Q: Your column has greatly influenced my personal choices. I invested $1043 annually in KiwiSaver from its inception, and when I reached 65 I withdrew the $15,000 that the scheme allowed me to accumulate. I made a good profit for not much effort and I was glad. My husband died in 2006, and "hard" is nowhere near the word.

Over the past four years I have turned that $15,000 into $62,000 by investing in shares. I'm treating it as my savings account. I never sell anything - me and Warren Buffett, lol.

I bought shares in Xero. Everyone was talking about them so I just did it. They cost $2.80 each, scared myself to death! Not so scared now, however.

Over time I bought into Fisher & Paykel, Ryman Healthcare ... I only bought things that I understood after Xero. I bought shares in my bank, the ANZ, Meridian Energy and Telecom (now Spark) because I use these, Air New Zealand and Auckland Airport because I fly a lot. I bought 1000 shares of BurgerFuel at IPO for a dollar because I loved the hamburgers.

The market has been down at times in the past five years. At one point I was minus 5 per cent overall. I freaked out at first but thought about it and bought lots more when the prices were really low.

I have shares in only 15 companies and I visit them most days, against your best advice.

Not much science here, Mary. But I seldom sell anything unless I specifically need to buy something - like the all-inclusive holiday in the Caribbean that I took all of my five children on last summer ... two weeks! It was the best time ever. Whoever said that money does not buy happiness needed to watch my 7-year-old grandson's face when he was swimming with the turtles off Tobago.

I guess if you hold on to most shares long enough, the majority of them increase in value.

A: Well done on several fronts. More on that in a minute. But first, I hope you're not insulted if I say that your story reminds me of Lusha the Russian chimpanzee.

You've done exceptionally well with your shares. While the New Zealand sharemarket index has more than doubled in the past five years - not bad! - you've more than quadrupled your money in a shorter period. Many fund managers and other professionals would envy that.

But as you say, there hasn't been a lot of science in your share choice. Even if the fact that you use the companies' products meant they would continue to do well - which, of course, it doesn't - that wouldn't necessarily mean they are good investments. See the next Q&A.

There will be many other investors out there choosing shares on some basis or other and probably more than half will have done worse than the market and been quiet about it. But if you get enough people making what some might call random choices, a few will do really well.

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Lusha's story illustrates that. She chose eight out of 30 blocks with company names on them. Her portfolio - which included banks and mining companies - tripled in a year, beating 94 per cent of Russia's investment funds.

Stories like hers and yours are encouraging. But the worry is that you'll get overconfident about your ability to pick shares. Please don't start investing huge amounts - or mortgaging the house to invest - on the assumption your luck will continue.

Having said that, congratulations for following many of the "rules".

First, you're pretty well diversified. Most New Zealanders who directly own shares hold a lot fewer than 15 companies, and it seems you're in many different industries.

I also applaud your "buy and hold" attitude. Watching the market regularly isn't necessarily bad, but many watchers can't resist trading frequently - getting out of this share and into that one, or out of all shares and into cash and then back again.

Heaps of research shows this is losing behaviour. What did well or badly today is quite likely to do the opposite tomorrow. And trading costs and tax eat into returns.

So good on you for resisting the temptation to trade in and out of shares - and, in fact, to buy more shares during a downturn.

I worry, though, that you regard your share investments as your savings account. I always suggest that people should put into shares or a share fund only the money they plan to spend in 10 or more years. If you expect to spend the money sooner, there's too big a chance the market will be down when you sell your shares, whereas over a decade there's time for it to recover.

With you spending the money right away, there's a high probability that you will, for example, plan another family holiday and then find, when you sell your shares, that they are worth considerably less than a short time ago.

You've been through a 5 per cent slump, but that's nothing. There will be bigger downturns in the future. How would you cope with a 50 per cent slump? That's rare, but it has happened.

Mind you, it'll all be okay if you have plenty of other income or more conservative savings to draw from to pay the bills. If you use the share money only for fun things like family holidays that could be modified down to a bach at a New Zealand beach, then go for it!

Picking winners

Q: What do you think about investing in the two major rest-home companies currently advertising in the press?

This area looks like a steady growth area. I think they are saying projected dividends not less than 3 per cent and possibly more? They don't say whether those dividends would be fully or partially imputed. If they were, this could be a good safe investment.

They seem to have no trouble selling apartments. As long as they don't get overcommitted. What is your opinion on this investment opportunity?

A: I don't know. And your letter - like the previous one - worries me.

I've never got into analysing individual shares. Years ago I became convinced that there's no point in doing that.

Why? Let's say the general consensus is that a company's prospects are okay. Who's going to know first if that changes? It will almost always be the fund managers, stockbrokers and others who analyse shares for a living.

If one or two of them predict better profits for the company, they will rush in and buy more shares. That increased demand will push up the share price. By the time you or I hear the good news, the price will already have risen.

That leaves us buying into what looks like a good company, but at a high price - perhaps too high because the professionals got overly enthused.

Here's the important point: no matter how strong a company is, if we pay a high price for the shares it's not a good investment.

If that's confusing, think about buying a rental property. Even if you buy a great house in a super location, a high price will hurt the rental yield. A $300,000 house that brings in $300 a week is better than a $500,000 house that brings in the same rent. Also, the higher the price you pay for the house, the less chance you'll sell later at a big gain.

In shares or property, high price equals bad investment.

Looking specifically at shares in rest-home companies, the fact that baby boomers will boost future demand is already known and discounted into the share price. If there were no baby boom, the shares would be priced lower.

But wait, you might say, you wouldn't be buying the shares to sell at a gain, but to get the dividends. Tread carefully. Dividends aren't like interest on a term deposit or bond, which you will receive unless the company or bank gets into financial trouble.

Dividends are a portion of the company's profits that the board has decided to distribute to shareholders. The company might expect to pay dividends at a certain rate, but if times get tough - or if the board decides to hold on to more of the profits for expansion - dividends can be reduced. It happens often.

In short, even if the rest-home companies thrive, their shares aren't necessarily a good investment. They might be great; they might be fizzers.

Another point: it's risky to put lots of your savings into two companies in the same industry. Every industry is vulnerable. You never know when a new competitor might come up with a better model, or when new regulations will cut into profits.

If you want dividend income, it's safer to get into a fund that invests in many companies that tend to pay high dividends. For more on this, see next week's column.

KiwiSaver bequest

Q: We are a retired couple (68 and 73) and are still able to contribute $85 a month to our KiwiSaver accounts. We have other savings we use for living costs.

If all works out to plan, our KiwiSaver accounts will be our last resource to draw on. If we don't need to do that, can the accounts be passed on "as is" to our daughters so that they continue to grow for them until they reach retirement age? They are financially okay, and all being well they won't need it before then.

A: No, you can't leave an intact KiwiSaver account to someone. The account closes when you die. But your daughters can inherit the money, and you could always leave a statement with your wills saying you would like them to use the money for retirement savings.

It's probably better, anyway, that the money isn't tied up for them. You never know when someone might need cash.

Emergency money

Q: The better solution to last week's Q&A about emergency cash would be to invest in our SuperLife cash fund.

Basically, if someone joins, then they pay a $12-a-year admin fee. The return after management fees is about equal to the one-year bank deposit rate - but the money is at call. If they ask for money by 11am they will get it that day, otherwise the next day.

If someone can tie their money up for 18 months or more, then bank deposits are a better solution, but for 15 months or less SuperLife is the better solution.

These comments are based on observations over the past few years. The markets will change, so no guarantees. But if the market changes, the person can always take the money out. The advantage is no rules about restrictions on taking money out or putting it in. But you would want at least $5000 or $10,000 to make it worth the hassle of doing something different.

A: You make a good case. The flexibility around withdrawals is certainly a plus for emergency money.

Any other providers of similar funds that charge the same or less - or in some other way think they can do better than this particular fund - please get in touch.

• Mary Holm is a freelance journalist, a director of the Financial Markets Authority and Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com or Money Column, Private Bag 92198 Victoria St West, Auckland 1142. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.