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Share Market tips

Here is an article I put on the site in 2020 and I thought I would repost it but have made some changes to it.

This article is solely based on the writer’s own opinion and knowledge and is not to be taken as financial advice. If you need the advice of a professional see your bank manager or financial advisor.

Share Market tips

Written by R. A. Stewart

It is crucial for investors to invest in companies which are going to withstand the covid-19 recession which could last for two or three years. It makes me wonder how many companies are still going to be around after this pandemic is over.

So which companies are worth investing in and which ones to avoid?

My picks are:

Genesis Energy

Power companies have to be a good investment since everyone uses power.

Trustpower

Same as for Genesis

Meridian Energy

Same as for Genesis & Trustpower

Spark

Have hosting rights to several sporting events and most people use cellphones. Has to be a good investment.

Fonterra

The milk payout is expected to be low next season so this is a share to snap up when they bottom out.

PGG Wrightson

Farmers are propping up the economy so expect Wrightson Shares to be steady

Westpac Banking

Long term investment. The banking selector thrives off the back of a thriving economy so they are a long term investment.

Warehouse Group

Best of the retail outlets but likely to be affected by the buying online trend.

Fletcher Building

This is one company I am looking at to add to my sharesies portfolio. It is affected by a shortage in building materials but still a good investment.

The companies I am a bit hesitant to invest in are those connected to travel and tourism, insurance, and manufacturing. The travel industry is rebounding but it is still a volatile industry to invest in. Insurance companies are prone to taking a hit from climate change events while manufacturing often suffers from cheap imports.

Most people have retirement savings scheme of some kind and in New Zealand that is called kiwisaver which are managed funds or mutual funds as they are called in America. The fund manager is making the investments on behalf of the fund owner but there is one kind of investment where you are able to make your own decisions and that is www.sharesies.nz This is a New Zealand share trading platform where you are able to join for as little as $1 as their TV ads state. The beauty of sharesies is that you can invest in managed funds or individual companies. It is a great way for the young and not so young to add another string to your financial portfolio and gain some knowledge of the markets at the same time. In the US there is www.robinhood.com There are other share investment platforms which are  cropping up. In NZ there is also Hatch, Kernel, Invest now, and Tiger Trade. They are a great way to get involved in the sharemarket for little outlay and gain experience. 

MY STRATEGY

My strategy with sharesies is to choose a particular share to invest in that throughout the year. I purchase some shares every two weeks in that particular company. That way I will have bought some shares when the price of it is low. This year the company I chose was Fonterra; in 2021 it was Spark, and 2020 Genesis Energy. I am looking at Fletcher Building for next year. All of these are New Zealand companies.

www.robertastewart.com

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Retiree scammed out of $100,000

Banking fraud is a major problem in the age of technology and there are some very sad stories of people being scammed out of their life savings. This is one of these stories and this could happen to your elderly relative. At the bottom of this article I have included some steps to take in order to protect yourself against banking scams.

Retiree scammed out of $100,000

A New Zealand bank refused to reimburse a New Zealand retiree after cyber criminals gained access to his account and transferred $100,000 from his accounts to an overseas account.

The 71 year old victim believes the scammers hacked into his banking app.

He claims the bank should take responsibility for his loss.

Three unauthorized transactions were made from the pensioner’s account; the first of 49k and two others of $11k and 38k and while the bank was able to stop the $11k and $38k transactions it was unable to prevent the $49k withdrawal which occurred the day before the other two.

Some of the money was set aside as an inheritance for his grandnieces. It is likely they will now miss out on their inheritance.

The bank’s customer who has been with this particular bank for years described the bank’s position on this situation as harsh.

Police had investigated this matter but believed it was between the bank and their customer to deal with. 

The bank had communications with the beneficiary bank in regards to the stolen money and say if they are unsuccessful in recovering the funds then they will not reimburse their customer for the loss.

There was no evidence to suggest that the bank’s own security system was breached and this was made known to the customer. It tends to suggest that somehow the customer’s to blame for this scam. However, he maintains that he did not share his internet banking login or password with anyone or divulged his personal banking details in response to an unsolicited email.

Unfortunately what happened to this pensioner is not an isolated incident. 

Another pensioner was scammed out of $134,000 and his bank refused to reimburse him after they claimed that he did not take adequate precautions.

Precautions against banking fraud

Here are some basic precautions to take to protect yourself against banking fraud:

1 Do not put all of your eggs in the one basket

The pensioner in this story should not have just left all of his money in the one bank account. He should have opened an account with a separate bank and NOT linked it to internet banking and invested his grand neice’s inheritance in this account. 

2 Do not click on links

Do not click on any links on any email you receive even if you believe it is from your bank because it may be from an internet scammer instead. It is safer to type in the URL address instead and just type in the URL address and log in.

3 Do not link your debit card to your personal savings account. Someone I know had $3,000 NZ go missing from his account when the website that had his banking details was hacked. Fortunately the bank reimbursed him the amount.

4 The other precautions are basic common sense ones such as not sharing passwords and changing passwords occasionally.

5 When signing up to a dating or other sites it will pay to use an email address which is different from the one which you do your banking. 

www.robertastewart.com

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American retirement schem

I have often talked about the New Zealand retirement scheme called KIwisaver. Here is an article on the  American Version which I have obtained PLR rights to. As with New Zealand’s Kiwisaver it is imperative that you join your country’s retirement scheme which is called 401k.

A 401(k) plan is an employer sponsored plan. The employer makes direct contributions to the account that are deducted from the employee’s paycheck. Most companies will match the paycheck contribution up to a certain percentage. In general, the contributions are before tax dollars and grow tax deferred until they are withdrawn. After-tax contributions are also allowed.

You should contribute as much as you can to your 401(k). Don’t overextend yourself, but you don’t want to waste the opportunity to deposit tax free, tax deferred money and have it matched. The amount the company matches you for is free money. Don’t let it go.

In 2005, the maximum before tax annual contribution that an employee can make is $14,000. If the employee is over 50 years of age, he or she can contribute $16,000. The limit is set to increase by $1,000 in 2006.

Your 401(k) is simply an account; you chose the investments within the account. There is usually an array of mutual funds presented to you, but you must decide the allocations. There is no one to advice you when it comes to role fees and expenses that will affect your overall returns.

First, decide how much risk you are willing to assume. How much volatility within the portfolio can you stand?

If you are in your 20’s and early 30’s you have the time to be aggressive with your investments. The time factor allows you to recover from slumps in the stock market. As you age, your investments should become more conservative to protect your earnings.

Many 401(k) plans have tools, such as online calculators and worksheets, which help you in determining how much risk you should accept. The best tool is often to seek the advice of a competent financial planner. It is worth it to hire a planner to evaluate your assets and earning ability if the end result is a comfortable retirement.

If you find that you are in need of money, most plans will allow you to borrow up to 50% of your vested balance, but not over $50,000. You usually have to repay the money with interest within five years. The interest payments go into your account, so you are paying yourself the interest. There are downsides, though.

The money you have withdrawn as a loan isn’t appreciating. The original contributions were made with pre-tax dollars, but the money you payback is after-tax. If you don’t pay back the money it will be considered a normal distribution, and taxed and penalized.

If you leave the company, in most cases you will want to take your 401(k) with you. You can role it over into another company’s 401(k) plan program or into your own IRA at a brokerage. With an IRA, you will have more control over your account, and better investment options.

Whatever you do with your IRA, make sure that you follow all procedures to the point. You don’t want to accidentally withdraw your money and have to pay the taxes and penalties. This is a very costly mistake.

If you are an entrepreneur, you can open an individual 401(k). This gives you the option of investing thousands of dollars more than in other kinds of self-employment retirement accounts. An individual, or solo, 401(k) is available to businesses that only have the owner and spouse as employees. This means that if you work for someone else and have a business on the side, you can open an individual 401(k).

www.robertastewart.com

 

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What is the biggest mistake made by bitcoin investors?

Question: “What is the biggest mistake made by bitcoin investors?”

Answer to the question, “What is the biggest mistake made by bitcoin investors?”

The biggest mistake is being too careless with your online banking and that includes crypto trading. Here are some rules to follow:

1. Don’t log on by clicking on a link in an email but type in the site’s URL instead.

2. Invest your cryptocurrency in different wallets because there is always the possibility that one wallet can be hacked and you will lose all of your bitcoin.

3. Use different email addresses for different crypto wallets.

4. If possible, do not use your normal email address for signing up with bitcoin wallets.

5. When using a two step method to sign in with a bitcoin wallet include your cellphone.

Following simple rules are necessary in order to stay safe online because the cyber world is full of scammers who are after your money. A bitcoin crash is not the only way you can lose your money as a crypto trader. Hacking is a problem. If your email address is hacked by scammers then how easily would the scammers have access to your crypto wallet?

It is not unheard of for a bitcoin trading platform to go bust. Cryptopia in New Zealand is an example. It is believed that hackers are responsible for that one. Therefore, it will pay to spread your money around different wallets to spread your risk.

Most importantly only discretionary spending money should be used for bitcoin trading. That is money you would have otherwise used for nights out, holidays, and hobbies. That way any loss to your money will not cause any undue hardship to you.

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv

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The bandwagon effect!

The bandwagon effect!

“Safety in numbers” is an old saying which is the downfall of many people. We have seen it so many times throughout history that when the share markets are on the rise investors jump on the bandwagon; this pushes the share price up even further. It is the same story that something is only worth what others are prepared to pay for. 

During the 1980s when the markets were humming along investors kept jumping on the bandwagon; some even borrowed money to purchase shares using their current share portfolio as collateral. Higher share prices meant that investors could borrow more. One person told me at the time that he knew someone who took out a mortgage on his home to buy shares.

Then the crash happened on Black Monday 1987; the result was that shares were worth less than the loans taken out to purchase them. In many cases they were ot even worth the price of the paper they were printed on.

The same bandwagon effect which pushed the prices of the shares up also caused the crash as investors jumped off the bandwagon.

We have also seen it in other industries. During the early 1970s farmers were buying bobby calves to hand raise for beef. Prices for beef were high but then prices took a huge dive and prices for some beef cattle did not even recoup the money which was spent raising them. Over supply of beef was a factor. I am speaking from experience here because my father was rearing calves for beef.

Back to the present, it is no secret that cryptocurrency has seen the same kind of bandwagon effect. It has experienced swings and roundabouts and will continue to do so. It all boils down to the fact that something is only worth what others are prepared to pay for. 

What often drives the markets is often the fear of missing out or as it is often called “FOMO.” Others see the success others are having with their investments and decide to jump on the bandwagon without any thought to whether their investment fits in with their goals. The young ones who are not tied down with commitments are mainly guilty of this but not necessarily. A couple of years ago one particular share was on a roll. Its share price increased ten fold and a lot of young investors jumped on the bandwagon; then the share price slid and it fell to one tenth of its peak. The media claimed that investors lost 90% of their money but honestly that isn’t true because it all depends on when they bought their shares. It may be true if one purchased their shares at the peak. 

The Global Financial Crisis led to several finance companies going belly up. There were heartbreaking stories of retired folk losing their entire savings after having everything invested in the one company. The TV advertising for these companies were aimed at the older folk. Many jumped on the bandwagon but investing everything into the one company, well, did they ever hear about diversification?

It is worth pointing out that if there is an opportunity for capital gain then there is also an opportunity for a capital loss.

All investors must be aware that markets go up and down; a cool head is needed during the periods of volatility. The risk you are taking on must be factored into your investment decisions. It all boils down to your timeline and whether the loss of your capital will cause you any distress. It is no good investing in something if the risk of losing your money is going to cause you to lose sleep.

Feel free to share this article. You may use this article as content for your website or ebook.

www.robertastewart.com

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv

 

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“Is Bitcoin right for me?”

Answer to the question  “Is Bitcoin right for me?”
It all depends on what the money is going to be used for. Bitcoin is not
the place to invest savings which are for a house deposit or vehicle.
Bitcoin is not a substitute for your country’s retirement scheme.
Because of its volatility only discretionary spending money should be
used for buying bitcoin. What is discretionary spending money? It is
money that you can fully afford to lose. Some examples of
discretionary spending are money which is used for betting on horse
races or lotto, money used for dining out, and holidays. If you have
debts then any discretionary spending money you have should be
used to reduce that debt. Less debt also means less interest you
have to pay to service that debt.
The other factor to consider when deciding whether bitcoin is right for
you is your risk profile. If you have little tolerance for risk then bitcoin
is not for you. Life is too short for you to be constantly losing sleep
over how your bitcoin investment is doing.
In a nutshell, the only money which should be used for purchasing
cryptocurrency is money which you can fully afford to lose. And then
maybe, you will get a good night’s sleep.
Thinking about giving cryptocurrency a go? Here is something which
may interest you

https://coinbase.com/join/gochwv

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What is dumb debt?

There is such a thing a dumb debt; so-called because borrowing for such things is just downright dumb.

It boils down to needs and wants. If you want something but don’t need it then purchasing it with borrowed money is just plain dumb and I am not talking about borrowing for something for your business but rather items of a personal nature such as a new stereo, TV, couch, or whatever.

The reason why borrowing for these items is considered to be dumb debt is because they lose their value once they leave the store. Have you ever purchased a consumer product and found that you could sell it at a high price elsewhere? Rarely!

The interest payable on goods bought on credit adds to the cost of the item; this is called “dead money” because you get nothing tangible for it.

The interest payable on dumb debt may not be noticable in the short term but over a a life time this adds up t a huge amount. If someone spends an average of $500 per annum on dumb debt this adds up to $10,000 over a period of 20 years. This is a conservative figure, some people will be paying three or four times this. 

One quote I heard years ago was, “Money makes you more of what you are.” This means that people will increase their borrowing in line with their income. As their income increases so does the stuff they accumulate with borrowed money.

For those people who have got into a bit of dumb debt it says a lot about their financial literacy. 

Many people consider themselves financially competent if they have a good credit rating. Success for them is about how much money they can borrow.

A person with some degree of financial literacy will invest in assets which increase in value over time. This could be your home, the share market, mutual funds, your retirement fund, and other types of investments.

It is not how much is in your pay packet which counts it is what you do with it. 

Many people may say that it is hard to save money due to the cost of living crisis. That is a fair comment. You may have no control over rising costs but you do have a choice in what to do with your discretionary income.

It is all about prioritizing your spending. I know one person who has 10 cats and is struggling financially. She has spent $1,000 on a vet bill for one of her cats. If that is not stupidity then I don’t know what is. What someone prioritizes their spending is what they value most of all.

Most items bought can be converted back into cash but problem is that the money received on such items is less than what was originally paid for them; that it why borrowing for such items is called “Dumb Debt”.

It is important not to get taken in by the flashy advertising by loan sharks. They are very enticing; so much so that you can easily fall for their smooth talk. Advertisers who are making their pitch toward you will try to convince you that they are doing you a favor but the truth is they want something from you. Many of their slogans are simply not true; one I saw was “Helping you to get ahead.” This couldn’t be further from the truth for the individual who fell for this. 

Interest is dead money, it is money you are spending but are not receiving anything tangible in return. Always keep in mind that anything which costs you money is a liability. Something which is a hindrance to financial success. I am not talking about your living costs here but rather what commitments you take on. You may not have any control over your rates or rent payments but other things you do have a choice in and it is these choices which can make or break you.

ABOUT THIS ARTICLE

This article is of the opinion of the writer and may not necessarily apply to your personal situation. You may use the article as content for your ebook or website. 

www.robertastewart.com

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Is it too late to invest in bitcoin?

Answer to the question: Is it too late to invest in bitcoin?

Answer to that question: If you believe that bitcoin will not rise in the future then it is too late to invest in bitcoin (according to your opinion) but who is to say that it is not going to be worth 100 times more than it is today? Look at it this way; if someone told you about bitcoin in 2010 and tried to persuade you to purchase some then you would probably have dismissed them as a scammer but now there are lots of investors who have thought “if only I had.”

Asking the question of whether it is too late to invest in bitcoin is similar to asking the question whether it is too late to invest in gold or the share market.

You are never too late for anything. Gold and the share market have both had their ups and downs and if you invest in something that is on a down cycle then chances are your investment will produce some capital gain but at the same time it is worth keeping in mind that whenever there is a chance for capital gain there is always a chance for a capital loss.

The rules of investing in other assets also apply to cryptocurrency and one of these is “If something is too good to be true then it is most likely is.”

So is it too late to be investing in bitcoin? Not if it bottoms out and starts rising again. As long as you have some money to speculate with that you are quite prepared to lose then there is no harm in having a go and who knows you may have caught on to the next crypto bull run.

 

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv

www.robertastewart.com

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How low will bitcoin go?

Question: How low will bitcoin go?

Answer to the question “How low will bitcoin go?”

 

That is the $64,000 question. I don’t think anyone really knows and if someone professes to know then you should check their credentials for making such bold claims. 

It should be pointed out that something is worth only as much as others are prepared to pay for it. If there are more sellers than buyers then the price drops. If people are greedy then the market will take advantage of it.

Many of the same factors which affect the share market are also present in cryptocurrency. I think it is no coincidence that the slide in bitcoin values has come at the same time as the share market slide.

Once the share market recovers then bitcoin may follow suit and notice I said “may,” without giving any guarantees because bitcoin has such a short history that it is difficult to predict its future but based on the last ten years it seems that bitcoin has gone through it’s highs and lows and this gives investors at least confidence that it is likely to recover but when will this be? Some are predicting that it will be late 2023 or 2024. Who knows?

 

Thinking about giving cryptocurrency a go? Here is something which may interest you:

https://coinbase.com/join/gochwv

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When is it a good time to borrow?

Written by R. A. Stewart

Are there circumstances when taking out a loan of some kind is justified?

The short answer is “”Yes” but only in exceptional circumstances.

Here is my list of things when borrowing can be justified.

  1. Buying a house

This can be the best investment you make. Can be because if you are not smart about

this then it can financially cripple you. At the peak of the covid crisis interest rates were

so low that house hunters took out huge mortgages but once interest rates rose it

affected their ability to service the loan. House hunters need to do their homework and

factor in the possibility of interest rate rises.

Purchasing a house is a major commitment which can lead to financial trouble if you do it

wrong. You have to do your homework before even considering purchasing a house

and work out how much you can afford to pay off each week. There will be rates and

insurance to pay as well as the mortgage and interest.

  1. Pay off a loan with a higher interest rate.

This is a good move. The savings you make here can go towards paying off your debts.

Dumb debt tends to have the highest interest rates so if you have some of that then you

need to question whether you really need to purchase stuff on credit.

  1. Purchasing a car

It is strongly advisable to purchase your car with as little borrowed money as possible. It

is also advisable to not pay more for your car than is necessary. Purchase from a

reputable retailer and not from some random individual. Taking out a loan to purchase a

A motor vehicle can be a necessary evil if the car is needed for your work or business. In

In the case of a business, any costs associated with the car are tax deductible.

If you are a responsible person you will have developed the savings habit you will have

some cash that can go towards the car which reduces the amount of borrowed money

needed to purchase the car. If you cannot even manage to save for a car then can you

even afford to have one? The running costs of a car are expensive with the rising fuel

costs, insurance, and parking costs. The question of whether yu can even afford to have

a car and whether there are other options available to you must be carefully considered.

 

  1. Purchasing a business

What do you need to consider when taking out a loan?

Here is a list of things to consider:

  1. How much can I afford to pay per week to service the loan?
  2. Can I obtain cheaper credit elsewhere?
  3. Is it really necessary to take out this loan?
  4. Will this loan help me achieve my financial goals?
  5. Taking out a student loan

Upskilling can pay off in the long run therefore, taking out a student loan can be

financially worthwhile if you choose the right course. You need to make sure that you

absolutely know what you want to do with your life because if you do not make use of

your qualifications then it can be a total waste of time and you will still be lumbered with

your student debt.

www.robertastewart.com