August 24, 2017
The Rise of Labour and the NZ General Election 2017
Never underestimate NZ Prime Minister Simon "Bill" English's ability to clutch defeat from the jaws of victory. I have no idea how competent the Labour leader Jacinda Ardern is, but voters can see she's at least human. By comparison Bill English you know is just lying every time he speaks. Now I realise both are lying most of the time, but English comes across as particularly disingenuous. It looks like Labour are romping to victory. A week, as they say, is a long time in politics.
August 18, 2017
The Greens Demise
It's about time the Greens got their comeuppance. These professional naysayers and avoiders of all responsibility have plunged in recent polls. On current trends they'll be out of the Nee Zealand Parliament all together. It turns out their support base was mostly Labour voters and now Labour has a viable leader, traditional Labour support is flocking back, abandoning the Greens in so doing.
August 15, 2017
Basketball Obsession and The Crushing Son
The Kindle versions of my two novels are available right now for free. For a limited time only as they say. Please download your free copy and read on your computer using Amazon's free Kindle reader software or buy a Kindle device and really cut loose.
If you like the stories then please review the books on Amazon. Despite being widely read, actually getting reviews seems more difficult than it looks, that is real reviews, I don't pay people to review my work.
You can also buy a paperback copy. I have a good conversion rate, meaning people who read the stories in Kindle format then often buy the book. I make more money this way, the royalties on the actual physical book are better than those from the electronic version.
The two books can be downloaded for free here:
August 14, 2017
Time Travel
I may have mentioned this before but here I go again, time travel and not the type for science fiction fans.
Is it possible to travel in time? Probably not physically but I think you can see the past and future and I'll tell you how. Let's deal with looking back in time first. We all travel in time when we look at the stars at night. When we do that we see the light as it was when that light left the star. That's not what you might see nearby the same star. Even light from the sun to earth takes 8 minutes and 20 seconds to reach us. That light illuminates our world and we live in 'real time' but the light is actually old and we sunbathe while enjoying the past.
Taking this idea a step further, imagine a world farther away and light from our sun takes 2,000 years to reach them. They see our world as it was under the Romans, not in the 21st Century.
See a map of the Orion arm of the Milky Way to get an idea of where the Roman world can be viewed from: http://www.atlasoftheuniverse.com/2000lys.html
The technical problem is being able to see earth from the vantage point of 2,000 light years away right here on earth. Solve that then learn how to fine tune it, like seeing earth from a spy satellite. See how Julius Caesar really died and potentially what he actually said which almost certainly was not 'Et tu Brute', as Brutus was not even there.
To see ahead in time the answer is chemical. We need to speed ourselves up (but not to the point we disintegrate or die) to see ahead in time. Call it prediction with chemical clarity. Can drug users see into the future? I don't think so as they're probably taking the wrong pharmaceutical drugs.
How could it be safe? It'd be hard to make safe or to even get permission to experiment, but I think seeing ahead in time is a chemical problem not a physical one. How far ahead? My thinking is 12 to 24 hours ahead, not much more than that. Has this ever happened naturally? The reported experience of soldiers fighting in battle suggests so. I've read accounts where they say they see the future, and I believe this could be chemical, produced by the stress of their surroundings.
Is it possible to travel in time? Probably not physically but I think you can see the past and future and I'll tell you how. Let's deal with looking back in time first. We all travel in time when we look at the stars at night. When we do that we see the light as it was when that light left the star. That's not what you might see nearby the same star. Even light from the sun to earth takes 8 minutes and 20 seconds to reach us. That light illuminates our world and we live in 'real time' but the light is actually old and we sunbathe while enjoying the past.
Taking this idea a step further, imagine a world farther away and light from our sun takes 2,000 years to reach them. They see our world as it was under the Romans, not in the 21st Century.
See a map of the Orion arm of the Milky Way to get an idea of where the Roman world can be viewed from: http://www.atlasoftheuniverse.com/2000lys.html
The technical problem is being able to see earth from the vantage point of 2,000 light years away right here on earth. Solve that then learn how to fine tune it, like seeing earth from a spy satellite. See how Julius Caesar really died and potentially what he actually said which almost certainly was not 'Et tu Brute', as Brutus was not even there.
To see ahead in time the answer is chemical. We need to speed ourselves up (but not to the point we disintegrate or die) to see ahead in time. Call it prediction with chemical clarity. Can drug users see into the future? I don't think so as they're probably taking the wrong pharmaceutical drugs.
How could it be safe? It'd be hard to make safe or to even get permission to experiment, but I think seeing ahead in time is a chemical problem not a physical one. How far ahead? My thinking is 12 to 24 hours ahead, not much more than that. Has this ever happened naturally? The reported experience of soldiers fighting in battle suggests so. I've read accounts where they say they see the future, and I believe this could be chemical, produced by the stress of their surroundings.
August 10, 2017
War Looming in the Far East
I have already posted about the massive military build up occurring in Japan right now. You'll remember the US warship that ran into a cargo ship in Tokyo Bay. That likely happened because the US are starting to fall over one another. Also extremely busy are the Kanagawa area US Naval Air Facilities.
Now with President Trump issuing stark warnings to North Korea, I'm predicting war will result. Somewhere along the line the US made the decision and pushed the 'go' button.
Now with President Trump issuing stark warnings to North Korea, I'm predicting war will result. Somewhere along the line the US made the decision and pushed the 'go' button.
This was my post in April 2017:
I've got friends living in Yokohama, Japan and they tell me the US Navy base at Yokosuka is the busiest they've ever seen it. Also extremely busy are the Kanagawa area US Naval Air Facilities. Planes are flying in 24 hours a day, 7 days a week. Locals are complaining of the noise. Bear in mind all the various crises over the decades, but they say the bases have always just been ticking along despite that. Not now, now they're really ramping up. Based on this evidence I'd say the US is preparing for war and not just talking tough. Who will that war be with? North Korea is my suggestion and anyone else who takes their side.
I've got friends living in Yokohama, Japan and they tell me the US Navy base at Yokosuka is the busiest they've ever seen it. Also extremely busy are the Kanagawa area US Naval Air Facilities. Planes are flying in 24 hours a day, 7 days a week. Locals are complaining of the noise. Bear in mind all the various crises over the decades, but they say the bases have always just been ticking along despite that. Not now, now they're really ramping up. Based on this evidence I'd say the US is preparing for war and not just talking tough. Who will that war be with? North Korea is my suggestion and anyone else who takes their side.
August 03, 2017
Picks from Downunder
Three companies to look for, they're financial and construction.
The first represents good value for money at the moment. Westpac is a major Australian bank, the largest in terms of branch network. They're down right now and therefore cheap. The Australian government would never let Westpac go bust. Never ever. So this is a safe bet. They're not a bad income earning investment either.
Snapshot of Westpac: https://www.google.com/finance?q=ASX:WBC
For the retired folks looking at yield. consider Kiwibank capital notes, at current prices yielding 6.9%. Kiwibank are essentially New Zealand government owned and would never be allowed to fail. Any government that did let them fail would not be the government come the next election.
The capital notes here: https://www.nzx.com/markets/NZDX/hybrids/KCFHA
And lastly we have Fletcher Building. They're NZ's largest construction company and experiencing some speed wobbles. Fletcher own both Laminex and Formica (you know those - right?) and the only cement factory in NZ, Golden Bay Cement at Whangarei. They're everywhere and do anything including build houses. They have a lot of political clout and so I'd consider them a safe bet too.
Fletcher Building: https://www.google.com/finance?q=NZE:FBU
The first represents good value for money at the moment. Westpac is a major Australian bank, the largest in terms of branch network. They're down right now and therefore cheap. The Australian government would never let Westpac go bust. Never ever. So this is a safe bet. They're not a bad income earning investment either.
Snapshot of Westpac: https://www.google.com/finance?q=ASX:WBC
For the retired folks looking at yield. consider Kiwibank capital notes, at current prices yielding 6.9%. Kiwibank are essentially New Zealand government owned and would never be allowed to fail. Any government that did let them fail would not be the government come the next election.
The capital notes here: https://www.nzx.com/markets/NZDX/hybrids/KCFHA
And lastly we have Fletcher Building. They're NZ's largest construction company and experiencing some speed wobbles. Fletcher own both Laminex and Formica (you know those - right?) and the only cement factory in NZ, Golden Bay Cement at Whangarei. They're everywhere and do anything including build houses. They have a lot of political clout and so I'd consider them a safe bet too.
Fletcher Building: https://www.google.com/finance?q=NZE:FBU
August 01, 2017
Labour Party Antics
Today could see a new leader for the New Zealand Labour Party just weeks out from a General Election. While that may seem amusing I wouldn't be so quick to write them off just yet. Consider all the surprising election results we've seen the last couple of years. Then we have Greens co-leader Metiria Turei admitting to benefit fraud and actually rising in the polls. Of course the thought has occurred to me that she did no such thing and is simply politicking.
July 26, 2017
Basketball Obsession
My first novel Basketball Obsession is free today and tomorrow on Kindle.
https://www.amazon.com/Basketball-Obsession-Ken-Horlor-ebook/dp/B00VIEZ51G/ref=asap_bc?ie=UTF8
https://www.amazon.com/Basketball-Obsession-Ken-Horlor-ebook/dp/B00VIEZ51G/ref=asap_bc?ie=UTF8
July 18, 2017
Automobile Innovation
Here's an idea I've had concerning electric cars. This has probably been thought of before, but my version goes like this: the problem with electric cars is range. Fine for around town stuff, but between cities the electric cars run out of juice.
What about cars that run on roads with an electrical supply reticulated into the road itself. Steam trains used to have water towers for refuelling, then a trough came along placed beside the track, a scoop picks up the water and the train never has to stop. Well, how about zones on highways where there is a live rail and the car lowers a wand to charge the batteries as the car drives along. Solar and wind could be added as a source of power as well as the surface also generating power from the wheels rolling across the surface.
Then what about nuclear cars. I currently have a car sitting in the garage with a full fuel tank. If invented today the set-up would probably be illegal. So what about a safe steam car, the heat coming from an on-board reactor. Within the useful life of the car it would never need refuelling. Think like a watch on the wrist glowing in the dark. As safe as that watch would be the design brief.
What about cars that run on roads with an electrical supply reticulated into the road itself. Steam trains used to have water towers for refuelling, then a trough came along placed beside the track, a scoop picks up the water and the train never has to stop. Well, how about zones on highways where there is a live rail and the car lowers a wand to charge the batteries as the car drives along. Solar and wind could be added as a source of power as well as the surface also generating power from the wheels rolling across the surface.
Then what about nuclear cars. I currently have a car sitting in the garage with a full fuel tank. If invented today the set-up would probably be illegal. So what about a safe steam car, the heat coming from an on-board reactor. Within the useful life of the car it would never need refuelling. Think like a watch on the wrist glowing in the dark. As safe as that watch would be the design brief.
July 12, 2017
Garbine Muguruza
Watching Wimbledon, I admire the mental toughness of Gabine Muguruza. When down or things are not working out she has the capacity to self-correct and get back on track. She did this against both Angelique Kerber and Svetlana Kuznetsova. She is clearly playing to a game plan and it's good she keeps to that plan.
[Phew, she won Wimbledon, I'm back to predicting well after my failure in picking the Cavs to win the NBA Playoffs]
[Phew, she won Wimbledon, I'm back to predicting well after my failure in picking the Cavs to win the NBA Playoffs]
July 09, 2017
All Blacks 15 Lions 15
I've said it before and this is a timely moment to repeat myself; I predict that in the not too distant future, the All Blacks will be banned for being too good. How it happens will be through the referees blowing the whistle every time an All Blacks player touches the ball. And then a new competition will evolve which excludes the world's top Rugby team altogether.
With the drawn match between the All Blacks and Lions at Eden Park I think we can see the beginning of the trend. Near the end of this game we saw the referee consult and change his mind in making an obvious political decision in not allowing an All Blacks series victory. The referee, Frenchman Romain Poite, to put it bluntly, was 100% right to award the penalty near the end for an offside by the Lions, then 100% wrong to change his mind.
Watch this space as more of this will continue. For decades the northern hemisphere have changed the rules annually in an attempt to nullify All Blacks dominance. The result has seen the All Blacks get ever better. Now a new approach will emerge and that will be to blow the whistle and in so doing, blow the All Blacks off the park.
With the drawn match between the All Blacks and Lions at Eden Park I think we can see the beginning of the trend. Near the end of this game we saw the referee consult and change his mind in making an obvious political decision in not allowing an All Blacks series victory. The referee, Frenchman Romain Poite, to put it bluntly, was 100% right to award the penalty near the end for an offside by the Lions, then 100% wrong to change his mind.
Watch this space as more of this will continue. For decades the northern hemisphere have changed the rules annually in an attempt to nullify All Blacks dominance. The result has seen the All Blacks get ever better. Now a new approach will emerge and that will be to blow the whistle and in so doing, blow the All Blacks off the park.
July 04, 2017
Make East Cape Monaco
Here's an idea for developing East Cape in the North Island of New Zealand; turn it into another Monaco.
Monaco is a principality on the Mediterranean and alongside France. It has no natural resources to speak of and occupies about 2 square kilometres. Despite this it is one of the richest countries on earth, if not the richest. What makes it so is zero taxation. It's a magnet to those wishing to minimise the amount of tax they pay.
France tolerates this but does not allow its own citizens to participate. If you're French and living in Monaco, you still pay tax at the rate that applies in France.
This is my idea - create East Cape as some form of self governing autonomous region, with no personal or company taxation. But this does not extend to New Zealanders or Australians.
As I understand it, to be a permanent resident in Monaco requires some hoops to be jumped through. There is a minimum amount of time you need to be in residence each year and it takes upwards of 12 years to gain permanent permanent status. Up to then any resident is subject to annual or three-yearly checks.
For East Cape I'm talking about all that area from Ruatoria to Hicks Bay. Turn it into Monaco.
Monaco is a principality on the Mediterranean and alongside France. It has no natural resources to speak of and occupies about 2 square kilometres. Despite this it is one of the richest countries on earth, if not the richest. What makes it so is zero taxation. It's a magnet to those wishing to minimise the amount of tax they pay.
France tolerates this but does not allow its own citizens to participate. If you're French and living in Monaco, you still pay tax at the rate that applies in France.
This is my idea - create East Cape as some form of self governing autonomous region, with no personal or company taxation. But this does not extend to New Zealanders or Australians.
As I understand it, to be a permanent resident in Monaco requires some hoops to be jumped through. There is a minimum amount of time you need to be in residence each year and it takes upwards of 12 years to gain permanent permanent status. Up to then any resident is subject to annual or three-yearly checks.
For East Cape I'm talking about all that area from Ruatoria to Hicks Bay. Turn it into Monaco.
July 02, 2017
Greenbrier Companies Inc (NYSE: GBX)
My latest stock pick is railcar and marine manufacturer Greenbrier Companies Inc., based in Lake Oswego, Oregon.
Check them out here: https://finance.yahoo.com/quote/GBX?p=GBX
I make no secret if my liking for solid industrials like these. But one thing to note is many pundits are picking them to collapse. I don't see that happening and expect them to do well.
[Update @ 20/11/2019: now solidly in the buy range for bargain hunters ]
Check them out here: https://finance.yahoo.com/quote/GBX?p=GBX
I make no secret if my liking for solid industrials like these. But one thing to note is many pundits are picking them to collapse. I don't see that happening and expect them to do well.
[Update @ 20/11/2019: now solidly in the buy range for bargain hunters ]
June 29, 2017
PACCAR Inc
My latest stock tip is PACCAR Inc., (Nasdaq PCAR) They're a truck manufacturer and a pretty good one at that. Brands under their roof include Kenworth, Peterbilt and DAF.
They also own Leyland and Foden. Why they retired these brands is a matter of conjecture and a mistake in my opinion. The Leyland plant in England is still producing but the trucks coming out the door are branded DAF. This seems strange as Leyland is a well respected premium truck brand right across the former British Empire. Foden also has a respected name, particularly its tippers. Maybe the Americans don't understand the depth and breadth of the brands.
But that aside, PACCAR is cheap right now. Since I adjusted my portfolio they're up 4%. By the way, for those following my tips, back in January 2016 I tipped Joy Global which was about $10 at the time. Later that year when Komatsu America bought them out, the price was just north of $28. I did say at the time that it was a pick for the not so risk averse as it could go either way. For those of you that are risk takers, you made a lot of money.
Is PACCAR in the Joy Global camp? No way. Can you imagine a world without Kenworth? I can't and that's why they won't disappear any time soon.
They also own Leyland and Foden. Why they retired these brands is a matter of conjecture and a mistake in my opinion. The Leyland plant in England is still producing but the trucks coming out the door are branded DAF. This seems strange as Leyland is a well respected premium truck brand right across the former British Empire. Foden also has a respected name, particularly its tippers. Maybe the Americans don't understand the depth and breadth of the brands.
But that aside, PACCAR is cheap right now. Since I adjusted my portfolio they're up 4%. By the way, for those following my tips, back in January 2016 I tipped Joy Global which was about $10 at the time. Later that year when Komatsu America bought them out, the price was just north of $28. I did say at the time that it was a pick for the not so risk averse as it could go either way. For those of you that are risk takers, you made a lot of money.
Is PACCAR in the Joy Global camp? No way. Can you imagine a world without Kenworth? I can't and that's why they won't disappear any time soon.
June 28, 2017
Forgotten Companies
I found this link interesting http://contractormag.co.nz/classic-machines/hough/ It tells the story of Hough, the US manufacturer of good Wheel Loaders. Depending on which story you believe. Hough invented the fully hydraulic pivot steer loader (while others say that was the Moore Scoopmobile). On my trip to the US last year I saw many Hough loaders still in their original paint.
That got me to thinking, what about those brands that are still hanging on somewhere, anywhere.
How about Gradall These telescopic boom excavators are innovative but never found widespread support.
Smalley is the inventor of the mini excavator. Made in the UK, they were, I believe, originally grave diggers. Then they put out a dredger for clearing canals, and these were exported to India. The company still exists.
One brand that doesn't appear around anymore is the Halitrax skid steer loader. Made in New Zealand they were the inventor of the rubber track skid steer loader and subsequently copied worldwide. They were sold mostly in Auckland and the upper North Island and in the Sydney and New South Wales market. In Australia an earthmover will still advertise having ' a Drott, a Tipper and a Halitrax,' the terms being industry standard.
The Bedford J5 and J6 is no longer made but they live on in Pakistan where the trucks have gained legend status. That's because they're simple, powerful and tough. Pakistan still import used J5/J6's and fit wooden bodies to the chassis. On their rough roads wooden bodies hold up better. Many will be familiar with the decorated site of these trucks: http://s3.amazonaws.com/mbc_actionha/uploads/56997/original.jpg
Why isn't the venerable Bedford J5/J6 still being made? It seems a no-brainer for certain conditions.
That got me to thinking, what about those brands that are still hanging on somewhere, anywhere.
How about Gradall These telescopic boom excavators are innovative but never found widespread support.
Smalley is the inventor of the mini excavator. Made in the UK, they were, I believe, originally grave diggers. Then they put out a dredger for clearing canals, and these were exported to India. The company still exists.
One brand that doesn't appear around anymore is the Halitrax skid steer loader. Made in New Zealand they were the inventor of the rubber track skid steer loader and subsequently copied worldwide. They were sold mostly in Auckland and the upper North Island and in the Sydney and New South Wales market. In Australia an earthmover will still advertise having ' a Drott, a Tipper and a Halitrax,' the terms being industry standard.
The Bedford J5 and J6 is no longer made but they live on in Pakistan where the trucks have gained legend status. That's because they're simple, powerful and tough. Pakistan still import used J5/J6's and fit wooden bodies to the chassis. On their rough roads wooden bodies hold up better. Many will be familiar with the decorated site of these trucks: http://s3.amazonaws.com/mbc_actionha/uploads/56997/original.jpg
Why isn't the venerable Bedford J5/J6 still being made? It seems a no-brainer for certain conditions.
June 27, 2017
Team New Zealand Win 35th America's Cup
New Zealand have won the America's cup for the second time as challenger. It's been four long years since their massive choke in San Francisco.
Listen to Peter Montgomery's iconic call of the final race http://www.radiosport.co.nz/on-demand/audio/pj-montgomery-calling-the-americas-cup-win/
Larry Ellison of Oracle got this one wrong. It may have been a mistake taking the competition to Bermuda. But stand in Ellison's shoes for a minute and see things from his perspective. He's one man and his billions up against the combined mass of the oil rich United Arab Emirates and the world's biggest milk products exporter (New Zealand). He probably sees himself as the little guy. Okay, stop feeling sorry for him now as he pretty much stole the Cup from Alinghi after the Swiss stole the cup from New Zealand. I say stole as all the aforementioned teams survive by buying Kiwis.
A relief then as the NZ government are going to have to spend money and that'll be good for the economy. It'll be good to see the Italians back in Auckland as the challenger of record. When they were last in town they made themselves almost as popular as the home team.
Afterthought: Will someone make the NZ skipper Glenn Ashby Prime Minister. Thank you. He's the type of guy NZ needs leading. Men would even follow the man into battle.
Listen to Peter Montgomery's iconic call of the final race http://www.radiosport.co.nz/on-demand/audio/pj-montgomery-calling-the-americas-cup-win/
Larry Ellison of Oracle got this one wrong. It may have been a mistake taking the competition to Bermuda. But stand in Ellison's shoes for a minute and see things from his perspective. He's one man and his billions up against the combined mass of the oil rich United Arab Emirates and the world's biggest milk products exporter (New Zealand). He probably sees himself as the little guy. Okay, stop feeling sorry for him now as he pretty much stole the Cup from Alinghi after the Swiss stole the cup from New Zealand. I say stole as all the aforementioned teams survive by buying Kiwis.
A relief then as the NZ government are going to have to spend money and that'll be good for the economy. It'll be good to see the Italians back in Auckland as the challenger of record. When they were last in town they made themselves almost as popular as the home team.
Afterthought: Will someone make the NZ skipper Glenn Ashby Prime Minister. Thank you. He's the type of guy NZ needs leading. Men would even follow the man into battle.
June 26, 2017
That Weak New Zealand Prime Minister
The events over the last few days illustrate what I've been saying for a long time, the New Zealand Prime Minister Simon "Bill" English is weak. He can't even get his story straight over the Todd Barclay matter. Who cares about what Todd Barclay did? No-one is the answer, but it does matter that the PM lacks a spine and can't stand straight. Do we have to put up with him for another three years? Please National Party caucus, overthrow him and let's move on.
June 23, 2017
I Picked Bradken, Did Anyone Else?
Just to recap, back in 2016 I mentioned Bradken three times.
I first mentioned them at 84 cents here...http://kenhorlor.blogspot.com/2016/04/risky-asx-stcoks-worth-checking-out.html
Then I followed up in June http://kenhorlor.blogspot.com/2016/06/advantages-of-investing-in-stocks.html and November http://kenhorlor.blogspot.com/2016/11/update-advantages-of-investing-in-stocks.html
Note that in October 2016 Bradken came under takeover interest by Hitachi Construction Machinery and the full sale was completed in early 2017. Any investor acting upon my initial pick at 84 cents, would have nearly quadrupled their money. The sale price was $3.25 (Australian Dollars).
My hypothetical $135,000 invested in Bradken would be $513,000 less than a year later. Sometimes I even surprise myself with this stuff.
I first mentioned them at 84 cents here...http://kenhorlor.blogspot.com/2016/04/risky-asx-stcoks-worth-checking-out.html
Then I followed up in June http://kenhorlor.blogspot.com/2016/06/advantages-of-investing-in-stocks.html and November http://kenhorlor.blogspot.com/2016/11/update-advantages-of-investing-in-stocks.html
Note that in October 2016 Bradken came under takeover interest by Hitachi Construction Machinery and the full sale was completed in early 2017. Any investor acting upon my initial pick at 84 cents, would have nearly quadrupled their money. The sale price was $3.25 (Australian Dollars).
My hypothetical $135,000 invested in Bradken would be $513,000 less than a year later. Sometimes I even surprise myself with this stuff.
June 21, 2017
Pike River Latest
The latest video footage from inside the Pike River mine is interesting to say the least. There is at least one wooden pallet still intact which means the temperatures inside the mine weren't that hot after all. It's quite likely there are bodies down the mine. There really is no reason for the continued refusals to enter the mine.
Has there been a cover up? It certainly looks that way but I don't see what exactly is being covered up.
The very weak and ineffectual New Zealand Prime Minister Simon "Bill" English should finally do something. New information and all that. But then with English's performance this past week regarding the Todd Barclay matter, I wouldn't be holding my breath.
Has there been a cover up? It certainly looks that way but I don't see what exactly is being covered up.
The very weak and ineffectual New Zealand Prime Minister Simon "Bill" English should finally do something. New information and all that. But then with English's performance this past week regarding the Todd Barclay matter, I wouldn't be holding my breath.
June 15, 2017
New Zealanders - Investing and Buying a House
This post is directed at New Zealanders and permanent residents of New Zealand. You're bombarded daily with what amounts to rubbish about what you should do with your money. My advice, ignore them and do what you're already doing. Whatever it is it's likely to be better than the advice you're receiving, that's how bad most advice is.
But if wondering how to structure your thinking, then read on. I'm assuming you make all your decisions yourself and make all your investments directly where possible. You do this right? If not then you're likely to come up short of expectations as an entire industry in New Zealand is devoted to fleecing you and everyone else.
So let's get started. Consider the young family, two children of school age with one parent working fulltime on less than $50,000 a year. Can you get ahead and buy a house? The answer is yes and here's how:
1. Live within your income at all times. Do not borrow, never use the credit card. Do not take expensive holidays and if you do go on holiday make it the neighbouring beach town and its cheapest motel (not camping, that's expensive). Only buy real food and only eat just enough. Do not buy so much you throw stuff out. Use water to clean (warm water is the world's best solvent, proven so by Chemists), do not buy cleaning chemicals. If you garden, go to auction rooms and such and buy secondhand tools, secondhand furniture, use Trade Me to buy stuff others are throwing out (it's often quite good).
For clothing visit the thrift stores such as the Salvation Army. They often sell new clothing for $1 or $2 an item. How this works is tourists throw away items that won't fit in their suitcase, the 'Sallies' collect the clothing up and then distribute them around their stores. We're talking name brands here, but you have to be patient and visit the stores regularly. In electronics for that all-important laptop computer, look for ex-lease sales or get the latest cheap deal from Warehouse Stationery online. The latter deliver very promptly and can be much cheaper than in store. Never get carried away with electronics, do not buy Sky TV, better still buy a cheap DVD player and buy cheap DVD's in the bargain bins once a month. This is entertainment, and use Trade Me to buy a cheap TV. Another source of electronics, bicycles and stuff is the local Pawn shop. They're always looking to unload their unredeemed items.
A family which lives like this can exist and even save if they follow my advice. Own only one car and make sure it's a small Toyota or Subaru. They never break down.
Furthermore, live in a small regional town, get out of Auckland.
2. Kiwisaver, that's the compulsory retirement saving taken from your income each week, just pay the minimum. Have it paid into a conservative fund, or possibly a balanced growth fund if you're under 40. For older savers just stay conservative as you will be aware markets do melt down and you want to collect this money when you're 65.
3. Register and collect Working for Families. For a family as described above the sum you receive is about $9,000 each year. This is what you save. Remember you are living within your income - right?
Think about how you will receive this money. You have two choices, either take the money in advance weekly based on an estimate of what you will earn, or in a lump sum based on the year gone past. The second option is prudent as you know how much you'll be getting and it comes as a lump sum. With the weekly in advance approach you can end up owing the Inland Revenue money if you get it wrong.
4. Invest in Bonus Bonds. That's because Bonus Bonds do not impact your Working for Families entitlement. Just about everything else does; for instance any income from bank interest or dividends from companies reduce the amount your receive. Even sizeable gifts from family reduce Working for Families. But not Bonus Bonds. And you may win a large prize, and if you do you still receive Working for Families. Let this pool of money compound, that means have your prizes from Bonus Bonds be reinvested in more bonds, and then let prizes you win win more prizes.
5. Take a proportion of the $9,000 (suggest $5,000 Bonus Bonds, $4,000 shares) and invest in companies through the New Zealand and Australian stock exchanges. In doing this, look for companies that are solid but have been on the receiving end of bad news recently. The market disproportionately penalises bad news and then gets drunk on good news. These companies won't pay too much in dividends and thus you'll still maximise your Working for Families. Hold these investments for a long time and take any capital returns (that's where the company returns money to you over and above regular dividends) and invest that in more shares. Any company that is taken over, take the money and invest in more shares. Over time your investments grow and they can grow a lot.
The capital gain from the above activity is completely tax free in New Zealand. You bought these companies because they were cheap at the time and you bought to realise income from them over time. You did not speculate and trade in buying and selling shares.
[Example: Steel and Tube It is in trouble over mislabelling of its steel but its earnings are always satisfactory.]
Remember to own these shares directly in your own name. Do not invest in managed funds. Why? With funds you have no control over how they operate and they charge fees which soak up your potential returns.
6. Now you have the stake to buy a house. This came about because you lived within your income at all times, you did not spend unnecessarily, and you claimed what you were entitled to. Then when you did invest you did so largely tax free.
When you do buy a house, up and coming areas are always good, or run down areas of large cities that are gentrifying. For instance, Tauranga or Nelson not Wanganui or Blenheim (sorry Blenheim). In Auckland, think West Auckland; in Wellington think Newtown.
Keep doing 1 through 5 above but take any gains you make and pay off the mortgage. To this end a variable rate floating type of mortgage is best. If you do fix the mortgage rate make sure you can make capital repayments up to a certain sum without penalty. Paying off the mortgage quickly is the best thing you can do, it trumps everything else. A home with an income, such as a small flat attached to the house is also good if you can find such a property (your income rises and Working for Families reduces but you take the rent and pay off the mortgage sooner with higher repayments over a shorter time period).
As the equity in your first home increases, you're now in a position to buy a rental property. You can do this by putting both your own house and the rental acquisition together and borrowing against the combined value. Timed right you can borrow the whole price paid for the rental property you're buying.
Now you're on the path to being wealthy. Your income from employment may have risen with inflation but the wealth you've created was from wise investment and not chasing your tail.
But if wondering how to structure your thinking, then read on. I'm assuming you make all your decisions yourself and make all your investments directly where possible. You do this right? If not then you're likely to come up short of expectations as an entire industry in New Zealand is devoted to fleecing you and everyone else.
So let's get started. Consider the young family, two children of school age with one parent working fulltime on less than $50,000 a year. Can you get ahead and buy a house? The answer is yes and here's how:
1. Live within your income at all times. Do not borrow, never use the credit card. Do not take expensive holidays and if you do go on holiday make it the neighbouring beach town and its cheapest motel (not camping, that's expensive). Only buy real food and only eat just enough. Do not buy so much you throw stuff out. Use water to clean (warm water is the world's best solvent, proven so by Chemists), do not buy cleaning chemicals. If you garden, go to auction rooms and such and buy secondhand tools, secondhand furniture, use Trade Me to buy stuff others are throwing out (it's often quite good).
For clothing visit the thrift stores such as the Salvation Army. They often sell new clothing for $1 or $2 an item. How this works is tourists throw away items that won't fit in their suitcase, the 'Sallies' collect the clothing up and then distribute them around their stores. We're talking name brands here, but you have to be patient and visit the stores regularly. In electronics for that all-important laptop computer, look for ex-lease sales or get the latest cheap deal from Warehouse Stationery online. The latter deliver very promptly and can be much cheaper than in store. Never get carried away with electronics, do not buy Sky TV, better still buy a cheap DVD player and buy cheap DVD's in the bargain bins once a month. This is entertainment, and use Trade Me to buy a cheap TV. Another source of electronics, bicycles and stuff is the local Pawn shop. They're always looking to unload their unredeemed items.
A family which lives like this can exist and even save if they follow my advice. Own only one car and make sure it's a small Toyota or Subaru. They never break down.
Furthermore, live in a small regional town, get out of Auckland.
2. Kiwisaver, that's the compulsory retirement saving taken from your income each week, just pay the minimum. Have it paid into a conservative fund, or possibly a balanced growth fund if you're under 40. For older savers just stay conservative as you will be aware markets do melt down and you want to collect this money when you're 65.
3. Register and collect Working for Families. For a family as described above the sum you receive is about $9,000 each year. This is what you save. Remember you are living within your income - right?
Think about how you will receive this money. You have two choices, either take the money in advance weekly based on an estimate of what you will earn, or in a lump sum based on the year gone past. The second option is prudent as you know how much you'll be getting and it comes as a lump sum. With the weekly in advance approach you can end up owing the Inland Revenue money if you get it wrong.
4. Invest in Bonus Bonds. That's because Bonus Bonds do not impact your Working for Families entitlement. Just about everything else does; for instance any income from bank interest or dividends from companies reduce the amount your receive. Even sizeable gifts from family reduce Working for Families. But not Bonus Bonds. And you may win a large prize, and if you do you still receive Working for Families. Let this pool of money compound, that means have your prizes from Bonus Bonds be reinvested in more bonds, and then let prizes you win win more prizes.
5. Take a proportion of the $9,000 (suggest $5,000 Bonus Bonds, $4,000 shares) and invest in companies through the New Zealand and Australian stock exchanges. In doing this, look for companies that are solid but have been on the receiving end of bad news recently. The market disproportionately penalises bad news and then gets drunk on good news. These companies won't pay too much in dividends and thus you'll still maximise your Working for Families. Hold these investments for a long time and take any capital returns (that's where the company returns money to you over and above regular dividends) and invest that in more shares. Any company that is taken over, take the money and invest in more shares. Over time your investments grow and they can grow a lot.
The capital gain from the above activity is completely tax free in New Zealand. You bought these companies because they were cheap at the time and you bought to realise income from them over time. You did not speculate and trade in buying and selling shares.
[Example: Steel and Tube It is in trouble over mislabelling of its steel but its earnings are always satisfactory.]
Remember to own these shares directly in your own name. Do not invest in managed funds. Why? With funds you have no control over how they operate and they charge fees which soak up your potential returns.
6. Now you have the stake to buy a house. This came about because you lived within your income at all times, you did not spend unnecessarily, and you claimed what you were entitled to. Then when you did invest you did so largely tax free.
When you do buy a house, up and coming areas are always good, or run down areas of large cities that are gentrifying. For instance, Tauranga or Nelson not Wanganui or Blenheim (sorry Blenheim). In Auckland, think West Auckland; in Wellington think Newtown.
Keep doing 1 through 5 above but take any gains you make and pay off the mortgage. To this end a variable rate floating type of mortgage is best. If you do fix the mortgage rate make sure you can make capital repayments up to a certain sum without penalty. Paying off the mortgage quickly is the best thing you can do, it trumps everything else. A home with an income, such as a small flat attached to the house is also good if you can find such a property (your income rises and Working for Families reduces but you take the rent and pay off the mortgage sooner with higher repayments over a shorter time period).
As the equity in your first home increases, you're now in a position to buy a rental property. You can do this by putting both your own house and the rental acquisition together and borrowing against the combined value. Timed right you can borrow the whole price paid for the rental property you're buying.
Now you're on the path to being wealthy. Your income from employment may have risen with inflation but the wealth you've created was from wise investment and not chasing your tail.