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Monday, 21 October 2019
Recently trending Bulls, bonds and brain damageThree strategies for retirees to spend their superFive important lessons on investing for income Elizabeth Bryan and Chris Cuffe on how good boards workDon’t expect too much from the Retirement Income Review
The search for income and cash flow by people relying on their investments has never been more difficult, so it's worth understanding both the opportunities and the overall context.
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The market is asking how much are you willing to pay to feel safe, and the answer is: a lot. Perhaps a better question to ask is: how much are you risking in your quest to feel comfortable?
Global indexes are undergoing a fundamental shift, forcing investors to revise their allocations. There has never been a change of this size, coinciding with China's rise as an economic power.
Understanding how super is treated in the unfortunate event of bankruptcy can help make the best of a bad situation. It's not a simple matter of anything in super is unavailable to creditors.
The journey began as a chat over lunch, and with the acquisition of Cuffelinks (Firstlinks) by Morningstar, the pieces are in place to take the publication to the next level.
The quality of the content and editorial attracted us to Cuffelinks and now Firstlinks. Personally, I am an avid reader of the weekly newsletter, as an industry professional and as an investor.
My thanks to our community of readers, writers and sponsors, as we join a global business committed to education for investors and advisers. Morningstar will grow our reach and services and Firstlinks will remain free.
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Welcome to Firstlinks Edition 328
Chief executives of banks usually give their pricing committees free rein to adjust fees, deposit and loan rates, as there are hundreds of prices regularly changing. But there is one rate which must always be cleared by the boss: the variable home loan rate. This demand goes back at least 30 years, because the managing directors know the Federal Treasurer of the day will hit the phone and the airwaves to complain if banks do not pass on a full cash rate cut.Read More.
Many retirees simply drawdown the minimum amount allowed under the pension rules. While their money may last longer than using other strategies, is a frugal lifestyle the best way to live in later years?
The role of a portfolio manager changes when normal opportunities become constrained. Flexibility and diversification in seeking alternatives in new markets is vital to adapting.
Expectations are already high for what the Retirement Income Review will deliver, but it will make no formal recommendations, and the 'fact base' it establishes will be disputed by other experts.
Links to dozens of global media articles that often do not receive mainstream coverage in Australia. Some links are sceptical, fun or pointed, while others challenge consensus and accepted wisdom.
Retirement planning will become increasingly complex in the face of trends in home ownership, wealth dispersion, life expectancy, health and aged care costs, work patterns and pension dependency.
Within a few years, a massive global industry will shift its well-established form entirely as electric vehicles become the norm. But the opportunities might not be among the car makers.
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.
The market has been looking for inflation for most of the last decade. Low interest rates should increase consumption, borrowing and demand and result in higher prices. What killed inflation?
The RBA is likely to first exhaust conventional easing by cutting the cash rate to 0.5% by year end before deploying unconventional measures. Negative interest rates are unlikely.
For value investing to remain a rational strategy, mean reversion must hold true, which requires supportive economic conditions. But historical ranges are not relevant to companies losing market share.
Markets are overlooking the obvious risks as traders pass the parcel to the next buyer. Even central bankers believe: “There is something vaguely troubling when the unthinkable becomes routine.”
Investors should not assume all property leases are the same, and long WALE funds have the advantages of tenant quality and term, plus look for the highly-desirable 'triple net leases'.
The investment opportunity in listed ‘real assets’ in Australia is almost $250 billion. Offices, roads, warehouses, airports, pipelines and shops are the foundation of economic growth.
What once seemed like science fiction is being created by the world’s highest-quality businesses such as Alphabet, Amazon and Microsoft. The best investment outcomes are achieved by buying the best companies.
The business environment has favoured massive dominant firms, but the question for the future is whether this is as good as it gets. Is the usual mean-reversion about to start?
Climate change campaigns have dominated world news in the last week, but they should not include universal antagonism towards mining. We need resources to build renewables, with one exception.
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.
Recent legal cases involving Westpac and BT put to rest any view that 'caveat emptor' (buyer beware) applies to 'no' and 'general' advice service models, even though those models do not attract a best interests duty.
Structuring giving using Public or Private Ancillary Funds is an attractive strategy for donors who need a tax deduction now, and the flexibility to distribute the funds to charity over time.
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.
The companies that earn a place in an investment portfolio are like the players in a sporting team. They must perform strongly and complement each other, and not keep someone out who is better.
ETFs are doing to funds management what Spotify did to music. All investors and product providers need to adapt. Active managers can no longer justify index hugging at active fees.
The journalist most responsible for the calling of the Royal Commission takes care not to be roped in by everyone with a complaint to push. It takes experienced judgement to gather the right information.
When you consider all the things people worry about, the current ABC survey called 'Australia Talks' is uncovering our attitudes and producing surprising results. Based on 54,000 responses, ahead of health comes 'Saving enough money for retirement'.
Last week, the Government announced the first Retirement Income Review since the 1993 Fitzgerald inquiry into national savings, which followed the introduction of compulsory super by Paul Keating in 1992. As background for the Review, we have selected six Classic Articles, including one from Keating himself, which many readers would otherwise miss.
A few days ago, Bloomberg Markets recorded the 'end of an era' and an 'epic shift' which has not been widely reported in Australia. Bloomberg called it a major turning point in history. "In August, the investment industry reached one of the biggest milestones in its modern history."
Disruption is an overused word but there are major trends underway which are changing retirement planning. Three experts, Michael Rice, Anthony Asher and David Knox, have described a better integrated system for retirement options. We draw out their seven trends affecting the long-term investing of Australians.
Sometime in the next year, if there is no major market fall, total assets in superannuation will hit $3 trillion on the way to a forecast $10 trillion in 20 years, as shown below. Not bad for a country with GDP of about $1.9 trillion. The entire market value of all listed companies in Australia is about $2.1 trillion. While super funds obviously invest in a wide range of other asset classes, super investments will be increasingly offshore.
The latest update on the Future Fund's portfolio shows an asset allocation that differs from almost everyone else, and certainly most SMSFs. The stark variations versus individual trustees are the heavier allocation to global instead of domestic equities and significant investments in private equity, alternative assets, infrastructure and timberland.
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.
Prime Industrial Fund equity raising closes oversubscribed.
Prudent Capital Trust Available on BT Wrap.
Register for Regal's ASX:RF1 Investor Presentation Roadshow 28 Oct - 4 Nov 2019.
Noel Whittaker shares his 20 Commandments of wealth management after decades of advising clients, writing bestselling books and reaching millions of people every week on radio and television.
No amount of experience as an adviser specialising in aged care prepared Alex for the actual events her father faced inside an aged care facility. It might be about care, but it's a profit-making business.
Your SMSF story reflects your life's journey, and real people telling real stories encourage the popularity of this structure. Retail and industry funds struggle with this.
Risk means different things to different people, and there is a misallocation of resources, energy and intellect across the superannuation industry (and investment industry more broadly) to address risk.
How do you determine annual spending for retirement, endowments or charities over a long horizon when investment income and the market value of assets fluctuate substantially from year-to-year?
I never expected Self Managed Super Funds (SMSFs) to become the largest segment of super. They were almost an afterthought added to the legislation as a replacement for defined benefit schemes. Here's why it happened.
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Firstlinks articles are collected in Pandora, Australia's national archive.