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This evening I did two things, neither of which took very long
- put in an application for Meridian Energy shares
- put in my "postal" votes for the Mighty River AGM in November
Both were quick and easy processes online.
Also relevant is that a couple of weeks ago a dividend from Mighty River slipped into my bank account with absolutely no fuss.
So I thought it was time to put down some of my thoughts about the whole process and experience, as one of the few "Mum and Dad" investors who actually went for the scheme (despite being neither a mother or a father). To get it out of the way - my motivation was simple. The asset sales were and are a bad idea, the only thing I could do to mitigate them in any way was to take up the offer and bottom-drawer the shares I could afford until some time as they are re-nationalised or forcibly acquired by offshore interests.
1. One of the things that was talked about in the lead up to the MRP offer was showing people that investing in shares can be easy. I give full credit to those involved for making the process practically painless in these instances. Application by internet was simple, the forms were well designed and logical, and there wasn't really a lot of information you needed to supply. A for effort those people.
However I have my doubts (given the low uptake by small personal investors) that this message was actually experienced by many. Moreover
- I have no idea if the ease of purchase facilitated for these special issues, complete with dedicated websites, at all compares to privately purchasing shares in any other company.
- attempting to sell my shares or to purchase more (should I wish to do so) still seems like an intimidating process and I would not know where to start.
My post-share-purchasing experience with ComputerShare's online system has been adequate. It is functional for what it seems intended to do but badly in need of a makeover.
Overall B-, after initially considering considered a C+
2. I now practically understand something I have struggled with in the past - the difference between buying shares for growth and buying for income. To my way of thinking either way ones paper worth goes up, and dividends can just as easily be re-invested (in fact that was the primary use I saw for them at my stage in the investment cycle). That MRP dividend sliding into my bank account made it clear how buying with dividends in mind you can actually purchase a (probable) future income stream. I do quite like that idea.
3. I have come to the conclusion that "investing in shares" and "investing in the company those share are issued by" are two different things, especially if you are buying for growth. It seems to me that you can only claim to be investing *in a company* if you buy the shares fresh from issue (or the company reselling after a buyback) and hold, or secondarily if you are increasing your holding with the intent of using the increased voting power to the company's benefit. (Whether what you want to accomplish with that influence will actually be in the best interests of the company notwithstanding - it's a genuine intent that counts).
In the other cases - purchasing existing shares for dividends or purchasing for growth - you are either
- investing in the income stream that the company may provide, but not actually providing *them* any new capital.
- investing in the likelihood that someone at some future point in time will give you more money for the shares than you paid for them. While this may certainly given you a firm *interest* in how the company performs it is not an *investment in the company* because it is not from the company that you expect to realise your return.
I am of course only referring to publicly traded shares here. There are a lot of ways to invest in especially smaller companies, many of which involve taking a "share" of the company which you might intend to cash in once the company has grown in value. Those are different beasts.
4. I find I have confirmed a strong preference for investing *in* companies. Buying existing shares explicitly for growth actually feels dishonest to me on some fundamental level. Buying for dividends - income - still seems like a potentially sensible thing to do. I think this comes down to my general approach that money is only worth what you can do with it, and you can actually do something with a dividend. You can't do much with the money represented by a share which is just getting fatter.
There are grey areas of course - my Kiwisaver for instance is in an "Active Growth" fund. But then I know (or believe) that the managers of that fund actively seek out investments in smaller companies with the potential for growth, and will purchase freshly minted shares in such companies. And I do wish I'd been able to pick up some Telecom shares for resale when they crashed to about $1.80 a year or so ago.
~~~
In truth I would rather put my money - if I can afford it - directly into a company knowing how it would help that company grow. Don't lend/invest what you can't afford to lose they say, and I've kept that firmly in mind. I am fortunate to have the resources to throw at these offers, and count lost.
- put in an application for Meridian Energy shares
- put in my "postal" votes for the Mighty River AGM in November
Both were quick and easy processes online.
Also relevant is that a couple of weeks ago a dividend from Mighty River slipped into my bank account with absolutely no fuss.
So I thought it was time to put down some of my thoughts about the whole process and experience, as one of the few "Mum and Dad" investors who actually went for the scheme (despite being neither a mother or a father). To get it out of the way - my motivation was simple. The asset sales were and are a bad idea, the only thing I could do to mitigate them in any way was to take up the offer and bottom-drawer the shares I could afford until some time as they are re-nationalised or forcibly acquired by offshore interests.
1. One of the things that was talked about in the lead up to the MRP offer was showing people that investing in shares can be easy. I give full credit to those involved for making the process practically painless in these instances. Application by internet was simple, the forms were well designed and logical, and there wasn't really a lot of information you needed to supply. A for effort those people.
However I have my doubts (given the low uptake by small personal investors) that this message was actually experienced by many. Moreover
- I have no idea if the ease of purchase facilitated for these special issues, complete with dedicated websites, at all compares to privately purchasing shares in any other company.
- attempting to sell my shares or to purchase more (should I wish to do so) still seems like an intimidating process and I would not know where to start.
My post-share-purchasing experience with ComputerShare's online system has been adequate. It is functional for what it seems intended to do but badly in need of a makeover.
Overall B-, after initially considering considered a C+
2. I now practically understand something I have struggled with in the past - the difference between buying shares for growth and buying for income. To my way of thinking either way ones paper worth goes up, and dividends can just as easily be re-invested (in fact that was the primary use I saw for them at my stage in the investment cycle). That MRP dividend sliding into my bank account made it clear how buying with dividends in mind you can actually purchase a (probable) future income stream. I do quite like that idea.
3. I have come to the conclusion that "investing in shares" and "investing in the company those share are issued by" are two different things, especially if you are buying for growth. It seems to me that you can only claim to be investing *in a company* if you buy the shares fresh from issue (or the company reselling after a buyback) and hold, or secondarily if you are increasing your holding with the intent of using the increased voting power to the company's benefit. (Whether what you want to accomplish with that influence will actually be in the best interests of the company notwithstanding - it's a genuine intent that counts).
In the other cases - purchasing existing shares for dividends or purchasing for growth - you are either
- investing in the income stream that the company may provide, but not actually providing *them* any new capital.
- investing in the likelihood that someone at some future point in time will give you more money for the shares than you paid for them. While this may certainly given you a firm *interest* in how the company performs it is not an *investment in the company* because it is not from the company that you expect to realise your return.
I am of course only referring to publicly traded shares here. There are a lot of ways to invest in especially smaller companies, many of which involve taking a "share" of the company which you might intend to cash in once the company has grown in value. Those are different beasts.
4. I find I have confirmed a strong preference for investing *in* companies. Buying existing shares explicitly for growth actually feels dishonest to me on some fundamental level. Buying for dividends - income - still seems like a potentially sensible thing to do. I think this comes down to my general approach that money is only worth what you can do with it, and you can actually do something with a dividend. You can't do much with the money represented by a share which is just getting fatter.
There are grey areas of course - my Kiwisaver for instance is in an "Active Growth" fund. But then I know (or believe) that the managers of that fund actively seek out investments in smaller companies with the potential for growth, and will purchase freshly minted shares in such companies. And I do wish I'd been able to pick up some Telecom shares for resale when they crashed to about $1.80 a year or so ago.
~~~
In truth I would rather put my money - if I can afford it - directly into a company knowing how it would help that company grow. Don't lend/invest what you can't afford to lose they say, and I've kept that firmly in mind. I am fortunate to have the resources to throw at these offers, and count lost.
