With the market's all-time high already drifting from the memory, let's repeat what the legendary Howard Marks told The Herald today, as we have before:
"You should not undertake investing without having thought about what your normal risk posture should be. It should be a function of your age, marital status, employment status, whether your income exceeds your needs or vice versa, whether you have assets in the bank, how many dependents you have, whether you hope to retire soon, what your ambitions are and whether you can withstand, intestinally, the rigours of volatility." (my bolding for a good word).
And also focus long term ...
A couple of weeks ago, a mate hosted his 70th birthday bash (thanks for asking, no, I am nowhere near that age). He was surrounded by his children, grandchildren and dozens of friends. As waiters brought out fine food and wine, he said the last few years had been the happiest of his life. He spends much of the year travelling or staying at his weekender.
In last week's Sun-Herald, Ali MacGraw, voted in 1972 as the top female box-office star in the world and once married to the volatile Steve McQueen, said after a difficult life, "I am lucky, I am blessed and happy." On reaching the age of 80, she thought: "Oh my god, I'm going to be 80. The rest of the trip is so short compared with the one behind." But then defiantly, "Dammit, this is what 80 looks like."
While we were moving content to our new website, I came across an article by former Prime Minister, the Hon Paul Keating, in one of our early editions in 2013. He said that he originally designed the superannuationit for people from the ages of 55 to 75. But that's now changed:
"So, we have two groups in retirement – a 60 to 80 group and an 80 to 100 group. The 60 to 80 group is all about retirement living and lifestyle, which I think the current superannuation system adequately caters for. But the 80 to 100 (which is technically, the period of life beyond the previous life expectancy) is more about maintenance and disability and less about lifestyle."
A chart from actuarial firm, Milliman, shows how people spend money in their later years. Note the health costs going up and the travel and leisure going down.
The message from my friend and Paul Keating and Ali MacGraw is that while 60 is indeed the new 40, make the most of it from 60 to 80 because 80 to 100 may not be as easy. And, of course, it helps if you have the money to pay for the travel and then the health. Dr Martin Fahy updates the numbers on how much retirees need for a 'modest' or 'comfortable' lifestyle.
Last week, I chatted with Adele Ferguson about her new book, Banking Bad. While I expected the book to cover only the Royal Commission, it's more a story about how banks ended up in such dire straits that they will pay remediation costs of around $10 billion. I suggested to Adele that among the terrible customer stories, many people are also taking advantage of the banks. She said she receives regular requests from aggrieved individuals asking her to "weave her magic".
Noel Whittaker also receives many emails from his followers, and increasingly, he is asked about property spruikers who continue to do their worst. Here are his warnings.
With tighter limits and ability to move money into superannuation, Matthew Collins suggests another way wealthier parents might assist their adult children to build their super, and David Bassanese shows how ETFs might help with portfolio rebalancing. It's a timely reminder also about diversification, as the ATO has announced
"At the end of August we’ll contact about 17,700 self-managed super fund (SMSF) trustees and their auditors where our records indicate the SMSF may be holding 90% or more of its funds in one asset or a single asset class.
We're concerned some trustees haven't given due consideration to diversifying their fund’s investments; this can put the fund’s assets at risk."
And while the five WAAAX stocks continue to grab the headlines, Keith Ward provides an excellent summary of the granddaddy of all boom stocks, Poseidon, and how it went from 80 cents to $280 in a few months. It's an important lesson in "the more things change ...".
Our new website launched on the weekend, and we provide a summary of ways you can find the right content to assist your investing. Take a moment to look around this resource designed for you.
Additional Features and the website include the latest ETF Report from BetaShares showing July 2019 was record-breaking for the industry, plus IIR examines LIC performance in FY2019 and checks some high-profile LICs.
Graham Hand, Managing Editor
For a PDF version of this week’s newsletter articles, click here.