Pulling clear of inflation

Monday 26 April 2004

There are lots of ways of measuring how an investment performs, but for your average investor the big question is likely to be: am I beating inflation?

By The Landlord

Faced with this priority, the typical response from the financial planning and stockbroking fraternity over the years has been to reach for their favourite investment - company shares.

Over the very long term this strategy has worked brilliantly, but many 60-year-olds don't have the 20 years or so that the experts say is necessary to guarantee success. In the short term anything can happen.

For example, Mum and Dad who took the plunge in January 2000 and bought shares in the WiNZ Fund (which invests in an index of international shares) were looking at a negative real return of about 55 per cent by the end of last month. In other words, inflation has been about 10 per cent and the shares' value is down by 45 per cent.

That's not a great start, and it gets more depressing when you realise that if international shares return 7 per cent a year from here on - an optimistic assumption - the investment will take another 14 years to catch up to inflation at 2 per cent a year.

Read More - Opens in a new window
Commenting is closed

Property News

Covid-19 return could derail market boom

The housing market was booming in July with price and sales up nationwide, new REINZ data shows, but the return of Covid-19 raises questions of how the market will fare going forward.


Augusta Capital takeover bid now unconditional

ASX-listed Centuria Capital has declared that its takeover of New Zealand property funds manager Augusta Capital is now unconditional, as it has secured nearly 66% of Augusta’s shares.


Mortgage deferral programme to be extended

Reserve Bank governor Adrian Orr says the mortgage deferral programme will be extended beyond September, as the Covid-19 pandemic regains a grip on New Zealand.

Site by PHP Developer