This article was published on 9 July 2016. Some information may be out of date.


  • Property upgrading sometimes works well, but not always
  • Was I paid for “advocating” a type of investment?
  • Unknown unknowns can hurt investors
  • Get on with property investing, regardless of the market

QA lot has been made of first home buyers, but I have seen little concerning the other end of the market.

A friend of ours sold her house and downsized. She sold it for $1.06 million, and this amount was what she had for the rest of her life plus her pension.

However, if she had upgraded her property in the years leading up to the sale she would probably have had somewhere around $1.5 to $1.6 million — a much bigger amount to play with. She was not able to do what she wanted with the lesser amount and consequently had to change her plans.

To my mind upgrading a house is not spending money but converting it into another form, which is redeemed at a later date.

People nowadays when viewing a property expect it to be brand new, no matter how old it is, and in tip top condition. If it’s not, they expect a bigger discount than what it would cost, usually, to keep the place in a good condition.

I think most people do not look far enough ahead to that stage in life in making a judgement as to the best course. The thought being, “I’ve got plenty of time yet to deal with that.”

AThere’s no question that it’s worthwhile to keep up the maintenance of a property. Whether that extends to upgrading the property depends on what you do to it.

It’s always a good idea to bring the worst house in the street up to the standard of its neighbours. But you may not be rewarded for turning a house into the pride of the neighbourhood. Sure, in a fast-rising market, you’ll probably sell it for more than you recently paid for it. But by the time you deduct the upgrading costs, your gain might be less than if you had done nothing.

It also depends what changes you make. Experts say that good moves often include updating kitchens and bathrooms — especially if the old ones are really shabby. But don’t spend heaps.

It’s often also good to: insulate a house, remove walls to allow for open-plan living, add a third bedroom, or build a deck — with large doors out to it.

A quick paint job can be a big plus, as can smartening up the entrance to create a good first impression. But installing expensive fittings, curtains or carpet may not be worthwhile unless the old ones are horrible.

Another change that may not pay for itself is adding a swimming pool, which some people see as just a maintenance chore or a hazard for young children.

Keep in mind, too, the hassle of living in a house while it’s being upgraded. If you’re not likely to gain hugely from the changes, you may not think it’s worth the bother.

By the way — following on from your point about house buyers’ expectations — would-be purchasers might want to keep in mind that if they choose a place that hasn’t been tarted up, it may be a particularly good buy. What’s more, they can then renovate to their own taste.

QSome months ago you advocated for Smartshares or purchasing installments of same, was it via SuperLife?

It’s so hard to keep track of who owns who. SuperLife was taken over a few years back. Today in the news NZX has acquired or has a secondary financial interest in both companies.

I query the reason behind your advocacy for a product. Are you required to disclose if you get any payment for giving advice?

I say this as I think you were quoted on either Smartshares or SuperLife website like a “banner” on top of their website.

My concern is they seem to be a viable option. Any future savings I made in those products is a risk for my own retirement, so I need to know: if the NZX has amalgamated or now aligned with Smartshares and SuperLife, is it overseen by FMA, or largely overseen by its own regulatory body? That would be a bit dubious if it is self-regulated?

I understand there are two NZ stock markets now? Is the NZX one the secondary IPO or start-up company listing one, and not the main board?

ASome good questions — even if I winced as I read your letter. Let’s take your questions from the top.

In recent columns I have said that I’ve always liked index or passive funds, which invest in the shares in a market index. That’s mainly because they charge lower fees than active share funds, whose managers choose which shares to buy and sell.

Research shows that index funds perform better than the average active fund over the long term, especially after fees. It’s not so clear for funds that invest in New Zealand shares, but I’m not convinced that any active NZ share fund will perform better than an index fund, so I prefer index funds for local investment too.

But I’ve never “advocated” for Smartshares, just told readers that they are by far the major provider of index exchange traded funds (ETFs) in New Zealand. As explained in a recent column, you can buy them directly from Smartshares or via SuperLife. You can read about the differences at

Who owns who? Well, a subsidiary of the NZX — the company that runs the stock exchange (then called the NZSE) — started this country’s first index ETF in 1996. The subsidiary, now called Smartshares, has since launched several more index ETFs.

Meanwhile, in January last year the NZX acquired passive superannuation and KiwiSaver provider, SuperLife.

“Smartshares and SuperLife have separate brands and offerings, although both are wholly owned by NZX and regulated by the Financial Markets Authority (FMA), as well as being supervised by independent trustees,” says the NZX.

“As a listed issuer, Smartshares is also subject to regulatory oversight by the Special Division of the New Zealand Markets Disciplinary Tribunal, which also regulates NZX Limited. NZX’s own regulation division has no involvement with Smartshares.”

Got all that? Basically, there’s a fair bit of regulation going on.

Am I required to disclose if I get any payment for giving advice? Legally no, but ethically yes. And I don’t get any such payments from anyone. In fact I’ve turned down many opportunities over the years to do lucrative work or endorsements that might compromise — or be seen to compromise — my independence. So it hurts a bit to be under suspicion.

By a “banner” on a website you must be referring to this quote from me on Smartshares’ website: “Many New Zealand shareholders own shares in just one or a few companies. That’s not clever.” As it says on the website, the quote comes from “Upside, Downside — a guide to risk savers and Investors”, a booklet I wrote for the Reserve Bank.

I gave Smartshares permission to use the quote, because I think the point is an important one. The more people who read it, the better. But at the time I wrote to Smartshares’ representative, “It’s really important that I retain my independence. I don’t want there to be a possibility that people will think I’m endorsing Smartshares.”

Your comment therefore worries me. So let’s make it clear: I was not paid for the quote. What’s more, in any of my columns — or on any website or wherever — if I say I think an investment is good, it’s because I think it’s good. I never receive any money or other favours.

On to your last question, about two stock markets. NZX runs both. Here’s how they describe them:

  • “The NZX Main Board is a public equity market for larger, more established businesses. For example, Spark, Fletcher Building and Trade Me are listed on the Main Board.
  • “The NXT market is an NZX market built for smaller and potentially high growth businesses. NXT is positioned as a “stepping stone” market for companies before they reach a size appropriate to transfer to the NZX Main Board.”

QYour two correspondents last week — from “sub-optimal” to Kaikohe — illustrate a marked difference in taking responsibility for their own decisions and happiness. The first writer is doubtless much better off than the second, but who has more gratitude and enthusiasm?

I also loved your paragraph, “I operate in the real world — making suggestions on how to cope with the unknowable. Is that sub-optimal? Only when compared to the impossible.” A nod to Rumsfeld’s famous quote perhaps?!

As I often say to my kids, to their great annoyance, “life’s not fair but it’s still good”.

AYes, the woman from Kaikohe, a stay-at-home mum with a part-time cleaning job, has a wonderful attitude, doesn’t she.

On US Secretary of Defense Donald Rumsfeld, I certainly wasn’t consciously referring to him. But his quote is worth repeating here. He was replying to a question about “the lack of evidence linking the government of Iraq with the supply of weapons of mass destruction to terrorist groups,” according to Wikipedia. But the quote could also apply to finance.

He said, “Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

In the financial world, a lot of people make out they know more than they really do about the future. There are just too many factors that affect interest rates, the value of currencies, share prices, bond prices, property prices and so on.

Sure, we can learn a lot from long-term trends. For example, interest rates and currency go down as much as up, but shares and property tend to grow faster than inflation over the long term.

But beyond that we should always invest assuming bad stuff might happen — including unknown unknowns. Work through a worst case scenario. If you could cope with that, then go ahead and, of course, hope for the best.

QI sold my unit last year so am “cashed up” at present (not a very large amount). I’m trying to decide how long to wait to get back into the market again.

I don’t live in Auckland. If I made a purchase it would likely be in an area outside of a main centre — somewhere where prices are still relatively realistic, not hyper-inflated. Any thoughts?

AAccurately timing property markets is another impossibility.

In light of that, you might as well get on and do what you want to do. It might turn out to be good timing, and it might not. But the same can be said for waiting on the sidelines. And in the long run, it probably won’t matter as much as you might think.

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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.