Innholdsfortegnelse for September 2021 i Money Magazine

THE BUZZ Gloom versus boom in the property inferno In the midst of the Covid crisis, why has property been booming? Since early 2020 we’ve been buried in gloom and doom news reports about the struggling economy. Lockdowns are seeing 60% of Aussies confined to their homes, and with international borders closed indefinitely population growth has ground to a halt. Despite this negative backdrop, house prices continue to boom. According to the latest CoreLogic figures, dwelling values have soared nationally by an average of 14% over the past seven months, with strong price rises occurring in 94% of regions across the country. In this climate, it doesn’t make sense. To understand this we need to compare residential property to grass fire, where three things are required to burn – fuel,…

As with other insurance, the more comprehensive the level of cover, the more you’ll pay in premiums. (The figures in the tables are for basic cover.) But there are opportunities to trim the cost. Paying a higher excess will lower the premiums. Just be sure you have the funds to pay the excess at claim time. Beyond this, there are three key ways to reduce premiums. 1. Choose your breed with care If you have your heart set on a particular breed of dog, it pays to consider possible hereditary health problems. As a guide, poodles can be at risk of glaucoma, large breeds like rottweilers and German shepherds can be prone to hip dysplasia, and breeds with those lovable squashed-in faces like French bulldogs can be prone to brachycephalic…

There are practical steps landlords can take to minimise the likelihood of a tenant defaulting on the rent. Stewart Bunn, of First National Real Estate, suggests four key steps: 1 Employ a property manager By using a property manager, landlords can be assured that proper enquiries are made about the applicant’s tenancy history, their credentials and their ability to pay the rent. 2 Know the rules If you plan to self-manage a property, Bunn recommends that you know the law inside out and collect as much background information as possible. Speak to previous landlords and verify the applicant’s job and income. 3 Check out a tenant’s social media posts An applicant’s social media profile may give clues about their character and conduct. 4 Make good use of tenant references Pay…

When talking property investment, most people still gravitate towards the familiar category of residential. However, seasoned investors have long been privy to the power of commercial and have been keeping the lucrative world of commercial property as their best-kept secret. If you’re looking to get started, these seven key steps will help you make the right choices where commercial property is concerned and lead you on the way to growing a passive income that you can live off. 1 Garner an investment mindset Shifting from a fear mindset to an opportunistic mindset is the number one key to successful commercial property investing. It will help you achieve larger goals, resulting in higher-yielding properties, stronger growth and ultimately more revenue. An investment mindset, conversely, will deliver results sooner, as it…

1 You can purchase them directly via a share trading platform such as CommSec. Top A-REITs include Goodman Group (ASX: GMG), Scentre Group (SCG), Stockland (SGP), Mirvac Group (MGR) and Dexus (DXS). 2 You can buy REIT ETFs. VanEck, for instance, offers both domestic and international REIT ETFs. Its Australian Property ETF (MVA) provides exposure to 15 holdings, generating a total return of 8.29%pa over the three years to June 30, 2021, while the one-year performance is 31.45%. It balances its portfolio in line with the MVIS Australia A-REITs Index. So, it essentially mirrors the capitalisation of the market, but no single REIT can represent more than 10% of the portfolio. By contrast, the global Van-Eck FTSE International Property (Hedged) ETF (REIT) has 319 holdings. “You’re getting a lot more…

At present, often the conversations among investors are limited to the short-term direction of the market, the timing of the so-called reopening trade, the short-term risks of various Covid-19 variants and the risk of inflation and rate rises. Investors can be excused for being preoccupied by these threats to the accumulated returns the markets have delivered over the past year or so. But at the same time, they need to look out for opportunities that are emerging from the confusion. Typical promising signs include underlying demand surge and pattern changes in a certain market, shifts in supply-side dynamics and step changes in government policies supporting an industry’s economics and prospects. The global semiconductor chips industry is one such area that checks off all of these basic signs, which are combining…

The legendary David Leckie died in July after a long battle with ill health. Without David, I can safely say you would not be reading these words today. We would not have a Money magazine. Nearly three decades ago, David - the then recently appointed CEO of Channel 9 - had a pilot tape of the Money TV show. He carried it around for some time waiting for a good moment to show his boss, Kerry Packer. Kerry was not convinced and told David that if it failed it was “on your head”. One of the things I always loved about David was his ability to make decisions, so he ran the Money show at 8pm on a Wednesday night. It was an unexpected hit for most people except David…

INNOVATION NAB caters for Islamic businesses National Australia Bank is set to launch a financing product for Islamic businesses. Interest is generally forbidden under Islamic law for being exploitative. The concern is that a “rich” lender is exploiting a “poor” borrower, because the net transfer of funds is from the poor to the rich. To ameliorate this concept, NAB has created products where “rent” and “service fee” are paid instead of “interest”. “There are some really interesting structural elements that we negotiated to finalise this latest offering in order to ensure that we comply with Australian federal and state tax laws and at the same time remain true to Islamic principles,” says Imran Lum, director, Islamic finance in NAB’s deal structuring and execution team. “We’re looking forward to further opportunities…

TOURISM Brighter days ahead for Airbnb Airbnb was hit hard as international and domestic tourism ground to a halt last year. After initially seeing its shares rise after its public listing in September 2020, the company’s price has dropped by around 25% in the past six months. But as vaccination rates increase, travel will invariably increase. And that’s good news for Airbnb. Josh Gilbert, analyst at the investment platform eToro, believes Airbnb, which has more than four million hosts in over 200 countries, provides investors with excellent exposure to the travel industry. “Airbnb remained resilient through the pandemic and was able to adapt swiftly,” he says. “The company added a plethora of new experience features and improved cancellation policies, which has allowed consumers to feel more comfortable when booking stays.…

You reckon you are getting older, Mel! I recently hit 66. It’s pretty funny, though. Fortunately, both my wife, Vicki, and I are in great health, but our three adult kids are now worrying about us and people stand for me on the train or bus, which is very alarming! Anyway, I get your point. With a really high combined income I would like to have seen you with a bigger pool of assets by now. But far more importantly, you are only young in terms of wealth creation and, like me and Vicki, you have three kids, which is great. Our three are now aged between 27 and 34. They, plus grandkids, bring us such joy. But back to money. First up, I am concerned you do not have…

Depending on how you look at it, lenders mortgage insurance (LMI) is a necessary evil or a necessary good. As a rule of thumb, banks will lend you up to 80% of the price of your dream home as long as you can stump up the remaining 20%. However, with average salaries barely keeping up with skyrocketing property prices, even 20% is out of reach for most people. This is why banks have come up with LMI, which gives them the flexibility to lend as much as 95% of the cost of the property as long as they are covered if you can’t service the loan. Using simple figures to illustrate the point, if you want to buy a $500,000 property and you can only afford a deposit of $75,000…

Small businesses are keen to ditch the landlord and own their premises, judging by several industry reports. It’s a step that can offer real advantages for an enterprise, with potential cost savings compared with leasing. Raine & Horne’s Commercial Insights Q2 2021 report confirms that low interest rates are encouraging businesses to invest in their premises. According to valuers Herron Todd White, the strength of owner-occupier demand for commercial property in cities like Sydney often sees investors priced out of the market. This demand can be backed by compelling benefits. “Owning a premises gives a business certainty of tenure,” says Angus Raine, executive chairman, Raine & Horne. “If a business needs to relocate, it experiences disruption and potential loss of customers and even employees. A commercial property is also a…

Many of us have a stake in city office buildings through our super funds, though not all of us realise this. And some also have an interest in office towers through investing in listed Australian real estate investment trusts (A-REITs), property exchange traded funds (ETFs) and unlisted property investment funds. So, the economic health of our major cities does have an impact on many people’s investment returns. To date the returns from investing in office buildings has been relatively healthy, despite a rollercoaster year in 2020 when average prices fell 39% early in the year before largely rebounding. Indeed, returns from all forms of commercial real estate have boosted incomes for many investors, especially as income from cash has plummeted. According to UBS data, over the past 20 years A-REITs…

If the pandemic has left you flat and badly in need of a sugar hit, open your annual super statement. If you are in a balanced or MySuper default fund, where most people’s money is invested, you will have scored big time. Funds achieved returns of 20% in the year to June 30, the best result in 15 years. Hopefully, the endorphin rush will prompt you to take your statement more seriously and read it carefully from cover to cover. For whatever reason, many of us neglect to do this. Alex Dunnin, executive director of research and compliance at the Rainmaker Group, puts the inertia down to the way super works: much of it happens without our involvement. “The strength of super is that it’s all automatic, but it’s also…

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 the emerging consumer. 2 Perpetual Global Innovation Share Fund The aim is 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 focusing on understanding changes in technology and innovation can lead to early identification of undervalued stocks. 3 Hyperion Global Growth…

Most Best in Breed articles this year have necessarily started with some reference to how much has changed over the past 18 months. Yet, as the pandemic (unfortunately) rolls on, we’re living in a – hopefully temporary – new normal. This time last year, we were comparing Covid-impacted results with the blessedly Covid-free 2019. This time, as they say, is different. We’re comparing 2021 results, companies, industries and economies with Covid-ravaged 2020. Yes, the goal posts keep moving (not least because the most recent lockdowns happened after many people assumed Australia was done with them for good), but we can at least make comparisons with a time when we knew the threat and impact of Covid. This time last year, we were looking at utility companies that were previously assumed…

I have never liked the expression “smart money”. It is demeaning to individual investors and used by the finance industry to imply they are smart and the rest of you are by implication “dumb”. There are only a few “smart money” activities, inaccessible to the mortal investor. They include: • Access to IPOs, share issues, placements. Being given larger allocations of hot new issues is something only the big institutions get, and they get it because the brokers controlling the issue want to suck up to them to get their secondary market business. • Inside information. There is a broker’s saying that “if you are not on the inside, you’re on the outside”. A lot of private investors think that this is how everybody else makes their money and some…

Drop a frog in boiling water and it will jump out. Put a frog in water, slowly bring it to a boil and it will stay until it’s dead and cooked. This is the “boiling frog syndrome”. It’s on full display on planet Earth as I type. The boiling water drop Us – the “frogs” – have been quick to try and escape the boiling cauldron of Covid-19. Through government mandates and/or our own volition, we socially distance, wear masks, restrict mobility and business activities, work from home, shut down international borders and/or get vaccinated to avoid being “cooked”. International health and financial institutions, national governments and central banks have been out in force to keep us froggies out of hot water. However, Covid-19 and its variants have distracted you,…

What was the lockdown like for your Stagekings business in 2020? It was a real downer. To start with we didn’t know what to do. Luckily, we quickly came up with the idea to make home office equipment. It was a really up-and-down time, but once we could get everyone back in, start manufacturing, and have an additional 70 people when we got right into it, it was a positive place to be. A lot of people loved the experience of being able to still come in and be working, so it was quite a positive year for us. When live events started again, how did you structure your work to get back to doing what was originally your core business? The big thing we learned was that we couldn’t…

Jeremy Fleming is founder and chief executive of Stagekings, a company that specialises in making sets for theatre, sport and concerts. Last year during the first lockdown he was in Melbourne putting up the stage for the Grand Prix, which was subsequently cancelled. He returned to Sydney, laid off staff, then thought of making office furniture – including the IsoDesk – which grew into a viable long-term part of the Stagekings business. He has further diversified the business and supports the entertainment industry, where much of his work is still focused. Stagekings has donated over $90,000 to Support Act and gives 1% of all furniture sales to the charity.…

I have been subscribing to Money for many years. It’s the only magazine I subscribe to and I read it from cover to cover. Paul Clitheroe is the same age as me and I especially enjoy his articles and advice – save some, invest some and enjoy some! Recently I was flipping through some old issues of Money and came across an article in the February 2019 issue titled “Top 50 share buys & property hotspots”. Five standout shares were featured, with Pfizer (US) listed as number three and the article outlined the benefits of buying shares in “one of the world’s largest research-based pharmaceutical corporations”. Like me, most readers had probably never heard of Pfizer in 2019. Oh, Money magazine, why didn’t I pay more attention and heed your…

At the start of this latest lockdown in Sydney, my Facebook account was hacked. I felt vulnerable and violated, and worried about the potential consequences. I also had no idea what the end game was for the hackers. My Instagram and Twitter accounts were the next targets. It’s all sorted now but I’ve been told that many others have had the same experience over the past few months. According to Shannon Sedgwick, who leads the cybersecurity and privacy practice for Ankura, online fraud and scams increased sharply after the start of the pandemic in 2020. “With the mass transition to remote working, data breaches went through the roof,” he says. Across the world, with the onset of lockdowns, businesses had to transition to remote working very quickly. “In many cases,…

When Sydney-based Lynda Stipanovic welcomed her dachshund puppy, Penny, to the family home five years ago, she wasted no time taking out insurance. It turned out to be a decision that saved her beloved pooch, and the family finances, from considerable pain. “I was aware that dachshunds are susceptible to spinal issues, so I researched the costs we could face if Penny developed back problems,” says Stipanovic. “At that point it was a no-brainer to take out cover.” She did plenty of homework, making sure any policy would provide cover for health issues specific to dachshunds. Having narrowed down her choice of insurers, she then focused on the cost. “Price was definitely a factor in our final decision though pet insurance generally is affordable across the board,” says Stipanovic. “The…

The federal government’s YourSuper comparison tool is free and easily accessed to help you compare MySuper products. What it does: • displays a table of 80 MySuper products ranked by fees and net returns; • allows you to select and compare up to four MySuper products at a time; • links you to a super fund’s website if you want to select another product; • can show your current super accounts if you access the personalised version through myGov; • provides links to help you consolidate your super accounts. Personalised version The personalised version allows you to view and compare your existing MySuper products. To access it: • log into ATO online services through myGov (my.gov.au); • go to the super drop-down menu and select information, then select YourSuper comparison. For more information see: choice.com.au/money/financial-planning-and-investing/superannuation/articles/comparison-tool.…

Space is the final frontier when it comes to exploration. The same also could be said of space investment, and Australian investors should buckle up for the ride. Two billionaires, Richard Branson and Jeff Bezos, recently launched themselves into sub-orbital space on their respective Virgin Galactic and Blue Origin craft, heralding a new era in space tourism. “It’s not a gimmick, though it won’t appear like that now,” says Andrew Kalms, lead partner for the defence and space industry at KPMG Australia. While these trips garnered headlines, it’s only one part of a burgeoning space industry that will attract investment globally. Private sector steps up Historically, space has been the domain of governments, most notably in the US and Russia. But the end of the cold war also meant the end…

YOUR GUIDE TO MANAGED FUNDS DATA 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…