Skip Site navigation

Skip Section navigation

 

1 - Saving for a Goal

Sam
Sam is saving for a deposit on her first home. Her savings goal is NZ$40,000 in three years and she can afford to put aside NZ$1,000 a month. Sam is looking for the investment that will help her reach this goal fastest. She has considered two options:

  • Opening a savings account at the bank paying 5.21% pa1 with interest compounding
  • Investing in SmartTENZ2 through Smartshares or an NZX Advisor with dividends reinvested. Based on the performance of the NZSX 10 index over the last three years, we have assumed TENZ Smartshares would return 12.83% pa3.

Year 1 (NZ$) Year 2 (NZ$) Year 3 (NZ$)

Bank account

$12,336

$25,315

$38,970

$12,819

$27,282

$43,601
Difference $483 $1,967 $4,631

1 Based on Reserve Bank average six monthly term deposit rate for the past three years.
2 Using actual historical returns of the TENZ (NZSX 10 Index Fund) over three years as reported by FundSource as at 30 April 2004. The returns are after tax and management fee but before brokerage which is usually 0.8 – 1.4%.
3 This example assumes that the full gross annual (i.e. before any applicable taxes) of the interest and the dividends received are reinvested. Any tax on these returns is ignored for the purposes of this example.

With a bank account Sam did not reach her target of NZ$40,000. With SmartTENZ Sam is NZ$4,631 ahead of where she would be if she used a bank savings account and has exceeded her NZ$40,000 savings target. This is a clear indication of the superior longer term performance of Smartshares over bank deposits.

Search

Quicklinks

Related Downloads

Back to top

Privacy Statement | Conditions of Access and Use | Contact Us | Sitemap
Smartshares Limited is a wholly owned subsidiary of New Zealand Exchange Limited (NZX) and is the manager of SmartFONZ, SmartTENZ, SmartMIDZ, SmartMOZY and SmartOZZY Funds. NZX does not guarantee the performance of SmartFONZ, SmartTENZ, SmartMIDZ, SmartMOZY, and SmartOZZY Funds. Units in SmartFONZ, SmartTENZ, SmartMIDZ, SmartMOZY, and SmartOZZY Funds have been accepted for quotation by NZX and will be quoted upon completion of allotment procedures. However the Special Division which regulates NZX takes no responsibility for this offer. Copies of relevant Investment Statements can be obtained by contacting a Primary Market Participant or Smartshares Ltd directly at www.smartshares.nzx.com or by phoning 0800 80 87 80. All currency in New Zealand dollars unless otherwise stated.