Monday, January 4, 2010

Some assistance please

My nine year old daughter has a bank account courtesy of her parents with a balance of about $1,600.00. I have a little part time job that earns me about $60 -$100 per month and this "wage" goes into said daughter's account. My goal is increase this slightly so that I am earning about $1,500 per annum and over the next ten years an accumulative $15,000.00 should result (the part time job is mine until I decide to stop) by which time said daughter will undoubtedly want to buy a flash car or maybe Karen Walker clothes, but daddy will be strongly suggesting she buys a property and lives in it with some friends who can pay the mortgage. Anyway, that's a wee while away.

What I want to do this year is invest two chunks of $500 from said daughter's account into the New Zealand sharemarket and the Australian sharemarket.

I will buy shares in two companies, one in each country.

In New Zealand, the $500 will go to Pumpkin Patch for two reasons. First, it is a distinctly New Zealand company that exports. Second, we have spent enough in the shop over the last few years (and are likely to in the next few years too) so it is a chance, in a small way, to get some money back via growth and dividends.

But I'd like some help with the ASX investment. I know a little about some Australian companies, but overall not much. I am looking for a growth company that will provide share growth. A dividend would be nice, but not essential at this stage. The investment would be planned for at least five years and would be a "throw the share certificate in the bottom drawer" investment and forget about it.

Any suggestions for the ASX based on these goals and the relatively small amount invested?

26 comments:

pdm said...

Dumb move Gooner - talk to Adolf he will put you on to a Financial Planner if he cannot help you himself. One share in the NZ market and one in Australia gives you no diversification whatsoever and you will take a big hit if either company fails. Plus with the strong NZ$ now is a good time to get some International exposure.

Redbaiter said...

Retailing???

I don't think so.

Anonymous said...

are you a multimillionaire pdm?
if you were you'd know that diversification is the path to failure, because it allows many ticket clippers a chance to do your dosh. This is the prime reason managed funds do so poorly. The managers make nice fees out of every transaction as do the brokers, and they get paid irregarless of whether the fund makes a profit ornot, so like real estate agents don't really a shit about whether the punter makes coin or not.
Your strategy is a reasonable one Gooner, and I'd be more likely to invest in an infrastructure company like origin, as Australia's need for electricity is still going to increase, as is NZs

Adolf Fiinkensein said...

Poseidon at 10c was a pretty good buy in 1967.

Aussies are inveterate gamblers and boozers. Look for something in those industries. Maybe an up and coming family winery which might be bought out by the biggies in a few years.

pdm said...

Anon - firstly if you are going to sound off use a pseudonym or your own name.

I think 23 successful years in the Financial Services industry gives me some credibility when it comes to advice.

I say again - a spread portfolio over the nest five years reduces the risk of huge loss and now is a good time to get into International Funds due to exchange rates and countries starting to emerge from recession.

There is a limit to what you can do with $1,000 and don't forget share brokers also want to be paid twice - at entry and on exit.

Kevin said...

Isn't the ex 'The Warehouse' guy, Greg Muir from Hanover, involved with Pumpkin patch as well?

Tim S said...

Hillgrove Resources (HGO)Gold and copper mine, good assay results coming in now and has jumped from 10c to 42.5c in last couple of months...production beginning in August or September this year.

Anonymous said...

Gooner

Nufarm is my suggestion on the ASX

I would also take a look at Blis on the NZX. Eion Edgar has that company by the scruff of the neck and it is likely to do good things in the next 3-5yrs.

Anonymous said...

Taken some lessons from the left then pdm, jump straight into the play the man rather than the ball approach, and avoid the question totally.
As for wealth, I started out with 10k in property and 10k shares and have since been forced into managed funds by Kiwisaver. the most successful by a long measure has been property, in that it gave me on average a 800% ROI, the shares gave 80% and the managed funds 18% (given the free-bee hand out of the govt: the employers bit is actually my own money as I own the company that employs me, so can't be included), and yes I still own a mutlimillion dallar property portfolio, of which there is more of my equity in, than the bank's.
The investments where I resorted to Financial advisor's opinion ended up costing me tens of thousands of dollars, especially as one of them took a page out of the Hotchin approach to wealth and feathered his own nest by delaying paper work until I was in a position where alternatives were not available and so I had to go with a second tier lender who promised 1 rate pre-signing only to sign off on a rate a full 1% above then current rates and get away with it because the the wording of a clause in the loan agreement essentially allowed them to fix the interest rate at what ever they deemed on drawdown day and thus it was too late to do anything about it, as settlement would have been in default if it hadn't happened that day.
I'm not saying that this is your modus operandi pdm, but your industry is full of those kinds of players. It really was a stupid move on his behalf, because those loans were retired last year, so now he has no ongoing feeder income because he stiffed me into a loan company that offered better commissions. More fool him really, as I have since taken on a further 4m in investment lending, and have interest in $18m of projects ovewr the next 18months, so sadly for him he gets no feeder income,and will never ever see another bean of income from any investment undertake.
23 years in any industry especially Financial services should give you a reasonable knowledge of it, but alas time in an industry means sod all when it comes to competence (how long has Money managers been in the industry, and how many of their investors are fulfilled of the promises of riches sold to them?). Nowadays, i scare you buggers off by saying i'll put as much into this as you have of your dosh in it, usually that ends the interview there and then, cos most the buggers have no money to put in it.

Jana said...

I suggest buying an index fund that tracks the Australian market. You can buy directly from Smartshares (www.smartshares.co.nz). I bought my nephew shares in SmartOZZY, which tracks the companies in the ASX20, when he was born in 2008. You are likely to get a slightly higher yield from SmartMOZY, which tracks midcaps.

Anonymous said...

Investment property? Don't get caught on inflated prices or body corporates or fibbing investment companies...been there, done that...

coge said...

Diversification is for lazy buggars. There is very real danger of not making any meaningful profit that way. Specialize & watch your investments like a hawk. Gooner, check out the Aussie banks, they know to run them well.

Gooner said...

Many thanks for all the advice.

I figure $500 is pocket money really; it is just to get it out of the bank and give my daughter something to follow in the coming years.

I also do not like diversification. Did Bill Gates make his money diversifying? Diversifying is fine for a fund worth millions of dollars, but for $1,000, it will be two companies, or even the mid cap index fund as Jana suggested for Aussie.

Keep them coming!

And yes, I think Muir is still involved in Pumpkin Patch.

Simon said...

Buy gold as it tracks down lower this year.

Greedy Boomer Hater said...

Anon 1:54pm Yawn, another property zealot who knows everything. Greedy pig property 'developers' caused the finance company meltdown you dolt. Did you ever lose a cent on a property deal? Ever had tenant not make a rent payment? If so, did that one of event make it a shit investment? .I once had a blue stolen from me; didn't put me off buying blue cars in the future. Why not open your mind and invest in something productive for a change.

pdm said...

Well said GBH.

Anon I wasn't playing the man - I just get pissed off with know it alls who post anonymously. Often you get three or four on a thread and have no idea if they are the same person playing silly buggers.

I am sure even you can dream up a nom de plume - in fact GBH even gave you one for free `property zealot'.

pdm said...

BTW - Sovereign Global Property Shares Trust after tax and after fees
1 year return of 16.06% looks pretty competetive against property to me.

heisenbug said...

Dunno if there's much in this field in Australia, but (pinching an idea from someone else's blog) I like unethical companies - arms manufacturers, liquor, gambling, and the like. They reflect human nature, so they're bound to do well ;-)

Cheers!

Anonymous said...

So real estate is a non productive asset; if anything is yawn worthy it has to be that statement. A statement peddled by people unable to clip the ticket, usually people who don;t get the opportunity to clip the ticket.
How can an industry that generates $5bn in business servicing it be non productive? Where do the workers live if the rate of home ownership continues to decrease and the government make property ownership unfairly disadvantaged compared to other classes?
Sorry GBH but unfortunately for you I am the offspring of a couple of boomers and have only been out of formal education for a decade, so to generalise that the Boomers have caused property to hyperinflate is a little narrow in causation. The fact that the NZ popualtion grew from 3.5 to 4.1million in the 90-2000s is more the cause for blame.
"Greedy pig property 'developers' caused the finance company meltdown" is that so? Lucky i'm not a developer then and buy and hold my assets for extended periods, hence I will admit to being a property investor but not a developer, but according to you i'm a dolt, and so the distinction should go over my head.

Anonymous said...

CSL or Cochlear

pdm said...

Gooner go to Stuff and have a look at the selections of 4 expers on the NZ Share market. Each have picked 5 companies and as far as I can see that gives 20 different companies as their best picks for 2010.

Pumpkin Patch is not mentioned anywhere.

The value share investments are in the international markets and that is where I would go - where there are hundreds of companies bigger than the NZ economy.

mattyroo said...

Have a look at Strike Energy (STX) on the ASX - huge growth opportunities for this year. Another excellent one, but a little riskier, is Blue Energy (BUL).

If you're investing on the ASX, stick with energy companies.

Forget Pumpkin Patch on the NZX. Try Pan Pacific Petroleum (PPP), NZ Oil + Gas (NZO) or for a very safe bet Fletcher Building (FBU). I also expect Fisher and Paykel Healthcare (FPH) to do very well over the next 5 years and grow consistently thereafter.

Greedy Boomer Hater said...

Hmmm, $5Bn in business servicing from a total debt load of over $150Bn. That's great ROI and efficient use of capital........

Anonymous said...

GBH, would you rather we lived in caves?

Anonymous said...

Good luck to you GBH, I hope your share investments are lucrative and that they create many new jobs, Weldon makes his targets to get his bonuses and eveyone lives happily ever after.
As for me, i'll continue to invest in myself and my own businesses, and use the residual cash they generate to invest in what I perceive value assets. No doubt they will include some more property, but they will probably also include other businesses and perhaps even some shares. Some of the ideas given above have given me food for thought and I may even take a punt on some of them after a little research.

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