Capital gains tax discussion in New Zealand

 

Written by R. A. Stewart

New Zealand does not have a capital gains tax or wealth tax. New Zealander’s do not want one according to statistics. That is despite the fact that the so-called Super Rich are paying half as much tax as ordinary New Zealanders according to new paper reports.

This may or may not be true. 

The reason is that the super rich are benefiting from capital gains which is not disposable income. The value of their property may have risen by x amount of dollars but it is unrealised wealth. 

There are ordinary New Zealanders who own their own home and whose property has increased in value too. That may be subject to a capital gains tax too.

Then there are those who have money invested in the New Zealand pension fund Kiwisaver which invests money in property and shares. A capital gains tax may affect kiwisaver balances.

New Zealand voters are smarter than many politicians give them credit for and any political party that treats them as idiots does so at their own peril.

The same rules which are applicable to the super rich are also available to everyone else who owns property. There will be a lot of people who are considered to be middle income earners but are finding things tough with the cost of living crisis yet many of these are property owners who are asset rich but cash poor. They may not have the cash available to pay the tax on the capital gains on their property.

For years New Zealanders have been encouraged to save for their retirement so what message does it send to the young to then increasing taxes on assets which have been built up over the years.

It is likely that a Capital Gains Tax will drive up rents as landlords will want to recover the extra costs to their business. This will hit those on a lower income the most as they are priced out of the housing market.

About this article

This article is of the opinion of the writer and is not necessarily applicable to your personal circumstances. Feel free to share and print this article.

www.robertastewart.com

How to make or lose a fortune

Written by R. A. Stewart

“How can I make a fortune on the share market?”-a question some random person may be thinking to him or herself and if I really knew the answer to that question then I would be rich beyond my wildest dreams.

I can’t tell you how to get rich but at least I can give you some hints to help save you losing your shirt and a lot more.

Share prices do not always represent value, but rather the opinions of the wisest men in finance. The markets tell the story of the times. The stock market moves according to the news coming out from various companies. Shares prices are often ahead of actual happenings.

When you are trading on shares you are competing with some of the best financial brains in the country. They have the benefit of years of research and experience behind them. Not to mention huge financial resources and every conceivable aid to assist them.

Never lose sight of the fact that someone’s gain is nearly always someone else’s loss-don’t let it be yours. Share prices can drop sudden and faster than they rise. Don’t let it overwhelm you.

A “tip” is just an opinion. There are plenty of people who are willing to advise you to sell or to buy. Don’t let any of this throw you off course.

Some companies have professional directors whose job it is to enhance the company’s image. They add little else to the company’s bottom line.

All of the glossy brochures about a company may look impressive but they can be doctored to look better than they really are.

The financial jungle can be rough and those losses can be hard to swallow but one must learn to take a financial hit occasional and not be discouraged from taking further risks. When I say risks I mean calculated ones. 

If you are going to make yourself ill by worrying if your shares drop by a percentage point or more then stay out of the share market and be a little more on the conservative side with your investing. 

In this day and age with modern technology and online share market platforms it is much easier for ordinary people to build a portfolio on a modest income. Managed funds enable anyone to tap into the best financial brains in finance-even the financially ignorant.

Even so, keeping up to date with the financial world will help you in the long run.

Share trading can be divided into three categories.

1 Long term: For people wanting to build a nest egg for their retirement. The type of investment will depend on your risk profile and your age. Investors may want to just invest regularly into this type of fund and forget them.

2 Medium Term: For investors wanting a reasonable return up to five years with a chance of a capital gain.

3 Short term: This is for money that may be needed within the next 12-24 months. It should be placed in more conservative accounts. Money in this category may be required for appliance repairs or replacement and so forth. It is for the unforeseeable expenses. Many financial advisors even suggest having an emergency fund for this purpose.

About this article

This article is of the opinion of the writer and may not necessarily be applicable to your own personal circumstances, therefore caution is advised. Read my other articles on www.robertastewart.com 

 

Share consolidation

Share consolidation-what is it?

One term you do not hear very often is share consolidation. It is a term seldom used because not many companies have used this as an option. This article sheds more light on the term. Hopefully I have explained it well enough in terms that even the novice investor will understand.

Share market price increase may be misleading

If you are a casual share market follower and notice a particular company’s share price has jumped up in price suddenly and you are thinking, “What have I missed out on,” then it all may not be as it seems.

Let me explain.

Years ago around 2001 I think, I owned some shares in Air New Zealand. The company almost went broke. The company almost went bust. It was the government who bailed them out. The share price went from about $1.95 per share down to 14 cents per share. The share price increased a little but still only a fraction of what I bought them for.

What the company then did was increase the share price but you owned fewer shares.

This is how it works:

For the sake of simple mathematics, let’s assume company xyz’s share price is 20 cents per share.  xyz then decides to increase the price of the share to $1. 

If an investor owned 1000 shares at 20 cents, they will now own 200 shares worth $1 each.

Unless you are a follower of the share market you may be unaware of this actually happening. 

I don’t know how often this situation occurs but it may pay to do your homework if a particular share increases dramatically for no apparent reason.

What I have just tried to explain is known as reverse stock split or share consolidation.

This makes the company more attractive to investors. They may hold fewer shares but the real value of the total shares in that particular company is the same. It is just that now they hold proportionately fewer shares.

Share consolidation can be viewed negatively by investors as a company in trouble and this could impact the share price.

One reason why a company may choose share consolidation is that if it’s shares fall below $0.50 for 30 consecutive days then it will be delisted. This is applicable to the New York Stock Exchange and there may be different rules for other countries. 

Another benefit of share consolidation is that it will mean fewer share certificates will need to be printed which will reduce costs.

ABOUT THIS ARTICLE

You may use this article as content for your ebook or website/blog. The information may not be applicable to your personal circumstances therefore discretion is advised.

 

www.robertastewart.com

How to handle the share market crash

How to handle the share market crash

Written by R. A. Stewart

Cool heads are needed during a time when the value of your kiwisaver or managed funds have dropped in value. It is time to consider what your options are so here are some dos and don’ts to think about.

The dos

Do keep a cool head and weather the storm. Investing in the markets is a long term game.

Do keep reading the financial pages to keep up to date with the financial world.

Do ensure you still deposit at least $1040 into kiwisaver per annum in order to get the $520 tax credit.

Do remember that when the market has lost value, you will get more shares for your money when you buy.

Do keep adding other strings to your bow

Do keep saving a portion of your income.

The don’ts

Don’t change to conservative funds if you are in balanced funds

Don’t keep looking at your kiwisaver balance every day

Don’t lose perspective on life

Don’t listen to prophets of doom 

Don’t ignore your career/job objectives

Don’t stop saving

Always remember

Your greatest asset is your ability to earn an income. Become more valuable to employers and no one can take that away from you, not even inflation.

ABOUT THIS ARTICLE: This article is of the opinion of the writer and may not be applicable to your circumstances so discretion is advised. You may use this article as content for your ebook or website.

www.robertastewart.com

Prioritising your spending

Prioritising your spending

Written by R. A. Stewart

Life is all about making prioritise and it is not all about money and how you prioritise your spending but about what you do with your time. We have different financial commitments and different levels of income but when it comes to time, we all have an allotted 24 hours in the day, no more and no less but our income and how we earn our income will have an effect on how much time we have to devote to the important things in our life.

Many people sacrifice their time for money by spending all of their time working leaving little time for anything else. They are out of balance.

If you have a specific goal in mind such as saving for a house deposit then the sacrifices may be worth it in the long term. Maybe because only you will know whether the long days were truly worth it. It al depends on what your priorities are.

What factors should you consider when setting priorities?

Here are several to consider:

Your commitments

Your commitments will have an effect on what you are able to spend your money on. Most people have commitments of some kind and these will having a bearing on your financial spending. 

Your debt levels

Any debts you may have will have a bearing on your spending. If you have a mortgage or other debt then saving up for an overseas holiday will not be on the radar nor will spending money on things which are considered to be wants rather than needs.

Your age

Your birthday will make a difference to how you spend your money. If you are in your 60s then you are not going to plan 30 years ahead. The young ones have tat luxury. Retired people are at the spending phase of their life. That does not mean to go out and blow your retirement fund all at once but rather enjoy life to the max by ticking off those items on your bucket list.

Your family circumstances

Your family situation will determine your priorities. A single person without any kids will have different priorities than someone who is married with kids. A married person is not going to make decisions based on themselves but has to consider their spouse and plan their journey together.

Your health

Your health is another factor to consider. If you have issues concerning your health then that will be a factor in how you prioritise your spending because you may not be able to work the hours you previously did which means that less money is coming in.

Your career

Another factor. Every career has its own unique set of challenges which have to be dealt with. 

Your pets

If you own pets then you have a responsibility to take care of their needs. However, it is important to think things through before deciding to get a pet because they can be a drain on your time, not to mention finances.

What now?

Who am I to tell you what you should do with your money but if your priorities in life always involves spending money and not investing it then somewhere down the road it will all catch up with you with that medical or dentistry bill and you do not have the funds to pay for it.

Hopefully this will at least serve as some kind of guide to setting goals for managing your money.

ABOUT THIS ARTICLE

The information contained in this article is of the personal opinion of the writer and may not necessarily be applicable to your personal circumstances. Please feel free to share this article. You may use this article as content for your blog/website/ or ebook.

www.robertastewart.com

 

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

Bank scam warning

Bank customer scammed out of 40k 

A BNZ bank customer was scammed out of $40,000. His experience is a timely reminder to all not to share passwords. 

The man who had received a sum of money from the sale of a house received what he thought was an email from his bank and gave away his log in details.

$40,000 went missing from his account as a result but it wasn’t all in one lump sum. Instead it was $5,000 here, $2,000 there to different names and email accounts.

$15,000 of the money did bounce back but about $18,000 of the money is still missing.

The bank customer complained that the bank did not contact him in more than a month.

The BNZ said that because the customer gave away the code to the scammers which gave him access to his bank account they were unable to return most of the missing money to his account.

The bank also said, “They would never ask their customers to click on link in an email or ask for their password.”

Sending a hyperlink was something scammers tend to do.

There are steps which people can take to protect themselves against cyber crooks: Making use of strong passwords, not sharing passwords with anyone and setting up a two-factor authentication system.

As for this particular customer. It was too late for him and he is still trying to get the bank to take responsibility for his loss.

MY PERSONAL ADVICE

Don’t leave all of your money in just one account but invest some in an account which cannot be assessed online.

www.robertastewart.com

The averaging strategy in the markets

INTRODUCTION

Investors must realize that investing in the markets has its ups and downs (literally) that it is important to keep it all into the right perspective if investments do not go your way. There is a method of playing the markets in a way that you can take advantage of the market drops. 

The Art of Averaging 

Averaging is a term one may come across in the markets now and again; what this refers to is the average price paid for a particular share if you had bought shares in that particular company.

To calculate the average price paid for a particular share you add up the total amount you have paid for the shares and divide that by the number of shares you have bought in that company. 

The answer is the average amount that you have paid per share.

Try this mathematical question:

There are five numbers 10, 20, 30, 40, 50

What is the average number?

The calculation: 

Add up the five numbers:  10 + 20 + 30 + 40 + 50 = 150

Divide the total of the five numbers (150) by 5

150 divided by 5 = 30 (answer)

You can do this easily with a calculator.

There are so many share trading platforms available these days that investing directly into the sharemarket has never been easier for the ordinary man and women.

So how does averaging work?

If you purchase stock at regular intervals you will pay different prices for each stock because share prices go up and down. Imagine if you bought something at the supermarket last week at the full price then bought the same item this week on special. The average price you paid for the item will be somewhere between the higher price and the lower price.

The sharemarket works like that. By purchasing a particular stock at regular intervals you will manage to pick up some shares in it when the price is lower. This is the advantage of saving regularly. 

In fact I think there is a case for purchasing more shares when the price is low. The average price paid per share is determined by calculations as explained earlier. 

The averaging strategy can also be used in cryptocurrency investing. 

Bitcoin is more volatile than the sharemarket so an astute investor who has an eye for a bargain can invest when the price has dropped.

There are so many share trading platforms available that playing the markets is accessible to everyone. I have joined two of them in New Zealand. Most countries have share trading platforms available. Signing up for them is easy; you require some form of identification. Just follow the directions and you are all set up.

TO SUMMARISE

Playing the markets requires a positive mindset and a cool head. If you have these you can profit from falling markets. Averaging is a method that takes advantage of falling markets. 

ABOUT THIS ARTICLE

Robert Stewart has a blog with other articles of a finance nature. Visit www.robertastewart.com Feel free to post this article on to your site, use it as part of your ebook, share it, print it, even sell it.

 

Investing in share trading platforms

Investing in share trading platforms

Online share market platforms are gaining in popularity; they provide a terrific opportunity for ordinary folk to get involved in the share market on a shoestring budget. Just deposit $5, $10, $20, or more per week and given the benefit of time and patience this can all grow into a tidy sum.

The beauty of this is that your financial literacy increases as you get more and more involved in choosing which shares to buy.

In New Zealand Sharesies is the number one share market platform. It enables anyone of small means to invest directly into the share market and even in individual companies. 80% of sharesies investors are under 40 so it is appealing to the young folk. That is a good thing as it shows that the young are interested in matters of finance. It is also a good thing that the young are improving their financial literacy.

I cannot speak for other sharesies investors but here is my strategy. It may not necessarily be right for your personal circumstances but I will share it with you. 

I choose one company per year to invest in with sharesies and drip feed money into it every two weeks which means that whether its share price is up or down I have bought shares in it. If I had just made one purchase of the share then chances are that I have bought it at the higher price and its value has dropped a few weeks later but spreading my investment out means that I have bought some at the lower price.

You can use different strategies to suit your budget, goals and personal circumstances.

Here is the link to join Sharesies if you are keen to give investing a go. This is only for those living in New Zealand or Australia.

 

https://sharesies.com/r/377DFM

www.robertastewart.com

The difference between assets and liabilities

ABOUT THIS ARTICLE

Knowing the difference between real assets and real liabilities and then setting your financial goals accordingly can be the difference between getting yourself financially sorted or the poorhouse. It underlines the value of financial literacy in helping achieve your goals.

The difference between assets and liabilities

Written by R. A. Stewart

An asset is something which pays you money while an asset is something that costs you money.

So let’s look at some examples.

Is property an asset or a liability?

Some people may say it is an asset because it is something you own, however, if you owe money on that property and are not getting a return on it then it is a liability because it is costing you money.

Is it an asset if you are receiving rent from that property?

Only if you are making a profit.

Some people would not agree saying, “The property is increasing in value over time.”

Lets not forget there are rates to pay plus maintenance costs and insurance to pay on that property so it could be costing you money in the long term but you will have to sit down and do your homework. 

Other investment times are less complicated such as the sharemarket so lets look at other investment types which are assets. 

Assets

Your retirement fund

Mutual Funds, also known as managed funds

Other investments

Business or farm

Learn to invest your money in items that can be quickly converted back to cash; some investments do not allow you to quickly turn the asset back into cash without jumping through several hoops.

Liabilities

Any item which has money owed on it and this is your form of transport, however there are circumstances where it may be an asset such as if the vehicle is used as a taxi, which therefore makes it an asset as it is producing an income. Such costs and the money owing on the vehicle can be tax deductible. The same applies to any vehicle used in a business.

Even though a vehicle used for work and business purposes may be classed as an asset, the money owed on that vehicle is a liability and will go into the accounts as such.

The reason why so many people are in such a poor financial state is that they borrow for stuff instead of saving for it and therefore pay more for that item in the form of interest payments.

A pet can be classed as a liability if it is costing you an arm and a leg to keep. Think of a dog for example; I read somewhere that it costs $20,000 to keep a dog during its lifetime. That is not just the food but vet bills and the like. A dog can be classed as a liability.

Do a stock take

Before you know where your money is going you need to do a stock take of all your spending.Your number one priority has to be the elimination of debt and plug up those leaks in your spending that is costing you money. In this way you will know where to make savings and redirect that money elsewhere.

Your task needs to be to reduce liabilities which means reducing debt then once you have savings use it to build your wealth. This involves setting goals which will increase your wealth and not send you to the poorhouse.

There are a number of share market platforms where you are able to drip feed money into the markets. Take advantage of these as they are a great way to build your financial literacy.

ABOUT THIS ARTICLE

Accumulating assets instead of liabilities will lead to a more prosperous future. It is vital for investors to know the difference between the two. In this article Robert Stewart explains this difference. Check out his blog at www.robertastewart.com

How to spend your money

This article was obtained from a PLR website. I have decided to share it with you. As usual the advice may not be applicable to your personal circumstances.

Improving how to spend your money

It is important to be aware of where your money goes in order to correct any bad habits

Money may not be with you all throughout the year. There are downs and ups when we talk about the financial resources and income of an individual or family. In dealing with financial difficulties, there is a need to have budgeting techniques as early as possible. There is a need for us on how to master the art of stretching the capacity of our available money. 

It is but normal to commit errors especially when you are not yet used to doing things your job calls for you to. But, do not make those mistakes that you would surely regret in the long run. As soon as you could, you have to develop a great way of managing to budget your money. There are some tips you could remind yourself of. These would be points you could use in making or establishing good means to improve the way you budget your money.

  • Make a list of your unwanted budgeting habits. This includes all those you think of being not useful or helpful for you and your financial needs and financial security.
  • You plan on what to do in order to take the first steps in changing your old habits or acts in which they made your budget method a failure.
  • Manage your income and the amount of money you spend by preparing a sort of tally sheet of such information.
  • Prepare your spend plan. This must include your foreseen expenditures.
  • Collect receipts and note bigger amount spent 
  • Limit spending by looking for some alternatives to it
  • As much as possible do not use many credit card or checks.

Those above-mentioned points are really a great reminder for you. If followed, you would clearly see the improvement in your budget techniques. It would surely result to better financial management capacities for you. 

When this is achieved, you would definitely live a more satisfactory life. The right way of how you budget what you need as a winning one in the field of financing one’s self.

It is important that you set personal goals that are your own and not be influenced by how others are living. People who have no goals or ambitions just fritter their money away and are left at the mercy of life’s misfortunes for stuff happens such as a car breakdown, dental emergency, house repairs, or some appliance such as the toaster, electric jug, dryer, or washing machine breaking down. An individual who manages their money well will be able to pay for these emergencies without using credit of some kind.

www.robertastewart.com