Sharesight Blog

I’m considering starting an SMSF. How can I make share investing most cost-efficient?

Posted by Andrew Bird on October 7, 2011

While some investors may be feeling concerned about current stockmarket uncertainty, the volatile markets appear to have done little to dampen our collective enthusiasm for self-managed superannuation funds. The sector is booming and recent numbers from the government regulator APRA show that self-directed investors poured an extra $44 billion into their super accounts in the past year to June 2010. The total amount of funds under management in SMSF at June 30 this year was estimated at $420 billion, and rising.

So how can investors maximise the benefits of running – even growing – their SMSF against the backdrop of volatile markets?

The state of the Greek debt default and its impact on global markets might be out of our control. But what if we take charge of those things we can control? Like the many variable costs that erode the overall performance result of your fund?

This is a key point, as many do-it-yourself investors often don’t consider the underlying costs associated with managing a portfolio, and the impact of these on overall returns.

It makes sense for investors to focus on minimising cost and freeing up funds for reinvestment. The good news for DIY investors is that that by exploring online services to help manage their portfolios they are in a good position to maximise cost effectiveness.

The costs of share investing generally fall into three areas: the cost of research and advice on what shares to buy; the cost of buying and selling shares (brokerage) and the cost of administering your portfolio.

Traditionally, these services would be bundled together by a full service broker or platform provider. This provides convenience, but the cost can be a significant drain on portfolio performance for many investors.

Online services now provide investors with the option to disaggregate these three areas and choose the individual providers that best suit them.

Online trading through an internet broker can save you money on your brokerage fees, while more and more of us are finding cost-effective advice, traditionally provided by a broker or financial adviser, through online advisory services.

Then there is the cost of portfolio administration. Using a broker, accountant or financial adviser to handle the significant tax and reporting obligations of DIY share trading can be prohibitively expensive for many investors. A good online share portfolio management system, which automatically records the data you need, can significantly reduce the time your accountant or adviser will have to spend on administration and record keeping – and therefore your bills – leaving you with more money to reinvest in your portfolio.

In short, while the complexities of investing in shares through your SMSF should not be underestimated, a growing number of services are being brought to market to make life easier for the self-directed investor. Nonetheless, before you jump head first into becoming the trustee of your own managed super fund, make sure you spend the time working out if this is the best option for you. And while you’re at it, spend some time looking into the cost of research and advice on the shares you wish to buy; the cost of buying and selling shares (brokerage) and the cost of administering your portfolio.

Is Sharesight in Cloud Cuckoo Land?

Posted by Tony Ryburn on September 29, 2011

No we are not!

We are all down-to-earth characters here at Sharesight and definitely not in cloud cuckoo land – but we are ‘In the Cloud’.

We have encountered a lot of confusion from our customers about what being ‘In the Cloud’ means. Some ask us questions like ‘how do I transfer Sharesight onto my new computer’? Or ‘my computer is stuffed – does that mean all my Sharesight data is lost’?

Most of you know more about cloud computing than this of course but we do encounter a lot of people who are worried by exaggerated stories about the risks of Cloud Computing.

This is the first in a series of articles that will look at Cloud Computing. My aim is to keep it really simple to help our customers who do not have a good handle on Cloud Computing. I will look at:

1. What is Cloud Computing?
2. How does Sharesight operate in the cloud?
3. How do you benefit as a Sharesight customer?
4. How Cloud based services can join forces to offer you benefits you have never dreamed of
5. Finally I’ll look at perceived disadvantages of The Cloud and set your minds at rest.

So let’s get started.

What is Cloud Computing?

This is a big topic so to keep things manageable I will just focus what matters to you as an individual Sharesight customer.

Because Sharesight operates ‘In the Cloud’ it means that when you use Sharesight you don’t use your computer – you use ours! That is a bit of an exaggeration of course because you do have to turn your computer on to use Sharesight. But it doesn’t do much more than act as a messenger. Your computer sends a message to Sharesight when you log on. Sharesight then sends a copy of all your information to your computer. When you log off again nothing is stored on your computer.

This is why it doesn’t matter if your computer packs up. Well, it does of course, but not as far as your Sharesight data is concerned. You can use any computer you like, anywhere in the world, to see your Sharesight portfolio because all it has to do is be a messenger.

Sharesight’s servers do all the thousands of calculations that are needed keep your portfolio up to date and make sure it is securely stored and backed up.

I’ll tell you a bit more about servers in the next article because they play a very important part in making sure your data is secure, does not get lost and is available to you when you want it.

The main message that I want to leave you with from this first article is that because Sharesight operates in ‘The Cloud’ it can look after all the nuts and bolts. This is not another of my exaggerations! I think it is actually an understatement because Sharesight in the cloud takes a big weight off your shoulders. You do not have to worry about downloading software onto your computer, keeping it up-to-date and having a software licence. And you don’t have to worry about viruses, backing up data so you don’t lose it or running out of space on your computer.

In short, you are left free to concentrate on the fun part – getting the best return you can from your investments and exploring all the benefits Sharesight offers.

We have had another share market collapse. So what?

Posted by Tony Ryburn on September 14, 2011

My top 5 points to ponder before you act

By Tony Ryburn Sharesight founder and managing director.

Just when we thought the worst was over, the share market takes another tumble.

I know we have to be mindful about what is happening overseas but things are much better in Australia and NZ so what is the problem?

If, like me, you are not sure what the problem is we are in good company. Retail king Gerry Harvey was recently quoted as saying ‘Australians should be as happy as pigs in shit with low unemployment and a resources boom, but instead they’re scared to spend money’.

So it looks like we are not spending money and we are taking it out of the share market as well. But where is all this new-found cash going? If it’s reducing debt great, but if you think it might be safer under the bed because the share market is heading south, here are my top 5 points to ponder before you take action.

1. The share market is volatile – you knew that before you invested. Dramatic gains can be offset by equally dramatic losses. But history shows very clearly that in the long run our markets produce good returns with gains exceeding losses.
2. Don’t over-emphasise what happens today. It is human nature to do this but current events, good or bad, are not the way to gauge what will happen in the long run.
3. To ensure you can maintain a long-term focus, only invest cash that you are sure you will not need for short-term requirements.
4. If the market takes a tumble you have made a paper loss; not a real one. Ask yourself if you know a better place (under the bed?) to put your money than in share market – especially when it is at low point! As long as you don’t bail out you are guaranteed to participate 100% in the inevitable bounce back!
5. Finally remember that doing something is not necessarily better that doing nothing. Besides doing nothing is easier and in the case of the share market, may well produce a better result.

Sharesight for Oldies the Young at Heart

Posted by Tony Ryburn on September 7, 2011

One of the issues we are grappling with at Sharesight is how we can better help the many older folk who have diligently built up substantial share portfolios over their lifetime.

Many older folk stand to benefit significantly from Sharesight because their larger portfolios are very demanding to maintain without the automated service Sharesight offers. Unfortunately this creates a Catch-22 because many older folk have had limited opportunity to become confident with computers or online services like Sharesight. So going online to manage their share portfolio is, understandably, a bit daunting.

While we strive to make Sharesight as simple and intuitive as possible, it is clear that some people are still struggling with it. The good news is that that we already have a feature that can help! And customer feedback is that many people are finding this really valuable.

Our sharing feature allows adult children or relatives of older folk to help them manage their portfolios in Sharesight. This allows a Catch-22 to be converted into a win/win so why not take advantage of it? Sharesight portfolios can be shared on a read-only or full-access basis. Full-access allows the person with whom the portfolio is shared to update and amend the portfolio as necessary.

Of course, this feature is also useful for people of any age who wish to share their portfolio with others e.g. members of a share club, your financial advisor or your accountant.

So if your share investment records are a bit of a mess but you find the prospect of setting your portfolio up in Sharesight a bit daunting why not get a trusted friend or family member to give you a hand? It takes less than a minute to record each share investment in Sharesight because most of the time-consuming work like recording all the dividends and making adjustments for things like share splits is done for you automatically. Sharesight also has an excellent import function for shares recorded in a spreadsheet. Once your portfolio is set up it will run on autopilot with minimal user input required.

Talking of older investors, I recently read an article urging people of retirement age or older to sell up their share portfolios and invest their savings in a few deposit accounts with reputable banks. Two main reasons were advanced for this suggestion.

The first was that shares can be volatile and should therefore be regarded as a long term investment unsuited to older folks. I agree that shares are volatile and you should take a long-term approach, but I do not agree that this makes shares unsuitable for retired investors– even those well-beyond retirement age. For investors young and old, the key thing is to ensure you never get into a position where you are forced to sell shares in a market downturn.

The second reason was that older investors should simplify their affairs so that the administrator of their estate and the beneficiaries under their will are not left with a complicated, poorly –documented portfolio of shares to unravel.

As our customers know, a portfolio in Sharesight will provide a complete and clear record of everything an executor of a will and beneficiaries will need to know.

Sharesight Server Upgrade & Outage Notice

Posted by Marcus Baguley on August 24, 2011

Sharesight will be offline for approximately 2 – 3 hours while we upgrade our servers. The expected outage will commence at 7.30am NZT on the 25 August 2011. We apologise for any inconvenience that this may cause.

Edit – The upgrade is now complete

Additional Info:

What’s included in the update?

This upgrade contains primarily ‘behind the scenes’ changes to ensure that Sharesight continues to be as fast, secure and reliable as possible.

We are moving to a new server infrastructure which includes dedicated load balanced application and database servers. The new architecture will offer speed improvements and also greatly improve our capacity as our user base continues to increase. The new architecture also offers improved scalability and redundancy.

Edit – Post upgrade stats indicate that average portfolio load times are around 30% quicker.

We Don’t Know How Lucky We Are

Posted by Tony Ryburn on August 18, 2011

When you consider that investors in many, if not most, countries round the world face a comprehensive capital gains tax on shares, our Kiwi customers can be grateful that they don’t have to put up with anything other than their Foreign Investment Fund (FIF) regime, ridiculous though it is.

Many of the countries without a comprehensive capital gains tax regime have half-baked alternatives that look every bit as unwieldy as the FIF regime so Kiwis are lucky compared to most of the rest of the world.

Our Aussie customers do have a comprehensive capital gains tax regime but the fact that both NZ and Australia allow for franking/imputation credits is cause for rejoicing because there has been a worldwide trend away from imputation/franking credits. Australia and NZ are about the only OECD country that still allows imputation credits. I’m sure that in many countries taxes are lower to partially compensate for this but ‘partially’ is the operative word.

Imputation/franking credits eliminate the double taxation of company profits that would arise if companies paid dividends from their after tax profits only to have these dividends taxed again in the hands of the investor.

Your Sharesight Taxable Income Report will show you at a glance the extent to which imputation/franking credits have reduced your tax liability and which of your investments have had Withholding Tax deducted.

Imputation/franking credits only apply to locally sourced income, so dividends from a company with offshore operations are taxed based on the full amount of the dividend which therefore reduces the after-tax return of the dividends they pay. The net result is that imputation/franking credits favour locally generated income and provide an extra incentive to local companies to pay strong returns to shareholders.

P.S.
Sharesight is proud to have Australian and NZ shareholders and to further the spirit of trans-Tasman cooperation it would be great if the NZ Government would allow Australian franking credits to be recognised in NZ and vice versa!

Big Brother is watching… and acting

Posted by Andrew Bird on August 11, 2011

The Australian Tax Office (ATO) warned this week that more than 40,000 suspect tax returns for FY11 have already been flagged by its computer system. Cases have included overstated or fraudulent claims for spousal offset or education tax refunds, but the ATO has also declared that declaration of franking credits by share market investors is also on its radar.

While some of these returns concern suspected fraudulent behaviour, no doubt quite a number relate to mistaken claims entered in good faith. We are human after all!

The news from the ATO provides a timely reminder for those of us looking to complete our tax returns over the next few weeks that not only is it important to complete your tax return accurately, but it is also essential to ensure careful record keeping throughout the financial year. If you don’t have up-to-date information at your fingertips, chasing the data you need gets very time-consuming – often leading to errors or corner cutting.

Many DIY investors are finding that using a service such as Sharesight can help them stay on the right side of the ATO at tax time. Sharesight automatically tracks data relating to your shares throughout the year, enabling instant access to taxable income reports that contain a summary of gross dividends, franking credits and withholding tax information for all dividends. You can also access CGT reports in a couple of clicks of the mouse.

But for DIY sharemarket investors who haven’t already signed up to the service, here are some tips to make your EOFY life a little easier….

• You need to keep a record of all shares bought, the date you bought them and the price paid. When you choose to sell, you will need those records to work out the potential capital gains tax due.
• To calculate the capital gain or capital loss when disposing of only part of an investment in shares or units, you need to be able to identify which ones you have disposed of. This can be very important because shares or units bought at different times may have different amounts included in their cost and can alter the amount of tax you may need to pay.
• Keep track of all dividends received for tax purposes. You will need the date the dividend is paid, the net amount and the franked amount (whether you must pay tax on the whole sum received or whether you have received franking credits from the issuer if they have already paid part or all of the tax due).
• Remember that the potential tax due can change as the price of your stocks goes up or down and this may influence the time you choose to sell.
• Storing your records online through a service such as Sharesight allows you to view your records at any time wherever you are in the world, and also gives instant access to your accountant or financial adviser.

With the ATO bringing on-board ever more sophisticated techniques (click here for The Australian’s report on how their computer modelling is tracking down false claims), the disorganised investors among us have no excuse but to get our houses in order! See www.ato.gov.au for more information on the tax requirements that come with investing in shares.

Importing your portfolio just got easier

Posted by Scott Ryburn on August 10, 2011

We know from the feedback that we get that the biggest challenge for many new customers is getting their historic portfolio set up Sharesight. One of our goals is to make it as easy as possible for you to get your data into (and out of) Sharesight. Last week we released some improvements to our file importer to make it compatible with a much broader range of spreadsheet files.

The first step is getting a list of all of your trades into a spreadsheet. Thankfully this is easier than it sounds as most online brokers allow you to export a copy of your trading history in a form that can be opened up in a spreadsheet program such as Microsoft Excel.

Provided that your spreadsheet contains one row per trade and one column per attribute (price, quantity, date etc) it is now much easier to import this data into Sharesight.

Importing your data in two easy steps:

1. Save your file in CSV format

Once you have the data in a spreadsheet, you need to choose ‘Save As’ and save the file as a CSV file. CSV stands for ‘comma separated values’ and is basically just a plain text file without any extraneous formatting information.

2. Upload to Sharesight

To access the file importer, click ‘Add New Security’ then click ‘Bulk Import’ and click on the ‘Import CSV’ button.

Once you have selected your file to upload you may need to specify what piece of information is contained in each of the columns you want to import.

You have the chance to add, modify, or delete any data before it is finally imported into your portfolio. Sharesight won’t let you import invalid data, but if there are any problems they will be clearly highlighted so that you can fix them up.

Sharesight appoints Andrew Bird as Australian Executive Director

Posted by Scott Ryburn on June 1, 2011

Today at Sharesight we are excited to announce the appointment of Andrew Bird as Sharesight’s new Australian Executive Director.

Andrew is the former chief executive officer of Morningstar Australia and he has joined with us as a major shareholder. Andrew will also be actively involved in managing Sharesight’s Australian operations.

Andrew shares our vision for creating a revolutionary cloud-based portfolio management platform. The skills and experience he has gained at the highest level in the Australian financial services industry mean that his help in developing and marketing Sharesight in Australia will be a huge asset to the company.

Further details are set out below in our Australian press release:

SYDNEY, 1 June 2011: Innovative portfolio management service Sharesight today announced the appointment of Mr Andrew Bird as Executive Director.

The company also announced today that it has closed a second round investment from an investor group led by Mr Bird.

Mr Bird is the former Chief Executive Officer of Morningstar Australia.

He joins New Zealand –based Sharesight as the company prepares to actively promote its online share portfolio management system to Australian sharemarket investors and their advisers.

Company founder Mr Tony Ryburn welcomed Mr Bird’s appointment:

“Sharesight is an investor-centric service founded on the principle of creating a better way to administer stock portfolios and dramatically cut costs by harnessing smart technology. Andrew’s background leading highly-regarded financial services companies in Australia fits well with this guiding principle.

“The Sharesight board and investors look forward to Andrew’s input as we bring our unique software as a service offer to the attention of a larger number of sharemarket investors in Australia and abroad,” he said.

Mr Bird said the Sharesight service held a unique ‘sweet spot’ in the Australian market, as its combination of new technology, low cost and high functionality was a welcome innovation.

”I have felt for a long time there was a need for a high quality, highly functional portfolio administration tool that is cost effective for SMSF and self-directed investors,” Mr Bird said.

“The Sharesight tool really hits the mark: it provides accurate and detailed performance information, automates most of the paperwork involved in a portfolio and provides easy to use income and CGT reporting.

“The Sharesight service impressed me straight away with its focus on 100% web based functionality and its integration with other cloud computing platforms like Xero accounting. This combination is a significant advance on most services available to self-directed and SMSF investors today.”

Mr Bird was previously the co-founder of Aspect Huntley, an investments information and research business that was acquired by Morningstar Inc. (NASDAQ: MORN) in 2006. Following the acquisition, he served as CEO of Morningstar Australia and New Zealand until 2010, when he resigned to focus full time on private investment opportunities.

New! Categorise your Shares

Posted by Scott Ryburn on April 7, 2011

This week we have released our new labelling and report filtering functionality to customers on the Expert plan.

This allows you to create your own set of labels and apply them to shares in your portfolio. It is then possible to report on specific categories of shares within a portfolio based on the labels that you have defined.

Labels can be anything you like and you can apply more than one label to each share. For example, you may choose to label your shares based on which broker or advisor recommended them and also label them based on investment profile (eg income vs growth).

The performance report can be filtered to include only shares that match the label(s) you specify. For example you could separately compare the performance of shares recommended by Broker A vs those recommended by Broker B.

We would be interested to hear how you use labels to categorise your shares and which other reports you would like to be able to filter. Send us your feedback or post a comment below.