Retirement/Passive Income: Dividend Shares vs Growth Shares vs PIE Funds

[Dolcile]

I posted on the 2CC but it probably belongs here instead.

I really like the idea of owning a good portfolio of NZ dividend paying stocks in retirement. The problem is I'm currently in the top tax bracket and the extra tax really takes the shine off the currently high yeilds from the likes of 2CC and TRA.  I know tax shouldn't drive investment decision but it does make PIE funds quite attractive.

I'd love to hear other views on this.

[Red Baron]

I really like the idea of owning a good portfolio of NZ dividend paying stocks in retirement. The problem is I'm currently in the top tax bracket and the extra tax really takes the shine off the currently high yeilds from the likes of 2CC and TRA.  I know tax shouldn't drive investment decision but it does make PIE funds quite attractive.

I'd love to hear other views on this.

Perhaps zhis one vould suit?

https://smartshares.co.nz/types-of-funds/new-zealand-shares/nz-dividend

But do you like ze composition?

RB

[Raven]

I posted on the 2CC but it probably belongs here instead.

I really like the idea of owning a good portfolio of NZ dividend paying stocks in retirement. The problem is I'm currently in the top tax bracket and the extra tax really takes the shine off the currently high yeilds from the likes of 2CC and TRA.  I know tax shouldn't drive investment decision but it does make PIE funds quite attractive.

I'd love to hear other views on this.

I used to like the idea of dividend stocks in retirement, but I've gone a bit cool on the idea. I think Buffet was right about ignoring dividends and just going for SP gains and then selling some shares to generate the income. The Smartshares NZ Dividend fund is an interesting idea, but from time to time the portfolio gets a bit...ummmm... "interesting"?

[HAWKDOG]

I think they really need to review the de-minimus level.  $50,000 in 2007 when the rules were introduced is not the same as $50,000 now with inflation in the last 17 years.  I think $100K per person, $200K for a couple is a more reasonable level.

Yes to this!!

Just looking at options for this - need to see an accountant.  Has anyone looked at putting their trading into a business to get tax write offs? or is that just silly.

[Basil]

Yes to this!!

Just looking at options for this - need to see an accountant.  Has anyone looked at putting their trading into a business to get tax write offs? or is that just silly.

Asked and answered but perhaps consider this.  Nobody in their right mind uses best endeavors to make a consistent trading loss year after year after year.  Once you declare yourself as a trader in business, that sticks in the years ahead but yes its best to do as you suggested and see an accountant if you have any remaining concerns.

[HAWKDOG]

Asked and answered but perhaps consider this.  Nobody in their right mind uses best endeavors to make a consistent trading loss year after year after year.  Once you declare yourself as a trader in business, that sticks in the years ahead but yes its best to do as you suggested and see an accountant if you have any remaining concerns.

My thoughts/question around write offs were more do with office space (% of your home sq footage), new computer, portion of electric/heat/internet bill, cleaning supplies, trips to Australia for conferences. 

Agree with your trading loss comment

[Dolcile]

I'm curious about how others are designing their retirement portfolio?

I'd love to hear how others are approaching this. Specifically:

• What's your asset allocation between NZ stocks, international equities, bonds/term deposits, and cash?
• How are you planning to generate income to supplement NZ Super - live off interest? Dividends? sell down?

Personally, I'm finding bonds/TDs/cash pretty unappealing given that real returns seem negative after tax. Curious how others are thinking about this!

[Basil]

The classic 60/40 shares bond portfolio allocation has a lot going for it but the yields on N.Z. bonds are now very low.  For that reason I prefer quasi bonds such as the REIT's ARG and KPG and also hold GNE as a bond proxy.  Those three combined make up just over 30% of my portfolio and I am currently holding about 10% in cash, which is just parked there waiting for the right opportunity in equities.

Equities are all very high quality N.Z. companies with a laser focus on GARP stocks on highly attractive metrics which are also great dividend payers.  I know it breaks all the classic portfolio construction rules having all my investments in N.Z. but I am very content with my long term portfolio performance and I prefer to stick to what I know well and has generated very satisfactory returns for me.

I also know my approach is higher risk than having a large proportion of my investments overseas but I am in the fortunate position that I can wear that risk and would rather have fewer investments in very high quality companies on metrics that are compelling than diversify just for the sake of diversification.
All that said, I might look at having a modest portfolio allocation to some international PIE funds at some stage in due course.

I will be living off my dividends at some stage in the future. Still quite enjoying part time practice, only work a couple of half days a week now which feels about right.

[Plata]

I remember reading a study comparing multiple retirement strategies using a montecarlo simulation constructed using historical equity and bond performance. They found the strategy with the lowest chance of running out of money before dying was 100% equities diversified accross global developed economies, with at most a 20% home nation allocation depending on tax advantages. Personally I think while cash is boring it really can be a sword and shield for your portfolio, shield you from having to sell equities during downturns and allow you to strike at good stocks on fire sale once you are secure.

I haven't thought much about retirement. But I like the concept of having cash/equivalent > year of expenses - half of expected yearly dividend income, and the rest being in equities. As we saw during COVID sometimes the dividend payers get a bit reluctant (E.G. KPG) to pay out. It's good to be prepared, never give someone else the power to put you in poverty.

[Apollo]

The graph comparing investments in 2026 in this article I found interesting not sure it helps portfolio management in 2026.

https://www.stuff.co.nz/money/360922035/investment-had-best-returns-2025-and-theres-another-big-opportunity-many-missed

Gold had a boomer of a year. Basil's NZ listed property did well possibly because Basil was buying them. Good to see NZ cash just keeping up with CPI inflation slightly ahead of NZ Shares and ahead of house prices.

Thanks for your openness Basil it is a lot more interesting and informative knowing what people are actually doing and why. I am not confident enough to share as I do not have a logical well thought out process and jump from one thing to the next based on a whim.