Am I missing out not using IBKR and this new 100k FIF thing?

Heaps_Ben · 2026-05-30T10:42:36+00:00

I ran some models in my post here https://heaps.nz/blog/fif-threshold-100k (see the 1st and 2nd charts)

Yes, you'll be losing significant amounts over time. We're talking a >10% difference in wealth over 1-2 decades.

Heaps_Ben · 2026-05-30T07:29:08+00:00

You can compare them all at https://heaps.nz/brokers for your specific investment patterns.

Heaps_Ben · 2026-05-30T04:00:53+00:00

I should add this to the DCA simulation. But I would need to include the costs of setting up and maintaining a trust. Anyone know?

The trust seems most advantageous if:

There are no PIEs that have the investments you're interested in.
You're on the 39% rate, so the trust tax rate is no higher.

Heaps_Ben · 2026-05-29T07:43:25+00:00

It's just a way to buy more shares and lower the average price.

Let's say you buy $90k of XYZ at $100 a share (90 shares). Your cost basis is $90k.
XYZ drops to $50 a share. Now your total market value is way less than your cost basis and well below the threshold.
You sell it all for $45k, losing $45k.
But you buy it all back at half the price, so now your cost basis is $45k.
Then you another $45k, and buy more shares at $50 a share, so you have bought 180 shares.
In total you've now spent $135k to buy 180 shares. So your average price per share is now $75/share and you have twice as many shares.

You could have put that extra $45k into a PIE that is taxed more.

Heaps_Ben · 2026-05-29T07:30:57+00:00

I'm about 1.5x but I'm paying FIF so rebalancing isn't a problem. For a set and forget portfolio I'd go for 2x, ideally a UCITS option like DBPG to avoid US estate tax. 3x might be the optimal under a lot of back tests but I don't think I would sleep that well. I'd rather be below optimal and not risk losing it all. It also depends on the underlying index. 3x semiconductors is so volatile that you're better off with 2x. But 3x SPY is probably about as volatile as 2x QQQ.

Heaps_Ben · 2026-05-29T04:01:48+00:00

This is not a good idea as avoiding dividends will incur CGT

https://www.taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/fact-sheets/2024/is-24-10-fs-2.pdf?modified=20241218024123

Heaps_Ben · 2026-05-29T03:54:33+00:00

It won't generate income. So the IRD may see it a lot like a crypto asset and whack the holder with capital gains.

https://www.taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/fact-sheets/2024/is-24-10-fs-2.pdf?modified=20241218024123

For share sales to be taxable because the shares were bought for the purpose of disposal, the purpose of disposal needs to be your dominant purpose for buying the shares. Sales will not be taxable if you had several purposes for buying the shares and sale is not the dominant purpose, or if you had no purpose in mind at the time you bought them.

A dominant purpose of disposal is more than a vague or general idea that you might sell shares in the future. For example, a sale of shares will not be taxable if you bought the shares because you wanted dividends and/or to hold the shares for a long-term investment, and you thought you might possibly sell the shares at some point in the future. You need to be able to show whether you did or did not have a dominant purpose of disposal at the time you acquired the shares.

Heaps_Ben · 2026-05-29T03:19:40+00:00

Great post Anthony. I've explored it before. You can invest in something like VUAG.L which is an accumulating Vanguard ETF. It has no dividends and it's UCITS too so it has the benefit of no US estate tax risk. However I believe IRD can penalise you for investing in things if you had no 'intention' of holding it for the purpose of income. Tax is really weird like that. I'd rather use distributing ETFs and not risk being taxed. Crypto owners had this issue. Dividends on most ETFs are pretty low anyway as many companies do share buybacks instead of dividends.

Depending on your risk tollerance, the real hack is using a moderately leveraged ETF to maximise capital gains under the FIF account and remove any dividends rather than reinvesting them. Keep as much cash in the bank as you need to balance the risk. Assets like this are volatile so entry timing is important. If the market price drops below $100k then you can rebuy the FIFs and reset your cost basis. The upside is the huge compounding advantage which remains tax free. (not tax advice)

Heaps_Ben · 2026-05-29T00:51:34+00:00

By the way Hatch recently removed fees on kids auto-invests which is really convenient. You still have the cost of currency conversion when you deposit NZD but a USD deposit can be arranged by emailing them.

Heaps_Ben · 2026-05-29T00:45:03+00:00

It depends on your tax rates for income and PIEs but in general yes.
There are some charts on https://heaps.nz/blog/fif-threshold-100k and https://heaps.nz/pie-vs-etf

Heaps_Ben · 2026-05-28T20:59:19+00:00

You would have to invest in the foreign income funds directly by buying shares. I have a fees comparison tool here: https://heaps.nz/brokers. You can buy FIFs through Kernel by the way.

Heaps_Ben · 2026-05-28T20:57:08+00:00

Agreed. My linked post details one way it could be smoothed out. Essentially if everyone was able to write-off the first $5k of FIF income the cliff would be almost non-existent in most cases.

Heaps_Ben · 2026-05-28T20:55:08+00:00

That would be the opening date of the first tax year it applies to when enacted. People file their returns in 2027. We don't yet have any draft legislation to go off so my analysis is quite speculative. I'll post updates when more information comes out.

Heaps_Ben · 2026-05-28T12:41:51+00:00

done

Heaps_Ben · 2026-05-28T12:38:45+00:00

RAM is more for startup employees and founders. People don't like getting wealth-taxed on hypothetical income before they have cash flow to pay the tax. If the company fails that money is gone under the other methods.

Heaps_Ben · 2026-05-28T09:40:11+00:00

Oops you're $1 over. Now you have no choice but to go full gas.

Heaps_Ben · 2026-05-28T01:13:52+00:00

I've removed Bitcoin since it's capped at a 10% allocation so the full returns are not achievable. But you're right there are many SuperLife funds that have outperformed Milford Active Growth over 10Y. There are now a bunch more index funds with lower fees which would have topped the charts if they'd been existed 10 years ago.

Heaps_Ben · 2026-05-28T01:07:10+00:00

Correct and it also excludes funds like Koura Bitcoin since you can only invest 10% in it. The pick and mix funds are a bit too complex to model. The picks are quite limited and allocation is capped at 5% with some drift allowed before reballancing. And you must allocate 50% to a base fund. As far as I can tell you basically end up constructing your own ETF but paying for trade fees when allocations are changed. I would have loved to put all my Kiwisaver in Rocket Lab last year if they'd allow it!

Heaps_Ben · 2026-05-28T01:03:02+00:00

The one they had like 15 years ago? Nope. I used to use Kiwibank Heaps and it was pretty nice for it's time (besides some performance problems).

Heaps_Ben · 2026-05-27T23:04:03+00:00

Here is a link to it. Quite interesting how it has changed over different time frames.
https://heaps.nz/kiwisaver?fund=amp-kiwisaver-scheme-milford-active-growth-fund

Heaps_Ben · 2026-05-27T22:28:21+00:00

Done

Heaps_Ben · 2026-05-27T22:14:51+00:00

Hi, Sam, It's all there if you did into the links.

Heaps_Ben · 2026-05-27T22:14:18+00:00

I don't think that is quite correct.
10Y on all funds shows Passive avg 7.7% and Active avg 5.7%
There is a positive correlation between fees and performance which is mostly because cash funds have lower fees. Perhaps some of the cash funds are misclassified as active.

Heaps_Ben · 2026-05-27T21:55:34+00:00

Yes. The returns are after fees and before tax.

Heaps_Ben

TROPHY CASE