Share investing can be easy

Q: What are shares? A: When you buy a share you get a small slice of a company such as Telecom NZ. As a result of your ownership you are usually paid a portion of the profits as dividends. If the share price goes up, you can also benefit from a capital gain when you sell. Q: What is the difference between shares and funds? A: A fund

Tuesday, March 1st 2005, 5:52AM

by The Landlord

pools your money with that of other people and invests it across a range of companies. You can choose to invest in managed funds that concentrate on a certain sector, geographical region or style of investing, or passive funds, which aim to track the ups and downs of a stock exchange index by holding the same numbers of each share as the index they are tracking.

Q: How do I buy shares and managed funds?

A: You can buy shares listed on the NZX through a stockbroker. Passive or "Exchange Traded Funds" such as the FONZ and MOZY can be bought in the same way as ordinary shares. To buy a managed fund you can do this through a financial planner, direct from the fund provider such as Liontamer or Fisher Funds or buy via websites such as FundSource (see link below).

Q: What does it cost?

A: ASB Securities' online share dealing services - one of the cheapest around - costs $29.45 per trade including a stock exchange fee. If you wanted to speak to a real live stockbroker at a firm such as First NZ Capital you would pay around 1 per cent for your trade, subject to a $50 minimum and the $5 stock exchange fee. Managed funds typically charge an up-front fee, which can be around 5 per cent and also an annual management fee. These charges can eat into the long-term growth.

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