Innholdsfortegnelse for April 2023 i Money Magazine

BACK TO BASICS Serina Bird Now that we're well into autumn, it's time to start thinking about energy costs before you get that dreaded mid-winter bill. Both electricity and gas prices have gone up (except in the ACT due to longterm renewable energy contracts). And global supply and transportation – coupled with the phasing out of old technology – mean the cost is not going to come down anytime soon, especially for those living on the east coast. Energy prices spiked dramatically in 2022, with households paying on average $520 more last winter than in previous years. And higher energy prices are going to be with us for at least the next couple of years. So, if you do nothing else with your finances, at least give your energy bill…

The rental market is facing significant challenges, with many renters struggling to find affordable and suitable accommodation. Restricted supply and high demand are the primary factors driving up prices in metropolitan areas and a significant percentage of the regions. With many young people and families renting rather than buying due to interest rates climbing, the return of expats to our shores and the explosion of investors being lured by the Airbnb phenomenon are putting additional pressure on an already strained market. There is little doubt we have been lacklustre as a nation when it comes to new housing construction for quite some years. Now the rubber is meeting the road and the disruptions caused by the pandemic have exacerbated this issue. Many renters are forced to compete for a limited…

Fringe benefits relief for electric vehicles There's some good news on the fringe benefits tax (FBT) front. This financial year, employers will not pay tax on benefits provided for eligible electric cars and associated car expenses. Benefits provided for electric cars are exempt from FBT if all the following criteria are met: it is a zero- or low-emissions vehicle the first time the car is both held and used is on or after July 1, 2022 it is used by a current employee or their associates (such as family members) luxury car tax has never been payable on the importation or sale of the car (that is, it generally costs less than $84,916 for fuelefficient cars in the 2022-23 year). Registration, insurance, repairs (or maintenance) and fuel expenses provided for…

Long-term investment expectations are at their highest level in almost a decade, according to Zenith Investment Partners. Short-term challenges do remain, but Damien Hennessy, Zenith's head of asset allocation, says higher yields, lower valuations and a normalisation of policy settings are setting up the market well. Last year was the worst in more than a century for a standard 60/40 (shares/ bonds) portfolio, but Hennessy sees plenty of reasons to be optimistic. “We do expect higher volatility than what we have experienced over the past decade given higher rates and inflation, less supportive liquidity settings and the likelihood of a more volatile business cycle.” If, however, inflation has peaked and the negative correlation typically exhibited by markets reasserts itself, then portfolios should prove more robust. Steven Tang, Zenith's head of…

Brendan James is happy for now to be a modest player in what is likely to become a huge, important new market. He is developing a carbon-free energy company, laying down a challenge to global oil suppliers whose filling stations dominate our roads and highways. He believes the survival of his business is not an issue. LINE Hydrogen is building its first supply network in Tasmania, which he expects will eventually expand to compete against petrol and diesel. Hydrogen can be used in existing combustion engines or in new-age fuel cells. There are no polluting carbon emissions when hydrogen comes from green sources, and its versatility in cars, trucks, planes and ships could make it a rival to battery power. It is the most abundant chemical substance in the universe,…

2021 Chateau Tanunda ‘Grand Barossa' Grenache Shiraz Mourvedre $25 This is an impressively presented, budget-priced range from one of the Barossa's finest: classy fruit, beautifully crafted. While super smooth with intense blackcurrant and bramble aromatics, it is plush, rich, deep and long with a pleasing tickle to finish. Calls for a pot of slow-cooked lamb shanks with the finest winter vegetables. SPLURGE 2020 Leeuwin Estate ‘Art Series' Chardonnay $150 It's a rare day, indee when one can say with conviction that this is the best vintage yet of one of Australia's finest chardonnays. This is a subtle white that builds in the glass, is delightfully floral, complex, fine and powerful, with generosity of fruit and timeless length. Will it age? The 1982, at the same tasting, is still profound and…

PAUL'S VERDICT Paul Clitheroe We're struggling to survive on the aged pension My husband and I are 82 and 73 respectively. We receive the full pension, own our home and car and have no debts other than household and utilities. I have superannuation valued at $127,000 in an AustralianSuper balanced fund, $100,000 in fixed term with Macquarie for three months and some backup savings of about $30,000. We have received no income from AustralianSuper and seem to be going backwards. Do we stay with them or would you suggest another super fund? Have a question? If you have a question you'd like Paul to answer, email money@moneymag.com.au or write to Level 7, 55 Clarence Street, Sydney NSW 2000. Questions need to be 150 words or less and you must be…

INFLATION NICOLA FIELD ACTION PLAN WE'RE ONLY A few months into 2023 and already it's shaping up to be a tough year as Australians battle rising living costs and higher interest rates. But a few strategies can help you fight back against inflation at every life stage. Young workers While 20-somethings may not have the pressure of feeding a mortgage, rents have risen dramatically, soaring 27.8% across our state capitals over the past 12 months, according to SQM Research. As interest rates rise, it's almost a sure thing tenants will be hit with rent hikes in the year ahead. It makes now the time to squeeze more from your money. • Rank your purchases Anne Graham, senior financial planner at Story Wealth Management, says there is a finite pot of money,…

AMERICAN SCOTT Rieckens, 35, was drowning in debt, overworked, depressed and trying to afford a luxurious lifestyle, complete with a leased BMW. He and his wife Taylor, with their toddler Jovie, embarked on a yearlong odyssey to follow the FIRE rules. Their efforts are recorded in the documentary Playing with FIRE. After discovering a Mr. Money Mustache podcast about FIREs, Rieckens quits his job, convinces his family to leave their home and slashes their expenses, to lead a simpler, happier life. They move in with parents and get rid of the BMW. Along the way, they meet hundreds of FIREs who share their strategies to stay on track. Some of these appear in Rieckens's book, also called Playing With FIRE, including Nataasha Torzsa and Leo and Alisha. Torzsa, who runs…

ACTION PLAN INVESTING MAX RIAZ Shares IF WE ASSUME that inflation settles down next year as the Reserve Bank is predicting and that it comes down closer to 3% from its current level of 7.8%, then you can expect there to be a cheer from investors in a range of stocks. Consumer discretionary stocks such as JB HiFi (ASX: JBH), Premiere Investments (PMV), IDP Education IEL) and Domino's Pizza (DMP) should do really well. These stocks have recently suffered from the twin headwinds of inflation, which is causing discretionary sales to slow, and rising costs passed on by suppliers, causing overall profit margins to come under pressure. Technology stocks such as Megaport (MP1) and Whispir (WSP), which have been sold off heavily because their lack of profitability and too much focus…

Jessica Farrugia, 36, is a single mum and graphic designer. As well as causing financial stress, the higher costs are taking an emotional toll on both Jessica and her young son Ben. She says the first thing she's noticed is the huge increase in her grocery bills. “I'm doing food shopping every week and I'd be spending anywhere between $200 and $300, which is crazy,” she says. Her petrol costs have also gone up from about $50 to about $70 a week. Her biggest concern is what she's going to do when her home loan comes off its fixed interest rate and switches to variable in August. She is currently paying around $320 a week, which could increase by as much as $550 in a few months. “I worry that…

Beyond health cover, one reason Australians choose insurance is to avoid the Medicare levy surcharge. This is a tax charged to high-income earners who don't have hospital cover. If you're a single person earning under $90,000 or a couple/family earning under $180,000, you're exempt from paying the surcharge, so there's no tax benefit to having health insurance. But if you do want to take out a policy just for tax purposes, then you would want to look at basic hospital coverage. These policies offer very little in a private hospital, typically just covering rehab, palliative care and psychiatric treatment in a public hospital, while some may cover treatment after an accident. The government offers a private health insurance rebate, which is based on your income, age and family status. If…

If you've never met with a financial planner before, you're probably not aware of the process they follow. It's important that clients understand the financial planning process so they get the most out of seeking personal financial advice. As with all interactions you have with advice providers in your life, it's okay to ask a financial planner about how they work with their clients. While there might be differences in how each planner works, the following process is general enough to cover off how most Australians receive financial advice. You can use this as a starting point for a conversation with a financial planner, should you decide to seek advice. 1 Make an appointment The first step is to make an appointment to meet the financial planner (usually arranged over…

FAMILY MONEY Susan Hely What do you do when your child has a medical emergency and you can't afford the treatment? Or your beloved pet runs up vet bills that you can't pay? Or you want to raise funds to help care for threatened species? One path is to appeal to people for money through an online fundraiser. Digital appeals have become increasingly popular, replacing doorknocking and charity sports events. One of the biggest fundraising platforms is GoFundMe. Launched in 2010, it operates in 19 countries and has raised over $10 billion. For example, it supports more than 250,000 medical appeals, worth around $650 million, every year. Another is Chuffed.org, whicbeen around for 10 years. It says the average amount raised is around $7000, but the biggest campaign collected $345,000.…

Inflation has moved from the halls of banks and into the backyards of everyday Australians. It's brought with it higher interest rates and a rise in the cost of living. Unfortunately, it's unlikely to get better quickly. To make matters worse, salaries aren't keeping up. While it's true that wages are growing at their fastest rate in nearly a decade, it's not enough to keep pace with the consumer price index (CPI). But what can you do about it? There's no shortage of advice that will tell you to pick up a side hustle, but you want to be able to enjoy your well-earned time off. Instead, look for a way to make your money work for you through passive income strategies. An example is peer-to-peer lending (P2P). It is…

MANAGED FUNDS Max Riaz After a century in relative obscurity, hydrogen energy is set to step up and play a critical role in transitioning the global economy's reliance on fossil fuels (coal, oil, natural gas) to a world that runs exclusively on renewable sources, such as wind, solar and, yes, hydrogen. The hydrogen economy is racing towards mass adoption in the next 10 years as governments declare their visions and outline their road maps. Suppliers and buyers in the hydrogen ecosystem are forming a queue that is largely dictated by their spot on the falling cost curve. Investors, too, have an important role to play as providers of capital to fuel the nascent hydrogen economy. How it will work First, a bit of chemistry. Hydrogen is the first among 118…

Almost 10% – or $13 billion of the total $130 billion in ETFs – is in Vanguard's Australian Shares Index ETF, known by its ASX code as VAS. Last year VAS was the most popular ETF on the sharemarket, attracting $2 billion. Why is it so popular? “The first thing is the cost,” says Stockspot's Marc Jocum. “It's very cheap – it only charges 0.1%. So that's $1 for every $1000 that you would invest.” Some of VAS's competitors have cut their fees, with iShares slashing its Core S&P/ ASX 200 ETF (IOZ) to 0.05%. VAS offers great diversification, with its 300 shares making up 98% of the Australian market. Many other Australian share ETFs track the ASX 200, or just the 200 largest companies in Australia. “It goes that…

BEST IN BREED Scott Phillips SECTOR RESOURCES One of the most important concepts in investing is opportunity cost. In short, it suggests that the true cost of one course of action is that it prevents you from taking another course at the same time – you're giving up one thing by doing something else. You can only spend $3 once. After that, it's gone. I could grab a can of Coke Zero (I'm quite partial) or I could grab a loaf of bread. But not both. Or, of course, I could invest that $3. The opportunity cost of any one of those options is that I can't do the other things. That's a feeling investors also know well. Last year, the information technology sector of the ASX fell by about a…

THE HOT SEAT Did you always want to be an architect? When I was in high school, I loved all things design, so I thought this was a way of making money and still having creative output – in a profession where I could design something as small as a door handle to masterplanning an entire city. I also travelled to Rome quite a bit where I have family and the architecture there influenced me in wanting to be an architect. What was your earliest money lesson? My first money lesson was when I asked my father for pocket money to do things around the house and he said, “No, it's your obligation to do things for the family.” I would have been five or six. I did get an…

Doing the groundwork first pays off Thanks, Michelle and Daisy, for an enjoyable and friendly podcast (Friends With Money #86: Top 5 property tips for buyers in 2023). I wanted to share a tip that might be helpful to people who, as I was, are scared of the commitment of buying a house and taking on what seems like a massive debt. Years ago we were renting but had saved a reasonable deposit. To really prove to myself that we could afford to buy, I worked out what the monthly mortgage repayments would be for the kind of house we were looking at buying. I even allowed for a 2% rise in interest rates (just in case!). Then, every month, when we paid the rent, I “paid” the difference between…

Inflation recedes, briefly, thanks to $3m super cap fuss Who'd have thought a financial story would come along and generate enough fervour to knock inflation and the Reserve Bank out of the headlines? Well, briefly. Since the federal government released the first details of its proposal to limit tax breaks on certain superannuation balances in February, there's been plenty of comment and speculation about the policy. At times it's been hard to cut through the noise to get to the detail, though, so it's worth homing in on a few points: what we know about the policy, why it was put forward in the first place and who it will impact. At the crux of the proposal is the government's plan to increase the concessional tax rate on super accounts…

BOOK OF THE MONTH THE ULYSSES CONTRACT: HOW TO NEVER WORRY ABOUT THE MARKET SHARE AGAIN The Ulysses reference is the author's way of alluding to the many temptations (siren songs) that threaten to separate investors from their money. What's needed for investment success, according to Kemp, is a sensible, longterm plan and a good dose of discipline, consistency and patience. This book sets out to change the way you think about the sharemarket and explains how the right information can help you gain an edge. DEBRA DUNCAN Five readers can win a copy. In 25 words or less, tell us about one success or failure you've experienced as an investor. Enter online at moneymag.com.au/win or send entries to Money, Level 7, 55 Clarence Street, Sydney, NSW, 2000. Entries open…

MORE MONEY STORIES ON P44-57 SWITCHING Save $20 a month on telco bills As rising living costs continue to bite, households are looking for savings wherever they can find them, with 77% of respondents to a recent WhistleOut survey reporting that they are trying to cut their expenses, including their mobile and internet bills. That's not to say that they will take any old reward for their effort, though, as 44% of those surveyed admitted they would need to be guaranteed savings of at least $20 a month on their phone plan before switching to another provider. Fortunately, says WhistleOut editor Alex Choros, there could be plenty of opportunity for the customers of larger telcos to save. “If an Australian owns their phone, it's very easy to trim $20 off…

The decline in home values has begun to slow, with the CoreLogic home value index recording its smallest monthly fall since May 2022. The national index declined -0.14% over February, with a 0.3% rise in Sydney values responsible for the national deceleration. However, the slowdown was noticeable across the board, with Darwin being the only capital city to record a steeper monthly fall in February, albeit from flat conditions. CoreLogic's research director, Tim Lawless, says that new capital city listings were 17% lower than in the previous year and 11.9% below the previous five-year average. “This trend towards a below-average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.” Auction clearance rates bounced back over February,…

First job was delivering pamphlets at 2c each. Wanted to be an air force pilot but couldn't because of asthma. A knack for problem solving led him to become an engineer. Became a stockbroker and later a fund manager in mid-career. Admits that his inquisitiveness sometimes leads to biting off more than he can chew. “For me, my real motivation is being given the biggest problems. I've always been good at it. It's what gets me going.” Believes that anyone can do anything and that there's a solution to everything.…

You are not alone here, Jan and Alec. The cost of living is hurting all of us, but those on fixed income, such as a pension, are most impacted. What I would like you to do is to give AustralianSuper a call. Our big, low-cost funds such as AustralianSuper have done a really good job for their investors. Sure, I get cranky with them from time to time about annoying things, such as a lack of transparency around the investments they hold for members. I also would like to get more details about their expenses. This seems to sit in a file called “top secret”. But as it is a super fund, it will not pay you dividends or distributions unless you request them. At your age you are entitled…

COVER STORY INVESTING NICOLA FIELD A TRIP TO the supermarket is fast becoming an eyebrow raiser as we're asked to cough up a lot more for the basics, let alone luxuries. But prices won't keep rising indefinitely. Continually rising prices are not something Australians are used to. Inflation is rampant in countries such as Zimbabwe (230%), Argentina (98.8%) and Pakistan (31.5%). Australia had coasted along with inflation at a barely perceptible 2%-3% for many years. That's all changed in the past 18 months. Inflation is measured by changes to the consumer price index (CPI), which is a representative basket of goods and services that the Australian Bureau of Statistics (ABS) uses to measure price movements. It's a misnomer that prices always track upwards. In mid-2021, the CPI moved by -0.3%, meaning…

Medicare coverage for Australians is wide reaching with a lot of services covered by the government, including visits to emergency departments. However, what is not covered across most of Australia is the cost of emergency transport or ambulance services. Only Queensland and Tasmania cover the costs of emergency transport while most other states offer some ambulance services free of charge for pensioners or healthcare cardholders. If you do not fall into that category, however, you will need to take out ambulance cover from your private health insurer. It can pay to do so because the callout fee for an ambulance can quickly rack up with an emergency road ambulance in NSW costing a minimum of $415 for the call-out, while in Victoria that cost could spiral to $1306. When taking…

How do financial planners get paid? What is the fee range? At your first meeting, your financial planner will talk to you about the fees they charge. The costs for the advice and services they offer are also outlined in a document called a financial services guide (FSG). This will be provided to you by the planner before or at your first meeting. A survey of the cost of a statement of advice found the average cost was $3315 in 2022 around Australia, but the actual cost will vary from provider to provider. Of course, the fees you pay will be related to the kind of advice and service and the complexity of advice provided to you. This should be clearly defined and agreed upon before commencing a new arrangement.…

REAL ESTATE Pam Walkley There are many potential traps that buyers need to be aware of when buying a strata title apartment. The Opal Tower saga – where hundreds of residents were evacuated on Christmas Eve 2018 from the 36-level building in Sydney's Olympic Park amid fears it was going to collapse – is an extreme example of what can go wrong. More than 2.5 million people, or 10.3% of the population, now live in apartments, according to the 2021 census. High housing costs, especially in areas close to major cities, have pushed many of us to choose apartments, which are generally considerably cheaper than houses in the same location. But buying an apartment rather than a house means you need to get your head around how owning and living…

Hydrogen ETF The Global X Hydrogen ETF (ASX: HGEN) seeks to invest in companies that stand to benefit from the advancement of the global hydrogen industry. This includes companies involved in hydrogen production, the integration of hydrogen into energy systems and the development/manufacturing of hydrogen fuel cells, electrolysers and other technologies. BNP Paribas Earth Trust – AUD The Earth Trust (APIR: ETL6684AU) offers a market first: an environmentally focused market-neutral strategy for sustainable portfolios. The manager sees a significant potential in green hydrogen in particular, based on an estimate that it will take about $150 billion of annual investments to ramp up supply from today's 0.8 megatons to the 614 megatons needed by 2050. VanEck Global Clean Energy ETF This ETF (ASX: CLNE) gives investors a diversified portfolio of 30…

Digital editor If you had asked me two weeks ago, I would have said an indoor basketball arcade game. Then my nephew Jake won exactly that in a raffle. Since he is a generous, big-hearted kid, he has been letting me play with it whenever I want. So I need to come up with a new toy to buy, and – since Jake was apparently born under a lucky star – wait for him get old enough to buy me a lottery ticket. Contributing writer Houses for the kids. It is the biggest financial risk for them and I would love to solve it. I can't bear the thought that one day the property market suffered “the big one” and left them with an equity deficit and working to pay…

The housing landscape for the next few years is set to be characterised by stock shortages, as immigration ramps up, international students and other temporary visa holders return, and the long tail of the supply pipeline is brought to market. This will bring our nascent build-to-rent sector into the spotlight over the coming year, but we shouldn't expect any material impact from this form of institutional investment for several years. With capital city rental markets as tight as we've seen, many first home buyers will be looking to make their first move onto the housing ladder. Of course, in the present environment any home buyer needs to be comfortable that they can afford the repayments in the event of further rate hikes. Overall, stock listings remain far below their fiveyear…

FRIENDS WITH MONEY #89: GETTING YOUR AFFAIRS IN ORDER Hosted by: Michelle Baltazar Guest: Mia Northrop It's one of those boring jobs we put off month after month, but April seems like a good time of year to cosy up indoors and spend time tackling life's important documents. Not only will you get your paperwork in order, you'll also free up some much-needed head space, according to podcast guest Mia Northrop, co-author of the book Life Admin Hacks. Find out how to best approach those tricky taxes, why you should shop around for better super and the importance of writing a will. DEBRA DUNCAN SCAN THIS CODE TO ACCESS ALL OUR FRIENDS WITH MONEY PODCASTS…

After reaching decade highs at the tail end of 2022, the cost of domestic flights is starting to come back down to earth, according to the latest Airline Competition in Australia report from the Australian Competition and Consumer Commission (ACCC). Between December and January, the average price across all domestic airfares dropped by 13% and discount fares fell by 34%, though airlines continue to charge travellers higher prices than they have in previous years. “While it's positive to see airfares fall from record highs in 2022, passengers are still generally paying more to fly today than they were before the pandemic,” says ACCC commissioner Anna Brakey. “Airfares typically come down after the Christmas travel peak due to a seasonal decrease in demand; however, some of this reduction is also explained…

Years of covering Telstra's results have demonstrated one thing clearly: Australia's largest telco is a mediocre business. Returns on equity, in the low double digits, are acceptable only by piling on debt. Unlevered returns on capital are piddling; we doubt they have covered Telstra's cost of capital for a decade. It's astonishing to think that $16 billion of debt and $15 billion of equity have been harnessed to generate such low returns. The business itself is targeting returns on capital of just 8% over time. The mobile business accounts for over half of operating profits. Another 25% of profits come from the towers (assets that Telstra leases to itself) and from asset leases to the NBN. The rest, including a shrinking enterprise segment, a low-margin broadband business and a decent,…

ASK PAUL Q&A NEED PAUL'S HELP? Send your questions to: Ask Paul, Money magazine, Level 7, 55 Clarence Street, Sydney NSW 2000 or money@moneymag.com.au. Sorry, but Paul can't personally answer your questions other than in the Q&A column. By submitting your question to Money, you consent to having your question and the response you receive from Paul published in the print and digital edition of Money. Q My dear mother passed away recently and I will receive a cash inheritance of $160,000. I would like to invest $5000 for my six-month-old grandson, and I am gifting my two adult children $10,000 each, which will leave me with enough to invest for myself. Ideally, I would like to buy a block of land in the bush and at a later stage…

ASK PAUL Q&A Q Since our son was born 15 years ago, my wife and I have been contributing $1000 to $2000 a year to a high-interest kid's savings account in our son's name, with his tax file number as a DIY trust account for his education. Over the past few years, interest rates have been very low, but now the account is starting to earn around $80 a month in interest, so it will exceed the $416 interest threshold for a child and be subject to 66% tax on interest above $416 or 45% tax on the whole interest if it exceeds $1307 a year, according to the ATO. It seems particularly unfair that a legitimate children's trust-type account is taxed at a much higher rate than an adult's account in…

What is it? Many men are reluctant to talk about their emotions or to ask for help. As a result, their mental health suffers. That's what the Australian Men's Shed Association is looking to change by offering a safe and busy environment for men to bond over various projects and tools. Where your money goes? The best part about Men's Shed is that it takes all kinds of donations, from financial to products, tools and equipment. Financial donations help to create new sheds, while tools and pre-loved goods help support various projects inside the shed. How to donate: Visit mensshed.org to donate funds or tools. ELIOT HASTIE WEBFIND WHICHBOOK.NET/MOOD-EMOTION Can't work out what book to read? Let Whichbook decide for you. But this isn't just a random selection generator. It…

SOARING INFLATION IS hitting us all in different ways. Whether you're young and renting, have a mortgage and children to provide for, or are trying to live out your retirement stress-free, you're no doubt feeling the pinch. Rents have risen 27.8% over the past 12 months in our capitals, according to SQM Research, while Sally Tindall, research director at RateCity says the latest Reserve Bank rate rise “means Australians can largely kiss goodbye to mortgage rates starting with a 4.” Retail sales volumes fell in the December quarter of 2022 too, signalling Australians are tightening their purse strings. But it's not all doom and gloom. In our April cover story, we look at ways to counter inflationary pressures. There are savings to be found in buying more fresh food and…

COVER STORY FINANCIAL FREEDOM SUSAN HELY ACTION PLAN IF YOU WANT inspiration about how to keep your costs down, look to the financially independent (FI) and financially independent, retire early (FIRE) communities. Spending less is critical and the most difficult part of the journey. The FIs are the gurus of cost-cutting. In their online blogs, you will find an abundance of detailed strategies about how to live cheaply. The FIs share how they cut down food, transport and accommodation costs, and buy second-hand furniture and whitegoods to build a kitchen. There are annual spreadsheets, showing you how to budget for big bills, such as car, health, home and contents insurance, throughout the year so they don't arrive unexpectedly. There are inspiring podcasts, regular social media posts, meetups, conferences and a documentary called…

COVER STORY INVESTING TIM WALLACE IN MANY PARTS of the world, inflation is the highest it has been in decades. In response, central banks – from the US Federal Reserve to Australia's Reserve Bank – have raised interest rates aggressively in the past 12 months in an attempt to bring inflation under control. But despite inflation coming down in recent months, the current inflation rate in Australia stands at 7.8% (December 2022), well above the Reserve Bank's target of 2%-3%. To “beat inflation” – that is, to see the value of your investment portfolio increase over time in real terms – means that an investor needs to earn a return in excess of current inflation levels. In periods of high inflation, not investing your money productively in assets like stocks, bonds…

ACTION PLAN THE HARSH REALITY MICHELLE BALTAZAR Australians between the ages of 20 and 40 will feel the full brunt of the cost-of-living crisis, with few to no tax concessions and government subsidies available to them to help make ends meet. The latest cost-of-living report by the comparison site Finder underscores the extent of the problem. It says 70% of gen Z (born between 1995 and 2009) are feeling the crunch, followed by 60% of gen Y (1980 to 1994) and 45% of gen X (1965 to 1979). Baby boomers (1946 to 1964) are the least likely to be affected. Chris Ellis, CEO of Finder Australia, says higher vulnerability from their lower savings has led to more than half of younger Australians feeling pressured to look for a second job. “Young…

Author Susanne Gervay has had a tough couple of years. In 2022, she had two brain tumours and a stroke that required urgent medical attention. “Having private health insurance gave me options. I utilise both the private and public health system and that gives me comfort when it comes to my healthcare,” she says. Gervay grew up having private health insurance and says it helped with elective needs like dental and optical, but it was always about the safety net for her. “I would be scared to not have private health insurance particularly later in life where I've had a number of emergencies happen,” she says. Even just having the option to get minor surgeries done faster can make all the difference to long-term health, she says. “I needed a…

It's possible to go it alone with health insurance. Some people opt to set aside money for their future expenses rather than giving it to a health fund. For example, if you save $150 a month for 30 years, this would give you a kitty of $54,000, provided you didn't dip into it along the way. Choice health insurance expert Uta Mihm says in principle this works if you're not earning more than $90,000 (see breakout above), but even then it comes with some big risks. “You may have a claim [medical expense] early on without the savings to cover it and if you end up taking out hospital insurance after age 31, you will pay the lifetime cover loading surcharge,” she says. Lifetime health cover (LHC) loading is a…

BANKING Michelle Baltazar A ustralia's banks aren't very popular right now, and neither are the Reserve Bank nor its governor, Philip Lowe. But when things go wrong in the US banking system, as in the case of Silicon Valley Bank (SVB) and other smaller regional banks, we should pause for a moment to consider that Australia's banking system is robust and well regulated through national legislation, rather than the seemingly piecemeal network of state-based financial regulation that operates in the US. Banks are too important to allow them to be weakly regulated, or to allow special interest groups and lobbyists to cajole government to agree that smaller banks should have lighter regulation, as happened in the US. In 2018, the US government changed the law so that any banks with…

Anthony O'Brien SMALL BUSINESS Some small business owners are content to maintain the status quo. But others will be keen to expand and realise the full potential of their enterprise, especially as it could enhance the value of the business if the owner sells up at a later stage. If you're keen to ramp things up, here are six telltale signs that it might be time to take the leap into expansion. 1 You're consistently hitting key targets If you're meeting or exceeding the goals you've set for the business, it's a good sign that you're ready to scale. “When you're hitting those targets on a regular basis, it's a sure sign you have the products or services that people want,” says Cameron Poolman, CEO of small business lender OnDeck…

SUPER Vita Palestrant Couples have joint bank accounts to pay off their mortgage, their credit cards and other bills, and put savings aside to build a secure future. This requires mutual goals, planning and an overview of their combined financial position. But when it comes to super, it's a different matter: there's no choice but to have an individual account. While compulsory super is a success story, many fund members remain disengaged for a variety of reasons. People are defaulted into their workplace super, where their employer's contributions accumulate and remain locked in until retirement. To complicate matters further, a new default account is opened every time someone moves to another job, giving rise to multiple accounts and more fees. Although people have the right to choose their own super…

HAT IF? Annette Sampson THE FIXED RATE CLIFF There has been a lot of talk lately about the so-called fixed rate mortgage cliff. This refers to the fact that the Reserve Bank has estimated around 800,000 fixed rate home loans are due to expire in 2023. Collectively these loans are worth around $350 billion and borrowers refinancing will face a sharp jump in interest rates. Many of these loans were taken out during the Covid pandemic when canny borrowers could lock in a fixed rate loan at a rate of less than 2%. After the March lift in official interest rates, its tenth since May 2022, the Reserve Bank said it expected further rate rises would be needed to curb inflation, though the rate of increases may slow. So, these…

THIS MONTH Marcus Padley I was once very taken with a story (hopelessly embellished for effect) that Warren Buffett's “people” had once been so pestered by a wealthy Pom wanting an audience for “just one hour” that they eventually appealed to Buffett himself to get rid of the man. His reply was simple enough. “I have worked out that I have 42,515 hours left to live, if you don't mind, I don't want to waste any of them.” Since we heard this in the office, we started what we called “the Death Sheet”. It is an Excel spreadsheet that slaves off the actuarial life expectancy tables. The average life expectancy of a newly born Australian female is now 85.3 years. The average Australian male life expectancy is 81.2 and, if…

Source: Rainmaker Information. Data sourced December 31, 2022. *Numbers stated here depict averages, other than the Rank column, which is the total number of funds in the category. For any queries on these tables, please contact info@rainmaker.com.au. 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…

The table contains information to help you compare super funds. It showcases publicly available MySuper investment options offered by some of Australia's biggest funds. Rainmaker categorises them into risk options based on percentage of growth assets in their portfolio. The highgrowth risk option has more than 85% in growth assets (growth has between 75% and 85%), balanced has between 55% and 75%, and capital stable products have less than 55% growth assets. The performance results are the annualised investment returns each option has delivered after all taxes and fees. Past performance is no indicator of future performance. The table only lists products that have achieved a Rainmaker Information AAA Quality Rating. For interactive performance tables, visit moneymag.com.au/super/funds/compare WHAT THEY MEAN Performance after fees: When calculating fees, Rainmaker assumes a member…

Alex Dunnin OUTLOOK If the Reserve Bank governor, Philip Lowe, had his time again, he probably wouldn't have made all those public announcements through 2021 and 2022 that interest rates in Australia wouldn't rise until at least 2024. Nor would he have given investment bankers private briefings. Yet as politically clumsy as Lowe sometimes seems, it's absurd to personally blame him for the highest mortgage interest rates in a decade. But once a pile-on starts, it's hard to stop, which is why even senior politicians joined the fray in the lead-up to his appearances before parliamentary committees when he visited the nation's capital in February. Indeed, Lowe seemed to disarm many of his critics with his surprisingly smooth performance, taking questions on the fly and calmly explaining the RBA's strategy.…