Analysis Paralysis - SuperLife or SmartShares
If you would prefer to listen to this blog post, please click on the play button.
When I started this blog my biggest fear was being sent ‘shouty’ emails from malicious people hiding behind their computers. This is because I have come across these people in real life from time to time and I thought “if they discover technology then I’m in for it”! But you know what, apart from the man who corrected my spelling of father-in-law (I put father and law) all I have ever had is nice, encouraging feedback telling me that what I’m writing is useful to them. Bingo.
And this week was no exception when I heard from Holly. I liked her immediately when I saw she uses as many exclamation marks as me!
Thanks for your email Holly, and YES, I had a brilliant weekend thank you!
I would crack straight into answering her question about the SmartShares vs SuperLife comparison but first I needed to duck down to the supermarket to buy some toothpaste (despite the fact I spent an hour at the supermarket the day before doing the biggest shop I have done all year). Imagine me stood in front of all the toothpastes, so many choices, so many ingredients promising so many things, so many prices, so many sizes. I instantly began to suffer from an acute case of ‘analysis paralysis’. There are so many good options that it is tough to make a decision, what if I make the wrong one and my daughter hates it, or the giant box actually hides the smallest tube of toothpaste and we run out in a week? Well, I can’t stand around here all bloody day choosing so I just grabbed the biggest box that was on special and that also claimed to be ‘original flavour’ and was off. $2.99. Job done. No regrets.
And Holly, indecision was how I was feeling way back when I decided to buy shares for the first time. I originally started looking at individual shares but became instantly bogged down in attempting to understand the complexities of each company in an attempt to predict their future returns. An impossible task for me. That is what led me to SmartShares. I read enough to understand how their different funds work, had a brief look at SuperLife as well but thought I would head down the path of SmartShares in order to avoid another acute case of analysis paralysis. I reached a point where I knew I had enough knowledge to just have a go.
Investing is like shopping for toothpaste. There is a range of companies offering a very similar product. There are differences, most of which are minor and you just have to cut through all the jargon and choose an option. If you get too bogged down in the detail it just all becomes too difficult and you will end up doing nothing.
So, my guess Holly is that if you are just getting started you are quite likely to do what I did and invest in the index fund (or ETF) which covers the Top 50 companies in New Zealand. Here is the quickest comparison I can make between the two funds from competing companies:
Ummmm, sounding pretty similar yes?
Personally for me the above is more than enough detail but for the engineers amongst you who are always wanting to know a bit more:
SmartShares has been around 21 years and bought SuperLife, who had a strong KiwiSaver focus, two years ago. Both have Exchange Traded Funds (ETF’s). They acquired them so they could launch a new range of Index Funds and also they could then add the KiwiSaver arm of SuperLife to their business. With SmartShares you are buying a unit in a fund so you get an individual unit allocated against your common shareholder number (CSN) whereas with SuperLife you are buying a pooled investment where you don’t actually own the units so you can’t control the price you sell it at. Enough already, let us move on.
They operate out of the same office, do they have a black line down the middle and share a receptionist? I visited the town of Derby Line on the American/Canadian border where The Haskell Free Library and Opera House literally straddles the border. Is the SmartShares/SuperLife office like that? Competing with each other but not really? Do they call a SmartShares meeting in the boardroom at 10am following by a SuperLife meeting in the same board room at 11am?
So, I’ve headed off on a bit of a tangent but the difference seems to come back to a slightly different structure and fees. SmartShares costs more to begin with as they have their $30 one off fee and SuperLife charge you an ongoing $12 a year. If you decide to have several funds at a time you might start to see some difference as SmartShares will charge you a $30 fee for each fund but SuperLife will charge you just one $12 annual fee.
Now, I’m as interested in fees as the next person and everyone seems to be talking about them at the moment (that is why I switched my KiwiSaver over to Simplicity a few weeks ago) but when it comes to the fees here my lack of training in economics will really show through when I say “I just don’t care”! I’ll hold off buying three flat whites for the year and that should just about cover the extra expense of buying SmartShares instead of SuperLife. It is inconsequential in my mind and I’m more interested in the performance of the fund that I’m invested in. Apparently SuperLife have a really good user interface which I’m all for, after all I am married to a Graphic Designer, but the SmartShares user experience suits me just fine as well.
TO END: Thousands have gone before us Holly and I would imagine that each of us have sweated the small stuff. But the reality is once you have made your call with who to go with the fee you paid (or continue to pay) will really only be something you review every year or so. If at that time you are not happy you can pull your money and change your fund. I’m no financial advisor, I’m just learning by doing like you are, but I can tell you the best thing you can do for yourself is just pick a path and GET CRACKING LADY! Time in the market is one of the most important things and every month you dwell on what choice to make is another month you miss out on investment returns.
I hope that answers your question. Let us all know what you decide to do!