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Hi, it's Maxim here. This newsletter is read by 1978 people and I appreciate you being here too! I mainly write about financial freedom, Auckland property tips and NZX stock market insights. Today you will learn:

● Facebook Live - 11 Easy & Free Ways to Research the NZX Stock Market
● Is it Better to Invest in Gold or NZX 50 index Fund?

● Fitch Ratings Downgraded All Australian Banks (Time to Cash Out?)
● Top 10 Rises & Falls Over the Last 7 Days (NZX Stock Market)


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Facebook Live - Top Mistakes NZ Investors Make When Buying & Selling Stocks
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Join me during the next online Facebook live chat about “11 Easy & Free Ways to Research the NZX Stock Market ". If you prefer to join me live via Instagram then follow my Instagram page (links below). 

There is no “selling” – just sharing educational information. 


Tuesday, April 14 at 8 PM 

📚YOU WILL LEARN:
1) Quick Steps to Avoid Costly Mistakes
2) How to Improve your ROI (Return on Investment)
3) Little-Known Tricks to Find Undervalued Companies
4) And Other Practical Tips You Can Implement Today!


✅ Follow the following Facebook Live link and click on the button ”✩ GET REMINDER" to join.

✅ Follow Instagram Live Page     

❓Post your questions in the Facebook comments now or during the live talk.

The information will be of a general nature only and does not constitute personalised financial advice.

 
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Is it Better to Invest in Gold or NZX 50 index Fund?
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🕑 4-minute read

COMMENT from a Reader:
All gold like houses will always have some value — but without the tenants.

If you invested $10,000 every six months for the last seven years with a 2.5 per cent annual increase, your gold would be worth $261,000, while the same investments in the NZX 50 Index Fund would be worth, before Covid, $243,000 and after Covid, $192,000.

You may argue that gold has had a recent rally, and the NZ dollar has dropped. But even dropping gold to $US 1450 per ounce, and raising our dollar to 0.65, that still gives you a healthy $212,000.

Like all things gold will trend up eventually.  A 10 to 20 per cent portion of your portfolio in gold may not be such a bad idea after all.

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ANSWER by Mary Holm (finance journalist):

You acknowledge that you’ve been lucky with the period you chose, in that gold rallied recently and the Kiwi dollar has fallen. But there’s more to it than that.

The particular pattern of prices suits you well. You’re drip feeding money in and buying gold cheaply early in the period, and then valuing it at a high price at the end. If, instead, you had invested the whole lot in early 2013, you would be losing now, as our graph shows. And what if you had put the lot in at the 2011 peak?

And you underplay the big drop in the exchange rate between the New Zealand and US dollars over the period — from about 80 to 60 cents. That greatly affected your results. In any future period, the opposite could occur.

Also:

+ You ignore dividends, which is like ignoring rent when you look at a property investment. And it makes a particularly big difference when we’re looking at NZ shares, which tend to pay higher dividends than in other countries.

+ You ignore tax, which favours NZ shares over gold. A tax expert tells me that after taking dividends and tax into account, we should add $35,000 to the shares and subtract $30,000 from the gold.

+ You ignore fees. These can be low for shares if you use an ETF (exchange traded fund) or index fund. For gold, either you have to pay for storage or you invest in a gold ETF and the manager has to pay for storage — a fee that is typically 1 per cent.

By the time we adjust for all that, NZ shares beat gold over the period. And that’s over a particularly strong period for gold!

Another problem with gold is that you don’t receive any ongoing income — like interest, dividends or rent. You have to come up with other money to pay your tax.

Gold is particularly favoured by some people in unsettling times. They make comments like yours, that it will always have value — whatever happens to a government or an economy.

What if you put just your suggested 10 or 20 per cent of your investments in gold? That does give you some diversification, but it’s not going to make that much difference if the rest of your savings either plummet or soar.

QUESTION TO YOU: Do you invest in gold - and why?

● Fitch Ratings Downgraded All Australian Banks (Time to Cash Out?)
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🕑 1-minute read

International credit ratings agency Fitch has downgraded all the main Australian banks, taking their AA- ratings to A+. It has done the same with their New Zealand subsidiaries. Fitch says unemployment will spike sharply and remain very elevated relative to pre-pandemic levels even after the recovery is underway.


There is no notice yet from the other big two credit rating agencies, Moody's and S&P, but a similar move would not be a surprise now.

But this downgrade action is minor compared to the record wave of downgrade cuts to junk bond issues.

Fitch expects the Australian economy to contract by over 2% in 2020, with unemployment averaging 7.7% for the year. Fitch says the NZ subsidiaries remain a key and integral part of their respective banking groups, with strong integration across management, risk frameworks and internal systems.

More details on Fitch Ratings website.
 
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Top 10 Rises & Falls Over the Last 7 Days (NZX Stock Market)
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🕑 4-minute read

Comvita said this year's mānuka honey harvest was looking positive with volumes having improved by around 50% over the prior season.

It continued to work on getting $15m of costs out of the business. Benefits are already starting to show for the business, although the full impact of these initiatives will only become obvious in the 2021 financial year.

It was currently trading profitably, was generating positive operating cashflows and was paying down debt.

A2 Milk stock price has soared by over 34% in the past two years with the sharp upside rally witnessed recently. It announced its increased interest in Synlait to 19.8% and its entry in the Canadian market with exclusive licensing agreement with Agrifoods Cooperative.

Oceania Healthcare, which is in the healthcare business, had been doing well before COVID-19. But it has fallen hard because of the risk of an outbreak of coronavirus and whether villages can sell new units and re-sell existing units.

There are examples of outbreaks at rest homes in Sydney, New York and Washington State and elderly are at risk of high mortality rates of 15%-plus.

Moa continues to have the support of their banking partner and it gives confidence in trading through the next financial year. Vendors of Savor Group will defer the $3.2 million additional cash payment until 1 April 2021.

Moa also agreed the terms of a strategic investment in the Group by a prominent New Zealand businessperson.
P.S. Is there anything else that you noticed this week worth sharing? Let me know and I'll see how we can distribute it in the community.
American businessman Leonard Lauder said in February 1985, “When a person with experience meets a person with money, the person with experience will get the money. And the person with the money will get some experience"

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Hi, I'm Maxim, the human behind this newsletter.

I research and interview economists, tax advisors and NZ investors to find tools & tactics that you can use to save time and money.
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