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  1. #11
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    Default Re: How to invest ones small savings?


  2. #12
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    Default Re: How to invest ones small savings?

    "Bonus Bonds are crap" !.

    Today they maybe, simply because there are so many, over 2 billion I believe.

    Back in the 70's a PolyTech tutor advised the class to win at BB you needed a long "string" of them, bit like shooting with a 22 compared to a shotgun.

    This BB fund was for first time home buyers, if my memory serves me right, but then ANZ took it over.

    We struck 3 $5,000 prizes over the long haul and as you can see from the spreadsheet we didn't do too badly, tax free too.

    Must check the power shares for a comparison.
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  3. #13
    Senior Member Digby's Avatar
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    Default Re: How to invest ones small savings?

    Quote Originally Posted by Laggard View Post
    Thanks for that
    So what colour is your Adkaf?
    Have you joined Proud to Be Kiwi yet?

  4. #14
    Senior Member Digby's Avatar
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    Default Re: How to invest ones small savings?

    As regards Bonus Bonds
    I don't agree that they are crap.
    If you only have say a few thousand the interest rate in a savings account is pathetic.
    So you might as well put it in Bonus Bonds, you may win a big prize or even a few small ones.
    And you still have your money.

    I know this argument has gone on for years.
    So what colour is your Adkaf?
    Have you joined Proud to Be Kiwi yet?

  5. #15
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    Default Re: How to invest ones small savings?

    Quote Originally Posted by Digby View Post
    As regards Bonus BondsI don't agree that they are crap.
    You don't have to. Assuming your goal is to maximize your expected return, they are an inferior investment instrument. If you get happy warm fuzzies from dreaming about a big win go for it, but you are not maximising your expected investment return. That's simply a fact, and whether you believe it or not is actually totally irrelevant.

  6. #16
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    Default Re: How to invest ones small savings?

    Here's a good article which isn't a hard read at all - https://i.stuff.co.nz/business/money...re-for-suckers

    Basically, I don't even know why you're asking for investment advice if you're ignoring plain facts like this because you 'don't agree'.

  7. #17
    Awaiting Enlightenment R2x1's Avatar
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    Default Re: How to invest ones small savings?

    Quote Originally Posted by Digby View Post
    So how can you invest in real estate if you only have small savings?
    Pot plants.
    Entropy is not what
    it used to be.



  8. #18
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    Default Re: How to invest ones small savings?

    Ok, I thought rather than just arguing about how I'm right and you're wrong, I thought I'd try to show you.

    Over the last 90 odd years, the S&P 500 has averaged around a 9.8% return. I'm going to assume that's an arithmetic average rather than a geometric average, as it always works out a bit higher. So let's just assume the geometric average is around 7.5%

    Say you invest $1000 in for 10 years

    Investing in the S&P500 (At my very, very conservative estimate of 7.5) would leave you with an expected total of ~$2061 in 10 years time.
    Investing in Bonus Bonds (I'm going to assume a 3% return, which is very, very generous) would leave you with an expected total of $1410.60
    Now, that's more than a $600, on a $1000 investment, in a 10 year period.

    Now, lets ignore the sharemarket for a while (say you don't want the risk as you only plan on investing for 5 years).
    BNZ is offering 3.4% on a 12 month $5000 term desposit. Even this is significantly better than the expected returns on Bonus Bonds. Investing in a conservative fixed interest fund will see returns that are better still (albeit with more risk, although less risk than a sharemarket fund).

    While the type of fund you're best to invest in depends heavily on your personal situation (especially investment horizon and willingness to take on risk), hopefully I've at least opened you to the idea that bonus bonds are, in fact, not the best investment.

  9. #19
    Senior Member piroska's Avatar
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    Default Re: How to invest ones small savings?

    Quote Originally Posted by Digby View Post
    Bonus Bonds
    So you might as well put it in Bonus Bonds, you may win a big prize or even a few small ones.
    .
    Nope.
    Might as well invest in another form of gambling then, if the "Might win a prize" is the attraction.

    Might as well still have your money and get a pathetic bit of interest I say.
    Ex-pctek

  10. #20
    Wrinkly Member! B.M.'s Avatar
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    Default Re: How to invest ones small savings?

    Quote Originally Posted by Digby View Post
    As regards Bonus Bonds
    I don't agree that they are crap.
    If you only have say a few thousand the interest rate in a savings account is pathetic.
    So you might as well put it in Bonus Bonds, you may win a big prize or even a few small ones.
    And you still have your money.

    I know this argument has gone on for years.
    It just so happens that I had a Mate (now dearly departed) who owned a substantial Saw Mill, and as he neared retirement he was made an offer for his Mill by one of NZ's largest building company's.

    The Mill turned out to be worth a $mill so he had a lot of beer money.

    Well his Bank Manager was overjoyed, and offered him all sorts of deals none of which overjoyed the Mate. So, much to the disgust of the Bank Manager and other Professional Financial Advisors, he put the lot into Bonus Bonds.

    You guessed it. First flamin draw he was entitled to sees him take out 1st Prize, plus a heap of minor prizes, so in a little over a month he had over doubled his money.

    Now this mate was rarely seen dressed in anything other than a Bush Singlet, Shorts, and Work Boots so he took immense pleasure in giving the Bank Manager and Financial Advisors some advice.

    But isn't it interesting how little money these Bank Managers and Financial Advisors actually have themselves? Most of the University Lecturers, on matters financial, couldn't afford a round of drinks.
    Global Warming is Mann made.
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