Innholdsfortegnelse for July 2021 i Money Magazine

PAUL CLITHEROE “Winning the 2015 Sydney to Hobart yacht race on my TP52 Balance is my most cherished prize. After decades of training, preparation and ocean racing, being the proud recipient of the trophy, for what is one of the toughest yacht races in the world will live with me and my crew forever. Racing a powerful yacht day and night across a dangerous piece of water is quite an experience.” JULIA NEWBOULD “Last year my book The Joy of Money won the Australian Business Book Awards. It was a much appreciated accolade at the end of a tough year when all our in-person launches were cancelled. But the first award I won outside school was at my first job. A colleague and I won the $1000 first prize in…

PAY DAY Drought is set to break Dividends are forecast to recover most of the ground they lost during the pandemic, according to the Janus Henderson Global Dividend Index. While Aussie dividends were flat year on year at -0.2%, global dividends did far worse at -1.7%. The report suggests dividend growth may hit 40%, which would take payouts to $70.9 billion. “A key factor for the dividend drought is the heavy concentration towards banks and mining stocks in Australia compared with other global markets, which are more diversified,” says Matt Gaden, head of Australia at Janus Henderson. By the same token, the financial and mining sectors are likely to do the heavy lifting in future. The miners led the way in the first quarter, up 58% year on year, buoyed…

It has been a truly strange year, Hayley. For some four decades, I and pretty much any other commentator on money has pointed out that over some 7000 years of human history, markets of all types have gone up and down. At times we see extreme booms, at other times extreme busts. Some of these can be quite terrifying, but the common theme, of course, is the recovery. What causes these huge downturns is easy to see with hindsight, but wars, plague and pestilence are up there. I would hate to count how often over my 40 years of talking about money I’ve pointed to some form of plague as a pretty normal risk. Nothing clever there – plague is well documented. But it is a bit like talking about…

Australia not only has high household debt (our collective debt is worth 210% of net income), we’ve also become a lot more indebted over the past few decades. In the 1980s our debt-to-income ratio was at the lower end among developed countries. Fast-forward to 2021 and we’re nudging our way to the top of the league table. High levels of debt make us more vulnerable to events we can’t control, such as rising interest rates or job loss. However, the news is not all bad. A Reserve Bank study found one of the leading factors behind our rising debt is high levels of home ownership. In Australia, almost all housing stock is privately owned. In Sweden, which has a similar debt ratio as Australia, less than two-thirds of housing is…

In a world of low interest rates, the choice between money minders often comes down to service. “The Covid experience has also accelerated the transition to digital,” says Peter Lock, CEO of this year’s winner, Heritage Bank. “Members who had never previously used digital channels started doing their banking online, and they’ve overwhelmingly enjoyed the convenience it provides. We’re factoring that acceleration into our future plans.” But don’t expect this to be the end of bricks and mortar. “Branches will still be an important part of our omni-channel approach for some time to come, which is why we are opening new branches at Macquarie Park in Sydney and Tweed Heads later this year.” The focus on customer experience is echoed by third placegetter Great Southern Bank (formerly CUA). “In a…

Bank First has held top spot for another year. Its offerings include premium, balance transfer and transaction credit cards, with rates starting as low as 9.6%pa with interest-free introduction periods of six months. All its credit cards are rated as being in the best 10% of all the categories in which it competes. And that’s a good thing, given the disruption posed by buy now, pay later. “As the industry has shifted based on changes in unsecured credit usage, we have seen services such as buy now, pay later become very prevalent, reducing credit card spend and changing the landscape,” says Bank First chief customer officer Matthew Ricker. “This has also become more attractive to the younger demographic as they try stay away from debt.” Against this backdrop, credit card…

I am absolutely over people losing their money. Way back in the late 1970s and early 1980s I started writing and doing radio segments on investment. A lot of this was about the positive aspects of saving and investing: using savings to pay down high-interest personal debt, saving to buy a home, paying off your home loan, buying a well-located investment property or some good quality shares. Over 40-plus years, these commonsense ideas have generally worked a treat. I say generally, because none of us has a crystal ball and with investments there are inevitable disasters. At a personal level, most of my property investments have worked out well. But along with a few of my university buddies, in about 1984, I bought a property for the grand sum of…

Most Australians start their hunt to buy a business with an online search. That’s the word from Noel Currie, certified business divestment and exit strategist from Australian Business Sales Corporation, who says at least 90% of buyers search the internet for their new business opportunity.  Still, finding the right business involves more than a few judicious mouse clicks; in fact, it’s a time-consuming and an incredibly challenging process.  How to find the right business The first step involves finding a business that matches your experience. As a writer, I make an inferior builder. When looking at target companies to buy, Adam Smith, chartered accountant and director of professional services firm Aurecon, recommends seeking out businesses that align with your skill set, background and expertise. “These days, there are countless websites…

Girls are more likely than boys to find it easy to spend money, though gender made no difference when it came to saving money or avoiding debt. How teens managed money at age 16-17 relates to whether they received extra pocket money at ages 12-13 or 14-15 and also if they stopped receiving pocket money or had it taken away. Teens who are saving or investing or had savings accounts at age 12-13 were more likely to be savers at age 16-17. Teens aged 16-17 are more likely to be spenders if they had paid for their own mobile or internet data when they were 14-15 than if they had not. Source: Diana Warren, Mabel Andalón, Constantine Gasser, Shop or Save: How teens manage their money, LSAC…

1 ETFS Physical Silver The ETP offers low-cost access to physical silver and avoids the need for investors to personally store their own bullion. It is backed by physically allocated silver bullion held by JPMorgan Chase Bank in London. Each physical bar is segregated, identified and allocated, which means there is no credit risk. Investors can choose to redeem units for the physical holdings. 2 Ausbil Global Resources Fund The fund aims to provide a positive absolute investment return in the long run by deploying a dedicated team of natural resources experts using top-down commodity and macro analysis, combined with bottom-up stock analysis and selection. The strategy will employ a long/short approach to global natural resources with a focus on generating positive returns in both rising and falling…

No vaccine is 100% effective, and while vaccination in Australia has stepped up from its sluggish start, it will take at least the rest of this year to get the bulk of the population jabbed, during which time we remain vulnerable to new outbreaks, as we have seen in Victoria, and mutated strains of the virus. In its May budget, the government dashed hopes for normality by indicating it would be unlikely to open our borders until at least the middle of next year. And while Australia has fared exceptionally well in terms of preventing mass outbreaks, we remain vulnerable to further restrictions and lockdowns if the disease moves back into the community. HERD IMMUNITY The challenge is that to stop the virus in its tracks, most epidemiologists say you…

ETFs have become a phenomenal global success and continue to increase in popularity as one of the fastest-growing investment products of recent times. They are essentially investment funds traded on the stockmarket. They are designed usually to track the performance of an index or mirror the price of an asset, such as the S&P/ASX 200 or the price of gold. “Investors are drawn to ETFs for their transparency and ability to offer diversification through a basket of securities in one single trade,” says Meaghan Victor, from State Street Global Advisors. “Their low cost and simple characteristics have also meant they have democratised investing, giving investors access and choice to equities that decades ago would have only been accessible to a select few.” About 20 years ago, Australia had around five…

It’s the sharemarket segment that is both all-inclusive and simultaneously hard to define: technology. I mean, we know it when we see it, but what is it, exactly? In the early 1910s, cars were “technology”. In the ’50s and ’60s, so were photocopiers. And the genius behind modern steel-making was groundbreaking at the time. None of those are considered technology any more. Still, in 2021 the term can be nebulous. Is an ecommerce company a technology company or a retailer? Is a payment processor a financial services business or a technology business? If you ask them, they’ll all say technology, of course. And for good reason: the suffix “tech” is worth a lot to the share price … and to the CEO’s prestige. So, we have fintech (financial technology), medtech…

There are two ways that forecasting is useful in investing. The first is in making successful predictions about an industry or a specific company’s outlook. The second is in making honest predictions about yourself. A 2015 study found that over the previous 20 years, the average US mutual fund investor earned a return of 4.7% compared with the market return of 8.2% – a gap of 3.5%. Almost half the underperformance was due to “voluntary investor behaviour” – panic selling, exuberant buying and trying to time the market. “No evidence has been found to link predictably poor investment recommendations to investor under-performance,” the researchers said. “Analysis of the underperformance shows that investor behaviour is the number one cause, with fees being the second leading cause.” Psychologist Daniel Kahneman has said…

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…

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.…

What was your first job? I started in retail at the age of 16. I got a job at the local Just Jeans store and I absolutely loved it from the first moment I joined. I loved customers, I loved selling, I loved clothes, I loved learning, and at the end of that year I told my parents I wasn’t going back to finish school. I’d been offered a full-time job. My parents hadn’t finished school themselves – they hadn’t had that opportunity. They were very passionate about giving us an education. They said, “Be passionate, love what you do, never give up and work hard.” These are the principles I’ve carried through my whole life. What came next? I’d been at Just Jeans for 10 years. I was the…

At this price, a Hermès is not quite in the bag If I can afford a $82,966 Hermes Kelly picnic bag (Extravagance, May issue), I would definitively not be needing to read Money magazine, to which l have been subscribing since its inception. Basil Great advice for the various stages of life’s journey I used to read Money mag religiously in my teens and early 20s, before a hiatus as personal and professional life demands took centre stage. During my 20s I purchased my first house, travelled the world (for work and pleasure), met my life partner and focused on building my career and completing postgraduate study. Looking back, I would give my younger self much the same advice Money did more than a decade ago: what you save is…

In life, it’s sometimes two steps forward and one step back. I have been reminded of this a few times this month. As I write, Melbourne has just experienced another extended period of lockdown. It’s tough. For some people, it’s a simple transition to working from home. For others, their businesses and livelihoods are threatened – restaurants, entertainment, venues, bars, pubs, florists and shops. All this can take its toll on mental health and puts a strain on finances. Will they be able to resurrect themselves from yet another halt in trading, recover from more wasted foodstuffs or other perishables, and are they likely to be reluctant to hire staff again? These are all issues that are placing enormous stress on people. When you add everyday concerns into the mix,…

BANKING HAS NEVER been easier. You can do it completely online if you want, at a branch if you need face-to-face help, or a banking expert will come to you, thanks to the rise of at-home mortgage services. With ease of access also comes increased customisation. There are hundreds of lending products and a couple of them are probably closer to your personal needs than others. If anything, the challenge we face is the prospect of feeling overwhelmed by the choices. That’s where the Consumer Finance Awards come in. Each year, we present a shortlist of the leading financial institutions based on their lending rates, fees or a combination of features. With Covid-19 hitting bank balances hard, your choice of finance provider could make the difference between shaving years of…

ME Bank has taken out the Money Minder award (bank) for a fourth year running – a testament to its long track record of offering simple savings products with great rates. The pandemic has changed a lot, not least the way people manage their money. “Covid-19 has accelerated the trend away from cash towards cards and digital payments,” says Craig Ralston, ME’s group executive, customer banking. While holding cash in the bank won’t provide much of a return these days, having an emergency fund is good financial practice. “The pandemic has increased households’ understanding of the importance of having a stash of savings for emergencies and I think we’re seeing savings behaviour increase across the board,” says Ralston. “While alternatives such as the sharemarket can be appealing in the pursuit…

5 G broadband is set to be nothing short of a paradigm shift that will fundamentally affect our daily lives and offer the potential for investment returns to match. At the most basic level, new generations are defined by ever greater bandwidth and the speed increases that come with it. “The data speeds will speed up, latency speeds to communicate across the network will speed up, and it will support up to 10 times the number of devices connected to the network,” says Kanish Chugh, head of distribution at ETF Securities, an exchange traded fund provider. For home use, low latency speed may only provide faster load times for streaming videos, but imagine the need for real-time data transfer when you go in for surgery undertaken remotely by an overseas…

Chartered accountant Adam Smith uses a checklist to assist his clients when buying a business: Buy the assets and not the business. This strategy is suitable for tax reasons as assets will be recognised by the amount you paid rather than what the seller paid for them. Further, if the company owes money to creditors or has a pending future legal claim, you won’t assume any of the liabilities. Understand how accounts receivable are dealt with on closing date. To allow for any pending bad debts, the buyer should consider acquiring the accounts receivable at a discount or removing certain poor-paying customers from the deal itself. Determine whether there are any outstanding penalties or payouts when you take over the leases. In some cases, buyers of companies have paid out…

Researchers are already working on upgraded vaccines that will address new strains of the virus, and several projects are targeting a universal coronavirus vaccine that could also be used in any future pandemics where animal diseases jump to humans. While these will take time to develop (and may not be successful), the hope is that Covid will become more manageable as populations are vaccinated and transmission of the virus slows. Treatments for Covid are also expected to improve and vaccination should ensure fewer people suffer from severe disease.…

The fashion industry icon is a “leader by design”, which happens to be the title of her new book. She believes leadership is something everyone can learn. In her book she shares her insights from 30 years in retail, including 13 years as CEO of popular fashion brands. Her experience runs from leaving school at 16 to suffering burnout from her workaholic ways to moving up the ladder and not being afraid to ask for her worth. Callander left the retail world in 2019 to experience the next chapter of her life – to follow her passions and travel – but when Covid hit she launched a new business, which happened to be in the right place at the right time. She now mentors and coaches others to achieve their…

I now live in Queensland but I grew up in Queanbeyan, NSW, and I was back there in 2017 for a school reunion. I walked up the street to the newsagent to get a paper, and Money magazine caught my eye. I’m so pleased I did, for in it was Greg Hoffman’s Strategy column, “Tiddlers In the Shark Tank”, and his summary of six companies. I picked out what I thought he liked the most and I bought three: Fargo Enterprises (ASX: FGO), Collaborate Corporation (CL8) and Imugene (IMU), for which I paid 0.016 cents. Over the years I have let the first two go. With Imugene, I got more through a capital raising, it has increased in value and I have bought more. Six months ago it came out…

THE BUZZ Big debt is fine – just don’t make it personal Australian government debt is on track to reach $1 trillion by June 2025 (around $37,000 per person), according to research by MyState Bank. Most people seem to be comfortable with the sizeable amount, which represents almost a third of superannuation assets. According to the research, 74% of us are okay with the debt if it is used for job creation, aged care and mental health. However, 62% are concerned about high personal debt. According to Heather McGovern, MyState’s general manager of customer experience, given the record low interest rates that support this borrowing, Australians understand how debt can be harnessed for economic good. “The fact that most Australians are comfortable with government debt increasing to support economic growth…

WINNERS & LOSERS Batteries power ETF returns Technology exchange traded funds have led the sector over the past year, according to the 2021 Stockspot ETF report. The ETFS Battery Tech & Lithium ETF (ASX: ACDC) topped the table with a 96% return over 12 months. This was followed by Australian and US technology ETFs. BetaShares S&P/ASX Australian Technology (ATEC) and ETFS FANG+ (FANG) returned 81.6% and 73% respectively. At the other end of the spectrum, BetaShares Australian Equities Bear (Hedge Fund) (BEAR) turned in the worst performance, down more than 30%. “This demonstrates how ETFs that are designed to do the opposite of the market can be risky trading tools," warns Stockspot. The Vanguard Australian Shares Index fund (VAS) continues to reign as the most popular ETF in terms of…

Aussies are no strangers to debt. Our household debt-to-income ratio is the fourth highest globally. Three out of four households have some form of debt, and close to one in three of us owes three times our annual income. Is this a problem? Yes, and no. Used wisely, debt can be a tool to build wealth. The trick lies in recognising how debt can work in your favour while also knowing the potential for it to leave you financially skewered. Despite today’s wafer-thin interest rates, debt doesn’t have a great reputation. Many of us still see it as something to avoid. A survey from the Consumer Action Law Centre found being debt free currently ranks as the top symbol of “success”, above personal health, raising a happy family or having time…

BANK OF THE YEAR The winner had the highest overall score among bank institutions that competed across six individual categories. Only full-service banks with a national presence were eligible for this major award. The weightings were: • Home lender 30% • Personal lender 20% • Credit card issuer 20% • Money minder 10% • Investment lender 10% • Business bank 10% WINNER: SUNCORP CUSTOMER-OWNED INSTITUTION OF THE YEAR The winner had the highest overall score among customer-owned institutions competing across six individual categories. To be eligible for this award institutions needed to be listed as a member of the Customer-Owned Banking Association and have more than $4 billion in assets. The weightings were: • Home lender 30% • Personal lender 20% • Credit card issuer 20% • Money minder 10%…

I find kids fascinating. Not only because they embody the future possibilities and have a seemingly endless supply of energy and curiosity, but also because they are often a less inhibited version of our adult selves. It’s part of why I love going to Saturday sport with my boys. It was here, standing on the sidelines at rugby, that I noticed coaches seem to take different approaches to drive the kids to win. The four types I observed are: The preserver. Plays the numbers, and values defence over attack; often seen as a very conservative approach. The aggregator. Cautiously pools the views of his assistants (and more outspoken parents) to hedge his plays based on the collective genius. The lone ranger. Doubles down on a single strategy where people play…

The teenage years are often the spending years, beginning with mobile phones, clothes, electronics and going out. Then come cars, higher education fees, travel and, if they move out of home, more bills. Many teenagers find it hard to save money. Often they have a sense of entitlement that is hard for parents to live with, and while you want to help them you don’t want them to slip into a habit of overspending. You want your kids to manage their finances day to day, keep track of their expenses and resist the temptation to spend money they don’t have. But it doesn’t happen automatically. After all, they don’t really need to be responsible for money, with parents paying all their living costs. They don’t understand what saving for a…

Where is the best place to buy an investment property today – city, suburbs or regional? If you own a house in one of the booming areas outside the major capitals – and have made a motza on it – you may be considering whether to hold or sell. In the lifestyle area of Byron Bay on the NSW far north coast, for example, house prices jumped 48% in 2020 to a median of $2.2 million. Many of us have long dreamed of living outside the big cities, but how to get to work every day was a major stumbling block. But Covid-19 has shown it’s possible to work almost anywhere as long as you have a decent internet connection and are not required to be in the office too…

While most investors have their attention trained on the stratospheric rise of iron ore and copper prices this year, many are yet to fully appreciate the potential for silver. Its price also had a strong rally between March and August of 2020, when it shot up by 100% from $14/oz to $28/oz but has since stabilised at this level. Could it go any higher? Well, in the past two major price peaks of 1980 and 2011, silver’s price rose to $38/oz. Its surge in 2020 came on the back of wallstreetbets’ retail investors (yes, those guys again) looking to repeat the strategy they used in the GameStop short squeeze. But to be fair to fundamental investors, silver started to look interesting in mid-2020 and gained more interest on the back…

Xavier O’Halloran, director of Super Consumers Australia, an advocacy group, suggests you check the following to ensure your super is well placed to make the most of the year ahead: Make the effort now “It’s important you make good decisions now because of the impact of compound interest. It’ll have a big influence over the type of retirement you’ll have. Your money can grow quite strongly if it’s invested in a high-performing super fund. Also, no one wants to be ripped off or charged excessive fees.” Get rid of multiple accounts “Set up a myGov account if you don’t have one, log in and see all the super accounts you have. The average person has two, so having a good idea of what you’ve got is the first thing. “Some…

There are a few myths about self-managed super funds. The main ones are that the costs are lower and the returns are better, but anyone in the industry knows that those are marketing lines more than reality, depending on who is helping you, what they’re charging you and how well your investments go. I have an SMSF. In the early days, I wondered whether it was all worth it when the accounting fees alone were taking 5% of the fund and when I lost $40,000 on Slater & Gordon shares. Yes, we all have one of those. And let me tell you a couple of other stories. I once had a broking client whose retirement as a football coach to a house next to the local football oval was ruined…

It is perhaps no surprise then that in choosing our Best in Breed, we’re harking back to one of the original ASX SaaS players. It is, in some ways, the local archetype of the genre. And its ongoing success not only proves the theory, but it continues to deliver for investors. Disrupting PC-based small business accounting by taking it to the cloud and recruiting accountants as its chief evangelists has delivered both market share and market-beating results in New Zealand, Australia and the UK, and offers more opportunities around the world. It’s far from done, and as the granddaddy of the genre, Xero is our ASX technology Best in Breed.…

1 Whenever I make a choice, I’m curious about what would have happened if I had chosen differently. 2 Whenever I make a choice, I try to find information about how the other alternatives turned out. 3 If I make a choice and it turns out well, I still feel like something of a failure if I learn that another choice would have turned out better. 4 When I think about how I’m doing in life, I often assess opportunities I have passed up. 5 Once I make a decision, I don’t look back. * Higher scores indicate a greater tendency to feel regret.…

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.…

In the words of Frank Sinatra, Australia is now “number one, top of the list, king of the hill …” Ol’ Blue Eyes was, of course, singing about the Big Apple, New York, but comparing economic apples with apples, Australia’s “top of the heap”. The Australian Bureau of Statistics’ national accounts show the Australian economy expanded by 1.8% in the March 2021 quarter – the third consecutive quarter of growth since the pandemic-induced recession in the March and June quarters of 2020 – taking the annual growth in GDP up to 1.1% and national output above the level it was before the coronavirus struck. Using the same measure, this beats America’s 0.4% GDP expansion over the same one-year period and is far and away above the economic contractions in the…