Why has no one learnt anything

[landlord1990]

After the sad blue Chip debacle, why are people still drawn to the "WIN A PACIFIC CRUISE" scam

[spurner]

Bit of a general question - Does anyone who invests money with wealth outfits, financial planners, investment advisers etc ever get a better return after commissions and fees than they would have by simply sticking their money in the bank?

If so, I wonder what proportion. And how that proportion compares to people that made LESS money by investing through investment advisers/experts.

[whitt]

You raise a valid point though.
I think I mentioned this expo competition scam some time ago on these forums also.

Not this exact outfit but the point the expo promoter was telling exhibitors to run fake competitions.

Stop the madness...

[JaredGravatt]

Bruce Sheppard posted a very interesting post on his blog (will try to find the link for you)

The reason investment advisors do so well is that there is an increasing amount of people looking for a quck buck (get rich quick schemes etc.)

[Keithw]

There are always people looking for the quick buck, but I don't believe that's why they go to advisors.
In these troubled times people want security for what little money they may have.
In the past they may have taken care of the investment themselves, ie taken on their own risk, but now they rely on "experts" to provide the safest investment.

As to the original question- money in bank or investment, this argument always leaves out the gearing issue.
10k in the bank might get 8% interest, but 10k can be geared to 100k or 200k & even just a 1% return on that volume will give you more than you got in the bank.

[NZGEMS]

A number of years ago I made quite a significant amount of money trading shares, I didn't know what I was doing, I feel I just got lucky, although I guess now I know it was partly intuitive acting, but that aside, We decided to employ a financial adviser who managed our shares from there and told us what to do, with these guys you pay them on the value of your portfolio so you pay whether you make money or not, not sure if they are all like this but he came recommended by someone we trusted so we used him, if he made you money, which he never did you pay him more.

Over the next few months we proceeded to see our booty slowly start to dissapear, we were paying him and getting less back than when I did it, we had handed it over as I didn't want to have to think about it and had been told these financial advisor people know what they are doing, so we ended up selling them all up and getting into realestate.

Over the past few years I have invested more money with other advisors, mainly in shares and lost it, so I have decided to keep my eyes on my own money now and control it, I use realestate, boy have I seen some share opportunities though lately as we all have. Don't have the spare funds to play still never mind the point here of this post is to say the financial advisor people really don't always know what they are doing.

Since that episode which was a good number of years ago now, I have met and sold houses to financial advisors, these people are dealing with your hard earned cash, and I know a couple of them at least have terrible money habits themselves. One of them even went bankrupt and continued to work as a financial advisor, gee I hope they have tightened the criteria up since then, this was only about 7 years ago this episode so not that long, the share thing was almost twice that long ago.

Robyn

[BTDT]

Dilema

The start of a very interesting debate on investing through advisers/managed funds/financial planners and the like. And please let me state here, that I was in charge of an investment division for a bank, and had experience/training with financial planning, through AMP, IPAC and one other organisation, and was also a member of the Financial Planners and Insurance Advisers association as it was then.

So I believed in investing through financial planners and in managed funds. However there is a very broad area within the two I have just mentioned. For example some financial planners can seek out specific funds, for example those offered by Brooke Asset Management, compile a portfolio which is outside of the ordinary, and work on it for you to produce a good return, all for a fee of course. However the majority invest in the more mainstream funds, which is something that most people could do on their own anyway (and save fees).

As regards managed funds, I have become disillusioned with this area of investing, despite what Mary Holm might say in her columns (and I know Mary from the old days) because in general they still do not provide what I would call a good return. However there is a proviso on this, if as a young man I had managed to put away just a little amount every month, without interrupting that saving habit, some 45 years later I would have a little nest egg which I would never normally have had, and because of the type of investing (regular amounts into an index tracker fund) it would show a return of say between 4 and 5% after tax and fees.

Now here is what I wrestle with, money invested in a typical managed fund in 1999, would now be showing return of about 0%. So a nine-year period of no growth, however it is well known that when the bull market takes off, then a lot, if not most of the growth occurs within a four to five-year period, but then again it all depends on the value of that investment when that bull run starts again.

Outside of these bull runs, there can be huge periods of inactivity in the managed funds arena, with fees and tax eating up any returns. I think the longest was 17 years whereby had you invested a $, you would still have a $ 17 years later, but inflation would have eroded most of it.

To add to the confusion, it is widely been publicised that the long-term returns on the US stock market (since 1904 I think) were in the region of 10 to 11% per annum on average. However I have yet to see that translate to anything like the returns which everyday Kiwis would get on their typical managed funds.

If I had to pass judgment, I would say the following. For younger people getting into something like Kiwisaver is a must for the longer term, say 40 years or more, with an amount which allows you to still achieve your goals of home ownership etc. For folk who want a bit of a hands-on approach, seek out a financial planner who does not select from the everyday bread and butter funds, but is prepared to work with you, and this may involve some active management to achieve above average returns. If you can get an adviser/financial planner who will charge a fee for the plan, and performance payments thereafter, then all the better.

I will not get into the area of investing in property, although I do believe that leverage gives this asset class a huge advantage over others. Lastly, money in the bank -- -- outside of the disastrous finance company collapses, there are some very good debt issues which could be taken advantage of, for example those of Rabobank, ASB etc, and these will provide returns in the current market of up to 9.4% per annum.

A diversified portfolio does help to mitigate the risk in any one particular asset class, however with this, you do dilute the potential returns from the better performing asset classes.

Just to end, for me the ideal situation would be some funds in those debt issues I mentioned, some with a share broker to pick up the bargains when they present themselves (losses occur also of course ), some in the boutique type funds offered by the likes of Brooke, also utilising some similar Australian funds for the purpose of investing in their market, and some available for hands-on investing in the property market!! Were I that wealthy!!

[Badger]

Well BTDT Im a private investor and trader with no university mumbo jumbo degrees!

Forget financial planners and learn it youself if you want to be an investor,trader speculator.

Pretty hard to beat the market or get a return when stealthy inflation is employed against us from central banks, politicians and those in the know like select elites backed up with bail outs and subsidy!

Kiwi saver looks and sounds like the 401k in the states. Known as a ponze scheme. 401k's in the states have already been looted and is now a empty jar of IOU's. The purchasing power of your Kiwi Saver set up will probably be 10% of today with the same amount due to central bank, bank, govt and corporations preference for creating credit from fresh air, reducing your purchasing power over time and the expenses needed for living in a resource constrained enviroment!

Debt issues? Think theres enough debt already. Havnt the masters of the universe in the Top Elite banks around the planet seem to have a bit of problem with there debt based fractional reserve scam and pyramid scheme of derivatives based on assumptions of illusionary promises?

[BTDT]

Agree

Hi Badger, for the record I agree with a lot of your sentiments (and I don't have ANY mumbo jumbo uni degrees, in fact I spent a lot of my life working as an engineer in some of the world's most dangerous places, Libya in the Sahara Desert just after the Gaddafi revolution, Nigeria at the end of the Biafran war and the North Sea on oil platforms), so I dont consider myself an academic, however am fairly well self-taught with the help of a few other organisations!.

Can't agree with the Kiwisaver comments though, as in the long-term I believe it will benefit those who participate, more so than if they had done nothing that is.

As for the investment banks creating complicated/complex financial derivatives, there were many people warning against this type of investment, however no one heeded their warnings and we can only hope that it doesn't happen again (the only problem being that history repeats itself).

Whilst I am now semiretired I should really look at doing a bit of share trading, as I have the time, and also the need to earn some extra income, although we know that it comes with its pitfalls......any pointers in this direction?

[NZGEMS]

I will give you some pointers in the share market BTDT if we get any more huge drops buy blue chip shares, they will make you bucket loads, just sell them again when things come up or a portion of them, that is one problem I found with shares compared to property you have to keep your eyes on them if you are trading, mind you I can talk at the moment with property not selling very readily. But if you set yourself up in property correctly you can just sit back and reap the rewards.

Infact getting back to shares, I haven't been following it really as I don't read the paper but I understand there have been some huge drops lately, it may be that it is still worth investing in some of those top companies. I know back in 87 when we had the crash, we had a few shares and we just held thinking we didn't need the money so we would wait, but some of the shares we had at the time actually dissapeared as the companies went under so with hindsight we would have been better to sell many of them, still what we kept grew back again and I started trading a few years after that and made bucketloads.

Have friends who have made and are making bucketloads trading forex too.

I am not discliplined enough for those investments that is why I like Realestate, if it is set up right you can just forget it for a while and it still ticks along.

As for Kiwisaver well I think it is good for those who don't save otherwise (sadly a big chunk of the population by the sounds of it) but you can do way better managing your own money, our son when he recently started full time work opted out and it was funny they were chatting around the table at lunch one day and one of they guys there said gee the kiwisaver was great he had 2 or 3 thousand, what ever the figure was, and my son pointed out he had saved way more than that already without kiwisaver, he has an investment account you see he puts half his wages in, my kids were bought up to save a portion of what they earn, how ever that money comes, I started giving them pocket money as youngsters, I know half is not practical for alot of people but I just used to wish that when I started work someone had told me that, so I suggested to my kids to do it, you save for investment, it is NEVER to be spent on do dads, (as Robert Kiyosaki would say) our son has a goal to have his own home in a year or two and he will make it, of course he already has 2 little rentals, as even when the kids did part time work they saved half for investment. those houses were bought down south where they are cheap but still there is a good amount of equity in them.

Wonder if we will see those prices back again? I think not somehow. Still be interesting to see just where the market goes, hope we get a bit of a blip for a while I have a few properties I would really like to sell.

Happy investing
Robyn

[Badger]

Hi Badger, for the record I agree with a lot of your sentiments (and I don't have ANY mumbo jumbo uni degrees, in fact I spent a lot of my life working as an engineer in some of the world's most dangerous places, Libya in the Sahara Desert just after the Gaddafi revolution, Nigeria at the end of the Biafran war and the North Sea on oil platforms), so I dont consider myself an academic, however am fairly well self-taught with the help of a few other organisations!.

Whilst I am now semiretired I should really look at doing a bit of share trading, as I have the time, and also the need to earn some extra income, although we know that it comes with its pitfalls......any pointers in this direction?

Hi BTDT cool sounds like a interesting life there! I worked with a guy who worked the rigs as a dereck-man, BP & TEXACO. Top man! 10 years on the rigs multi millionaire...great yarns

Kiwi saver mmm One reason is government top ups naturally that money is created from fresh air and paid back by the tax payer....thats one flaw. Since I dont partake in KS why should I help top it up? No one subsidizes my stuff ups in life?

Many people are warning about "true nature of things" but its always disregarded as a conspiracy theory. Handy for those in charge since it keeps the slaves in line on the debt hamster wheel going round and round!

I invest and trade in US. I invest into canadian resource trusts looking for passive income. I have traded stocks and options but have almost flagged that! The US markets are too manipulated!

FOREX is where I dabble now its too big to manipulate by the likes of PPT and backroom traders at Goldman and JPMorgan.

Ive found Needham at the DanielCode a interesting place to hang out, for making pocket money!

[outspoken]

ive found needham at the danielcode a interesting place to hang out, for making pocket money!

ssshhhhh!!!

[pjimmyinahouse]

Needham has written some very good articles (I especially liked the Urideshi ones) although they can be hard to absorb in one sitting.
Are any of you guys using his service? I must admit I can't help being a bit of a skeptic still.

[mortgage broker]

I wonder how skewed our view points are about share markets and investments in general when we are sitting and watching a global meltdown. Its not exactly the average position to be comparing performance with.

We are falling down the side of a cliff promising that we will never climb another cliff again, but I bet those who manage to grab on to something will start to climb back up the very same cliff.

[Errol]

In the early 70's I was almost sold a "super" fund with the National Mutual Insurance, don't recall what, "Golden something". Didn't do it, did something else. About 3 years ago a friend was lamenting on his matured fund, it had paid out 15% less than he had put in! it was the "Golden something", have since heard that an AMP fund had the same sad performance. The victim of fees and conservative investing I was told.
Robyn is right, it's a great time to be thinking of starting sharemarket investing.
Buy in gloom as they say.