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Tuesday, 13 April 2021
Recently trending 400th Edition Special: 45 of the best investment ideas Four bubbly market pockets show heightened risk for investorsTurning point: the 2020s baby boom retirement surgeHume and Frydenberg reset super with two buzz wordsHow long will my retirement savings last?
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Many self-funded retirees will outlive their savings as most men and women now aged 65 will survive at least another 20 years. Compare your spending with how much you earn to see how long your money will last.
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Residential property attracts little interest from institutional investors and the listed market. Here are three reasons why retail investors have an advantage over well-resourced institutional investors.
It may surprise even industry insiders that over 30% of all trading on Chi-X comes from retail brokers. What is the growing influence of retail investors on Australian stock exchanges and who are they using?
A broader rebound beyond tech companies is likely to accelerate. Structural reforms may regain momentum after COVID and a lower risk premium is warranted for emerging markets equities compared with prior crises.
Fund performance varies over time. A fund may have strong capability and perform well over time, but it may fail the performance test at some point. The YFYS reforms create unwelcome and unintended consequences.
This month's look at innovations changing the world explores computer chips, cryptocurrencies, renewables, cybersecurity, robotics, mobility, alternative foods, finance ... there is no limit to human ingenuity.
One problem with defining a single and universal purpose of superannuation is that people have contributed to super for years, even decades, with different ideas and intentions.
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Welcome to Firstlinks Edition 402
There was an important moment in an interview with Paul Keating last week when asked about the origins and purpose of super. He said he thinks about retirement in 'family terms', and it is appropriate to pass super money to the next generation ... assuming you have not spent it through living so long.Read More.
A member of the Retirement Income Review explains the focus on home equity. For homeowners at retirement, homes represent three to four times as much wealth as superannuation, but the average age at which mortgages are paid out has increased from 52 to 62.
What do hot cross buns and funds have in common? In both, there is no answer to which is the best, as their characteristics appeal to different people. Select the ones that suit your taste and appetite, maybe with added spice.
Two sides of the super debate - 9.5% is enough with better use in retirement versus 12% is the minimum for a decent income - are deeply divided, but what if a radical solution could bridge the gap.
In Australia, the preference for passive funds is nowhere near as strong as it is globally. Australians added to their active funds in 2019 and 2020, and there's a type of active fund that is especially benefitting.
There is a spectrum of retirement investment strategies ranging from ‘business as usual’ to more complex ‘income layering’. They allow for varying degrees of personalisation in managing retirement risks.
Efforts to become more sustainable will challenge many companies and perhaps even bankrupt some. Sustainability drives new opportunities but brings risks for others, and companies which cannot adapt will suffer.
While western policymakers aim to sustain economic recovery, Chinese post-pandemic policy normalisation is a headwind with slower credit growth, less government bond issuance and a reduction in the fiscal deficit.
With bond rates and Reserve Bank actions driving equity markets and inflationary expectations, it pays to understand what is really happening in both central bank and commercial bank balance sheets.
Bull markets tend to follow their own momentum until they hit a clear opposing force. The economy is like a spring about to be uncoiled with the most obvious restraint on the horizon is the return of inflation.
The outlook for emerging market debt in 2021 revolves around liquidity, uneven recoveries and debt sustainability. Damage has been done to many countries’ finances and watch for central banks withdrawing support.
Key factors to watch in 2021 are coronavirus cases and deaths, global business conditions, unemployment, inflation, bond yields and the gap between earnings yields and the US dollar. Where are we now?
We need to think hard about how we work and live in the future. How do governments, health gurus, individuals, politicians, businesses and social groups need to act in 2021, both in dealing with COVID and thereafter?
Howard Marks updates his views on markets and whether we are in a bubble, but his comments on fund managers in public markets, liquidity premiums in private markets and the role of SPACs were most original.
Social media, app and trading platforms that drive retail participation also open doors for greater volatility. Ironically, easy money is contributing to market risks, with shorting hit by spiking to the upside.
Heavy consumer spending, rising commodity prices and government deficits point to rising inflation. Given the risk in long-term fixed rate exposure, where else can bond exposure help generate income?
Equity valuations are lofty, but long bond rates have now returned to levels before the pandemic crisis. In a balanced portfolio, long bonds now provide more opportunity to cushion the volatility of equities.
After a strong rally since March 2020, markets are increasingly worrying about the threat of inflation and higher interest rates. Ironically, it might be at a time of strong economic growth which benefits companies.
The rise of the Bitcoin price coinciding with a pullback in the gold price is leading commentators to argue the precious metal is being usurped by its purported digital counterpart. There's a long way to go.
Seeking financial advice can be a daunting task and over 80% of Australians do not have a financial adviser. Here are the steps involved in understanding the advice process to encourage more people to jump in.
The widespread use of 'millionaire' must stop. Inflation means that the basket of goods and services that cost $1 million in 1960 now requires $15 million. Today, millionaires are not wealthy.
Let compounding do its work. It starts slowly. This is why many of those who start an investment programme (or fitness programme, dietary change, sport, or business) give up in the early stages.
Don't make life difficult for the person trusted to manage your estate. Find the time to arrange your documents, contacts, online accounts and files in a convenient place, including giving them some cash.
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.
Active managers need to know what factors are distorting asset prices. This interview with Ted Maloney, CIO of MFS, explores how much of 10 years of growth has been pulled forward and the impact of Reddit users.
The Interview Series has proved highly popular with our readers. This year’s collection of 20 interviews for 2020 covers most asset types and is a window into how diversification helps to manage risk.
ETFs have gone from bit player to major force in Australian investing in the space of a few years, and will top $100 billion soon. One of the major providers explains how they bring products to the market.
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.
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.
It's doubtful we will see short-term rates above 5% for at least a generation, maybe a lifetime. It's a weird thing to say for someone who spent his first decade in money markets with double-digit rates and a bank bill rate of 17.5% in 1990. Plus Deborah Ralston on retirement income, and why picking fund managers is like selecting hot cross buns.
Around 2,500 people retire in Australia every week, and 1.1 million Australians are trustees of their own SMSF, with millions more in large funds. Investors need better education to nurture the $3 trillion in superannuation and trillions more outside super. It's a lifelong learning process, and this Special 400th Edition is dedicated to investor and personal education.
It's a year since the World Health Organisation declared COVID-19 a global pandemic, and we've all experienced changes in our daily lives that none of us expected. The 12-month range for the S&P/ASX200 is 4,402 to 6,938, a rise since February 2020 of 58%. New spending habits - less on travel, more on cars and homes - have impacted individual companies differently. Plus Howard Marks on No Price Too High.
While markets always have differences of opinion, fund managers are further apart than ever. At one end is the bounce back theory of massive consumer spending. The other is the overvaluations during a pandemic with mutant virus threats. Plus Julie Bishop on leadership, life and libertines.
Clichés such as 'unprecedented conditions' and 'we're all in this together' enjoyed prominence in 2020 but there are two new buzz words in Canberra for 2021. The 'polispeak' of innocent-sounding words are softening us up for major changes in the way we think about and manage superannuation.
There's a favourite phrase that climate change sceptics like to use, that ‘the science is not settled’. It's powerful because it's easy to find a qualified scientist who disagrees with 95% of his or her colleagues. Investing is even worse, because it is open to personal interpretations and subject to behavioural biases. The science is certainly not settled.
To mark Firstlinks' 400th edition, we're offering almost 50% off a Morningstar Premium subscription, now with Sharesight. Ditch that old portfolio spreadsheet and manage your investments more efficiently.
Warren Buffett's annual letter has a simple focus on long-term investing: "All that’s required is the passage of time, an inner calm, ample diversification and a minimisation of transactions and fees."
It is often said that female investors are more risk-averse than males, but a closer look at the data suggest that income - rather than gender alone - may be the real determinant of women's investing choices.
Immersed in the business and finance worlds at an early age, Hetty Green became one of the most successful investors of all time. Her story shows that the best advice is often timeless.
Retirees or those close to retirement are courting risk by standing pat with too-aggressive portfolios. In a volatile market, tune out the pundits and take a look in the mirror. Are you happy with your exposure?
Warren Buffett's investment portfolio gains attention because of his legendary status, but parts of his empire in insurance, railways, metalworking and aircraft suppliers have been damaged by the pandemic.
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.
Australia's first diversified 'all growth' ETF now available on the ASX.
Two MCP loan funds secure ‘A’ band S&P ratings.
AllianceBernstein launches $1.3 billion fund on Chi-X Australia.
It looks like a magic money tree, where the central bank simply deposits money in the government's bank account. We asked one of the world's leading authorities on monetarism for an explanation.
Favourite quotations from famous people on markets, investing, processes, noise, pessimism, self perception and life balance. These lessons carry across investment cycles and lifetimes.
It's often said that 'A man is not a financial plan'. A Practice Director in a successful business shares some of her life tips on financial independence for women aiming to self-fund their retirement.
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.
The story of Mr Market originated with Ben Graham and was further popularised by Warren Buffett, but does it still hold true? Based on experience, the two-investor scheme looks hopelessly oversimplified.
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.