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Tuesday, 25 January 2022
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Wealth accumulation has four main drivers. Evaluating long-term investment risk requires shifting the focus on shorter-term losses and volatility towards failure to achieve long-term objectives.
Savers are making small decision after small decision that leads them away from investing and closer to outright speculating. Time will tell if this ends in a bloody climax or we all live happily ever after.
Risk isn’t something to be avoided altogether. To achieve returns beyond the government bond rate, some level of risk must be accepted. Assessing which risks to take and calibrating them is the investor's challenge.
Investors often overlook the capital risk in high-yielding stocks. It's better to ensure capital grows and investors can sell a portion each year to make up for the shortfall in income from dividends.
Investing in a traditional index can be compared with taking the main road to a destination, but if you know the backroads and traffic conditions, you coud reach your goal quicker.
While franking credits attached to Australian equity dividends can be a meaningful source of extra returns, a deliberate tilt towards franking can also introduce significant unwanted risks into the portfolio.
To avoid retreating from making investment decisions during uncertainty, investors are compelled to rely on 'rules of thumb' to guide them in decision-making. Here are many of the more popular commonly-used rules.
The worldwide trend to populism loosens fiscal restraint, leading to asset price inflation and forcing investors to focus on a range of low probability but potentially material risks.
Many active managers are closet indexers. The real cost of forcing a skilled manager into a low tracking error is the limit to the upside.
It’s much easier to measure returns than the risk involved in generating those returns. Yet, it’s crucial to understand risk because in certain markets, higher returns may simply be coming from taking more risk.
ETFs have grown rapidly in popularity and diversity, but like managed funds, not all products will survive for the long term and there are consequences if a small-scale ETF is closed by its issuer.
What to do when you think a market correction is overdue? Instead of selling off everything, a viable option is to position yourself for an easier exit, although it's tougher to implement in equities than fixed interest.
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.
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.
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.
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.
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.
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.