Innholdsfortegnelse for November 2021 i Money Magazine

Money celebrates its 250th issue this month! We’re proud to reach this milestone in 2021. And at a time when print sales are declining, we’ve increased our readership by 134.6% (online and in print). For that, we want to thank our staff, our contributors and, most of all you, our loyal readers. The original inspiration for the magazine hasn’t changed since it was launched in 1999, following the TV program of the same name that had debuted 10 years earlier. “If you’d told me I’d still be publishing hard copy for the 250th time I wouldn’t have believed that,” says Paul Clitheroe, founder and editorial adviser. For me it’s about equity: ensuring financial information and advice are available to everyone who is interested in making the most of their finances.…

Complaints about the big four – Westpac, ANZ, NAB and CBA – fell 7% in 2020-21, accounting for 17,593 of a total 42,261, says AFCA. The top five complaints related to unauthorised transactions, service quality, default listing, failing to respond to a request for assistance and incorrect fees or costs. “Over 70% of cases were resolved in the early stages of AFCA’s process with an agreement being reached between the complainant and firm or an outcome in favour of the complainant,” says AFCA. OnePath has dethroned AMP as the worst-performing super fund on Stock-spot’s “fat cat” list. AMP came second, followed by MLC, Zurich and EISS Super, all third. The ranking takes into account fees and performance over five years. The funds management industry, along with policymakers, must improve classifications…

Demand for online banking is surging in the Asia-Pacific countries (APAC). According to analysis by the news site Finbold, neobanks in APAC signed up more than 130 million new customers in 2021, representing growth from the previous year of 113.62%. This dovetails with a surge in the number of neobanks, with 68 platforms coming online in the first half of 2021. Australia accounted for 13 of the region’s new platforms, outdone only by India with 14. The growth in neobanks has put pressure on traditional bricks-and-mortar banks. As well, “traditional banks are still facing challenges like an outdated legacy of technology architecture,” says the report. “Typically, when new technologies evolve, they are established on top of a bank’s existing infrastructure, complicating it. Consequently, to keep a grip on the customer…

1. Focus on the outcome. If you focus on what you fear, that’s where you’ll end up. Set your sights on your goals and focus on how you are going to overcome challenges rather than on the challenges themselves. 2. Start small. Practise little test-and-learn experiments, creating safe spaces to fail. Invest in something small, learn what you can from observing performance, then tweak it until you get something that seems to work. Patience is a virtue and life is not a race. Slowly increase your investment “height” so that you can learn new lessons along the way without wiping out your savings. 3. Learn by watching others (not the market). I am often amazed at how many people study the market to understand how to trade. That is like…

This is an important question and one that I wish people knew the answer to so that they clearly understood the importance of putting these documents in place. Put simply, if you don’t have them in place and you can no longer make your own decisions, you – or, more to the point, your family or loved ones - are in a pickle. Each state has its own body or tribunal where someone, normally a family member or close friend, would have to apply to be appointed to make decisions on your behalf with respect to your financial, legal, medical and guardianship needs. Some years ago, I acted for two adult sons. Their father, who we shall call Bill, had suffered several falls at home. His much younger second wife…

The situation for employers changes slightly from November 1, 2021, when “super stapling” takes effect – this is something that’s designed to help prevent workers starting a new default fund each time they change jobs. “From November 1, if a new employee does not select a super fund, employers will be required to check with the tax office whether they have an existing super account (that’s their ‘stapled’ fund),” says McCrea. “If the new employee has a stapled super fund, employers will be required to pay compulsory super contributions into this account rather than the business’s default fund.” Super stapling doesn’t impact existing employees. It only applies to new hires. The initiative may mean more work for employers, but it is expected to cut the number of duplicated super accounts…

Gold has a well-earned reputation as a safe-haven asset, a hedge in case the market turns sour. Yet its right to this throne has been threatened by a new kid on the block: cryptocurrency. But are the crypto prophets jumping the gun? Gold has long been touted for its capital preservation qualities during market downturns and times of inflation. When the market goes down, gold goes up, and when inflation increases, gold increases at a greater rate. Nor will gold overly weigh down your portfolio when the market is going well. You won’t get the same bang for your buck that equities provide, but you’ll still get some return. “The overall correlation between gold and equities is very minimal, but if you just look at when the equity market rises,…

And the “best of the best” from the US stockmarkets (the New York Stock Exchange and the NASDAQ)? To my mind, it’s hard to go past the biggest and the best. I own shares in Google’s parent company, Alphabet, in Amazon, and in Shopify, PayPal, Disney and a few others. They are, in my view, some of the very best businesses on the planet. But the very best? Run by a peerless CEO? It may be no surprise, but if we’re talking Best in Breed, I think you want Warren Buffett and his legacy (including the operating businesses and his lieutenants, who will take the business forward for decades) in your portfolio. If you don’t own shares in Berkshire Hathaway, as I do, I think you’re missing out.…

Financial markets have been on edge ever since they got the first whiff of “taper” in the air. This started when the minutes of the US Federal Open Market Committee (FOMC) meeting on April 27-28 revealed that “a number of participants suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”. Cue horror! From this time on, every dip in the equity markets – and, more generally, risk-off moves – became one of the major go-to excuses. Good news on the US economy and progress on vaccinations stirred taper talks. Bad news for the bulls and risk assets. That was until the Federal Reserve’s…

TRADITIONAL, MULTI-TOPIC comprehensive financial advice (often an 80- to 120-page document) has become unaffordable for many investors. Fees can start at around $4000 for the initial advice, and the same again each year if that advice needs to be regularly reviewed. An alternative has been developed using technology to deliver affordable advice, created by an algorithm, which works by taking data or information the client inputs and interpreting that information against several pre-defined rules. These rules tell the algorithm what to do with the information, such as perform a calculation or compare it with other data. The algorithm has another set of instructions that tell it what to do with the outcome of those comparisons and calculations and those instructions essentially form the “decision making” basis of the advice. This…

When we experience a personal health crisis, life changes in ways we don’t expect. Emotions run high and priorities change along with financial decisions. People may need a guiding hand during these times to get a specific understanding of their financial situation but cannot afford the services of a financial adviser. That is why the Pro Bono Financial Advice Network (PFAN) was created. PFAN is a community of financial advisers who work to improve the financial wellbeing of Australians living with serious illness and/or disability by providing their time and expertise free of charge. The financial advice provided can be as simple as ensuring insurance policies, such as income protection or total and permanent disability insurances, are maintained. PFAN offers services to eligible individuals living with multiple sclerosis, their families…

How do you help protect the elderly? Look for suspicious signs. While one or two of these probably don’t indicate something is wrong, a combination of several could. • When an adult child has undue influence over an ageing parent who is losing capacity to make decisions and a deteriorating memory. • If an adult child lives with the parent and is financially dependent on them. • The parent is isolated by the adult child who blocks visits from other adult children. • The adult child is secretive about the parent’s finances. • The adult child has a substance abuse or gambling issue. • Estate planning documents such as the will or power of attorney or enduring guardianship are changed if the parent has some cognitive issues such as early…

Going green doesn’t have to cost you the earth. There are bank “green loans” designed to offer more favourable terms if you want a household that is more environmentally friendly. You can borrow as much as $30,000, depending on your bank and your borrowing capacity, to have a fully kitted-out green home. That means installing a solar panel system with battery packs, rainwater tanks and even a grey wastewater system, taking your gas, water and electricity bills down to a fraction of where they could be. The appeal of going off the grid has gone up as electricity prices rise and the spectre of tight water restrictions faces us during bushfire season. More people are also working from home or living in remote areas, making sustainable living an easier choice.…

People start businesses for myriad reasons. It could be that they are following a passion or wish to take control of their lifestyles and schedules. Perhaps there’s a level of demand for their products or services.  Also, unlike working for a boss, you are not dependent on others to either run the show or pay you for your efforts. At the same time, you have the flexibility to decide how much effort you’ll put into your business and, hopefully, how much you’ll earn. Still, the primary contention many owners face is the size of the pay packet they can take out of the business. Unfortunately, it appears many SME owners aren’t paying themselves enough, according to business coach Suz Chadwick. Through her research, Chadwick has discovered that around 45% of…

This is an edited excerpt from Legacy: Taking Care of the Most Important People in Your Life When You Are No Longer Here by Melisa Sloan (Publish Central, $29.95). To win one of five copies, tell us in 25 words or less what concerns you most about what will happen when you’re no longer around for your loved ones. 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 October 25, 2021 and close on December 1, 2021.…

Super fund members rely on labels such as growth, balanced, conservative and cash to help them choose an investment option. They match their risk profile and goals with the most suitable product. But how true to label are the options? Each has a different exposure to growth and defensive assets. The growth option aims for higher returns and invests in more volatile assets such as equities and property. The cash option is least risky, but also less rewarding. But since the introduction of super, options have taken on a life of their own as funds compete for members and a bigger slice of the industry’s $3.3 billion pie. What are members to make of labels like alternative growth, conservative balanced, sustainable balanced, balanced growth and capital stable, to name just…

The news of China’s largest property developer failing to meet its obligations to its creditors has sent shockwaves through the Asian fixed-interest markets. So exactly what risks and opportunities does this shock bring for investors in Asian high-yield debt? To understand Evergrande’s fallout, one must understand the backstory to China’s property market. Chinese property developers have enjoyed an exponential rise in their revenues over the past decade from 4.4 trillion yuan (almost $1 trillion) in 2009 to over 16 trillion yuan in 2020. The activity in the main has been focused on developing residential, rather than commercial, real estate. Property prices as recently as 2019 were growing as much as 10% a year, but slowed to mid-single-digit growth over 2020-2021. House prices have more than doubled since 2015, which is…

The banking sector has been front and centre of the Covid-19 pandemic. Low interest rates and government support have put the banks in a relatively strong position. But the easy days of low rates, monetary stimulus and industry disruption paint a complicated outlook for the big four. To understand their present situation, it helps to go back to the financial industry royal commission. It exposed a lot of the skeletons in the banking sector’s closet, including misconduct ranging from fees charged to deceased estates to predatory lending practices. “The banks have done some cosmetic changes, but have gotten away without making large scale changes,” says Mathan Somasundaram, CEO of Deep Dive Analytics, an investment strategy service. They did divest from their non-core operations, namely their wealth management operations. Today, their…

NICOLA FIELD I’m a great believer in investing in businesses I know and understand. I’d tip $10,000 into FANG stocks – Facebook, Apple, Netflix and Google. Amazon is normally in the FANG line-up but I’m batting for Apple, which pumps out new products consumers love. The FANG companies have robust business models that show no real signs of slowing down. Plus, they have diversified businesses across software, consumer products and the cloud. Also, my cat is called Fang. JULIA NEWBOULD I would put $7500 into super and make sure I had a pretty even spread of Australian and international shares. Within my current investment choices I’ve also narrowed it down to sustainable and environmental options. The remainder would go on a course to make me more marketable, whether that’s presenting,…

The Reserve Bank has held the line on the expected path of monetary policy, attempting to anchor expectations of the cash rate out to March 2024. We now see the market pricing 1% and the RBA suggesting more like 0.10% – an expectation gap of some 0.9%. Gaps of this scale are not uncommon at turning points in the market or the economy; we saw something similar in August 2018. With this gap comes material risk, for both policymaker and market maker. Consequently, this proxy for economy-wide risk also grows with these expectation gaps. A “least regrets” approach may be worth introducing, moving away from articulating expected outcomes to managing for unexpected outcomes. We can be reasonably assured the large downside risks to the economy have been managed and turn…

BOOK OF THE MONTH TOP STOCKS By Martin Roth Wiley, RRP $29.95 Now in its 28th year, Top Stocks has become one of Australia’s most popular stock-picking books. Martin Roth provides the most up-to-date data on public Australian companies to help you determine where to put your money. The book includes company information, latest results and outlook. From the All Ordinaries Index and beyond, it filters out the noise and jargon to guide you through the market using factors such as profitability, debt levels and dividends. It also provides comparative sales and profits data. Special offer for Money readers To claim your offer, go to educatedinvestor.com.au and click on the Top Stocks 2022 banner. Click “Add to cart”. Enter the coupon code “Money2022”. Click “go”. This will reduce the price…

Australians are increasingly enthusiastic about sustainable investing, according to the 2021 Schroders Global Investor Study. It found that 56% would feel positive about moving to a sustainable portfolio for the same level of risk and diversification, while 83% said they would switch to have a positive impact on the world. By contrast, only 3% of those aged 18-50 felt negative about sustainable portfolios, while 9% said they did not know what a sustainable investment fund was. When asked what would prompt them to pull out of an investment, 59% nominated a financial or accounting scandal, followed by a human rights issue (56%) and a data privacy break or cyber hack (also 56%). “A significant number of Australian investors say they are attracted to sustainable funds for a variety of reasons,…

I was delighted to get your email, Earl and Emz. So many of us came to this terrific country from somewhere else. In my case it was from the UK, a very long time ago. My dad, mum, sister and I arrived in 1963 when I was eight. My parents felt that our family would have a better life in Australia. My dad was a doctor and quite a number of his English friends were practising in Griffith, in NSW. I really enjoyed growing up there, doing things that were not so easy to do where we lived in England, such as golf, sailing and water skiing. The ability to ride my bike to school and mucking around on friends’ farms made it a really good childhood. Australia has been…

If I asked you to walk across a 10m long, 20cm wide plank that is 10cm above the ground, I’m sure you would have no trouble doing it. No one falls off at 10cm. Raise it to 1m and likely this will still be simple enough. Raise it to 2m and you’ll probably start feeling shaky. Raise it to 10m and you’ll probably say, “Thanks, but no thanks.” This seems rational – it’s too risky, right? Or is it? The risk of falling hasn’t actually changed, only the consequences of falling. You’ve already proven that you can walk the plank at lower heights without falling, so why should the increased height make any difference? The consequence of, and our fear of, failure has significantly increased. Most people when faced with…

The Australian Prudential Regulation Authority’s Your Future, Your Super Performance test released in August shows 13 of 80 MySuper products it assessed failed its performance test. APRA wants dud funds to lift their game or act in their members’ best interest and “transfer members to another fund/product and/or exit the industry”. Fund members are encouraged to use the comparison tool, administered by the tax office, to see how their MySuper product compares with others in the market. See ato.gov.au/YourSuper-Comparison-Tool. Most fund members have their money in a MySuper product – either a balanced option or a lifecycle option. As its name implies, the latter changes its asset allocation, and reduces investment risk, as its member gets older. Xavier O’Halloran recommends consumers use the tool to see how their fund stacks…

You don’t need a lot of money to get a slice of the property investment pie. The high prices of individual properties, both residential and commercial, mean many people think investing in real estate is beyond them, but you can start a diversified portfolio for $10,000 or much less. You can, for example, buy a fractional interest in a prime Sydney or Melbourne suburban residential property starting with just $250 through BrickX. Or you can buy a stake in a portfolio of commercial properties by investing as little as $500 in an Australian real estate investment trust (A-REIT) on the ASX. Fractional owners have smaller capital outlays, diversification (because you can choose your own properties), no management hassles, liquidity and the benefit of detailed due diligence. On the downside, there…

Kyle has $10,000 invested in shares. He decides to borrow $15,000 to invest in more shares through a margin loan. The total value of his shares is now $25,000. Kyle’s LVR is 60% ($15,000 divided by $25,000). The maximum LVR his margin lender allows is 70%. Kyle has invested in five mining companies. He’s taking on a lot of risk as he’s not diversified. After a fall in the price of commodities, Kyle’s shares fall by $5000. The total value of his investments is now $20,000 while the loan is still $15,000. Kyle receives a margin call from his lender as his LVR has increased to 75% ($15,000/$20,000). He has 24 hours to lower his LVR. Kyle uses $2000 of his savings to reduce his loan balance to $13,000. This…

1 VanEck Emerging Income Opportunities Active ETF Holds a globally diversified portfolio of bonds and currencies in emerging markets. It aims to provide total investment returns, measured over the medium to long term, in excess of the benchmark. 2 Bentham High Yield Fund Aims to provide investors with a diversified exposure to the US high-yield securities market with active allocation among individual securities and industries. 3 iShares Global High Yield Bonds ETF Aims to provide investors with the performance of an index before fees and expenses that is designed to measure the $A hedged performance of fixed-rate, high-yield corporate bonds across global developed markets.…

Australia has many wonderful listed companies. And I don’t like to brag but, according to a recent report out of Credit Suisse, the ASX has been the world’s top-performing stockmarket since 1900. Australia has a lot to be proud of. BHP and Fortescue are home-grown, world-class miners. CSL is a global leader in vaccines and blood plasma products. Even more recently, Afterpay created a payment methodology that is taking the fight right up to Visa, Mastercard, Amex and PayPal, a few short years after our own Bankcard folded, figuring the race had been done and won, with the international giants the victors. And we have living standards that are regularly at or near the top of the international heap, not to mention world-beating sports teams, natural beauty that is the…

I have spent 39 years in the stockmarket, which is an embarrassingly long time because the truth is, as Emma keeps reminding me, if I was any good at it she would have been in the Bahamas years ago being waited on by a couple of nannies and a well-cut pool boy. But she’s not, we’re not, and many millions of us aren’t. Well, actually, some people are; they are the “lucky generation” and, amazingly, most of them don’t even know it. They are the generation of investors in the property and equity markets who have ridden a nearly 40-year credit boom – a previously unseen engorgement of debt and an access to money that created a golden wave of investment returns between about 1974 and 2007 and, after that…

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…

Q What was your first job? It was at a newsagency stacking shelves with magazines etc, and later the front counter. When I finished school I worked in a bar and bistro. I was keen on working full time consistently. I was a duty manager working eight- to 10-hour days. My first job in entertainment was on ABC Kids show Giggle and Hoot. What’s the best money advice you’ve ever received? It’s a tough one because I think it’s having a goal. I think back to when I was earning a full-time wage at the pub. What was I doing with the money? I had a goal to move out of home. The advice is that if you have a goal you can work towards it, and if you don’t…