Fair enough.
Each to their own.
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I get what you were saying but it isn’t a bank account. It’s a portfolio so it’s going to go up and down in value over the years. There is no guarantee you will get back what you put in (even though we know you probably will over the long term) - the value of your portfolio could be less or more when you want to withdraw it. Having said that, in any given year you are right - you put in the minimum amount and get the full govt contribution, which is a 50% return on your one annual deposit. But that doesn’t really translate to your overall return over time, when you decide to withdraw it.
Or maybe I am just as confused as you now :confused:
OK, that's interesting, so if you extrapolate that logic out to 20, 30, 40 years, your p.a. gain is bascially nothing. (can you please show the maths?).
I would contend that it is not a portfolio strategy, is is just pure returns on deposits, which every year returned 50% on deposits and at the end yielded 50% on all deposits made.
I'd really like to see the maths that says I put in $1k but withdrew $1.5k (one day) wasn't a 50% ROI.
Let's recap for a moment, I'm not saying KS is an investment, all I'm saying is that if you put in the absolute minimum amount, every year, the government will put in your account 50% of your deposit. How can that not be a 50% gain every year and 50% total when you withdraw your money, plus the governments money?
My scenario was based on a 100% cash position (not a portfolio view, which is why I said like a bank account), which you will always get back, cash is cash. Just put in the $1024 every year and the government pays you 50% $512.
The cash account might make a few bucks on interest or lose a few on fees, but it's just an illustration of leveraging the government incentive, of $512 (for free) for your $1,024 every year invested.
Sure. Using the same scenerio of $1 deposit and 50c govt contribution yearly. At year 50, your total portfolio is worth $74.5 before the govt contribution (gain) of $0.5. So therefore your gain as a percentage of your portfolio for that year would be 0.5/74.5, which is a return of 0.67%.
Your return for that given year is 0.67%, but your total return is still 50%.
There is a difference between a annual return and total return (which is your ROI)
This is what I don't get. The SUM of the deposits, is contributions (deposits) of $1024 every year, PLUS, $512 government (deposits) every year. Total gains = govt deposits / your personal deposits = 50%
Show me the maths, I need to know why 50% free money from the government .. every year, isn't a good way to make money over the long term.
I've been around a while but you lost me there, do you have a spreadsheet that shows that?
I'm thinking annual return by your definition is irrelevant in this case, vs total return which is real money coming your way. You get 50% of your minimum deposit, every year (free), just by making the minimum deposit. And, you'll get to keep it when you're allowed to withdraw.
Annual return, by those calculations seem somewhat irrelevant. In real money, the government will give you 50% of the minimum money you need to invest in KS to get their money.
In any event, I think we're agreeing absolute, total return, is 50%. It must be, the government gives me 50% of my minimum deposit every year, I can withdraw that some day. Free money, half of what I deposited.
Doesn't this make it the best and safest investment of anything, anywhere, ever? It might not be a lot of money, but its easy money and government guaranteed.
Absolutely it's a very good and safe investment, and yes looking at annual return as a percentage of your portfolio in this case is definitely irrelevant since your return isn't based on the size of your portfolio. The point of my reply was to show why dobby41 and you disagreed about the return, since you guys were looking at different ways of calculating return.
Anyway I made a spreadsheet https://docs.google.com/spreadsheets...it?usp=sharing
edit: Just realised the kiwisaver govt contribution is $521.43 and not $512, but the %'s remain the same regardless