Sharesight Blog

Tips for becoming a successful share market investor. Tip #2

Posted by Tony Ryburn on May 21, 2013

Every week we post a tip that we hope will help you become a successful share market investor

Tip#2 The share market is not for everyone
Short-term market turbulence such as we are currently experiencing can be disconcerting and many investors at the moment are nervous about their on-paper losses. Despite all the evidence that the share market provides excellent investment opportunities, if you’re not prepared to ride out the lows for the sake of longer term gains, then stock market investing probably isn’t right for you.

Share records you must keep to complete your tax return

Posted by Vanessa Gorman on May 16, 2013

When it comes down to it, the person responsible for keeping up-to-date and accurate records of your shareholdings for the tax department is you. That’s right, whether you complete your own return or work with an Accountant or Tax Agent (adviser), the buck stops with you.

In Australia, for example the ATO requires that:

“You must keep:
• your acquisition and disposal statements (your ‘buy’ and ‘sell’ contracts) – keep these records for five years from the date you dispose of your shares
• your dividend statements – keep these records for five years from 31 October or, if you lodge later, for five years from the date you lodge your tax return.
You will receive most of the records you need to keep from:
• the company that issued the shares
• your stockbroker or online share trading provider
• your financial institution, if you took out a loan to buy the shares.”
Source: Australian Government Australian Taxation Office website.
To see the ATO’s full explanation of records you need to keep please see here.

No matter how organised you are, that’s a lot of paperwork for you to manage and store, and a lot of data for your adviser to sift through and enter into the appropriate forms. So that means work for you and your adviser, and subsequently, cost for you.

Good news is that Sharesight updates and maintains all of these records for you.
Once you set up a portfolio in Sharesight then all you need to do is arrange for your broker to email contract notes to that portfolio (for more information on how to do this see here), and your trades will be automatically recorded – with the appropriate contract note attached to each trade! From then on all your dividends (franked and un-franked amounts), current share prices, and any relevant corporate action information affecting your earnings are automatically updated in Sharesight.  Everything you need is ready to give to your adviser and ready for tax time!

Other good news is that you can share your Sharesight portfolio with your adviser so that they can access all these records and data when they need them as well. This means that they are confident that your records are accurate, spend less time entering data, and, have more time available to consult with you regarding any capital gains on shareholdings. This saves your adviser a lot of frustration and helps you achieve your best tax outcome! To learn how to do this please see here.

It may be that your Accountant or Tax Agent is already using Sharesight. We have a Professional Edition of Sharesight that allows advisers such as Accountants, Bookkeepers, Tax Agents and Financial Planners to administer client share portfolios. If you would like your adviser to learn more about Sharesight please ask them to visit Sharesight Professional or contact me at Vanessa.gorman@sharesight.com.au

Tips for becoming a successful share market investor. Tip #1

Posted by Tony Ryburn on May 14, 2013

Every week we post a tip that we hope will help you become a successful share market investor

Tip#1 Why you should invest in the share market
Innumerable studies have shown that over the longer term the share market will generally outperform other forms of investment.
“Over the long term” is a very important qualifier because you should only invest money in the share market that you will not need in the short/medium term. If you need your money at short notice, you run the risk of having to sell when markets are low, which could crystallise unnecessary losses for you. So don’t invest money in the share market unless you are confident you are not going to need it at a particular time in the future in case that time coincides with a slump in share prices.

New Navigation Menu

Posted by Scott Ryburn on May 9, 2013

Yesterday we launched our new and improved navigation menu. The new menu is designed to make it much quicker and easier for you to navigate around your portfolio and provides quick to access to portfolio sharing and other portfolio settings that were previously difficult to find.

Some key highlights of the new navigation menu include:

• The holdings tab lets you quickly see the most recently accessed holdings in your portfolio. There’s also a search box so you can easily find any share in your portfolio (including sold shares). Now you can quickly bring up the holding detail page for a share from anywhere within Sharesight.
• The settings menu gives you quick access to all of the settings for the portfolio that you are currently working in. This makes it easier and quicker to edit portfolio settings, configure alerts, enable the contract note import functionality or set up a Xero connection.
• The Sharing and permissions tab gives you an easy way to see who has access to your portfolio, change sharing permissions and invite new users to access your portfolio.
• The help tab offers contextual help for each page and one-click access to post a question in our community forum.

Here’s a quick video we prepared to highlight the changes:

As always we look forward to your feedback as we continue to develop and improve Sharesight. Please leave your feedback below or join the conversation in our Community Forum.

We have an exciting roadmap ahead including our soon-to-be-introduced consolidated performance reporting across multiple portfolios and improved CGT reporting functionality for Australian subscribers. Stay tuned for more details!

Dividend Franking and Performance

Posted by Andrew Bird on May 3, 2013

Dividend franking or imputation is one of the great features of investing in shares for NZ and Australian investors.  It increases the effective return on your investment and can have a very significant impact on your overall share performance.  With Sharesight it’s easy to track franking credits so that you can claim the correct amount on your tax return, but we also account for it in analysing your portfolio so you can see exactly how it impacts on your performance.

What is franking?

In essence franking provides a tax credit to the shareholder for company tax already paid by the company.  It’s a way of avoiding double taxing of company profits.  For those not familiar with franking (or imputation for kiwis) you can find a good explanation here.   For the ATO’s explanation see here.

How does it work in Sharesight?

Let’s take Telstra as an example.  Telstra pays a fully franked dividend of 14c per share.  Each dividend carries a 6c franking credit for the tax paid by the company which lifts the “grossed-up” value of the dividend to 20c.  The 14c is paid by Telstra in cash and the 6c is claimable by the investor as a credit in their tax return.

When we calculate performance we take the full 20c grossed up dividend and include this in the return.  Needless to say it can make a big difference.

Have a look at this screen shot of 100 shares of TLS bought 12 months ago.

The compounded return from dividends is nearly 12%.   You can see in the two dividends received that the cash dividend paid and the franking credit is included.

In the following screenshot I have removed the franking credit – as if TLS carried no franking and it’s clear the return is significantly lower.

The dividends return without franking falls to just over 8%.    All things being equal, it certainly pays to own a company paying fully franked dividends.

One thing to note is that all franking is not the same.  QBE, for example earns a large portion of its income overseas which cannot be franked and therefore the gross dividend is lower than it would be if QBE were a 100% Australian-based company.   In the screenshot below you can see that only a portion of the total dividend is franked with the balance being an unfranked dividend.   All of this is captured in our return calculations.

Lastly, we also account for differences in dividend franking between Australian and NZ investors.  An Australian buying NZ shares is not entitled to NZ imputation credits.  Similarly a NZ  investor is not entitled to Australian franking credits (with some exceptions).  We capture this as well and do not include the franking in the above situations.

It’s all about trying to give you the true picture on your portfolio performance and making sure you can get your tax right with a minimum of fuss.

How old is too old to own shares?

Posted by Tony Ryburn on April 26, 2013

First I would like to add my thanks to all of our customers who responded to our recent customer survey. We got a fantastic response which was very encouraging for us because it shows you are interested in Sharesight and keen to help us make it even better.

One interesting fact that emerged from our survey was that nearly 60% of our customers are over 55 and 25% are over 65. It’s interesting because it shows we older folk appreciate the benefits and advantages of using online services but it’s not surprising. After all investing in the share market is a long term project and for many of us it is not until the kids have grown up and the mortgage is paid off that we can really start building our portfolio.

Our oldest known customer is 93! I’d be interested to hear of anyone who can beat that. I’m not sure what his answer to my question above would be but it would be safe to say it would be more than 93!

The problem is that I have lost count of the number of times I have read articles from investment advisors and others advising that as we move through our retirement years we should reduce the proportion of our savings that we have invested in shares.

Their reasons for saying this have never made any sense to me. Are they saying that investing in the share market should be a long term proposition (agreed) and therefore, as life becomes less and less of a long term proposition, we should start selling up our shares?

There is no doubt that some older self-directed investors will eventually find that maintaining a share portfolio is too much of a chore but this does not have to mean selling up your portfolio. This is especially true if you are a Sharesight customer because you can share your portfolio with a professional advisor or family member who can then provide the level of assistance you require.

If you are intending to leave your shares to family members it makes sense for them to have the opportunity to become familiar with the portfolio ahead of time.

Data entry, what’s that? Have your share trades recorded automatically!

Posted by Scott Ryburn on April 17, 2013

Our aim at Sharesight is to make share market investing as easy as possible for you. With that aim in mind, a little over a year ago we announced our newly developed contract note email import service. This saves you the hassle of having to manually record new trades into your Sharesight portfolio each time you buy and sell. Since then we have gone on to support over 30 different brokers across Australia and NZ!

For those of you who have yet to try it, here’s a quick rundown on how it all works and how to set it up (it’s really easy!).

How it works
Sharesight provides you with a unique email address for your portfolio and you instruct your Broker to send a copy of each of your contract notes to this email address.
Each time we receive an email with a contract note from your broker, Sharesight will automatically scan the attachment and create the trade record in your portfolio. As soon as the trade has been created (typically within 10 minutes) you will receive a confirmation email from Sharesight containing a link to the newly created trade. As an added bonus, a copy of your contract note is attached to the trade record in Sharesight for future reference (trust me, your accountant will love it!).

How to get started
Step 1 – Make a note of the email address for your portfolio.
To view the email address for your portfolio, you must enable the broker email import function. To do this, first click the ‘settings’ link and then click the ‘edit settings’ button below the appropriate portfolio. Look for the section titled ‘Broker Email Import’ and click the ‘enable’ button. Once enabled, the email address for your portfolio will be displayed. This is the email address where you will send your PDF contract notes for processing.

Step 2 – Check that we currently support your broker.
We maintain an up-to-date list of supported brokers here. If your broker is not on the list, ask us to support your broker by submitting an ‘idea’ to the community forum.

Step 3 – Send through your contract notes (or get your broker to do it)
Simply ask your broker to email your contract notes to the email address generated in Step 1. Alternatively you can manually forward your contract note emails or set up a mail forwarding rule – just make sure to include the name of the broker (as per our list of supported brokers) is in the subject line of the email.

That’s it, your portfolio will now be kept up to date automatically each time you trade!

Will Mighty River’s share price sink or swim?

Posted by Tony Ryburn on April 9, 2013

The NZ Government’s asset sales programme has generated heated debate much of which has been politically driven and ill-informed. But whatever side of the fence you are on, the bottom line is that it is going to happen at least for Mighty River Power which is the first cab off the rank. So as an investor are you going to dip your toe in the water or do you think investing in Mighty River will leave you up the creek without a paddle?

Rather than regurgitating all the factors that might impact on Mighty River’s share price after it floats I thought it might be interesting to look at how previous Government asset sales have performed for investors over the long term. Three that come to mind are Auckland Airport, Contact Energy and Vector. Recording these stocks in Sharesight on their IPO dates reveals some interesting information.

Contact Energy is obviously the most relevant to Mighty River. It listed in May 1999 and since then has produced an electrifying performance with an annualised return (including capital gains and dividends) of just under 15%. However it has suffered a power cut since September 2010 producing a total return over this period of minus 2.6%.

On the other hand Vector, being a lines company rather than a power producer, has seen its share price become tangled in the wires and it is currently below its August 2005 listing price of $3.00. But it has still produced an overall return of 5.6% courtesy of strong regular dividend payments.

Auckland Airport has been the high flyer of the trio with an overall performance of nearly 22% p.a. since it became airborne in July 1998. It is obviously in a different industry and has some unique characteristics, but it does show that previously owned Government assets can perform for investors and are unlikely to sell you down the river.

Meet the Cloud Superheroes

Posted by Scott Ryburn on March 14, 2013

Superheroes spend a lot of time in the clouds but now they’re bringing the cloud to you.

Why? So you can learn how cloud services are transforming the lives of accountants and bookkeepers everywhere—without having to read a book or spend a whole day at a boring conference.

The presentations will be short, blindingly informative and probably spandex-free, although we can’t guarantee that.

But the event is completely free. If you can save the world without raising an invoice or being registered for GST, how can you charge for beer, wine and canapés?

Here are the details:

The Superheroes

We can’t reveal their names for obvious reasons but we can say where they’re from:

Sharesight: See how this new generation, online share portfolio management system can make tax reporting a breeze and performance tracking even easier.

Shoeboxed: Learn how Shoeboxed can take a pile of paper receipts and turn it into payables invoices in your accounting package in an instant

Fathom: Watch as this management reporting and financial analysis tool reveals loads of improvement opportunities for your clients’ businesses.

Workforce Guardian: See how a cloud-based tool can help you easily manage staff and create compliant employment contracts—effortlessly.

There are even two top class MCs. Sholto MacPherson, publisher of cloudadviser.com.au and boxfreeit.com.au and a leading business technology journalist, believes cloud software will drive the greatest leap in productivity since the word processor. He’ll host the Sydney and Melbourne events.

In Brisbane, Michael Carter from Practice Paradox, a marketing and sales guru specialising in the accounting industry, will try and keep the Superheroes in check.

The Dates

Melbourne – Next Monday 18 March at Federation Square – 4.30-6.30pm

Brisbane – Tuesday March 19th at Riverside Centre – 4.30-6.30pm

Sydney – Thursday March 21st at Citigroup Centre – 4.30-6.30pm

You never know – show up wearing spandex and you may get a flight with a Superhero.

Places are strictly limited so please register now.

Product Update – Notes, File attachments, PDF reports

Posted by Scott Ryburn on April 26, 2012

We’ve recently been developing some enhancements to help you keep track of more information about your shareholdings. The following new features are now available:

File attachments
Investor, Expert, and Professional Edition customers can now upload a file attachment to each trade or dividend record in Sharesight. Additionally, you can upload up to 5 file attachments against each shareholding. This allows you to store an online copy of contract notes, dividend slips or any other relevant documentation that you receive from the company. If you’re using our Broker email import function, your PDF contract note will automatically be attached to the trade record in Sharesight so that you have a permanently accessible online copy that you can download whenever you need it.

Notes about the shareholding
In addition to the existing comments field where you can record notes about each trade or dividend, we’ve now also added a comments section for the shareholding itself. Think of this as a notepad where you can jot down any information about the share. This is a great way to communicate extra information to shared users, eg your accountant or financial adviser (or client if you use Sharesight Professional Edition).

We’ve also introduced new PDF reports so that you can download and save a great looking copy of any of the reports. The PDF download option replaces the previous ‘print’ option as printing from the PDF file offers substantial improvements to the formatting. Look for the new PDF icon next to the Excel icon at the top of the reports.