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Edition 212

  • 28 July 2017

The Holy Grail of investing is high returns with low risk. When a fund or index delivers a return of say 10% and volatility (used as a measure of risk) of 10%, analysts say it has a 'Sharpe Ratio' of 1.0 (ie return/risk). This 'risk-adjusted return' rarely averages over 1.0, and 0.5 is considered a good result. Yet according to Bloomberg, in the 100 months to June 2017, the S&P500 index delivered a Sharpe Ratio of 1.4. A stellar result.

Tension as diversified portfolios have lost their anchor

With the strongest defensive assets earning close to zero and negative real returns, investors are looking at other ways to shock-proof their portfolios, but it invariably means taking on more risk.

Decide if 'fake crises' are worth the worry

Instead of automatically reacting to fake crises, a better approach is to weigh up the pros and cons first. If the news proves to be correct, take action based on your risk tolerance.

How to improve retirement outcomes for women

Adequate retirement incomes rely on accumulating superannuation balances throughout a working life, and many factors are detrimental to women keeping pace with men. Urgent reform is needed.

Disruption supports small company growth

New technologies and markets are driving opportunities for small to medium cap companies, as well as the global tech giants. Many Australian companies have jumped on the wave.

5 factors for SMSFs investing in residential property

Should SMSFs invest in residential property, should they borrow to do it and what is the impact on housing affordability and market stability?

Easier transfer of death benefit pensions

Transferring a death benefit pension can be complicated but new legislation from 1 July 2017 simplifies the process.

Are banks misjudging retirees?

A retired reader wrote to us about his poor treatment by several banks, seemingly because he is retired. Are banks missing out on opportunities to service retirees?

Australian LICs versus Berkshire Hathaway

As part of the continuing discussion about dividends, Peter Thornhill sent in a chart that compares the long term performance of three Australian LICs with Warren Buffett's legendary Berkshire Hathaway.

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10 little-known pension traps prove the value of advice

Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.

Check eligibility for the Commonwealth Seniors Health Card

Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.

Hamish Douglass on why the movie hasn’t ended yet

The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.

Start the year right with the 2022 Retiree Checklist

This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.

At 98-years-old, Charlie Munger still delivers the one-liners

The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.

Should I pay off the mortgage or top up my superannuation?

Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.

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