Shares vs PI

[Perry]

An insightful and provocative comment here:

Sam Stubbs, managing director of Kiwisaver fund manager Simplicity, said that a KiwiSaver manager, the real issue is the ongoing relevance of the NZ stock exchange as a place to invest.

The delisting was "a huge red flag" for the NZX but entirely rational from Xero's point of view, he said.

As a percentage of GDP, the New Zealand sharemarket is small relative to other developed economies and New Zealand investors have been the losers.

[Nick G]

Merge with the ASX? I hear the fees they charge (NZX) are high too, have to be due to scale.

[Anthonyacat]

Yes, a takeover/merger with the ASX seems to be the way it's going. The NZX just doesn't make sense for most new business listings.

[Wayne]

Shares v's PI - what's it got to do with PI?

[Perry]

Feel Good About PI

The number of times people "rabbit on" (irrationally) about shares and other forms of investment being productive, whilst PI is (I presume) not so, it's good to see a fund manager saying that buying shares via the NZ Stock Exchange is not a good idea. Something longer-terms PIs have been saying for many a year.

As a percentage of GDP, the New Zealand sharemarket is small relative to other developed economies and New Zealand investors have been the losers.

[Lissica]

The number of times people "rabbit on" (irrationally) about shares and other forms of investment being productive, whilst PI is (I presume) not so, it's good to see a fund manager saying that buying shares via the NZ Stock Exchange is not a good idea. Something longer-terms PIs have been saying for many a year.

I'm not sure how you come up with that conclusion. NZ share investors are 'losers' only in the reduced number of investments available on the NZX and potential liquidity (but still far more liquid than property). That has little to do with the return on the actual investment, or whether share investment is a 'good idea'.

It is very straightforward to invest on the ASX- I would think most serious NZ share investors are invested on both the ASX and NZX. So Xero is only going to be listed on the ASX- no big deal for any investor.

[Perry]

A Toss Up

As a percentage of GDP, the New Zealand sharemarket is small relative to other developed economies and New Zealand investors have been the losers. Something longer-terms PIs have been saying for many a year.

I'm not sure how you come up with that conclusion.

It's something that has oft been said on PT. References to share market price collapses were usually included.

However, many PIs who - years ago - found that their property values had dropped, just shrugged and carried on collecting the rent.

Less fun collecting a dividend on a share worth 35 cents that was once worth $3-00 and that the investor paid $2-75 for. (Plus some sort of brokerage fee?).

As I see it, the share market is not too far from Lotto, when it comes to certainty.

I know a few PIs (on PT) are in the sharemarket and doing OK., but my perception is that they are in a small - if happy - minority.

[WINZ]

It's something that has oft been said on PT. References to share market price collapses were usually included.

However, many PIs who - years ago - found that their property values had dropped, just shrugged and carried on collecting the rent.

Less fun collecting a dividend on a share worth 35 cents that was once worth $3-00 and that the investor paid $2-75 for. (Plus some sort of brokerage fee?).

As I see it, the share market is not too far from Lotto, when it comes to certainty.

I know a few PIs (on PT) are in the sharemarket and doing OK., but my perception is that they are in a small - if happy - minority.

They're different asset classes, you can't compare..

[Wayne]

They're different asset classes, you can't compare..

That's what I have always thought.
I really don't know why people try to say one is better than the other - they are just different, why would you compare?
I use both, have had great success with both.

[Perry]

They're different asset classes, you can't compare.

Why not? Does it not depend on the context?

One might be productivity. Another might be ROI. Yet another might be risk.

[Anthonyacat]

Why not? Does it not depend on the context?

One might be productivity. Another might be ROI. Yet another might be risk.

Or ease of leverage, or price-barriers-to-entry, or tangibility, or ownership pride, ability to affect change on your investment


I'd argue that the pure extreme range of potential dimensions on which to compare is what makes it highly difficult to compare. But certainly not impossible.

[Perry]

Why would it necessarily be hard to answer the question:

where do I think it best to invest my savings?

[Wayne]

Why would it necessarily be hard to answer the question:

where do I think it best to invest my savings?

Because it depends on what you want your savings to do.
In the next short while (a couple of years) I will seel all my investment property and buy shares (and maybe a few bonds etc) as the return is so much better.
But others might want their savings to have greater capital growth and don't care about cash flow so much - easy to leverage with property but harder with shares.
So the answer for someone else may be different.
This is one of the reasons for a financial planning industry.

[WINZ]

Why not? Does it not depend on the context?

One might be productivity. Another might be ROI. Yet another might be risk.

Then why not compare term deposits with property? That is also an investment class is it not?

Can you define "productivity" and how it relates to the comparison?

[Anthonyacat]

Exactly, Wayne. As a couple more examples of what you want your savings to do, must consider your tolerance for volatility. The sharemarket (as a whole) is always on an upward trajectory in the medium term, but short term there can be (and are) regular, drastic drops. If you never want your money to drop at all, you don't want either property or shares. Stick to bonds and term deposits.

Personally I diversify across everything. Hugely varied share portfolio through Simplicity (up 12% in the last year), small P2P lending experiment through Harmoney (13% ROI, after all losses and fees), and a few properties. Leveraged capital gains have done very well for me thus far, but with a couple larger than expected repair bills my total property portfolio is unlikely to make a cash profit this year.