Money 2013: Now for something a little bit different

by The Listener / 28 February, 2013
Alternative investment options.
Charles Goldie’s No Koora te Cigaretti
Last year, Webb’s sold Charles Goldie’s No Koora te Cigaretti for $337, 500.

Remember ostrich farms? For a year or two in the late 1980s, they were all the go for investors with cash to burn – who might as well have lit a barbecue with dollar notes and roasted the big birds’ parts thereon. These days, you’d be hard-pressed to find an ostrich in New Zealand outside a zoo. In fact, the current version of the ostrich-farm investment is hard to find – perhaps the past few years have taught New Zealand investors the value of caution.

However, intrepid types will always be looking for stones unturned. Here are a few of the options:

CAR PARKS AND STORAGE UNITS Do not go there unless you can buy a whole parking building or storage facility. Experiments in selling individual carparks and storage units to small investors have been tried in New Zealand but they have rarely been successful.

“Anyone’s who’s invested in car parks has generally lost money,” says Wellington valuer Nigel Lockwood. Mark Bateman at Storage King, a franchise storage unit operator, says unless you’ve got $5-7 million and a site with room for 500-600 units, forget it.

COLLATERALISED DEBT OBLIGATIONS (CDOs) AND ONLINE FOREIGN EXCHANGE TRADING Strangely, these deeply risky investments are pushed at investors through commercial radio advertising and cinema ads. Unless you have deep pockets and an even deeper understanding of global debt and currency markets, don’t touch these with a barge pole. You’re safer chucking money into a pokie machine.

EXCHANGE TRADED FUNDS ETFs are big business globally and are attractive because they give investors exposure to the movement of a whole market, and avoid the pesky business of actually boning up on specific companies before the shares are bought. Such products exist in New Zealand, but they’re underdeveloped, says Andrew Bascand, who hints at moves afoot in the professional investment community to rectify that shortcoming. Watch this space.

BONUS BONDS Possibly the least logical investment ever devised. ANZ Bank owns the Bonus Bonds franchise and will happily take your money on the promise of no interest payments and perhaps the occasional prize. It’s worth money to the bank, not to you.

SUBORDINATED DEBT In these times of low interest rates, the returns from fixed-interest investments look downright disappointing. However, there will always be a few high-risk, poorly rated offerings out there with high interest rates. Bascand’s advice? Don’t. Two generations of investors have been badly burnt by the likes of high-interest-bearing Equiticorp bonds in the 1990s and then the finance company busts late last decade. Hopefully, we’ve all learnt by now that if it looks too good to be true, it probably is.

ART It’s a fair bet that your prized Hotere just got a lot more valuable, although the advice from art dealers is to try to find up and coming artists whose work has yet to be discovered. It’s more affordable for the small investor. Make sure you like it before you buy it, though. There are no guarantees in this market.

Money 2013

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