Putting all Eggs in One Basket

[donna]

Property & investment fund...oh and my business!

cheers,

Donna

.....but property is the lion's share and would remain so

[elguapo]

And just so we make our point super clear.......diversification is putting your money into more than ONE asset class.

That's not actually correct. There is no significant diversification achieved by having a house and shares in Commonwealth Bank of Australia. You would have more diversification having a house in NZ and an industrial property in Bangkok. Diversification is about the spreading of risk, a house in NZ and shares in Apple is one example. Most people don't also consider their main income either, a real estate agent who invests in real estate has no diversification at all for example.

You can also stray from diversification into hedging, but that; perhaps another topic.

[elguapo]

Thats the beauty of real estate it is so wide you can stay in the same broad asset class and be completely diversified.

Technically perhaps you can, but I very much doubt this is possible as an individual. How on earth would someone manage a completely diversified property portfolio as a single investor? Learning property laws in other countries, airfares etc would be a nightmare. Paying for that would have a major impact on return over and above any value it would yield.

[Damap]

And just so we make our point super clear.......diversification is putting your money into more than ONE asset class.

Wrong wrong wrong thats my point.
And I made no mention of international property.
My example, one of countless variations, was to invest into a finance company, shares in a quality listed construction company and own your own rental. Hardly beyond the skill set of any investor and is completely diversified.
AND using bold italics doesn't give your wrong statement any more credibility.
ANY MORE THAN THIS DOES :-)

[elguapo]

My example, one of countless variations, was to invest into a finance company, shares in a quality listed construction company and own your own rental. Hardly beyond the skill set of any investor and is completely diversified.

That is not completely diversified. It's not even very diversified at all.

[Damap]

Finance company, share market and real estate. Do you even do diversify :-)

[eri]

putting all your eggs in 1 basket

decreases the chance you'll lose ANYTHING

but increases the chance you'll lose EVERYTHING

diversification is always less efficient with more ongoing costs

which makes it just like insurance

what skews the system in nz is the wide expectation that the gov will protect you from yourself

as proven in chch

ie if you put all your eggs in 1 basket by only investing in property in ak

and renewed volcano activity means ak has to be evacuated and all your 'investments' fail at the same time

there is a wide expectation that the taxpayer will take the worst of that sting on your behalf

people in nz are tempted to take the easy way out in just about everything

as their bottom line

is guaranteed by the taxpayer

[speights boy]

Very true eri.
One of the consequences of too many people treating housing as a tradeable investment commodity.

Definition of 'Privatizing Profits And Socializing Losses '
A phrase describing how businesses and individuals can successfully benefit from any and all profits related to their line of business, but avoid losses by having those losses paid for by society.
Privatizing profits and socializing losses suggests that when large losses occur for speculators or businesses, they are able to successfully lobby government for aid rather than face the consequences of said losses.

[eri]

it's not just speculators or businesses

seems ingrained into a large section of the kiwi psyche

[speights boy]

what skews the system in nz is the wide expectation that the gov will protect you from yourself
as proven in chch
..........
there is a wide expectation that the taxpayer will take the worst of that sting on your behalf
people in nz are tempted to take the easy way out in just about everything
as their bottom line
is guaranteed by the taxpayer

it's not just speculators or businesses
seems ingrained into a large section of the kiwi psyche

So what, in your opinion, are the 3 most egregious examples of that we see today ?

[ENP]

Hate it how this forum always goes off topic into arguments...

So looks like majority (50%) only invest into property. Along the lines of what I thought would be the result.

Personally, we are looking to build up a solid base of property and use it as our long term approach. Buy and hold basically.

[orion]

Hate it how this forum always goes off topic into arguments...

So looks like majority (50%) only invest into property. Along the lines of what I thought would be the result.

Personally, we are looking to build up a solid base of property and use it as our long term approach. Buy and hold basically.

Depends on the individuals choice of course, some people might like different investment avenues and be passionate about them. Personally I just do property and as someone else said you can do various things in the one area.
Many investment advisors will say work hard, save money, get out of debt, invest for the long term & diversify. And most are broke or have very little themselves I’ve found. Roberty Kiyosaki calls it diworsify.

Sounds like you have a good plan Elliot and if you are committed to making it work it doesn't really matter too much what others are or aren't doing.

[elguapo]

Roberty Kiyosaki calls it diworsify.
.

He says a lot of funny stuff;

http://www.arabianmoney.net/gold-silver/2013/12/09/rich-dad-poor-dad-author-robert-kiyosaki-thinks-gold-and-silver-will-hit-new-all-time-highs-in-2014/

His current preferred portfolio allocation is: real estate 40 per cent, gold and silver 25 per cent, oil 20 per cent, cash 10 per cent and stocks five per cent.

That's diworsified I guess....but this one is even better......

http://millieleung.com/kiyosaki-2014prediction/


Robert Kiyosaki’s View on What To Invest In

• Gold and Silver
• Oil and gas
• Food and water
• Defense and firearms
• Entrepreneurship is the greatest opportunity going forward (start or find businesses that can do well even in a down market)

[Aston]

Hate it how this forum always goes off topic into arguments...

Totally agree.

I personally believe that an overabundance of testosterone may be the problem here.

[Learning]

Roughly...
60% Property
30% investment funds and endowments (including kiwisaver)
10% shares