Innholdsfortegnelse for March 2020 i Money Magazine

Burst water pipes, train disruptions, flash flooding … there’s no shortage of stuff to whinge about if I really wanted to. But I’ve always viewed the world with a “glass half-full” lens and see these issues as mere inconveniences to get what we really want – rain, and lots of it. The bushfires, compounded by fears about the coronavirus outbreak, made things that would otherwise feel important seem trivial by comparison. It’s hard to dwell on commuting hassles when we’re facing the prospect of a pandemic. While it’s early days, two of our regular contributors, Greg Hoffman and Marcus Padley, share their views on what this health emergency means for long-term investors. An economist I know explained it best when he described the coronavirus as an “event”, not a “trend”,…

DAVID THORNTON David Thornton is a staff writer at Money. David says: “I won’t pay for an Uber or taxi if the trip is walking distance. Admittedly, I have a very stretched definition of walking distance, which means up to about 3km if I’m good for time. It’s a no-brainer; I save money and burn some calories.” SUSAN HELY Susan is a senior writer at Money. Susan says: “Home delivery meals. The food never tastes as good in the takeaway containers. It often arrives lukewarm or cold. Sometimes the prices are steeper too. I prefer to go out but mainly cook at home and save the money. I also steer clear of packaged holidays after my honeymoon in Africa, where we splurged but were ripped off badly – often camping…

Recently I had a flat tyre while driving home to Sydney from the Blue Mountains. I’ve long abandoned changing my own tyre – the bolts are way too tight! I called the NRMA and within an hour I was back on the road and using the spare tyre, which had speed restrictions; so I had to buy a new tyre as soon as possible. Before the NRMA man departed I asked him what a new tyre was likely to cost. I had no idea of the price of tyres, but I did think it was a lot of money. I could’ve had the tyre replaced anywhere, but I am limited in my automotive knowledge so I went to my mechanic because I trusted him. The feeling of vulnerability that comes…

THE PROPERTY 101 By John Cannizzaro (JCX Media, $13.59) The author is a property professional and agent with experience in project management, building and construction. It is with this understanding and knowledge that he shares his tips. He covers all aspects of the property journey: financing, buying, renting, renovating, flipping, investing and selling. There are also tips on landscaping and making decisions on whether your renovations are adding true value. His detailed approach can make for a dense read but it’s an easy book to dip into for a deeper understanding of where you are in your property search. Ten readers can win a copy. In 50 words or less tell us what part of the property journey is of most interest to you right now. Enter online at moneymag.com.…

Jane Bianchini Owner of an online job interview platform with global ambitions; age 47; based in Sydney. Started work managing a bar and nightclub, KD’s, in Sydney’s St Leonards. First major investment was a house, which she still owns, in Sydney’s Manly; also has an SMSF, property and share investments and briefly dabbled in crypto currencies. Talks to her two children about saving and investing and the need to be frugal – “they are very good at cash, which is excellent”. Her parents worked hard to provide a private education. Likes running, playing tennis and football, and is an avid podcaster and reader.…

Ben is the founder of Empower Wealth, a specialist property advisory firm, and author of The Armchair Guide to Property Investing and co-host of The Property Couch podcast. Well done on what you have achieved, Naomi and Thomas. You certainly haven’t let the grass grow under your feet. There are many people twice your age who haven’t achieved half the wealth results you have. I’m tipping your success has a lot to do with you just taking action, in conjunction with some spending sacrifices along the way.  The question about whether you should keep acquiring properties, which includes more debt, carries with it several variables to consider. Your portfolio of three properties with mortgage debt of $1.8 million, giving you a loan-to-value-ratio (LVR) of 50%.   While most banks are…

As much as I like numbers, facts and statistics, Kiara, one of the most misused is “average”. At present, the average Australian family has, I am told, around 2.3 children and 11% of a golden retriever! My industry loves “average returns”, even though these can be highly deceptive. An advertisement describing 12% average annual returns over 15 years sounds impressive, but it would have served investors better by saying the worst year was minus 32% and the best plus 55%. Here I am not knocking an average return of 12%, but looking at each year’s return tells me more about the risk level of investments in the fund. So in your case, while I am pleased you have looked at the average in super for people in your age group…

Kim and Andrew have run a regional automotive business for 15 years. In the last 18 months, things got hectic, and they “took their finger off the pulse”. Kim confessed to Bright Spenders’ Anthea Falkiner that she hadn’t been as active in their business as she should have been. “It was kind of running itself and I wasn’t monitoring our personal spending consistently.” The couple reached a crunch point in their business – the drought had hit a lot of farmers and there wasn’t a lot of work going around. They were $35,000 in credit card and personal loan debt at the start of working with Bright Spenders. Just one year later they had paid off almost $20,000 and saved $1000 in their emergency fund.   And not long after…

Society holds ingenuity and hard work in high regard, but tring to turn your hobby into a business may not be worth the emotional or financial burden. Michela Sorensen, a general practitioner in Sydney, warns against letting side hustles encroach the time we need to recharge and devote to family. “We live in an era of 24/7 connectivity and there is an expectation you are always contactable,” says Sorensen. “Answering work calls when you’re tucking the kids into bed, quickly ducking into the office on a Saturday or checking emails by the pool on your holidays – this is now seen as normal, but it shouldn’t be.” And this is often the case before a side hustle is introduced to the mix. “Downtime is essential for health – both mental…

Should you borrow from the bank of mum and dad? Most people would advise against it unless you’re willing to take the risk of having a major falling-out with your parents. The good news is that some banks are now developing products that can help you manage both the financial and social risks so that the dreaded words “I will never speak to you again” need never be uttered by either party. Called “family guarantee” loans, these products allow prospective home owners to address that big problem many Australians face: affordability. The property research firm CoreLogic found that, nationally, house prices have gone up 4.1% over the past 12 months. The median value of a house in Sydney, for example, is now $994,300. What can prospective homeowners do to buy…

The type of education a family chooses is a personal decision. What matters to one family is totally different to another. Property expert Peter Koulizos, who is based in Adelaide and a former teacher, says that in his experience, highly ranked, academic, non-selective public high schools are the most keenly sought. Some families focus on student results, the quality of the teachers and the quality of the curriculum. Others prioritise new buildings and sporting facilities. Koulizos says that, among the families he knows, he can’t think of any who haven’t considered the quality of education when buying property, except for those who will send their kids to a private school and don’t need to live in a school zone. What should first home buyers do? Margaret Lomas doesn’t think millennials…

You’ve decided to sell your family home. Perhaps you’ve outgrown it and need to find something bigger to move into as soon as you sell. Or maybe you’re moving for work, perhaps interstate or even overseas, and are keeping your options open regarding buying another property. Either way you’ll need somewhere to put the funds from your sale, preferably somewhere where the value of your money doesn’t go backwards – and it’s not easy given our low interest rates. Your options will mainly be dictated by how long you’ve got between selling and buying. If you’re basically trying to move from one family home to another without much time in between, your best bet is likely to be an online savings account. Rabobank’s high-interest savings account (which was one of…

COULD IT HAPPEN? There have long been calls to get rid of stamp duty, particularly from economists, who see it as inefficient. The Productivity Commission in 2017 recommended it be phased out, the Henry Review into tax in 2010 said it was damaging and a chorus of industry players have called on governments to ditch it. Last year, the NSW government indicated it would prefer to phase it out in its review of financial relations with the federal government, and the ACT is already heading down that road. Because stamp duty is a state tax, it will vary depending on where you’re buying. But a $1 million home in Sydney or Melbourne now attracts a stamp duty bill of more than $40,000, which makes the idea of scrapping it pretty…

Good trade careers are overlooked Regarding Paul’s In Your Interest column (December/January 2020), one issue in job creation is what jobs young people today are prepared to do. Our two sons both finished high school in the late 1980s and unemployment was high, especially for those leaving school at that time. They both had an idea of what they wanted to do and wrote more than 50 letters each to a lot of different organisations looking for work. It paid off for them as they obtained a career in what they wanted to do – they still work in their chosen careers today. What is disturbing is that our younger son is today trying to employ apprentices, as he once was, and almost nobody applies. When he “won” his job,…

February is a month I always enjoy. Earlier in the year is a great chance to catch up with our adult kids, new granddaughter and two grandpups, but life is life and the kids need to get back to their work. This gives us a chance to do a bit of travel and catch up on some reading. A lot of my reading is for pleasure, but I can’t resist magazines like The Economist. A recent issue certainly caught my attention with its cover story: “The horrible housing blunder. Why the obsession with home ownership is so harmful.” I suspect this will not cause too many Money magazine readers to race out and buy a copy! Equally, as a long-term enthusiast about the merits of Australians owning a home, I…

Selling your home without the main residence CGT exemption can mean a substantial tax bill. It’s available to all Australian tax residents, but it is no longer available to foreign residents as of December 12, 2019. This law affects homeowners who are leaving Australia for several years and are considering whether to retain or sell their home, former Australian residents who have a home in Australia and temporary residents who own an Australian home and may become foreign residents. Sometimes the intention to return to Australia is there but circumstances mean they need to sell the home at short notice, which makes the ability to meet the Australian residency rules impossible. With the surges in the value of residential property over the past few decades, the importance of being an…

If you’ve ever had trouble collecting everyone’s cash when it comes to paying that restaurant or cafe bill, then fear no more. Groupee is an app that splits the bill to make sure you pay your fair share. It provides instant notifications for your account activity so you know where your money is going. The app is free to join and is available anywhere that accepts a Visa or MasterCard credit card. It’s also compatible with all Australian banks. You can also add your rewards credit card to the app as your funding source, meaning you will earn rewards points on your portion of the bill. It’s important to note that the app doesn’t reverse payments to users once a transaction has taken place. The app charges 1.95% per transaction…

My husband and I married in 2019 and are making plans for our future investments, housing and family. He is 29 and I am 28, and we have $50,000 in savings with no investments. I recently read an article from ANZ bank which gave statistics on the average superannuation balance for 25- to 29-year-olds, which was $21,372. The recommended amounts for 28- and 29-year-olds are $52,000 and $59,000 respectively. My super is closer to the average amount of $20,000, whereas my husband’s is only about $15,000 due to various work circumstances. Would it be worthwhile for either of us to make a voluntary lump sum contribution, particularly to my husband’s super, to boost the balances by $2000-$5000 for a better long-term outcome before we use our savings to invest in…

Having your finances in order should be one of the top priorities when going through divorce. It will be the key to your future when you finally split from your partner. To help you get ahead, ASIC’s MoneySmart website has prepared a quick checklist: • Close any joint bank accounts. If you have a redraw facility with your mortgage, you can cancel that too – the last thing you want is to be increasing your debts. • Conduct a financial stocktake – write down any assets or debts in your name and record any important dates during the divorce. • If you’re renting a property, ask yourself if you still want to be on the lease. Also, if you’re the account holder for any utility bills, remember you will be…

If you’re in the situation where there’s no foreseeable way of paying off debt in your lifetime, bankruptcy may be a path to consider. It’s best to consult a financial counsellor first. These sessions are free. Restarting your finances after bankruptcy is not an easy road, but it is achievable. Normally bankruptcy lasts for three years and one day and this time should be spent moving on from your previous debts (because most, if not all, are now cleared) and setting up new and attainable budgets. Anthea Falkiner, a spending planner based in the Southern Highlands, south-west of Sydney, says bankruptcy generally stems from lingering debt, including credit cards and mortgages, where people “just can’t seem to be able to make a dent in it”. Often it can be the…

Whether paying for dinner or negotiating complex business deals, having a “brain-aligned” conversation is essential to successfully navigate any difficult moments. A few months ago I was at a dinner with new international business partners at a nice restaurant and everyone was keen to impress. The night was going perfectly with conversation and wine flowing freely. Then the moment came that could potentially derail the whole evening – the bill was brought to the table. “No worries,” I said. “I’ll grab this.” One of the partners then insisted, “No, I really must take care of this.” In a friendly manner I retorted, “No, no, we’re quite happy to take care of this one.” “No, no, no,” the partner said much more pointedly this time, “I really insist that I pay!”…

Laura was into the first few months of her one-year maternity leave when she and her husband started thinking about buying a home for their growing family. They didn’t want to live in a unit but couldn’t afford the house they wanted based on their joint earning capacity. Laura heard about family guarantee home loans and looked at the five providers in the market. Working with a mortgage broker, she ended up choosing Heritage Bank’s product. The concept of a family guarantee loan was simple enough but there were a couple of surprises. First, she found that prospective borrowers should be prepared to share their finance details with each other, including superannuation, income and expenses, and assets. She said that was the first time she learnt a lot about her…

Plan ahead Schools often require residency of at least a year before school enrolment. For example, if your child is to be enrolled in 2021, you may be required to show you have lived in the area in 2020. Can’t afford to live in the area? Good schools are found throughout the metropolitan area. Check out the top-ranked public schools and move to a more affordable area and still be in the catchment zone for some of the best schools. Do you buy or rent? You may not find a property in your price bracket and have to rent. Renting gives you more flexibility if the school doesn’t work out for your child and you need to move to a different area. Documentation Check what proof of residency the school…

A home loan can be a virtually watertight mechanism to grow your wealth – or, like a leaky bucket, leave much of your hard-earned money trickling into the lender’s profit pool. And an uncompetitive interest rate is often the main cause of the holes. Let’s say you have two loan options: one from a big bank and another from a smaller or lesser-known lender. The big bank’s rate will quite often be a full 1% higher than the average charged by the rest of the market – even if you’ve managed to secure its top discount. The smaller, more streamlined outfits are where you find many of the home loan bargains – so much so that they always dominate the 10 cheapest mortgages list. But 1% is not much, you…

Transparency is crucial when it comes to making an informed decision. But what happens when it comes to your super? Unlike fund members in most OECD countries, those in Australia still have no fundamental right to know what their money is being invested in. While some funds voluntarily disclose their largest 10 to 20 holdings, Australia has no law to compel them to itemise all the investments they make on their members’ behalf. People are left guessing at the source of their fund’s returns. Portfolio holdings disclosure regulation has been repeatedly deferred for years. The industry has argued it is too costly and difficult to implement and there are issues of confidential information having to be disclosed. It has also questioned the benefit to consumers. That means members can’t tell…

Over the past five years, A2 Milk’s revenue has grown almost tenfold and operating profits have risen 200-fold. The business has gone from making a net loss in 2015 to generating $275 million last year. And that’s just the start of it. Over the same period, operating margins have gone from 2% to 32% while return on assets has increased from 1.5% to more than 30%. A2 now generates a higher net profit margin than Apple. We have long argued that A2’s high margins would be competed away. This is, we reasoned, a commodity producer and high margins would invite competition. Returns would eventually fall. Only they haven’t. There’s a reason for that, deeply embedded in the company’s business model. About a third of the solid content in milk comes…

I’ve only been a reader for the past eight months, but the magazine has truly helped to solidify my understanding of personal finances. I’m not from a wealthy family and until last year I had barely anything saved. I wanted to build up a safety cushion and with your help I’ve been doing quite well (I’m up to $25,000 now!). As a result of my interest in finances (which is far outside my everyday employment), I’ve become something of a financial adviser to my family. It is thanks to you that I’ve been able to show my parents how to budget, how to pay down debt and seek out the best rate. It is thanks to you that I have uncovered my brother’s overwhelming debt and sat down with him…

In early February, Money magazine’s inbox was flooded with press releases about submissions to the government’s retirement income review. Judging by all the super representative groups and associations having their say about future retirement, it’s clear everyone has their own ideas. While each idea has merit, there are loads of policy, economic and personal consequences to consider. One of the big four accounting firms says the review should focus on women. Top suggestions were removing the $450 per month wage threshold for employer super contributions; and requiring the super guarantee to be paid on paid parental leave as well as workers’ compensation payments. Another group says that because self-managed super funds (SMSFs) make up more than one quarter of the $3 trillion super system’s assets, and more than half of…

Of the first 3000 applicants for the first home loan deposit scheme, 25% are aged 35 or older. The median taxable income at pre-approval stage is just over $68,000pa for singles, while for couples it’s about $108,000. Meanwhile, more than 60% of applicants who secured a place are single. The Productivity Commission has found it now takes 50% longer for older people to enter a nursing home after being assessed as needing aged care. The median time was 152 days in 2016-17, up from 105 days the year before. NSW, where the median wait time was 143 days, was worst, while Victoria’s wait time was 124 days.  Owners of high-status cars such as BMWs and Audis have been found to drive more aggressively and break traffic regulations, research from the…

One of the most commonly asked questions I receive is how property investors can minimise the amount of capital gains tax (CGT) when they sell an investment property. The capital gain you trigger sale is the difference between the amount you sell the property for and the amount you paid for it. In addition, any costs incurred in the sale and purchase (like estate agent and solicitor fees) can be added to the tax cost of the property to reduce the overall gain. So make sure you keep all purchase and sale documentation, firstly to work out what the relevant costs are and secondly to prove that the costs are legitimate to the ATO. You may also be able to add the cost of renovations or improvements to the property…

Australia’s property market recovery shows little sign of ending soon, with the Australian Finance Group Index showing a lift in home loan applications during the December quarter to $15.4 billion, representing growth of 19% from the same time in 2018. AFG is one of Australia’s largest mortgage brokers. NSW topped the table, recording 25% growth. Victoria posted growth of 19%, while Queensland and South Australia both showed healthy 17% increases. Non-major banks continue to chip away at the market share of the big four, accounting for 47% of lodgements in the September quarter – the highest since 2007. For the first time more than half of the loans taken out by property investors were secured through non-major banks. First home buyers also led the charge, with a record 36% of…

Negative gearing is falling back in favour with financial planners and stockbrokers, a report from Investment Trends finds. Almost 90% of stockbrokers think that borrowing can boost clients’ investment returns, up from 72% in 2018. Financial advisers are also supportive, with 89% in favour of negative gearing now compared with 82% in the previous year. However, advisers’ views on the equity market remain sombre. On average, they expect the All Ords Index to rise by 2%, at the bottom end of the 2%-6% increase they predicted before 2019. “Advisers do not expect the local equities market to repeat its strong 2019 performance, prompting more advisers to consider gearing to magnify investment returns for their clients,” says John Carver, analyst at Investment Trends. “While the use of gearing to invest in…

Peter is the author of property books that include Property Vs Shares and is the program director of the master of property degree at the University of Adelaide. Naomi and Thomas are to be congratulated for having already acquired a number of investment properties. I can understand their desire to create wealth through property but even I, as a property lecturer and investor, feel it is time to diversify their Sydney residential portfolio. They have a number of options. If they feel most comfortable with direct property, they could buy more, but it should be cheaper and in different locations. They have enough relatively expensive property in Sydney so it is time to look further afield. Some readers may not think this is a diversification strategy, but as the property…

Whether it’s a life event disrupting your finances or you’re in pursuit of something greater in life, there are always opportunities to restart your money management. Life events such as having children, losing your job (or starting a new one), going through divorce or dealing with a bushfire or flood can often be a catalyst to re-evaluate your financial plans. When you make the conscious decision to start over with your finances, the first thing to do is make certain you know what you’re trying to achieve and why. Each expert we spoke to for this feature suggests that making headway will only happen if you know where you want to go. We’re not here to tell you that starting over with your finances is easy. It’s not. But with…

Financial adviser Harry Goldberg recently met a young, divorced mother with a four-year-old daughter. Going through her support network, he worked with the woman to answer questions like how much could each person help, starting with her parents. Even though the young mother could afford to pay her mortgage, Goldberg asked whether this was something she wanted to be paying and whether she could look at moving back in with her parents. They then worked how much support might be available from the woman’s religious group or other cultural connections, as well as from her daughter’s school. “Everyone was understanding,” Goldberg says. “She was still trying to manage a business.” He says none of this would have been possible without the mother knowing what she wanted to do post-divorce. Otherwise…

In 1985, JR Walker, a real estate agent in Towns-ville, found himself in the Supreme Court. Years earlier, he’d forked out $3000 for an angora goat with reproductive potential. Not wanting to see a good thing go to waste, he spent a further $2000 for a number of high-quality bucks to service the goat, which was in Victoria. He researched widely, joined his local Angora Goat Society and kept records of his income and expenses. The operation ended up producing four offspring, which Walker promptly sold off for a loss. He then claimed his expenses against his regular taxable income as a real estate agent. The tax department rejected the write-off, claiming Walker fit the definition of an investor, not a primary producer. The court decided otherwise and awarded Walker…

Activate. Trigger their interest and active listening. Why is it relevant? What is the shared goal? How does the conversation specifically relate to them? Wait for a sign of emotion before moving on. Partner. Empathise with the feelings of the other person so you are not adversaries, but partners trying to solve a common problem together. Shift the conversation away from beating each other to achieving a shared goal. Wait for a version of “yes, that’s it” before moving on. Strategise. Outline the overall strategy without going into detail. What is the pathway or key points that need to be achieved so you both win? Don’t go into detail of the plan until you sense some form of acceptance. Implement. Now work out the detail. Outline exactly what the plan…

Ellie has always wanted to be a mother but hasn’t had a partner for the past five years. She has decided that having a baby matters more to her than finding a partner, so at 27 she set out to have a baby on her own before she reaches 30. Many women who would like to have kids won’t consider having a baby on their own, saying it is too hard, exhausting and expensive. But Ellie has made up her mind. She has a supportive family who live close by: a mother who works in childcare and sisters with kids who can give her gen eral – but not financial – support. A growing number of solo mothers by choice are faced with the option of adopting a baby or…

Schools can sometimes dictate where families buy or rent property. Schools can also be ridiculously expensive. One way to get around the high cost of education is to live in a neighbourhood with good public schools. It can save a family with two kids some serious money. “A private school education at a public school price” is how Peter Koulizos, program director of the master of property degree at the University of Adelaide, describes the quest that many parents undertake. You only have to look at the numbers: the bill for two kids with 13 years of education each at government schools will be around $137,000 compared with perhaps three times as much, and even up to $600,000, for a metropolitan private school. A Catholic education costs less than half…

Is property a good asset for your self-managed super fund (SMSF) to hold? Unfortunately, the answer is far from straightforward. If you have the ability or the expert help to select a property that will grow in value and you don’t overpay for it, then it can be a winner. And if it’s a property you can use for your business – the only type of purchase that doesn’t have to be totally arm’s length – even better. For Tyron Hyde, director at quantity surveyor Washington Brown, buying a Sydney CBD strata office in his SMSF to use as a business premises has paid off. His fund paid about $1 million for the property during the GFC when prices were attractive. The net return was about $100,000 a year and,…

Ultimately, it’s usually the interest rate, not the fees, that will make the largest difference to your mortgage cost. It’s not just first home buyers who pay lenders’ mortgage insurance. If you refinance before you’ve paid off 20% of your property, or before it’s grown in value enough to give you 20% in equity, you could be up for the insurance too. Be sure to dodge the enormous mistake most people make when remortgaging: taking the loan over a fresh 25 years. This cuts monthly repayments, so they do a little happy dance. But it means that overall the interest bill rises. Say you have 15 years and $300,000 left on a loan that was originally $500,000, and now realise you can refinance from 5.5% to 3.5%. If you do…

A joint report from Deloitte Access Economics and FIIG Securities says the main drivers for high-net-worth individuals (HNWIs) and “corporate investors” to invest in corporate bonds are beliefs that the investment products provide a reliable income stream and relatively good returns given the risk profile. “As a fixed -income asset, corporate bonds provide capital stability and regular interest payments,” it says. “But they offer higher yields than other fixed -income securities such as government bonds and deposits, in order to compensate investors for the additional risks associated with corporate issuers.” That said, of the 700 high-net-worth individuals the firms surveyed, 16% directly owned corporate bonds and almost 70% of non-investors had insufficient understanding to invest in corporate bonds (see fact file). The 2018 report does acknowledge that recent innovations in…

While a lot can happen to a portfolio in six months, Morningstar’s Greg Bunkall says the changes will be positive. “Typically, fund managers tend to report more frequently than the legislation standards require. Once systems are set up, it’s not extra work to do it every quarter, or every month, because you’ve already created the system,” he says. Super funds will have to disclose information about each investment option and identify each item allocated to that option and the value and weighting of each. While funds need to disclose any third-party fund managers they use – infrastructure funds, hedge funds and private equity – they don’t have to itemise their underlying investments. “If AMP Super invests in AMP Capital Australian Shares, then AMP Capital Australian Shares will have to disclose.…

There are reports calling the coronavirus a “grey swan” event. I’m not quite sure what the experts mean by that – it’s not a black swan event but not a white swan event, by the sounds of it. Or maybe it’s just an expression to say “panic but don’t panic”. The expression “black swan event” derives from the old saying “a rare bird in the lands and very much like a black swan”, which was common in 16th century Europe. It was a phrase that described the impossible. All swans were considered to be white with the phrase “black swan” epitomising impossibility. Until, of course, the Dutch discovered them in Western Australia in 1697 and the phrase changed from meaning impossible to meaning the impossible can happen. Black swan events…

The smell of smoke and the haze that filled the Australian sky in January was not from the fireworks set off to welcome the new year. They were from the catastrophic bush-fires that burned across the country even before 2019 became 2020, resulting in a number of human lives lost, millions of animals burnt or euthanased, homes razed to the ground and families displaced. The scale of devastation was such that a Reuters poll conducted in January showed economists predicting that the Australian economy would grow only 1.8% in 2019 (downgraded from 1.9% in the previous poll), 2.3% this year (from 2.5%) and 2.5% in 2021. These compare with the Reserve Bank’s GDP growth forecasts – published in its statement on monetary policy (released in November 2019) – of 2.25%…

Consumer staples. The very name is enough to make you switch off, right? How much money can you really expect to make from a sector that customers are all but compelled to patronise and where growth can be hard to come by? The answer, at least sometimes, is “a lot”. The poster child for this group is almost certainly Woolworths, whose shares gained around 27% last year, including dividends. Indeed, consumer staples can be a surprisingly volatile sector, despite its reputation as a “defensive” option. Yes, we all have to shop there, but with such little growth (in general) a small gain (or loss) in market share can have a big impact on the company. Even more impactful are small movements in profits – these companies operate on thin margins…

Our decision comes down to the infant formula innovators, the supplement creators and the winemaker. And it’s a tough group. A2 has runs on the board with strong momentum here and overseas. In comparison, Bubs is small but with big ambitions and smart backing. And Blackmores has misstepped overseas, but its Australian fortress continues to be impenetrable. Meanwhile, Treasury has whiffed in the US recently, even as its Australian business remains solid and the Asian business is still growing quickly. We can probably blanket the field when handicapping for risk and return, but for brand quality, Chinese potential (with occasional setbacks) and the combination of pricing power and margin opportunities, for the second year our winner is Treasury Wine Estates.…

Continuing our theme from last month, examining some of the smallest Australian company opportunities, it is always first worth reiterating the risks. There are massive rewards possible from investing in smaller companies, but a lack of liquidity means the race to the exit, if or when the need transpires, can be very tight indeed. The consequence of a narrow exit and illiquidity is that any losses could be magnified or any gains could be wiped out while you’re trying to get out. In calendar 2019, small capitalisation stocks such as EML Payments (ASX: EML) and Electro Optic Systems (EOS) rallied more than 200%. Avita Medical, which is owned by the Montgomery Fund, rallied 696%. Such returns are highly desirable, but as soon as the outlook deteriorates or a company doesn’t…

YOUR GUIDE TO SUPER DATA The table on this page contains data and information to help you compare superannuation funds. It showcases MySuper investment options offered by some of Australia’s biggest super funds. MySuper options are default superannuation products that employees choose or are allocated by their employers. The performance results displayed are the annualised investment returns each MySuper option has delivered after taking account of all taxes and fees. Past performance is no indicator of future performance. The table also lists each fund’s SelectingSuper Fund Quality Rating. Funds that achieve these quality standards are designated AAA. Research was prepared by Rainmaker Information, which publishes Money magazine. For more info, see www.selectingsuper.com.au. WHAT THEY MEAN Performance after fees: When calculating fees, Rainmaker assumes a member has $50,000 in their…

What was your first job? My first job as a teenager was at Woolworths packing groceries, then at McDonald’s. After leaving school I worked for the tax office while moonlighting in bands (Transistors and the Finger Guns) in the ’80s. The ATO wasn’t intended to be a career but I stayed longer than I thought (eight years) as it was a good job and it had flexitime so I could always roll in late if I had to. The Wiggles came along at the end of the ’80s. I’d decided music wasn’t going to be the thing for me, so at age 28 I went to uni and did early childhood teaching and met Anthony (Field) and a little bit later Greg (Page). We recorded an album for kids and…

Murray is former Wiggle and now lead guitarist in the Soul Movers. His passion is music – he’s spent his life playing in bands and is regularly spotted at live gigs. As one of the original Wiggles he played all over the world, from halls and stadiums to New York’s Madison Square Garden. For more than two decades he developed a loyal following of (now) adults who grew up with him and who are now starting to introduce their own children to The Wiggles. He was recently billed by a leading guitar magazine as “Australia’s most influential guitarist”.…