NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Don't try to time the markets

Mary Holm
By Mary Holm
Columnist·
11 Oct, 2001 03:47 AM8 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

By MARY HOLM

Q: My long-term goal is to have a portfolio as follows: 30 per cent property, 30 per cent bonds, 30 per cent sharemarket funds and 10 per cent cash.

My sharemarket fund allocation is still in cash while I wait for the United States stock market to bottom out
before reinvesting.

In addition, I want to add to my property investment by purchasing a further three or four rental units (I have four now).

If I proceed with buying more rental units, I will have the opportunity of taking on a much smaller mortgage if I use all or part of the cash from the share fund to assist the purchase.

Alternatively, I can be strict and not use any of the cash earmarked for the stock market to assist the property purchase, but just take out a larger mortgage.

Which of the two alternatives is better, and why?


A: I like the second, with modifications.

That's partly because I think you should use the share money to buy into share funds now, regardless of what's happening in the markets.

Your long-term goal is to be diversified. Make it your short-term goal, too.

But before we get into all that, good on you for setting some clear goals and working towards them. That's a great start.

Let's look first at property. I assume that ultimately you expect to own all your assets without any mortgages. The fact that you see a smaller mortgage as advantageous suggests that.

Not everybody thinks that way. Borrowing to invest sometimes works well.

If you have a mortgage on investment property, you can deduct your interest payments on your tax return. And you can buy larger or more properties.

If all goes well, you should make larger capital gains.

The downside is that borrowing to invest - in property or anything else - raises the risk. If you have to sell in a down market, you might owe the bank more than the sale proceeds.

That has happened frighteningly often in recent years.

Note, too, that even after tax deductions, you still have to pay some mortgage interest.

If your investment is not returning more than you're paying out, you're going backwards.

Let's say, then, that you plan to take the conservative route, and end up mortgage-free.

If that's the case, why not start now, by buying only as many units as you can afford with no loan, or a fairly small loan?

You can buy more units later, as your savings build up.

Turning to your share fund money, I know that you're waiting for the US market to bottom out.

The trouble is that nobody ever knows, at the time, when a market has hit bottom.

If the US market plunges on Monday, will that be the year's low? Next week it may drop further.

Then again, next week it may rise.

If it does rise, should you leap in then? What if it's just an upward blip, followed by further drops?

Perhaps you should wait for a more sustained rise before buying. But if you do that, you've missed out on benefiting from the rise.

And sitting on the sidelines can be costly.

If, over a 10-year period, you happen to be out of the market for just the 10 best trading days, you're likely to miss out on about a third of the decade's growth, research shows.

And if you miss the 40 best days, you may miss out on two-thirds of the growth. Ouch!

The message: If you plan to invest in shares, buy now. Don't try to time the markets.

When someone asked investment guru Mark Mobius when was the best time to invest, he replied, "When you've got some money".

Having said that, I'm going to back-pedal a little.

If you've got a large sum to invest in shares, there's something to be said for spreading your purchases out over a short period, so you don't buy the lot on what turns out - with the wisdom of hindsight - to be an expensive day.

You might, for instance, buy a third right away, a third in two months and a third in four months.

If you do that, though, set your schedule now and stick to it, regardless of what the markets are doing.

Q: Let us assume for a moment that your claim (in last week's column) that "indices" and "indexes" are synonymous is correct.

The reader who wrote to you used the word "indices" in his inquiry. You used this as an opportunity to give us your views on the plural of index, which treated the reader's usage with disdain.

Is that the right way to treat any reader?

Secondly, your employers/fee-payers on page C10 of the Business Herald have a table headed "Indices"! Enlightened self-interest, if nothing else, should surely prompt you to conform with their example.

Finally, according to my 10th edition Shorter Oxford, you appear to be wrong. It says: "indexes, or especially in technical use, indices".

Nothing is much more technical than the Dow or the FTSE, as you are at pains to explain.

P.S. And what is your plural for "agendum"? Or sheep?


A: I'm having a bit of trouble separating the sheeps from the agendums here.

If the poor correspondent in last week's column thought I was being disdainful, I'm sorry. I was just trying to explain why we had indices in the question and indexes in the answer.

I actually think it's those who use foreign plurals on words that have become English who can be rather disdainful.

A while back, someone on the radio who had gone to more than one forum talked about "fora".

Gee whiz, they obviously did School Cert Latin!

Your use of agendum, singular of agenda, is a sort of reverse example. Agenda is an English word; agendum is not - or at least it's not in my Concise Oxford.

You make an interesting point about Weekend Business using "indices". It also quotes capital sharemarket indexes, rather than gross ones, on its front page.

I would like to see both changed. But I'm not the boss. And so far he has been indulgent enough to let me use the plurals and indexes I like in my column. Thanks, boss!

As for your comment on "technical use", I strive to keep Money Matters as untechnical as possible.

P.S. I was relieved to see you signed yourself "Yours enjoyably".

Q: I was most interested in your comparisons of some of the major world gross index rankings in the Herald two weeks ago.

I wondered how little old New Zealand and our close friends over the Tasman rated over these time periods, especially over the long-haul - 25 years.


A: The Down Under picture is not a pretty one over the shorter term. It gets better over longer periods - but it never gets brilliant.

I'll run the same numbers as last time, and plug in the New Zealand and Australian performances.

For New Zealand, I've used the NZSE40 gross (including dividends) index and for Australia the All Ordinaries gross index.

After griping about America's Dow Jones Industrial Index in last week's column, I'll use the much better S&P500 gross index for the US.

Here's how we compare with other gross indexes in the periods ending last March 31. The figures are annual rates of return, in New Zealand dollars.

* Over the past five years: New Zealand 5 per cent, Australia 12, World 21, Britain 22, Europe (except Britain) 24, United States 27.

* Over the past 10 years: New Zealand 11 per cent, Australia 11, Britain 14, World 14, Europe 17, United States 19.

* Over the past 25 years: New Zealand 16 per cent, World 17, Europe 18, US 18, and Britain 19.

I couldn't get Aussie gross figures for 25 years, but over the past 20 years their annual return was 12 per cent, compared with New Zealand's 14 per cent.

As you say, the long-term numbers are probably the most important. And, for all that New Zealand is bottom of the 25-year list, it's only three percentage points from the top.

It's also worth noting, if you look at New Zealand, Australia, the US, Britain, Germany and Japan, that New Zealand was the top performer in 1986, with a 99 per cent return, and in 1993, with 48 per cent.

And the way things are going this year, we might come out top again - although certainly not with such high return figures.

But before you all rush out to transfer your savings into New Zealand share funds, please note that I said, "the way things are going".

There's absolutely no guarantee things will keep going the way they have. As always with shares, nobody knows.


* E-mail problems: My e-mail system has been playing up, and many e-mails apparently haven't got through to me. If you've e-mailed me in the past few weeks, you may want to send a copy to my new address, maryh@pl.net.

* Mary Holm is a freelance journalist and author of Investing Made Simple.

* Got a question about money?

Send it to:

Money Matters

Business Herald

PO Box 32, Auckland

or e-mail: maryh@pl.net.

Please note: Letters should not exceed 200 words. We won't publish your name, but please provide it and a (preferably daytime) phone number in case we need more information.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from New Zealand

OpinionUpdated

NZ Herald comments: The stories open for discussion today

07 Jul 10:05 PM
New Zealand

Four injured in bus crash on Southland highway after reports of black ice

07 Jul 09:52 PM
Premium
New Zealand

$61m building project under way at one of nation's richest private schools

07 Jul 09:00 PM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from New Zealand

NZ Herald comments: The stories open for discussion today

NZ Herald comments: The stories open for discussion today

07 Jul 10:05 PM

Want to have your say on our stories? Here's how.

Four injured in bus crash on Southland highway after reports of black ice

Four injured in bus crash on Southland highway after reports of black ice

07 Jul 09:52 PM
Premium
$61m building project under way at one of nation's richest private schools

$61m building project under way at one of nation's richest private schools

07 Jul 09:00 PM
Travel Tuesday with Lorna Riley

Travel Tuesday with Lorna Riley

Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP