As we move into 2024, the 12th year of publishing Firstlinks, we have gone back over 540 editions and about 1,000 pieces written by me to find some of our most popular and standout articles.
While we focus of investing, superannuation and products, and try not to second-guess the market on where it is likely to head in the coming year, we inevitably write about property regularly. While Australians held about $3.6 trillion in superannuation at the end of 2023, they are investing about $10.5 trillion in residential property. Whereas 20 to 30 years ago, houses cost about four times the average salary, new buyers are now paying double that, or about eight times their income. It has made buying a house (or other home) a massive social problem and the increase in inequality has created a two-system economy.
The numbers are startling in a period of rapidly-rising interest rates. The national Home Value Index (HVI) rose 8.1% in Australia in 2023 according to CoreLogic, but Sydney, Brisbane and Perth rose even more. While predictions are prone to bias and inaccuracy, it seems unlikely that prices can repeat similar rises in 2024 on the back of large increases in interest rates.
In any case, several selected articles focus on housing trends, including the role of homes in retirement and superannuation. We also draw out many of the unknown risks of buying off-the-plan, increasingly important as more people need to buy apartments rather than houses.
The 2019 'OK Boomer' article showed how much my generation had benefited from the times, and we also review comments by Markowitz and Marks.
So take a look down memory lane at some important pieces, as we head back into our usual format during January 2024.
(A reminder that all past editions remain forever on our website, and glancing through an article archive, or perhaps following a particular contributor, reveals a treasure of content to follow).
1. 2023 (Edition 503)
10 reasons owning your home beats super in retirement
https://www.firstlinks.com.au/10-reasons-owning-home-beats-super-retirement
Since the introduction of compulsory super, the industry has pushed its members to put as much as possible into super. It has been a disservice to anyone entering retirement who could have owned a home instead.
2. 2022 (Edition 478)
Homeowner retirees should not ‘run out of money’
https://www.firstlinks.com.au/homeowner-retirees-not-run-money
A retired couple with up to $419,000 in assets plus a family home can receive a full age pension of $40,000 a year (worth maybe $1 million) plus many other benefits. With home equity access, money should not run out.
3. 2021 (Editions 407 and 408)
Whoyagonnacall? 10 unspoken risks buying off-the-plan
https://www.firstlinks.com.au/whoyagonnacall-10-unspoken-risks-buying-off-plan
https://www.firstlinks.com.au/whoyagonnacall-unspoken-risks-buying-off-plan-2
All apartment buildings, new or old, have defects, and inexperienced owners assume someone else will fix them. But developers and builders will not volunteer to spend time and money unless someone fights them. Parts 1 and 2.
4. 2020 (Edition 365)
11 lessons from my lousy $50K profit on Afterpay
https://www.firstlinks.com.au/11-lessons-from-my-lousy-50k-profit-on-afterpay
Afterpay listed at $1 in 2016 and traded at over $100. How should an investor treat a small holding in a 100-bagger when each new level defies the experts? Should true believers let the profits run?
5. 2019 (Edition 332)
OK Boomer: fessing up that we’ve had it good
https://www.firstlinks.com.au/article/ok-boomer-fessing-up-that-we-ve-had-it-good
The pre-Boomer generations faced global wars and depressions, but Australians born after 1946 have enjoyed prosperity. Superannuation, education, strong markets and surging property prices locked in gains.
6. 2018 (Edition 248)
$1 million is never worth less than $500,000
https://www.firstlinks.com.au/1million-never-less-than-500000-assets
Of course more is more. It's become common to claim there is no incentive to save more than $500,000 because of the loss of age pensions and possibly franking credits. But these arguments overlook the way super is supposed to operate.
7. 2017 (Edition 187)
Howard Marks on expert opinions as a coin toss
https://www.firstlinks.com.au/howard-marks-forecasting-coin-toss
Seven years after we first published this article, it feels as relevant as ever as market experts try to predict the next Fed rate move. Nearly all were wrong at the start of 2023, yet optimism led to a strong conclusion to the year. The memo from Howard Marks titled 'Expert Opinion' explained how forecasting is more art than science, and too much weight is given to expert opinions which are little more than a 50-50 guess.
8. 2016 (Edition 150)
Culture shock: 'Naked Among Cannibals' revisited
https://www.firstlinks.com.au/culture-shock-naked-among-cannibals-revisited
In my study of the way Australian banks operate, the cultural shortcomings have been obscured by the more prominent scandals in wealth management. Without a legal fiduciary obligation to customers, are banks fulfilling the social role expected of them?
9. 2015 (Edition 117)
What real estate agents don't tell you
https://www.firstlinks.com.au/real-estate-agents-dont-tell
The costs of owning an apartment for short term rental consume most of the income, leaving uninformed investors blind to actual returns until the statements roll in. The practice of marketing gross yields is misleading.
10. 2014 (Edition 65)
Harry Markowitz on investing until 100
https://www.firstlinks.com.au/harry-markowitz-investing-100
At age 87 in 2014, Nobel Prize winner and investment legend Harry Markowitz was far from retirement, dividing his time between teaching, consulting and writing. He sat down with me to share his wisdom.
11. 2013 (Editions 1, 2 and 3 by the Hon Paul Keating)
We're living longer and so should our superannuation
https://www.firstlinks.com.au/living-longer-and-superannuation
Where did SMSFs come from, and where are they going?
https://www.firstlinks.com.au/where-did-smsfs-come-from-and-where-are-they-going
Dividend imputation and superannuation are worth fighting for
https://www.firstlinks.com.au/dividend-imputation-and-superannuation-are-worth-fighting-for
12. And a bonus from 2020 (Edition 359)
The most amazing investment lesson of all
https://www.firstlinks.com.au/the-most-amazing-investing-lesson-of-all
If you had to choose one valuable concept to explain to a young person setting out on an investment journey, it should be compounding and the steady accumulation of wealth.