The smart money

As a stall in house-price rises turns the spot­light on other in­vest­ment strate­gies, the in­vestors of Gen­er­a­tion Rent are won­der­ing what’s best to do.

New Zealand Listener - - CONTENTS - By Pat­trick Smel­lie, Jonathan Un­der­hill & So­phie Boot

As a stall in house-price rises turns the spot­light on other in­vest­ment strate­gies, the in­vestors of Gen­er­a­tion Rent are won­der­ing what’s best to do.

In a dark­ened meet­ing room high above Auck­land’s Short­land St, a large group of stu­dents from St Peter’s School in Cam­bridge is lis­ten­ing to one of the best-known names in the New Zealand in­vest­ment in­dus­try, Brian Gaynor, on the sub­ject of per­sonal sav­ings. The ad­vice is along the same lines he al­ways adopts: start sav­ing early; don’t in­vest in just one thing; take more risk when you’re younger, less when you’re older; and if it seems too good to be true, it prob­a­bly is.

The mes­sages may be old chest­nuts, but Gaynor says the fact he is speak­ing to sec­ondary-school kids at all sig­nals a gen­er­a­tional shift in New Zealan­ders’ at­ti­tudes to sav­ings and in­vest­ment. “Ob­vi­ously the teach­ers bring them along, but you’d never have got that a while ago.”

The head of in­vest­ment firm Mil­ford As­set Man­age­ment, Gaynor says the ad­vent of the KiwiSaver re­tire­ment sav­ings scheme a decade ago has driven two big at­ti­tude shifts: a chal­lenge to the pref­er­ence for res­i­den­tial prop­erty in­vest­ment over other as­sets as house prices stall; and the dis­si­pa­tion, at last, of the fear ex­pe­ri­enced by a gen­er­a­tion of in­vestors af­ter the 1987 share­mar­ket crash.

That fear per­sisted as house prices kept ris­ing, fu­elling the stam­pede to res­i­den­tial-prop­erty in­vest­ment that bred an apa­thy to­wards other in­vest­ments, es­pe­cially af­ter the col­lapse of fi­nance com­pa­nies in the late 2000s ham­mered con­fi­dence in that sec­tor too.

Gaynor notes that it took nearly 30 years for Wall Street to re­cover from the 1929 crash that sparked the Great De­pres­sion.

“Some­times, if you have

At last, the fear ex­pe­ri­enced by a gen­er­a­tion of in­vestors af­ter the 1987 share­mar­ket crash has dis­si­pated.

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