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Saturday, 7 December 2019
Recently trending Responses to the 'OK Boomer' pollHow to make money at the end of a bull marketRobert Merton on retirement incomes and Jane AustenNest and nest egg: 23 aspects of housing and ageingUncharted waters, 2020 and beyond
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Billions of dollars of personal savings are flowing into 'fixed interest' funds, but do investors understand the risks? These funds have a place but they are not a short-term haven for worried retirees.
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Favourite quotations from famous people on markets, investing, processes, noise, pessimism, self perception and life balance. These lessons carry across investment cycles and lifetimes.
Two different articles cover a recent report on the attitudes of Australians towards retirement. What should be a enjoyable life stage is feared by many, and they fail to plan and work towards it.
The valuation maths of many expensive companies simply cannot work. They assume low interest rates for long terms, but strong economic growth to drive ongoing success. You can't have both.
With the best will in the world, family disputes often occur on the death of a family member. SMSFs often hold substantial assets, and the role of trustees and death benefit nominations is tricky.
Bankruptcy is surprisingly common but many people do not consider the impact on their SMSF. An undischarged bankrupt cannot continue as an SMSF trustee, but the impact can be managed.
APRA is pushing for executive remuneration to move to non-financial metrics, which will lead to poor outcomes for all stakeholders. Investors should resist and vote against such measures at AGMs.
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Welcome to Firstlinks Edition 335
I doubt the Reserve Bank Governor, Philip Lowe, is looking for a new home at the moment. If he were, he would know first-hand that Sydney residential is red hot, and it might make him think again about cutting rates. For the first time in 30 years, I am looking for a new home, and it's clear that FOMO has replaced the FONGO (Fear of Not Getting Out) in the space of a few months. It's a market where selling before you buy can quickly become expensive.Read More.
The family home is the biggest asset of most Australians across all age groups, and its role as both a place to live and an investment makes home ownership the biggest retirement policy issue.
Many investors are looking to emerging markets due to stretched valuations in developed markets, but there are particular reasons why choosing a passive ETF in emerging markets may not be optimal.
Quantitative investing has its share of critics who denounce the investment approach as a black box exercise. But this active investing style is directly supported by analysis of the numbers.
Regulators are insisting that large super funds become more innovative to assist their clients, but what are the traps within businesses that inhibit creativity and fresh solutions?
While every generation has its unique opportunities, the majority of Firstlinks readers agree that Boomers have had a better run than others. But the real highlights here are in the comments.
1997 Nobel Laureate Robert Merton wants greater focus on the income that will sustain a retirement, and even Jane Austen understood this. And he has a surprising proposal to help with longevity risk.
As we approach the 2020s, we are sailing into uncertain waters at best. These times also have some historical precedents, but we need to make important reforms before our luck runs out.
Prolonging a recovery with stimulus could lead to a worse slump later. Even today, policymakers are haunted by actions taken in 1937 which led to a loss of production and jobs and a falling GDP.
Global trends will create opportunities in Asia, including dealing with some of the world's youngest and oldest populations. Australia's Free Trade Agreement with ASEAN this week a valuable step.
Global central banks are delivering a sugar hit that markets are relying on, but it is unsustainable. Interest rates cannot continue to be cut into negative territory forever.
A close inspection of Reserve Bank Board minutes, the implications of US Fed moves, the way unemployment is measured and how monetary policy is set add up to a picture of further rate cuts.
Central bank independence was an appropriate solution when inflation was a threat. In today’s low-inflation, low-growth and high-debt world, even central banks doubt their level of influence.
Australia has lagged many developed countries in providing top quality rental accommodation owned by institutions, but it is changing, driven by social preferences, affordability and investor needs.
Individuals may feel disempowered when their small number of shares are outweighed by large institutions, but combining retail power into a voting block can lead to meaningful engagement.
A global portfolio of infrastructure assets allows trends in one part of the world to be recognised early in another, while companies with pricing power and high barriers to entry enjoy extra resilience.
It's been a strong year for the stockmarket, and a good decade since the end of the GFC. However, there are signs the bull will stop running soon, and portfolios should be positioned in advance.
Equity market vigilanties, particularly resisting poor Initial Public Offerings (IPOs), are showing the benefits of active managers not simply buying everything put in front of them.
Our annual scorecard for Australian banks shows earnings were hit by remediation costs and slow credit growth, but they are in good health and look attractive versus other listed companies.
The value of financial advice is increasingly questioned after the Royal Commission and changes to advice business models, but the case for financial advice for many people remains strong.
Even if you are in a wonderful relationship now, you should not assume you will never be in a blended family. We all need to plan accordingly by avoiding common mistakes in wealth planning.
In solving problems relating to conflicts and best interest duties, comprehensive financial advice has become so expensive that it will be increasingly confined to the wealthy. Is that what we want?
Thanks to the Royal Commission, everybody is aware of the problems with vertical integration and in-house conflicts for financial advisers. What should advisers and their clients look for?
SMSFs are useful retirement vehicles, but there are rules to follow which can easily be overlooked in haste. Run your eyes over the next five rules in this continuing list.
Statements by Brian Hartzer, CEO of Westpac, confirm that financial advice delivered by advisers to the mass market is not financially viable, and technology is the solution if most Australians are not to miss out.
After 35 years in fiduciary and leadership roles, the President of MFS Investment Management is clear about the major problem in wealth management: we have not convinced investors to think long term.
Two of Australia's most experienced and successful chairs explain what makes a good board, what to watch for in bad ones, with advice for aspiring board members: understand first what motivates you.
In the month when index US equity funds exceeded active funds for the first time in history, a look at the company which started it in 1975, with insider views on mass market financial advice.
Marketplace or P2P lending has come a long way in Australia in the last five years. Most investors will be surprised by the type of borrowers and purposes of the loans, and how they are priced.
Two reports this week confirm that superannuation will remain at the forefront of social, business and political debate forever. Deloittes issued an estimate that super assets will grow from the current $3 trillion to $10 trillion over the next 20 years, and super funds will become so large that they will own most of the listed assets in Australia.
This week, JP Morgan downgraded its global growth outlook for 2020 by 0.2% to 2.3%, blaming 'population ageing'. Then Treasurer Josh Frydenberg said: "As our ageing population puts pressure on our health, aged care and pension systems, we need to develop policies that respond effectively."
Almost overnight, 'OK Boomer' has become a biting retort for younger people. The New York Times calls it "the end of friendly generational relations". OK Boomer entered Hansard in New Zealand when Chloe Swarbrick, a 25-year-old politician, silenced a heckler. How much have Boomers benefitted from favourable policies and markets?
Sludge. Well done ASIC for calling out the meaningless warnings, disclosures and disclaimers in financial presentations and offer documents. ASIC even says they are often harmful to client outcomes. Consider the dreaded disclaimers at the start of every talk. They interrupt well-crafted and strong introductions, and they are usually the butt of jokes by presenters, along the lines of "You've all read that, right? Good, now I'll get on with what really matters."
The superannuation industry is its own worst enemy. The disagreements spill into the public domain and reduce confidence and trust in the system. Research released this week by Qantas Super shows only 60% of Australians (and worse, only 52% of those in the critical savings years of 40 to 49 years old) trust their super fund to act in their best interests. Confidence in having enough money in retirement languishes at an average score of 5.4 out of 10.
Are you ready to pay your bank to accept your deposits, as is happening in Denmark and elsewhere? Already, some Australian banks will not accept large deposits from companies unless there is a business relationship. The ACCC Review on mortgage pricing may exacerbate the problem for depositors, as government pressure to reduce mortgage rates will be passed to the other side of the balance sheet.
Chris has many years of experience in building successful wealth management practices.
Noel Whittaker is one of the world's foremost authorities on personal finance.
Phil Ruthven is the founder and director of IBISWorld, Australia's best-known business information, forecasting and strategic services corporation
Paul John Keating is a former Australian politician who served as the 24th Prime Minister of Australia, in office from 1991 to 1996 as leader of the Labor Party.
releases findings of its annual ETF research Report in partnership with Investment Trends.
Global Fixed Income Fund cuts fees.
launches Global Opportunistic Fixed Income Trust.
Business has always faced changes, but the rapid extent of technical progress means many companies will cease to exist over the next 20 years, including some famous global brands.
We hear a lot about establishing an SMSF, but not much about exiting one. What are the options for SMSF members when the structure is no longer appropriate as a superannuation vehicle?
At a time when technology and society are forcing fundamental change on businesses, there is logic in adding 'shorting' to portfolio management. But it's not simply the opposite of going 'long'.
Nobel laureate Robert Merton wants us to focus on the income that will sustain us in retirement, even Jane Austen understood this. And he has a surprising proposal to help with longevity risk.
Is it paranoia, or are the goal posts always changing for Generation X? Read the musings of a disgruntled Gen-Xer, lifting the lid on our government's secret plan to thwart her kind at every turn.
We hear about what's wrong with our superannuation and retirement income systems and over time, exaggeration has crept in. We need to dispel myths and have a clear fact base as the foundation for discussion and policy.
Specially-selected collections of the best articles
Firstlinks articles are collected in Pandora, Australia's national archive.