Innholdsfortegnelse for June 2021 i Money Magazine

$250,000 IS CLOSE to the magic number if you want to know how much you need to save through super as a single homeowner while still being eligible for the age pension. When we last ran a similar cover story two years ago, some readers were aghast at the idea of anyone wanting to have the best of both worlds. Surely with so many people struggling to make ends meet, anyone with a hefty nest egg shouldn’t try to game the system and get additional government assistance in their old age. But I think this misses the point that unless we have a national discussion about superannuation and its impact on our social system, more people would be spending decades at work only to walk into their retirement worse off…

SHARYN McCOWEN This year I’m on a mission to donate plasma every two weeks. One in three Aussies will need blood products in their lifetime, but only one in 30 of us donates each year, so I’m trying to move the needle (pardon the pun). It’s a rewarding way to support strangers in need, plus there’s free chocolate milk. And I’m encouraging the rest of the Money team to get involved, so please remind them to roll up their sleeves. BOB CHRISTENSEN Charities have been having a tough time because of the pandemic, so I’m increasing my contributions to the random ones I support. In normal years I renew my friendship with the neighbourhood dogs and their owners through Red Cross Calling, but this year it’s a virtual appeal instead,…

Australians spend $2.3 billion annually on their tax affairs. And we have one of the highest rates of tax agent use globally. At Blueprint Institute, a think tank, we recently called for a $3000 standard deduction to simplify most taxpayers’ affairs. Under our proposal, people with deductions higher than $3000 could opt out, claiming their full itemised deduction. But 11 million people would be better off, receiving an average tax cut of $400-$1000. This would eliminate $4 billion in compliance costs and seven to nine million tax returns. No taxpayer would lose out. But low- and middle-income earners would benefit proportionally more. Men and women would benefit fairly equally, with women better off at higher income levels. The standard deduction also improves “horizontal equity” – the idea that two people…

THE ART OF BUSINESS WARS By David Brown John Murray Press, RRP $32.99 Using the seminal strategies of Sun Tzu’s The Art of War, US journalist David Brown examines why some companies triumph while others fail. Based on his popular Business Wars podcast, this book explores the greatest business rivalries such as Blockbuster vs Netflix, Gibson vs Fender, iPhone vs BlackBerry and H&M vs Zara. Other brands put under the spotlight are Helena Rubinstein, Kellogg’s Corn Flakes and Adidas. The ultimate goal is always to stay ahead of the competition and emerge victorious. Whether you’re a creative freelancer or a CEO, the insights should prove invaluable. JULIA NEWBOULD Five readers can win a copy. In 25 words or less, tell us why you would be interested in reading The Art…

Kate Morris Online beauty products entrepreneur and co-founder of Adore Beauty; age 43; lives in Melbourne with her family Started work as soon as she was old enough, after her parents imposed a $12-a-week pocket money cap. First job was in a pharmacy in her home town, Launceston. “I went there every day after school, cleaned the lunch room, cleaned the toilets, vacuumed the shop and took the mail to the post office.” Initially wanted to be a lawyer, but changed her mind after the first few lectures. Believes money should be a big part of the school curriculum. High priority is spending time with her children.…

How do low-income-earning single mothers with health issues get their foot in the door buying property? I’m a single mum of two awesome children. I have a series of health issues that have impacted my employment opportunities for a while now.  One of my biggest fears is not being able to own my own house. I have a few small businesses I’m trying to build, as it allows me to pace my skills around my health.  I’m a celebrant, stand-up comedian, a storyteller and an actor. I have a decent deposit– at least 10% - for a home, but I’m unable to get approved for a mortgage. I took on a casual job, which is now in limbo due to a back injury.  When I chatted with a mortgage broker,…

There is nothing more rewarding than knowing you are on top of your mortgage. Your home, for most people, is likely the biggest purchase you’ll make in your life, next to your car. This has become even more so in recent years. When I bought my first property, the ratio of the cost of my house relative to my junior salary then was five to one. Today, my niece has to contend with an almost 12 to 1 ratio for an average unit in a suburb in northern Sydney ($920,000) versus her salary as a primary school teacher. With average property prices likely to hover around $1 million in our big cities, it’s become even more compelling to pay off your home loan sooner. Everyone knows that making extra repayments…

Plenty has been written about the “mindset” needed to achieve success in business. However, no single outlook has been linked to entrepreneurial power. A study by Harvard Business School sums things up neatly, saying entrepreneurs are a mixed bunch, and there’s no reason to think a geeky 20-something tech founder is closely aligned to a 50-something immigrant who is opening a family store. To shed some light on what makes successful business people tick, Money caught up with two entrepreneurs who have achieved success multiple times. Fred Schebesta: the brains behind Finder Schebesta kickstarted his career in 2001, with the launch of Freestyle Media, a digital marketing agency. He sold the business a few years later, and in 2006 introduced the world to Finder, a comparison site that now…

This is an edited excerpt from Rethink Property Investing (become financially free with commercial property investing) by Scott O’Neill and Mina O’Neill (Wiley, $29.95). We have five copies to give away. To enter, tell us in 25 words or less what kind of property investment you are most interested in and why? Enter online at moneymag. com.au/win or send your entry to Money magazine, Level 7, 55 Clarence Street, Sydney, NSW, 2000. Entries open on May 24, 2021 and close on June 30, 2021.…

Once the domain of professional investors looking to hedge their portfolios, contracts for difference (CFDs) are increasingly being traded by retail investors. But are they worth the risk? CFDs are over-the-counter (OTC) derivatives, so the underlying security is never physically owned. They are essentially a two-way bet between a provider and a trader that a security, such as stock or currency pair, will either increase or decrease in value. Traders can bet that a security will go up, known as going long, or that it will go down, known as going short. But perhaps the most significant aspect of CFDs is that they allow traders to leverage their position. And this is where the bodies are buried. Leverage amplifies the position such that the gains or losses are based on…

Value investing is all about finding bargains. The market prices stocks based on supply and demand, but this price may sometimes be below what investment experts assess to be a “fair” price. As the father of value investing, Benjamin Graham, has said: “The intelligent investor is a realist who sells to optimists and buys from pessimists.” The idea behind value investing is that the stock is bought on the cheap, and eventually the market will realise it is actually worth more than it is trading for and then recalibrate the price upwards, thereby returning a profit for the investor. Growth investing, on the other hand, is all about finding stocks that will grow faster than the rest of the market. If Graham is the pioneer of value investing, the mantle…

1 Munro Global Growth Fund The fund aims to provide investors with absolute returns through exposure to global growth equities over the medium to long term while maintaining a capital preservation mindset. It has interests in such areas as digital enterprise, climate change, high-performance computing, internet disruption, ecommerce, digital payments and emerging consumer. 2 Perpetual Global Innovation Share Fund It aims to provide investors with longterm capital growth by investing in quality global companies that are benefiting from technological change and innovation. The manager believes that changes in technology and innovation can have a significant impact on the future earnings and valuation of companies, and that by focusing on understanding new changes in technology and innovation this can lead to early identification of undervalued stocks. 3 Hyperion…

Performance after fees: When calculating fees, Rainmaker assumes a member has $50,000 in their account. Strategy: Some MySuper products invest your superannuation based on age and are known as lifecycle funds (marked LC). The table includes the LC option for 40-year-old members. Non lifecycle funds are known as single strategy (S). Rank: Funds are ranked against all MySuper investment options available in Australia. Indices and averages: To produce these indices, Rainmaker analyses the results of more than 3300 investment options.…

Tim Harcourt is the “Airport Economist”. That is the title of the book he wrote when he travelled widely to get an anecdotal feel for other economies as well as the numbers. The name was originally used to insult the American economist Milton Friedman, who made prognostications about Australia just after stepping off a plane here for the first time. However, Harcourt feels his moniker is preferable to that of an armchair economist who uses data without real life. The Airport Economist was released in 2008 and was followed by a TV series, which visited thriving markets across Asia to learn more about these economies. His work has now expanded globally.…

Letter of the month How we play mind games with our money I’ve really enjoyed Phil Slade’s contribution to Money over the years in his Mind Games column. Having studied psychology myself, I’m able to get a sense of how many of our decisions around money are often not so much about money at all. One of the more enduring theories in psychology is that of self-determination theory, first introduced in the 1980s. One its central tenets is that people are going to be strongly and intrinsically motivated to make decisions that reinforce three key psychological needs: autonomy, competence and relatedness (or connection). Who doesn’t want to feel self-determined and in control, skilled and competent, and connected to other people? It’s not hard, then, to see how money becomes a…

When I read an article recently by journalist Karren Vergara (on Moneymag.com.au) on her super balance of $154,000, it got me thinking. With just over 25 years to retirement, she can’t possibly reach the $1 million mark that so many of us are convinced we’ll need in our super before we can retire. But perhaps she doesn’t need to. According to AMP, the average super balance for men aged 40-44 is $134,992 and for women it’s $98,572. By the time they reach 50-54, it’s $242,007 and $159,188 respectively. Now, Karren’s figure of $154,000 is certainly an outlier for a woman aged under 40. And in 10 years this total would likely be around $286,000 (with 6% returns and current contribution levels) whereas the average for a woman in the 50-year…

New data from Rural Bank provides detailed insights into the true monetary value of Australia’s farmland. Its Australian Farmland Values report reveals that for the first time in 15 years, all states saw growth in median price per hectare, demonstrating the resilience of values despite adverse events in recent years. Tasmania led the way with 25.3% growth in 2020, followed by WA at 19.3%, NSW at 15.6%, Queensland at 11.8%, SA at 10.9% and Victoria at 6.9%.  These extraordinary increases occurred despite a 14.5% rise in transaction volumes.  Australian farmland delivered an average compound annual growth rate of 7.6% over the past 20 years and the latest report has raised questions about how aspiring young farmers will enter the market.  Rural Bank wants to encourage the best and brightest talent to…

APP OF THE MONTH SUPERHERO COST: FREE OS: IOS and Android Entering the market and offering free brokerage charges for ETF purchases, Superhero is a cheap alternative to most online broking platforms. Other trades are priced at $5. Regular features cover advanced order placements, real-time market data, comprehensive reporting on realised and unrealised gains, income, tax and performance reporting. The Superhero universe takes in 2500 shares and ETFs, including Australian and global property through real estate investment trusts (REITs) and listed investment companies (LICs). At this stage, there is no ability to link an existing bank account to your Superhero trading account. Trades can only be made through available funds deposited in your Superhero wallet. There is no minimum amount to maintain your account, but you will need a minimum…

Geoff may have only five years to live and would like some advice on ... What to do with $460k in cash Q My wife and I are 79 and 84 respectively. I have only five years left, according to medical advice. We have recently downsized to an apartment and sold our home of 50-plus years. We both have a more than adequate superannuation income (she takes only half of the original amount) leaving us with a surplus each month. Assets include a share portfolio of $600,000 (mainly banks) and income greater than $23,000pa. We have had our shares for 40-plus years and seen a few ups and downs. The problem is what to do with $460,000 now in a bank. The possibilities are to invest in: • Exchange traded…

When travelling through France in early 2020 (just before the lockdowns) I noticed something interesting when we arrived at various hotels to confirm our room. When the reception staff spoke English, we often enquired about the size of the room and the view, or whether there was a better room or late check available. However, when we got to a hotel where we had to speak French (we tried hard but our French was quite limited) our conversation was much more transactional – names, check-out times, how do we get to the room. Admittedly, the difficulty overcoming the language barrier did mean we were just glad that we got a room to ourselves and didn’t accidentally book a bunk in a share house or the suite Présidentielle. But it wasn’t…

Both my kids needed braces. One has a cross bite and the other crooked teeth. I wasn’t prepared for the expense as neither my partner nor I had orthodontics. I soon discovered that if your kids need orthodontics, expect big bills. Prices vary from $6000 to $9500, depending on a range of factors, according to Robert Schwartz, specialist orthodontist and spokesperson for Orthodontics Australia. He estimates about 300,000 Australians have braces or aligners and about 75% of them are in the mouths of 225,000 children. What can you do to save money on orthodontics? Start early. Having orthodontics isn’t an emergency medical procedure, but it is hard to put it off because there is strong evidence that a delay in straightening out crooked teeth will cause problems later, which could…

Most retired renters in Australia live in poverty, whereas very few retired homeowners suffer the same fate, according to a key finding of the federal government’s Retirement Income Review. Could there be a better argument for owning a fully paid off family home in retirement? The review found that housing is an important component of voluntary savings for most people and a major determinant of their retirement outcomes. “As homeowners generally have lower housing costs in retirement, they tend to have better retirement outcomes than those who rent. The home is also an asset that can be drawn on in retirement.” It also points out that the principal residence is excluded from the assets test for the age pension. “Regardless of the value of the house, a homeowner can receive…

This time last year, Australians were revering healthcare like never before. At least not in our lifetimes. We were, at once, thankful for our health system and also wondering if it would be able to cope with the huge influx of Covid-19 cases that, worst case, would threaten our ability to provide adequate care. It is one of those things that, in normal times, we’re able to take for granted: that our health needs will be able to be met if and when we find ourselves in need. It is, in Australia at least, an assumption we can make in large part because of our public health system. But it is also because of our private healthcare networks and health insurance, and because of those companies that have made improving…

The tables on these pages contain data and information to help you compare managed funds, which are pooled funds managed professionally by investment experts. Managed funds displayed in these tables are multi-sector or asset class specific. Multi-sector managed funds invest across a diversified mix of asset types spanning equities, property, bonds, cash, infrastructure, private equity and alternatives. Managed funds are normally set up as unit trusts. You may be able to invest in them directly or through a platform. These products may be recommended to you by a financial adviser. The performance results displayed are the annualised investment returns each managed fund has delivered after taking into account taxes paid by the unit trust and investment fees. Research was prepared by Rainmaker Information. For more information, visit www.rainmaker.com.au The table…

“It’s not time to make a change, just relax, take it easy,” sang Cat Stevens. This is the US Federal Reserve’s message to the markets at the conclusion of its April Federal Open Market Committee (FOMC) meeting in its efforts to calm concerns over rising inflation expectations that would eventually force its hand into tapering policy accommodation. After two days of deliberation, the committee decided to maintain the status quo: keep the federal funds rate at 0%-0.25% and increase its bond purchases by at least $US80 billion a month and agency mortgage-backed securities by around $US40 billion a month. “And I know that it’s not easy, to be calm when you’ve found, something going on …” That “something” is the sharp improvement in economic activity underpinned by low interest rates,…

Contact us To send a letter to the editor, write to: Money, Level 7, 55 Clarence Street, Sydney NSW 2000 or email money@moneymag.com.au For all enquiries and letters, please include name, address and phone details. Letters may be edited for clarity or space. Because of the high number of letters received, no personal replies are possible. How to get Money Subscribe to the print or digital edition, as well as our free weekly email newsletters via the Money website or: Online: magshop.com.au/money-magazine Call: 136 116…

Schroders has rolled out a new actively managed fund that will invest in China A-Shares, companies listed in China and Hong Kong and US-listed ADRs. The Schroder All China Equity Opportunities Fund is pitched as a fundamental, bottom-up fund that aims to outperform the MSCI China All Shares Index after fees over the medium to long term. Super funds are coming up short on advice, according to a report, The Future of Global Retirement, by the UK fintech Smart. It found that while 50% of Australians expect to receive retirement advice from their fund, only 16% of those who received advice found it useful. The federal government will provide $1.2 billion to support the digital transformation of the economy and measures to encourage business investment in technology. Announced ahead of…

If you’re engaged as a contractor in the building and construction sector, road freight, information technology, cleaning services, security, investigation or surveillance services, you need to take extra care to disclose your income. In all these industries, entities that pay contractors have to lodge a taxable payments annual report (TPAR) with the ATO to identify their contractors and how much they were paid. The TPAR enables the ATO to identify those contractors who have not included all their income on their tax return; not lodged tax returns or activity statements; not registered for GST if required to do so; or quoted the wrong ABN on their invoices. The last report, covering 2019-20, was due on August 28, 2020. If you received income in that year, you should have disclosed it…

Astronomical house price growth has been one of the ironies of the Covid-19 pandemic, but many experts say the trend is likely to slow. While national dwelling values have increased on average by 6.2% over the past year, according to Corelogic, 47% of experts surveyed by the online comparison site Finder believe the growth is unsustainable. “Rock-bottom rates, government stimulus and a fear of missing out have really lit a fire under the belly of the market,” says Graham Cooke, head of consumer research at Finder. “Listing numbers are unable to meet high buyer demand, keeping inventory levels low overall and adding to the sense of urgency among buyers. “We’ve seen more borrowed for housing over the last six months than during any similar period in history – and economists…

Research from Industry Super Australia estimates that millions of low- and middle-income families will not have enough money for retirement unless the federal government raises the superannuation guarantee. If the rate is frozen at the present 9.5%, about half of all middle-income families will not reach the benchmark of a retirement income that is 65% of what they earnt while working. “It’s time the government re-commits to lifting the super rate to 12% [from July 1, 2025] – no ifs, no buts and no maybes,” says Industry Super chief executive Bernie Dean. “If the government cuts super, millions will not have enough for retirement and will have to drastically change their lifestyle. For some people it could mean choosing between a night out or keeping the heater on, and for…

Virtuous verbs. Before making a decision, change the verbs in the core decision question to help look at it in a different way. Replace invest with gamble, spend with save, give with share, credit with loan, capitalise with risk, etc. If this language changes your instinctive decision, then ask yourself why? Repeat in your own words. When in a sales or negotiation conversation, summarise what the other person has said back to them using different words. This helps clarify your thinking, lets the other person know they’ve been heard and allows more time for your mental processing to work through detail more rationally. The foreign language flip. Learn key phrases like “Do I need this?”, “Is this the best use of my money right now?” and “Is there another way…

Despite our many years of investing experience, it has taken us a long time to understand what commercial property is and isn’t. There’s no point in investing your hard-earned money if you don’t really “get” how it works and how you can make money from it. So let’s dive right in so you can really appreciate what we love so much about this investment vehicle. WHAT IT IS Commercial property can be defined as any property that is zoned or used solely for business purposes. It includes shopping centres, strip malls, hotels, retail stores, warehouses, restaurants, industrial spaces, farms, office buildings, childcare centres, service stations, data centres, even vacant lots that have been designated as commercial by the local government. They are the buildings you see every day as you…

A mere mention of the term artificial intelligence (AI) causes a lot of people to think of it as some abstract technology that is being tested in advanced computing labs, modelling robots on human behaviour. In reality, AI is far more common and being harnessed to affect our lives in a variety of ways – we just don’t notice it as much. In fact, AI is becoming a real competitive advantage for some companies and setting them up to deliver significant value to their customers and shareholders. Therefore, developing an appreciation of how some companies are leveraging AI in their operating models is an important skill for investors. Artificial intelligence, in essence, is the processing of countless volumes of collected data by computers to make automated decisions or even elicit…

My first car was paid for with the cash I earned cutting watercress in Whitwell in the UK for 10 hours a day, six days a week, for 10 weeks in the summer of 1979. I had to stand or kneel all day in water, bending up and down. Health and safety at work was a thing of the future. The car was a Deux Chevaux, or 2CV6 as it was known – 600cc of raw French soft-top power for £500. It was all I could afford. I never want to see a blade of cress again in my life. When I moved into my first rented flat in London I slept on a camp bed with a sleeping bag until I could afford a bed. Furniture was a luxury.…

Performance after investment fees. Investment returns after investment fees annualised to describe each fund’s returns per annum. But if your managed fund achieves a high return and charges you an extra “performance fee”, Rainmaker has not taken this into account. Past performance is not an indicator of future performance. Rank. Funds are ranked against all managed funds in each segment, not just those included in each table. Indices and averages. Arithmetic average investment returns or average fees for all fund investment options within each category, that is, not fund size weighted.…

What was your first job? My first job was at Coles in Adelaide. I was the microphone attendant and I used to be able to say things like “we have a red spot discount” and “are you having a bar mitzvah or party happening? We have specials today in aisle … ” When I was 15 I went to the ACTU to ask for a job and they said either get a job in a trade and work for a union or go to university and study law or economics. Their best people had been economists, so they suggested I get an economics degree. My first real job was as a cadet international economist at the Reserve Bank under [future RBA chief economist] Glenn Stevens, at age 20. It was…