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Thursday, 3 December 2020
Recently trending Five ways the Retirement Review points to new policiesGraeme Shaw on why investing is at a pivotal momentRetirement Review gives strong views on hoarding of super11 key findings on retirement dreams during the pandemicBank scorecard 2020: when will the mojo return?
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The Retirement Income Review goes much further than an innocent-sounding 'fact base', and is sure to guide policies in the run up to the next election. It will change how we think about retirement incomes.
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As people stayed home during the pandemic, a bearish view swept over most property sectors, but many have thrived and prices have recovered rapidly. The best opportunities are in long leases with quality tenants.
The Review includes some profound findings, most notable that retirement income should include drawing down far more capital. Expect post-retirement products to proliferate under a Retirement Income Covenant.
Paul Keating is the champion of compulsory superannuation as the central means of funding retirement. In the wake of the Retirement Income Review, he is at his passionate best defending the system, with Leigh Sales.
Investors with heavy allocations to a broad US index should check how much is exposed to tech stocks, especially when valuations look a bit steep. It might be time to reallocate to other sectors or styles.
At some point, policymakers will turn to the task of deleveraging, to work off massive debt burdens built up during the pandemic. Australia is already ticking the boxes on many policies used in the past.
During COVID, bankruptcy rules have allowed small businesses to trade while insolvent. It may mean an SMSF is hit by the collapse of a business leaving trustees struggling to meet their own legal obligations.
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Welcome to Firstlinks Edition 385
Superannuation is under attack on several fronts, and the Retirement Income Review adds fuel to the fire. Far from being simply a 'fact based' set of statistics, it takes a strong stance on many controversial subjects. While not formally making recommendations, its findings are no less powerful, setting up retirement planning for significant changes.Read More.
A mid-pandemic survey of over 1,000 people near or in retirement found three in four are not confident how long their money will last. Only 18% felt their money was safe during a strong economic downturn.
The suspension of ASX trading this week showed how real-time data is essential for investing. A strong API should integrate many sources of data, improve speed, automate tedious processes and reduce risk.
The 4% withdrawal rate in retirement is an industry standard, a level where a retiree could be confident of not running out of money. Its creator Bill Bengen explains its use in this interview with Michael Kitces.
The Australian retirement funding system relies on three pillars: the age pension, superannuation and voluntary savings. Most retirees have their wealth tied up in the family home, so what role does it play?
Biden is close but Republicans will likely hold the Senate. A split Congress has historically resulted in higher market returns. Investors should note that company earnings, not elections, drive the stock market.
If he wins, Joe Biden will enter office with a weak mandate relative to expectations due to the underperformance of his party, but the executive branch wields a great deal of power in the regulatory framework.
Bonds have been strong performers over many decades and always play a role in defensively-positioned portfolios. There are some basic principles investors should understand such as the types of yield.
While the recent Pfizer announcement deserves optimism, the global life sciences supply chain is likely to create more sustainable profits than those in the highly-competitive vaccine market.
Over the long term it doesn’t matter who is the President as the US has thrived under different presidencies and parties. At least as important for Australia is the deterioration of our China relationship.
No option removes the existential threats to the UK stirred by its EU departure. What started in 2016 as enough voters defying the odds has left the UK dangling politically and economically amid a pandemic.
The US is days away from a presidential election with major repercussions for economic policy and investments in the US and the world. Views from First Sentier Investors and BNP Paribas Asset Management.
The impact of the pandemic on Australia's debt and deficit has forced the government into borrowing on a scale unimaginable at the start of 2020. What are the implications, and what is even more important?
The concept of 'activity-based working', where several people occupy one seat on a particular day, is gone. Businesses will need more space for the same number of people as an offset to the decline in demand.
Exchange Traded Funds have moved well beyond indexes to a range of sectors, themes, smart beta and active. They are attracting strong flows from both experienced investors and newcomers.
With negligible returns on term deposits and cash, investors who qualify as 'wholesale' are turning to a range of bond alternatives where yields are more attractive for taking some extra risk.
A review of the performance of gold in the aftermath of prior US Presidential elections gives a feel for where the price may head, but with a wide disparity within the one-year figures.
When Australian companies are marked against their role in tech disruption, stock market returns are higher for companies with higher tech disruption scores. They also benefit when valued using low interest rates.
Most people pay cursory attention to estate planning, limited to a will and maybe a chat with the children. Those who want to make their intentions clearer and easier for others should check these quick tips.
Financial advice has moved well beyond simply recommending investments, with five major components to quality advice. Helping clients avoid potentially disastrous mistakes is often underestimated.
Although the Aged Care Royal Commission (with Paul Keating) and Budget announcements gave the aged care sector high profile, the welcome 'granny flat' changes came with inadequate extra Home Care Packages.
Reductions in loan repayments, either deferrals or failing to opt out of lower payments, seem like a good idea. But they are expensive and should only be adopted if the borrower needs the money.
Aged care should not be narrowly defined, as opportunities include home care, granny flats, retirement villages, land lease communities and residential aged care. Take advice and don't rush it.
Simpler tax arrangements for investments are a key benefit of separately managed accounts, where after-tax outcomes vary from other vehicles such as managed funds and direct equities.
Company profits have not improved for many years but higher valuations have been driven by falling rates and excess liquidity. Conditions do not suit a value and contrarian manager but here are some opportunities.
There is a popular view that retail investors panic when markets fall, but in the recent COVID selloff, they were waiting in cash for buying opportunities. What's equally interesting is the stocks they bought.
Kate Howitt identifies the stocks she likes and the disappointments, gives context to the increasing role of retail investors, and explains why the market is more of a 'voting not weighing' machine than ever before.
Questions on the stock market/economy disconnect, how to focus long term, technology's growing role, income in a low-rate world, Modern Monetary Theory and endless debt and the tooth fairy.
Underperforming asset managers receive little sympathy from critics and investors, but what does 'underperforming' mean? It's normally a reference to not matching a benchmark, but what should a manager do if the market is behaving in a way that is totally anathema to a belief in how companies should be priced? Most supporters demand style consistency, even if it does not work in the short term.
One of the downsides of Donald Trump commanding the headlines is that we skim over other significant issues. For example, few Australians read the China Daily News or coverage of its contents, missing official statements that are terrifying hundreds of Australian producers. China says Australia will 'pay tremendously' for its recent lack of respect.
ELECTION UPDATE. At 3.20am AEST on Sunday, Joe Biden became the 46th US President by winning Pennsylvania. Donald Trump is yet to concede but he did much better than the polls expected. Despite a scandal-filled Presidency, 70 million Americans voted for him in 2020. Regardless of his own wealth and the way he used the Presidency for his own businesses, he managed to tap into the disillusion from the bottom 90% of Americans who combined own as much wealth as the Top 1%. Much has changed in the US since I holidayed there with my family in 1998.
There is a popular belief that retail investors do not even achieve index returns due to poor timing of investing and selling decisions. The theory is that they buy after markets rise as confidence grows, then sell in panic when markets fall, and miss the recovery. This 'buy high sell low' tendency loses the advantages of long-term investing and riding out the selloffs. But the evidence for this belief is not convincing.
Former US Vice President Al Gore once told me he needed to raise only US$70,000 when he first ran for politics. Now Biden and Trump spend billions just on television advertising. Little wonder so many favours are owed after each election, and this time, it really matters. Plus investing insights from Kate Howitt, Hamish Douglass, Roger Montgomery, Phil Ruthven and Morningstar's top stock picks.
It is trite and obvious to say the future is uncertain, and while COVID-19 brings extra risks, markets are always unpredictable. However, investing conditions are now more difficult than ever, mainly because the defensive options for portfolios produce little income. We explore whether investing rules have changed with new input from Howard Marks.
Risk isn’t something to be avoided altogether. To achieve returns beyond the government bond rate, some level of risk must be accepted. Assessing which risks to take and calibrating them is the investor's challenge.
A Morningstar stock screener reveals a cross-section of companies with competitive advantages that are trading at material discounts to estimated value. This is a list of 18 highly-rated names worth watching.
Not every retiree needs to gun for higher returns, but a conservative portfolio can court its own risks, especially with bond rates so low. But some retirees prefer to settle for a lower income.
Markets have recovered in the last six months but most investors remain nervous about the economic outlook. Morningstar analysts provide four quick tips on how to navigate this uncertainty.
COVID-19 pushed many SMSF trustees to change their asset allocation, but some of the adjustments are surprising. In the GFC, there was a surge of new SMSFs as investors lost confidence in fund managers to protect them.
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.
significant investment into SuperMate set to revolutionise support of professional clients.
Prime Industrial Fund secures $2.6 billion of new equity commitments.
Australia’s first ‘all growth’ diversified ETF to start trading on ASX on 16 December 2020.
Understanding demographics is vital for successful planning and investing for the future. What is happening on population growth, ageing, natural increases, immigration and our role in Asia?
State Street Global Advisors is a pioneer in the Australian ETF market, but aggressive pricing from new rivals has eroded its competitive edge.
As he prepares for retirement, a Chief Investment Strategist from a major global fund manager summarises what he has learned working through five full business cycles. He says it's time to take risk off the table.
Make sure you're not focussing on minor investment problems while giving short shrift to the game-changers. This pyramid describes the important decisions and it might surprise what comes last.