The NZ government now has a page up with all you need to know about investing in shares.
There is not a lot on the page, and certainly not investment advice. It even avoids answering its own question of “How many New Zealanders own shares?”
They do point out that Kiwisaver and term deposits as well as Iwi funds total $100 billion, but a quick search shows that Kiwisaver funds under management was just $11.26 billion at the end of March 2012, according to Morningstar.
However it’s what’s missing from the page is very important. I’ve proposed some more questions which could be answered on the page:
- How do I sign up to a share broker? Provide links to them, all of them, and show which ones you can sign up to online (That would be none).
- What are the costs are to buy and sell shares? Show, for each of the brokers, the costs to buy and sell shares.
- How long should I hold the shares? Discuss the different approaches to investment and investment horizons, defining the traders, long term buy and holders and discussing successful investment strategies.
- What is selling shares short? Discuss shorting, and its application in the NZ context. Show why a healthy shorting and options market is good and that the NZX is liquid enough to cope with it. (This may be difficult)
- How do find out about companies to invest in? Discuss disclosure rules, and show where each of the companies is required to disclose information. Show whether the unsophisticated investors are on a level playing ground with the professionals. (This may be difficult)
- How do I know it is fair? Discuss the rules in place that ensure agents and large shareholders and their friends cannot get any advantage over other investors. Show how the watchdogs are relentless in their pursuit of any irregularities. (This may be difficult)
- What are tax imputation credits? Show how you don’t, unlike pretty much anywhere else, have to pay tax on dividends from New Zealand companies, unless you are Australian of course in which case you do. Confused? So are offshore investors.
- Where can I do more research? Point to the large range of analysts that provide free and very cheap reports on the top NZX companies, allowing sophisticated and unsophisticated investors to really dig behind the company rhetoric and numbers to see the real long term value of the business. (This may be difficult)
- Should I stop my Kiwisaver? Gently show that most Kiwisaver finds will be investing in the top NZX firms already, and that placing more of your funds in a Kiwisaver fund gives the portfolio diversity effect as well as tax benefits, giving increased returns at lower risk over time. Point out that betting on individual companies is something that is fraught with danger for uninformed people, especially with a short term time horizon. (This may have a negative effect on SOE sales)
- Should I buy more NZ stocks? Show that New Zealand is a trivial part of the international investment scene, but also point out that we know the most about our own businesses and foreign ownership by short term financial investors, as with Telecom in the day, is a very very dangerous thing. Discuss how a well constructed portfolio will balance offshore and domestic investments, while trying to avoid talking about the asinine tax regime for assessing offshore holdings. (This may create tension)
- Any others?