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Cash And Fixed Interest
Corporate and government bonds
These investments are generally made through an intermediary, such as a stockbroker (listed below). Apart from the fees, other complexities exist. The investments are difficult to understand and there may be a minimum investment of $10,000. Don't let that put you off, though, as bonds should be part of your investment portfolio; your adviser will be able to help you understand this particular investment option.
Although not shares, bonds are traded through
the NZX Debt Market and, as such, are subject to the vagaries
of demand and supply. When a bond is issued, it's issued at a
face value, for example $10,000. It will pay a set interest rate,
for example 7%. This is known as the coupon rate. If you buy a
bond when it is first issued and hold it until maturity, it will
be just like a term deposit. You'll receive your interest (at
7% in this example) and get your money back at the end of the
Notice, though, that if you're buying and
selling bonds, you can make a capital gain or loss. You can, of
course, avoid that by holding the bond until maturity. Larger
private investors may be caught under the tax accruals rules.
As with all tax discussions, please discuss your personal tax
situation with your adviser.