Why Has My Investment Performed So Poorly? Ask Susan

Got questions? RNZ has launched a podcast, 'No Stupid Questions', with Susan Edmunds.

We'd love to hear more of your questions about money and the economy. You can send through written questions, like these ones, but even better, you can drop us a voice memo to our email questions@rnz.co.nz.

I was interested to read your comments regarding how some portfolios have performed in Sharesies. The most disappointing for me is the Top 50 ETF.

Diversify, spread the risk has been the call. Surely the top 50 will achieve this?

I've been in negative territory since 2021, $500 per year dividends on a $20,000 investment is only 2.5 percent, more than swallowed by the losses. If the NZ sharemarket is going so well, why is the Top 50 a dog?

I think the main issue here is that, although sharemarkets around the world have been going well lately, the same can't really be said for New Zealand's.

Morningstar data director Greg Bunkall said the local market had underperfomed most of its peers.

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He said, if you've been hearing stories about stocks soaring, that's probably a US story - not a New Zealand one.

"The US stock market is very tech focussed, so all the advancements around AI and other technologies are being felt in those markets, and less so here.

"While the NZX is very diversified across the available NZ listed companies, it's not diversified geographically and contains little of the technology plays that exist in other markets. There are other broad market ETFs that can achieve this by gaining exposure to more global markets and sectors."

Kernel founder Dean Anderson said the price movement return on the NZX in the past three years was negative, when annualised to the end of April.

It was positive, when it was assumed dividends were re-invested with gross imputation credits factored in.

"The picture isn't quite as bleak as the share price alone suggests, but you're right that it has been a disappointing stretch."

He said real diversification would mean spreading your money across sectors and countries.

"Each year, it is typically a different country at the top of the best-performing markets and the best-performing sectors rotate too. Don't try to pick them - just be spread across markets.

"A combination of index funds or even a single low-fee High Growth fund will do that efficiently. For example, the Kernel High Growth fund is a mix of index funds with exposure to NZ, but also spread across global developing and emerging countries and sectors, and its return after fees has been 16.57 percent per annum over the same three years to the end of April.

"There is still a role for NZ equities - they're more tax-efficient for NZ investors to hold locally compared to global shares - but we don't have all the sectors here and we have very little exposure to big tech, which is exactly why you need to mix it up."

He said it was also worth keeping an eye on fees.

"If you're paying brokerage to buy an index fund and then paying brokerage again on every distribution re-investment, fees of up to 1.9 percent can materially eat into your return."

I'm interested to know whether ANZ has been paying the correct interest on their personal Serious Saver account. According to their webpage, there is a premium rate payable, if no more than one withdrawal is made during the month.

I'm sure this was how it worked earlier on, but at some stage, I realised that they were counting the tax on interest as a withdrawal, therefore if I did any withdrawal, the account did not qualify for the bonus interest.

Since tax on interest is a given, I haven't received the bonus interest for years. I rang a couple of times to try to clarify whether I was correct, but have never received an adequate answer.

I do an automatic deposit of $20 monthly into the account.

We've had a bit of coverage lately of problems with bonus saver accounts, namely that a lot of people do not meet the necessary criteria to get the full advertised bonus interest rate.

In your case, ANZ tells me that tax is not counted as a withdrawal from Serious Saver. If you deposit at least $20 a month and don't make a withdrawal yourself, you will qualify for the bonus rate, but if you make one withdrawal a month, you won't.

This may be your issue and highlights why it's important that banks make it clear to customers what they must do to get the bonus rate.

Rightly or wrongly, for the past four or so years, I have managed most of my savings through short-term term deposits. I am retired and not really one for risky investments.

What I have liked about the term deposits at Kiwibank was how easy it was to open these and to keep an overview of them. I have mostly used six-month terms, mainly because I was unsure what the future would bring.

The deposits are in the $5000-10,000 each range.

Suddenly, two weeks ago, I could not open a new term deposit. I have been in contact with Kiwibank several times and basically I can no longer open a term deposit myself, because I have run out of suffix numbers.

From now on, I can only open a new one at Kiwibank through a secure email or by ringing them. Neither option suits me, so I have started opening term deposits at other banks.

Through a Google search last night, I discovered that others have had the same experience with Kiwibank, and blame a poor and outdated IT system, and general Kiwibank attitude.

Kiwibank doesn't seem to be concerned about the fact that I am taking my savings away from them to other banks.

Not sure what to do, other than continuing to remove my savings to other banks once the term deposit term has expired.

Kiwibank says, in some circumstances, customers who have a large number of term deposits can reach a system limit that affects their ability to "self serve" online.

It recognises this can be frustrating, but there do not seem to be any solutions, beyond what you've already identified.

"Importantly, this does not prevent customers from opening or holding term deposits with Kiwibank. Where this limit is reached, our team can assist by setting up term deposits through secure mail in the mobile app, over the phone or in one of our branches.

"Our focus is on making sure this small number of customers continue to receive the support they need to manage their savings and access our products."

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