Which index fund — if any? A reader asks which index fund to invest in. These days, though, we need to ask first whether any index fund is still a good idea. Index funds invest in all the shares in a sharemarket index. For example, the TENZ fund invests in the ten biggest companies that make up the NZX 10 index.
Bigger and better houses distort numbers. Readers keep sending in thought-provoking letters about the shares v rental property debate. It’s central to the question of how to invest long-term savings, so it’s worth continuing to explore the issues. Today, excerpts from two letters: “Your reader who commented on comparisons between housing price indexes and share market indexes has overlooked many points. Sometimes very large amounts are spent on home improvements without being considered when calculating house price increases. “With new houses, a trend for larger houses and obviously the higher cost for more square feet will also distort the figures to indicate asset value growth where there is none.
Index distortion not what it seems. A reader’s point about the ongoing shares v houses debate sounds fair enough. “Your comparisons do not compare like with like,” he writes, “because you are using an index for shares, which only covers some companies, whereas for housing, you are using the average over all houses.”