Paying tax is for suckers

Im interested in shares/options etc.

This topic raises the question, Where are the recommended (preferably independent) shares forums?

Cheers
Craig
I know theres Sharechat.co.nz

NZ Property Investing News
http://www.Landlords.co.nz

Thanks W, but all I really know is how to apply maths to some fundamental concepts.

“2) Are you also investing in investment properties or are shares your forte?”

I’ll answer this one first W. I have 5 IPs plus my PPoR. One IP is commercial and it’s cf+, but the other IPs are the sort that are only cf+ after depreciation deductions. My income is such that those properties are just enough to push me down to the 43.5% tax bracket, so at that point I stopped. The maths just doesn’t work so well if you’re not in the 48.5% bracket. I now have about $350k equity after sitting back doing nothing for 5 years, so I’m in the process of setting up a line of credit loan. I’m just starting to look at shares again, because it’s probably a good time to get a bit more balance back in my portfolio towards equities. If I pick the companies that are soon to go ex-dividend, then I should have a good head start. (ie 6 months worth of interest in effect)
I’m really no expert in share investment though. I made 50k in 98, 30k in 99, and lost 30k in the tech wreck in 00, all on a 50k investment, mostly on luck, good and bad. It was enough to tide us over while we started our new company, so I’m not complaining. Obviously with those numbers I was just gambling a bit with my 50k, but now I have to try to find something a bit more stable and sensible for my LOC. I’m only going to consider shares that can fund my interest payments, eg bank shares, with at least 4.5% to 5% fully franked dividends. (My LOC rate will be 6.1%, and you have to divide the ffd’s by 0.7 to work out the grossed up dividend.) At least with the LOC finance I don’t have to worry about margin calls. I just have to hope that the dividends and loan interest don’t get out of kilter too much. I figure that after 5 to 7 years I should have a good equity in income from the shares. I might still dabble with what’s left of my original 50k, but my work is such that I can’t afford to be too distracted by it. I’ve spent too much time as it is just planning what to do with my loc.

“1) I’m really keen to start investing into equities. What recommended readings/sites/courses would you recommend? How did you get started.”

As I wrote above, W, I’ve no right to make any recommendations. I was lucky enough to be given a fair bit of equity in my previous company, so I started when it was taken over and I had to sell my share of it.” Someone recommended http://www.marketmad.com recently but Crashy doesn’t think much of them. They are currently very bearish on banks btw. They want $990 for the first 13 months. There’s Crashy’s site of course. It’s always a dilemma; should you spend the money hoping to recoup it quickly on even the first trade, or do you just go with your own gut and maybe a bit of research. All advisers suffer from the same bit of adverse logic of course, ie if they are so good, then why do they need to sell their advice?

There are far more experienced share investors on this forum though, who I’m sure could give much better advice (about advice [] ).

“3) What is the most suitable structure with which to purchase shares in order to maximise nett after tax gains. I’m a PAYG with a salary of $150K, married with children.”

With that sort of income W, you could go a long way down the slightly negative, positive after tax type of property investment. You need to buy a lot further from the cbd now than I could in ‘98 to achieve the correct balance. You need at least 6.5% gross rental return to do that effectively, and it will only last for about 8 years before most of your depreciation runs out. Hopefully by that time you will have a substantial equity and your rents will have increased enough to keep the balance. With your income, you could probably buy 5 properties of that sort before your net taxable income drops to the 43.5% bracket. You would be net cf+ on each property though. I have serious doubts about this strategy in the current climate however; that’s why I’m going to switch to equities for a while. You have to want to keep working (and keep your job!) for that strategy to work of course.
I don’t think shares will ever offer quite the same “tax dodge”. You can get margin loans etc, and pre-pay interest, but if your shares are paying a reasonable dividend (I wouldn’t get a margin loan on one that wasn’t) then that will cancel out most if not all of your interest deductions. You can set up a family trust to minimise tax of course. It depends on the age of your children, and whether they are earning their own money. It’s most effective when they are all at uni, ie aged 18+ and not earning much of a PE income. It’s what I should have done about 5 years ago, but I suffer from too much inertia when it comes to dealing with accountants[].

Sorry to ramble on but I’ve tried to show all my motivations/ rationale etc.
Regards, Jim.