A nation of share-holders
February 24th, 2005 at 12:59 pm by David FarrarDr Cullen wants us to become a nation of share-holders, not just home-owners.
This is rather ironic.
You see if Dr Cullen stopped over-taxing us, and gave us back some of our $7 billion surplus, then hey we would have more money to invest in shares and the like.
So a fairly simple solution in sight. Not of course one Dr Cullen will take, as he would rather spend our money for us.
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February 24th, 2005 at 1:51 pm
Wow – is Bush’s “ownership society” taking off or what? Pity Cullen missed the first part of the program – giving people their money back so they can actually participate in it!
Vote:February 24th, 2005 at 1:54 pm
Maybe some tax breaks on equity investment and saving will help – get rid of resident withholding tax on interest earned from savings accounts and think of a better way to get exampt dividends from your equity investments. It is completely stupid when you get a dividend from a company with imputation credits attached (reflecting the 33% tax paid by a company) but if your marginal tax rate is 39% you have to sell out the extra 6%. Stupid rule by increasing the top marginal tax rate a few years back.
The other thing to consider is that the annual fees for some investment funds are quite high compared to the return you get. Maybe this issue needs to be looked at as well.
The Government commissioned a report that was produced in November last year by Craig Stobo. Based on the media releases that came out late last year it doesn’t really have anything earth shattering in it. I just hope John Key comes up with something a lot better.
Vote:February 24th, 2005 at 2:16 pm
The Kiwi investor is not silly and this is reflected in investment preferences. While it is admirable to invest in shares, the investor is trusting their funds in something unsecured and reliant on the abilities and behaviour of company executives. Many investors see direct investment in shares as almost discretionery money that can be lost or significantly devalued without warning. Therefore it is a minor part of most portfolios.
The past record of many share funds for the more risk averse also show ripoffs through huge management fees that neutralise any financial benefits. “Consumer” magazine and other analysts have shown this to be the case with many funds.
So what does that leave? You guessed it, leave it in the bank, buy a property or two, regularly buy lotto, and spend the rest on the family, travel, and home entertainment systems.
Vote:February 24th, 2005 at 2:23 pm
NZ evidence contradicts your assertion, David, as I have said before. When direct income taxes were HALVED at the top end of the scale by Labour in the 1980s, private saving *did not* increase.
Swapping public saving for private saving is not the challenge. The challenge is to raise national savings, to the point where we can meet more of our investment needs internally. This will lead to a smaller current account deficit and more local (less foreign) ownership of industry.
Tax cuts will achieve, at best, a swap from public to private saving.
If the govt can put together a savings package that encourages people to save more than the cost of the package, then savings are increasing and that would be good.
Tax cuts seem to be, for you, the solution to every problem. Economics is not so simple.
Vote:February 24th, 2005 at 2:27 pm
The 1980s tax cuts did not greatly reduce the level of taxation, especially as GST came in also. And dozens of loophiles were closed off. The system was much better and fairer, but it did not create much of a revenue drop IIRC.
You seem agnostic over public vs private savings. I am not. I do not want the Government doing any saving for me. I do not want Dr Cullen to decide what shares to buy for me.
Vote:February 24th, 2005 at 3:04 pm
Too late David – he’s already buying shares for you. Remember the Cullen fund?
Vote:February 24th, 2005 at 3:22 pm
And does Sullen buy local shares with our money
Vote:Hell no that risk is far to high but all right for dumb kiwis
Ray
February 24th, 2005 at 4:07 pm
I agree with Waterman,investing in shares should not be seen as saving it is always a gamble.It’s a gamble I take, but not at present as stocks seem fully valued.Unit trust managers (Carmel Fisher excepted) don’t live up to their promises,charge high fees,and achieve mediocre returns at best.Overseas shares are double taxed and subject to exchange rate fluctuations.As with horse racing you need to do a great deal of study and have a fair degree of luck to come out on top. To expect young New Zealanders to place their savings into such an environment is ludicrous.As Don BRASH said pay the mortgage off first.
Vote:February 24th, 2005 at 5:30 pm
DR Dons advice: Dont buy a personal home !
DR Cullen’s advice : buy shares instead of buying an ‘investment’ house.
AS a macro economic principle which is the best advice.!!
Vote:Hint ,Dr Don didnt take his own advice but he did buy a kiwfruit orchard as an investment while
Dr C has his money in Kiwibank ( yes they do have higher interest rates)
February 25th, 2005 at 9:35 am
When politicians offer personal investment advice I tend to look away.
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