasing the age of superannuation eligibility. But we will need to adjust our policy settings to account for these changes, especially in transitioning young New Zealanders into their first job.

AI stand corrected. You — Massey University sociology professor Paul Spoonley — know more about this than I do.

Still, I’m not going to concede 100 per cent! Regardless of the economic climate, the number of jobs is not finite. If older people keep working rather than retiring, that must create at least some jobs, even if each working oldie doesn’t create one full job these days.

This all leads to the question: Should people who work past 65 feel guilty for doing that? Maybe a solution would be that they could try, in the course of their work, to create jobs for the young.

QI work for NZ Post. As you may have heard, a lot of people in NZ Post are going to be made redundant soon. My question to you is will some of my redundancy pay go into KiwiSaver? If so how much percentage-wise?

Is it best for me to pull out maybe (take a contributions holiday say two weeks before I get the redundancy pay) so I don’t lose a lot of my money into KiwiSaver? I’m 60 now and when I leave NZ Post I will be in my 62nd year.

AI’m glad to be able to take one worry off your shoulders. Inland Revenue says, “Redundancy payments are not liable for KiwiSaver deductions.”

After you’ve left the job, you can continue to contribute to KiwiSaver if you wish — whether or not you get another job.

If you retire at that stage, I suggest you use a bit of your redundancy money to contribute $87 a month to KiwiSaver, so you keep getting the maximum tax credit. You’ll get your contributions back in just a few years, plus the government’s contributions.

QCan I withdraw from KiwiSaver to start a business? Any quick advice would be good, cheers.

AI’m not sure whether you’re asking if you can withdraw your money from KiwiSaver or if you can stop contributing.

If it’s the first, no you can’t take out your savings to start a business. The only reasons for withdrawal before NZ Super age are: significant financial hardship, serious illness, leaving NZ permanently, or buying a first home. Also, if your relationship breaks up, the money could be given to your ex-partner in the same way as other savings. And if you die, the money goes to your estate.

But if you’re just asking whether you can stop contributing, usually you can. The only situation in which you can’t is if you’re an employee who has been in the scheme for less than a year — and even then you may be able to take a contributions holiday if you are suffering financial hardship. All other employees can easily take a contributions holiday without giving a reason. Download the form from

If you’re self-employed or not employed, you can just stop contributing whenever you want to.

Good luck with the new venture. And how about employing some young people?

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Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.