Innholdsfortegnelse for November 2016 i Money Magazine

“I can understand wanting to have millions of dollars... but once you get much beyond that, I have to tell you, it’s the same hamburger.” BILL GATES As we were heading to the printers, treasurer Scott Morrison was named in the No. 6 spot in AFR Magazine’s annual list of the most powerful people in Australia. Interestingly, he maintained his position from last year. Love or loathe him, there’s no denying that whoever controls the purse strings to our economy is somebody who commands our attention. If they can get it right they can do a lot of good. If not, we all feel the pain. Right now Morrison needs to plug our debt and, as he says in our exclusive interview with him, “the best way to ensure…

Money is published by Bauer Media Pty Limited (ACN 053 273 546), part of the Bauer Media Group, 54-58 Park Street, Sydney NSW 2000. The trade mark Money is the property of Bauer Consumer Media Limited and is used under licence. Printed by PMP Moorebank 31 Heathcote Rd, Moorebank NSW 2170 IMPORTANT DISCLAIMER The information provided in this magazine has been obtained or derived from sources believed byMoney magazine to be reliable. However, Money does not make any representation or warranty, express or implied, as to its accuracy or completeness. We recommend persons making investment decisions contact their financial advisers. Bauer Media Limited, its related bodies corporate, and their directors and employees, do not accept any responsibility arising in any way (including negligence) for errors in, or omissions from, the…

There’s a simple way to ensure our savings last a lifetime. Part 2 ‘My advice is to not get overly stressed about planning for age 90’ Last month I was ruminating on life and the role of money in it. I am unconvinced that money – beyond our basic needs of food, clothing and shelter – has much link to happiness, though I do get the old saying: “If you think I’m unhappy now, I’d be even more miserable if I was also poor”, there is little evidence that happiness increases as we advance beyond a reasonable lifestyle. Some even grow unhappier as they then start to worry about losing what they’ve accumulated. Others, of course, revel in having more. Personally, I do get pleasure out of having enough…

Most pension plans are sticking with 7%-8% annualised return expectations, despite pygmy interest rates and elevated bond and stock prices. Investors in a typical Australian balanced investment fund are expecting something similar despite the economy relying heavily on a booming residential market (in Sydney and Melbourne at least) that can’t go on forever. The solution? Look beyond the top 20 stocks for attractive and safe returns, either in Australia or abroad. Be more active or seek out active managers with long track records of successfully navigating market cycles. Volatility will eventually increase, producing plenty of opportunities for those who are prepared and patient. Australian investor Don Brinkworth once said, “Profits can be made safely only when the opportunity is available and not just because they happen to be desired or…

Airbnb has experienced explosive growth as a vehicle for people looking to rent out part of their property to short-term visitors. But those who rent out a room or two in their house, through Airbnb or otherwise, could open themselves up to a tax shock when they sell their property. Usually there is no capital gains tax on any profit you make when you sell your main residence. However, you cannot usually obtain the full CGT main-residence exemption if you used any part of your home to produce income during the period you owned it. If you are affected, you will have to calculate how much of the profit on disposal of your house is taxable. Typically, this is based on the proportion of the floor area that is set…

Now that a reduced non-concessional contributions cap of $100,000 a year is on the cards from July 1, 2017, Centuria Capital says it has seen an increased number of inquiries about insurance bonds. Offered by insurance companies, an insurance bond is a tax-effective product similar to a managed fund. Earnings are taxed at the corporate rate of 30% before being reinvested back into the bond, making it a suitable option for investors with a marginal tax rate higher than 30%. But there are some rules to follow to maximise the tax benefits. The earnings will be tax free only if no withdrawals are made in the first 10 years. Each year you can top up the bond by up to 125% of your contribution in the previous year. Although you…

Don’t waste your proxy vote if you own shares. One way to make it count is to give it to one of the many members of the Australian Shareholders’ Association, which monitors different companies. Last year the ASA voted on around $4 billion worth of shares. The not-for-profit association will vote on your behalf at a company’s annual general meeting. It publishes its voting intentions on its website two weeks before the meeting. (See australianshareholders.com.au.) Any shareholder can make it their proxy representative. You don’t have to be a member and even if you appoint the ASA as your proxy you can still attend the AGM. If you have questions about how to nominate the ASA as your proxy, phone 1300 368 448 or email share@asa.asn.au.…

This is a complicated time of your life with a growing young family, moving across Australia for work and the finances feeling as though you just cannot get them under control. Often just meeting the monthly expenses is fine. However, Johnny and Nikki are doing many of the right things. They have reduced the mortgage from $450,000 to $420,000 in a short time and they also have a small savings plan for their daughter. On this I often advise it is better to get your own finances in order before worrying about children; however, if they have started it, keep it going. Now to the issue of renting out their old home, and the tax benefits not being utilised as the home is in Nikki’s name. The issue is not…

Paul’s verdict:Make the most of your rare capacity to save and investMore property is fine but think about shares too I’m 23 and work in the Australian Defence Force. My disposable income is $1650 a fortnight. I live on a base and have no expenses. I am building an investment property in Tarneit, Melbourne, with an interest-only mortgage of $305,000. Monthly repayments once the property is built will be $1024. Rent will be about $350 a week, meaning it will be neutral to positively geared. I don’t have any savings due to the purchase but am now putting away $2200pm. What would be the quickest and most efficient way for me to retire with a passive net income of $45,000 a year? What other investment avenues should I pursue as…

Building and refreshing infrastructure has been identified as one of the most effective ways for government to assist economic growth, while creating assets that may have a significant commercial value in the future (as distinct from consumption programs in periods of crisis, which give the economy only a short-term sugar hit). The problem, historically, has been the long lead times required to sign-off on such projects. Japan, for example, has infrastructure plans laid out almost 50 years into the future and, slowly, Australia is recognising this approach. Note one hint the Treasurer also gives: “monetary policy around the world has reached the edge of its effectiveness”. In other words, interest rate cuts are losing their effectiveness. This is why infrastructure counts so much, especially in a downturn.…

Most people would agree that the first home saver account was a complete flop. Having said that, any scheme that helps would-be buyers to build a deposit should be encouraged. Tax-free savings accounts are not uncommon in other parts of the world. In Canada, for example, there are accounts that do not charge tax on any contributions, interest earned, dividends or capital gains, and the money can be withdrawn tax free. Limits of $5500 a year apply. While I’m sure the government would prefer to hold onto every dollar it receives, record low interest rates are doing little for home loan affordability, because while homeowners can afford to service the debt, they have very little chance of saving for a deposit, or an incentive to do so.…

• 1987 Telecom (now Telstra) introduces first cellular mobile phone network in Australia utilising a 1G analogue system. • 1993 Second-generation wireless telephone technology (2G for short) rolled out, paves the way for caller ID, text and multimedia messages and eventually internet access. • 2005 3G introduced by Three, in conjunction with Telstra (up to 14 Mbps). • 2006 Next-G launched (up to 42 Mbps). • 2011 4G unveiled in October (up to 400 Mbps). • 2020 Telstra to roll out 5G.…

• Does your income exceed your spending? • Do you save money each month? • Do you pay the full amount off your credit cards each month? • Do you have adequate insurance? • Can you manage an emergency without increasing debt or selling assets? • Can you cover expenses or loss of income over the next two years? • Are you investing appropriately for your circumstances? • Is your portfolio diversified? • Have you consolidated your super accounts and checked its performance? • Do you have a will and other estate planning arrangements? • Are you on track for a comfortable retirement? “Not being able to repay credit card debt each month is often the first sign that your personal cash flow is in trouble,” warns HLB Mann Judd’s…

If, like me, you love working in your own business, the last thing you want to do is think about the day when you finally hang up the keyboard. However, not even Rupert Murdoch, Li Ka-shing or Warren Buffett can work forever and it’s unavoidable that one day you’ll need to leave your business. Whether you sell, retire or quit for health reasons, it’s important you plan as soon as possible for that day. This is where a succession, or exit, plan comes into play – it outlines the things you will do when you transfer the ownership of your business to a third party or a family member. In fact, research from professional services firm PwC shows that more than 1.4 million owners employing more than 7.9 million people…

Don’t look now but ... it’s already happening. While most of the talk about climate change centres on the politics and potential for more severe weather events, there is a growing push by investors for better information on the risks of climate change and how those risks are to be managed. The global Task Force on Climate-Related Financial Disclosures, which arose out of the G20 group of economies, is due to finalise its recommendations by the end of the year. A draft report, back in March, called on all listed companies – not just the obvious ones such as insurers and fossil fuel companies – to disclose in their financial reports how climate risks could hit their bottom line. Listed companies are already required to disclose any material risks to…

Commit yourself to learning – be it a new share, city or strategy The resurgence in coal prices in the past six months should be a lesson for all investors to search for bargains when things appear to be at their bleakest. It’s the same reason why searching for property bargains in places such as Townsville – racked by drought and the closure of the Clive Palmer-owned Yabulu nickel smelter – might also be worth considering. Every one of us knows and understands counter-cyclical investing. In other words, buy at the bottom of the cycle when the owners of the assets have all but given up in exasperation. But having the discipline to buy coal stocks – New Hope Coal and Whitehaven Coal have been big beneficiaries of the recent…

We are entering a very interesting period for investors. On November 8 the US will have a new president. Meanwhile, at home the Reserve Bank has to decide if it has any work left to do in cutting interest rates. And if it believes there is less to be achieved by cutting rates, the question is where do we go from here? First to the US. The good news is that election uncertainty will soon be resolved. The less positive news is that the outcome could yield very different outcomes. An outcome where Hillary Clinton wins power would present few problems for financial markets. Clinton was secretary of state in President Barack Obama’s first administration. As such by holding a lofty post in a previous administration she would be well…

CHRIS GRAY CEO of buyer’s agency Your Empire and host of Your Property Empire on Sky News Business, Chris says: “I always assume I might be dead tomorrow so I live for today, completing my bucket list as the ideas come to me. Highlights include competing in a supercar race across Europe, becoming a chopper pilot and hiring a superyacht.” SUSAN HELY Susan has been a finance journalist for 30 years and has been a senior writer at Money for 10. Susan says: “I want to visit Bhutan in the remote eastern Himalayas. Volunteer with WIRES Australian Wildlife Rescue Organisation and look after injured native animals (particularly wombats) and birds. Write a novel.” EFFIE ZAHOS Effie is Money’s editor and author of The Great $20 Adventure. Effie says: “Go to…

During the recent banking inquiry, Australia was treated to a peek inside the often unscrupulous world of the big banks. Huge profit margins, excessive fees and executive salaries soaring into the millions were just the beginning – the inquiry also trotted out a litany of fake documents, million-dollar “errors” and exploitative financial advice. Despite the fanfare, to some it seemed the inquiry was mostly a superficial measure – a “PR victory” – and landed no major blows on the banks. In fact, we learnt very little that we didn’t know before. After all, is it news to anyone that the big banks are looking after themselves first? Even so, several ideas came out of the inquiry – the most significant was the formation of an independent banking tribunal, which would…

You’ve got to love a good “rising from the ashes” story, and this memoir is a cracker. Scott MacDonald, an American real estate executive, tells how he was summoned by Morgan Stanley to save one of its dying acquisitions, Investa Property Group (now the AVID Group), during the GFC. This is a gripping memoir that finishes with 25 valuable lessons for investors. Interwoven with stories of family and past experiences, MacDonald takes the reader on a journey through his life and immerses you in the greatest challenge of his career: turning around one of Australia’s biggest companies. STEPH NASH Ten readers can win a copy. What has been your greatest challenge so far? Entries should be 25 words or less and be sent to Book of the Month, Money, GPO…

The lead-up to Christmas can be a stressful time for shoppers. When your purchase doesn’t end up being quite right, not only is it disappointing but replacing it or getting your money back can be a nightmare. While certain store policies might threaten you with a strict set of rules, the good news is that consumer law offers some comeback. • No refunds on sale items. Ever seen a “no-refunds” sign? Retailers that refuse refunds on sale items are breaking the law. Consumers have the same refund rights on sale items as on full-priced items. If the item is faulty, the retailer needs to be upfront about the fault on purchase. You won’t be able to claim a refund for problems stated on the tag. • Lost receipt. Don’t panic.…

When it comes to purchasing property, a little mistake can become very costly in the future. First-home buyers in Sydney and Melbourne have an especially tough market to break into. Buyer’s agent Patrick Bright says a good understanding of market values is key to paying the correct price for your property (and no more). Here are his three tips for first-home buyers: 1. ACT QUICKLY Things can change very quickly. Some markets in particular are in incredibly high demand, so by delaying your decision a few days you run the risk of losing the property or having increased competition. 2. GET FINANCE PRE-APPROVAL Work out how much you can afford before jumping into the market. Signing a contract without finance pre-approval is not a wise move. You risk losing your…

New research released by Lonsec shows that Australian equity funds tend to rank higher than global funds when it comes to environmental, social and governance (ESG) factors. Additionally, responsible investment funds returned more over a five-year period than the S&P/ASX 300 Accumulation Index (5.4%pa). 58% of active Australian equity funds achieved a “moderate” rating or higher on an environmental, social and governance basis. 9.1% The average annual return over the past five years for Australian responsible investment equity funds researched by Lonsec.…

Chris can salary sacrifice to ... Make the most of tax perks QI’m 56, single and live in my own home (valued at $430,000, mortgage of $240,000). I have an income of $83,000 from salary, and $10,000 in my loan offset account for emergencies. In addition I have 3000 shares, purchased at around 6¢, in Viralytics. My super balance is $360,000 and I contribute an extra $200 a fortnight through salary sacrifice. I have a car worth $15,000. In view of the mortgage debt, I do not foresee retirement in the near future but am not sure what to do to minimise the time that I must remain working. Well, Chris, I have never heard of Viralytics but I see that as I write this that the share price is…

SPENDING Paul Clitheroe, AM Money’s chairman and chief commentator, chairman of the Australian government’s Financial Literacy Board and a best-selling author. Q Money magazine firmly believes in individuals and governments spending less than they earn. After a really impressive 25 years of economic growth that has made Australians among the richest people on the planet, with an impressive range of services and support, it is worrying that we continue to run budget deficits. Any proposed cut to services or increase in taxes is met with howls of dismay. How does any politician, who quite sensibly would like to keep his or her seat in parliament and their party in power, deal with this democratic dilemma? As treasurer you have to focus on the task and challenges as they present regardless…

The treasurer is committing to not making any further detrimental changes to superannuation this parliamentary term. Frankly, the government has turned the system upside down so I’d hope it wouldn’t meddle any further. The reality, however, is that the government’s super proposals are yet to be floated in parliament and are still subject to debate in both houses of parliament before being enacted as law. I must say that I am in favour of these changes as they stand today and many of the changes actually benefit lower-income workers. The co-contribution, the low income super tax offset, the spouse contribution and the ability to split super with partners all assist lower-income workers and none of these have received nearly enough press, promotion and education.…

The treasurer’s reply is revealing. Clearly the government sees the interest costs on current government borrowings as its No. 1 budget issue, an issue it ranks above politically popular spending initiatives. You do not pay off a credit card bill by spending more after all. But solving the debt issue will require long-term planning; it is not something that can be done in one election term. So it is encouraging that Treasury at least is looking to solve the budget issues on a long-term time frame rather than on an election time frame. Plus the assumption in my question that interest rates are going to stay lower for longer is now looking a little bit premature. Market rates have been rising since July. As they say, “assumption is the mother…

Most travellers sail through a vacation with no problems but if something does go wrong the cost can hit altitudes even Boeing 747s don’t reach. Travel insurance is especially valuable if you need medical treatment overseas. Hospital bills can run into tens of thousands of dollars, and the Australian government won't foot the bill if you need treatment overseas. The prospect of sky-high medical expenses isn’t the only reason to take out travel cover. “One of the most common reasons we see for customers making a claim is a cancellation or delay in their trip,” says David Ringsell, of Easy Travel Insurance. Delays can be unavoidable especially if you’re relying on connecting flights with different airlines. But miss a flight because of a delay with another operator and the whole…

I’ve used a basic phone for the past 16 years. I’m clumsy, a technophobe and too easily distracted, so upgrading to a smartphone would be a recipe for disaster. I have the internet at home; I’m not desperate for a computer in my pocket. Besides, my Nokia 105 ($40, 2G) has everything I need: calls and texts, an alarm clock, a calculator, a torch and a battery that lasts for 840 hours. It’s also almost indestructible. I have a prepaid plan with Vodafone ($30pm) that gives me unlimited standard national calls and texts, plus 2GB data (which I don’t use). So, as a like-for-like replacement, I’m leaning towards a prepaid 3G feature phone – either the Telstra Cruise T126 ($29) or Alcatel onetouch 2036 ($29) – purely because they look…

So you want to send some money overseas? Be very careful who you choose to do this for you because currency may be a commodity but it doesn’t always carry the same price tag. With hidden fees and margins on exchange rates (this varies based on the provider’s cost of doing business) you can find that by the time your money reaches the other side a chunk of it has been lost in transit. There are several ways you can send money to another country. The most obvious is through your bank, via a telegraphic transfer. Other ways include a cash transfer, or an international money order. Online international money payment specialists are another service that could be quicker and cheaper. According to comparison site Finder, had you transferred $2000…

‘Sift through the wording carefully to avoid buying a ‘junk’ policy’ I feel you don’t officially recognise your adulthood until you start paying insurance. That’s what real adults do – they pay hundreds, often thousands, of dollars a year to protect their stuff, including their health. When you cease full-time study (or turn 25), mum and dad will let you know gently that they can no longer include you in their private health care. It gets worse – as you reach 30 you discover you can’t keep putting off private health cover because the government will tax you extra if you don’t take it out. If you’re about to turn 30, it’s time to get serious about health insurance. If you wait until after you turn 31 to take out…

Card fraud has been on the increase, more than doubling to $2.1 billion during 2014-15 from $1 billion in 2010-11, according to Australian Bureau of Statistics (ABS) figures. Credit cards are targeted more than debit cards. The good news is that in most cases you won’t be liable for unauthorised transactions and will probably get your money back. ASIC’s MoneySmart website says you won’t get your money back if you acted fraudulently; didn’t keep your PIN or password secret; unreasonably delayed telling your account institution that your card was lost or stolen or that someone else may know your PIN or code or; accidentally left your card in an ATM. Even then though your liability will be limited to certain caps. So what should you do if you spot a…

A mid all the hype surrounding Australia’s booming house prices – which really only applies to Melbourne and Sydney – it’s easy for those owners selling their homes to become complacent. Most buyers are still choosy, especially if they are laying out big bucks, and if your home doesn’t come up to scratch it won’t bring top dollar no matter how hot the market. New research has identified the top 10 turnoffs for home buyers, and smart sellers should do their best to remedy these flaws if they apply to their property. Topping the list is no parking, with 59% of 1002 Australians surveyed in September by Pureprofile for comparison site Mozo nominating this as a no-no. While there’s not much you do about the parking, other deterrents can be…

• Put your figures into the MoneySmart account-based pension calculator. • Look at the fees you are paying for your pension. How do they compare with other pension fees? • Once you have set up your pension, you can vary your drawdown amounts, as most retirees don’t need the same amount each year. • As you age, you spend less as your mental and physical condition deteriorate. • Cut your spending when markets don’t do well. • Spend more when markets perform strongly.…

Before starting a self-managed super fund, members – who are also the fund’s trustees – need to consider the circumstances under which they will wind up the fund and how they will proceed when the time comes. Exiting at the right time will make for a smoother, less stressful transition down the track. The most common reasons for winding up an SMSF are failing health, finding all the compliance and complexity too demanding, divorce and a low balance that makes the SMSF too costly to justify. Genene Wilson, a senior financial planner at the Omniwealth advisory group, says it isn’t just death and ageing that trigger a wind-up. “As a planner working across the spectrum of people’s financial life, we expect to see an increasing number of younger clients for…

From beginner to expert, financial journalist Martin Roth guides you toward the stocks that offer the best low-risk, long-term value for your money. Top Stocks 2017 will help you to compare sales and profits across companies, find financial ratings for top Australian companies and look beyond share prices to see the real measure of a company’s worth. To claim your offer, go to educatedinvestor.com.au  and click on the Top Stocks 2017 banner. Click “Add to cart”. Enter the coupon code “Money”. Click “Go”. This will reduce the price of the book by 20%. Shipping will be free for deliveries within Australia. This reader offer expires on December 24, 2016. For more information email Janene at info@educatedinvestor.com.au.…

From 1990 to 2006 the gold price traded in a range from $US250 to $US500 an ounce. Between 2006 and 2011 it almost quadrupled to $US1900 an ounce, then fell to almost $US1000 an ounce at the beginning of this year. It has since rallied to $US1366 – and that’s just the US dollar price. Thanks to a falling Australian dollar, gold has rallied even harder in Australian dollar terms and created some tremendous share price performance over the past year. In fact, the gold sector has been the best-performing ASX sector over the past year (up 49.3%) and three years (up 87.2%). There are many drivers of the gold price, some of which are more a marketing fantasy than a reality: • Interest rates. Gold doesn’t yield anything and…

I am usually a big fan of Paul Clitheroe’s pronouncements but his defence of the big banks (In Your Interest, September) cannot be allowed to pass without comment. I do appreciate that the mortgage interest rates aren’t directly related to the Reserve Bank rate. But the banks seem very reluctant to pass on all the reduction when the rates are cut, and almost always pass on the increases. Result: ever increasing bank profits. You would also be aware of the number of cases where banks have given loans to unsuspecting people who cannot afford to service them. Often this is due to unscrupulous third parties taking advantage of financially illiterate people (yes, they are obviously not Money readers!) but certainly the banks are guilty of not exercising the most basic…

EDITORIAL Chairman & chief commentator Paul Clitheroe Editor Effie Zahos Deputy Editor Maria Bekiaris Art Director Ann Loveday Deputy Art Director Tim Verrender Designer Luise Vestergaard Senior Sub-editors Bob Christensen, Lindsey Leathart Senior Writers Susan Hely, Pam Walkley Online Content Producer/Writer Steph Nash CONTRIBUTING WRITERS Chris Batchelor, Alan Deans, Nicola Field, Chris Gray, Ross Greenwood, Sam Henderson, Greg Hoffman, Roger Montgomery, Anthony O’Brien, Marcus Padley, Vita Palestrant, Martin Roth, Annette Sampson, Richard Scott CONTRIBUTING ARTISTS Frances Andrijich, Rocco Fazzari, Reg Lynch, Jim Tsinganos, John Tiedemann PHOTOGRAPHS Getty Images iStockphoto ADVERTISING NSW & Vic Peter Balinski (02) 9282 8075 Queensland Nikkola Hogan (07) 3101 6636 South Australia Jo Moroney (08) 8267 5032 Western Australia Vikki Stacy (08) 9449 9908 PRODUCTION Controller Ian Henn Advertising Production Dominic Roy MARKETING Subscriptions Marketing Coordinator…

With the recent scandals and political focus on the banks, a key problem is the incentives banks use to drive sales rather than provide us with the best service. The industry is suddenly alive to this concern, with the Australian Bankers' Association (ABA) initiating an independent review of product-based commissions and rewards. These payments distort sales staff behaviour, placing the imperative to make a sale above considerations of appropriateness for the consumer. Research confirms this. A paper from the Reserve Bank of Chicago found that “the effects of incentive pay on approved loan characteristics are dramatic”, indicating that monetary bonuses induce loan officers to push through questionable loans. Indications are that the banks are moving away from these sorts of reward systems. Westpac has already abolished product-related incentives paid to…

If you’ve got a holiday coming up, you’ll love this new app from Google that keeps your itinerary and ticketing information all in the one place. It conveniently links to your Gmail account, sifts through your emails and automatically logs any important travel bookings. All of your information is sorted by destination, making it easy to use while you’re on the go. The app’s best feature is its offline navigation function, which allows you to save small areas of Google Maps that you can access without an internet connection. Google offers a range of suggested eateries, bars and activities for you to save to your maps. It also has a range of suggested day trips that you can pre-load to your maps. Each trip gives estimated departure and travel times,…

Hiring a car when you’re on holiday can turn into a nightmare of unexpected costs. Even though you might book online for a reasonable cost, the add-ons such as child seats, cleaning and refuelling can make for a pretty expensive getaway. CarHireExcess.com.au, an insurance company, is highlighting a particular charge that it claims car hire companies are exploiting: the “collision waiver” or “excess reduction” fee. According to the site, customers are regularly coaxed into paying $25-$35 a day to avoid a costly excess if the vehicle is returned dirty or damaged. CarHireExcess offers its own standalone excess insurance for around $11 a day. It claims customers can save up to 50% off the cost of regular excess insurance by pre-purchasing it.…

Australian investors are embracing an innovative form of financial product known as a separately managed account (SMA). As the name suggests, an SMA is a separate portfolio that is the sole property of the investor. An SMA gives an investor access to a professionally managed investment portfolio but, unlike a managed fund, their investments aren’t pooled with those of other investors. The analogy might be a standalone property as opposed to a unit in a strata development. The attractions of SMAs include flexibility, transparency, tax advantages and an overall cost effectiveness. Depending on the flexibility that the manager offers, the investor may be able to restrict or exclude holdings in specific securities for ethical or other reasons and transfer in existing holdings (a significant advantage where the cost base is…

While Aristocrat Leisure has performed very well over the past three years, the seeds of a successful turnaround were probably first sown with the appointment of the current CEO, Jamie Odell, in 2009. One of his first strategies was to identify and segment the market – not all gaming markets are the same and not all gamblers are the same. Aristocrat then deliberately set out to hire the right people (primarily game designers) to produce content/games that would systematically compete in each identified market segment. It was a simple strategy, executed well, and the company is now seeing the fruits of its labour. US market share in the outright sale market has risen from 10% to 21% in the past three years. The company released highly anticipated games, such as…

‘As an investor be very aware of your personal limit based on the fact that you like the artwork rather than its investment potential’ Collectors fall in love with their artworks. But it’s seldom the same for property, a share portfolio, a collection of rare stamps or any investment you care to name. Which is exactly why, says David Handley, there should be a distinction between buying art purely for financial gain or because it stirs deeper emotions. Handley knows something about the objects people plonk in their gardens, on coffee tables and even on window ledges. He is the founding director of Sculpture by the Sea, the public extravaganza that enlivens the shores of Sydney’s Bondi-Tamarama and Perth’s Cottesloe beaches. This year’s Sydney show – which is expected to…

It is wonderful seeing a couple so young take hold of their financial future and start making long-term plans. I called Johnny and Nikki so that I could show them how to do the research on their current property to see if it is a “keeper”, then we worked through their finances to see if they are in a position to buy again. However, as always we started with their long-term goals. Being young they have at least 35 years of working life ahead of them and they decided that they would like to have a passive income in 30 years of $100,000 a year. My Investors Choice Mortgages calculator worked out that this would require a $5.7 million property portfolio, which sounds extraordinary but if we bring that back…

What is it? Gear yourself up for the latest stair-climbing charity challenge: the 1642-step, 88-floor trek up Melbourne’s Eureka Tower to Skydeck88 – the highest viewing platform in the southern hemisphere. Get a team together or register as an individual for the fundraising event for White-lion and Interplast Australia and New Zealand. The challenge will take place on Sunday, November 13, with registration starting from $50 a person. Where your money goes: All proceeds raised will go directly to Whitelion and Interplast. Whitelion’s mission is focused on providing young people with support that enables them to make positive life choices. Interplast sends Australian and New Zealand volunteer surgeons and health professionals to the Asia Pacific region to provide free treatment for disadvantaged patients. How to donate: To climb, register at…

Well, I am not going to disagree with the treasurer about “prior to 2013-14 there had been 14 consecutive budgets where the government made decisions to increase policy spending in net terms”. Nor would I criticise the projections to return the budget to balance in 2020-21. But the challenge is how to do this when decreases in spending or increases in tax are met with howls of outrage. Getting the budget back into balance is very simple but politically painful. As we all have to do with our personal budgets, when things get out of control we spend less, earn more or turn to the credit card with disastrous long-term consequences. In a democracy, this is a real challenge for any government.…

What would have been refreshing from the treasurer is to acknowledge the key part that the federal government could play in providing the “political will” to approve a fast rail network between Melbourne and Sydney as a serious solution to the affordability/ supply housing issue. While he points out that supply is largely the responsibility of the states and territories, the glue that binds such a forward-thinking proposal together is well and truly in his court and despite numerous failed attempts to get such a project off the ground in the past, it would seem like a perfect time to seriously revisit this as a genuine solution to our population growth and affordability concerns in the two major capitals. There is perhaps a real opportunity missed here to offer meaningful…

The airline tickets are booked, accommodation is sorted – now it’s time to think about how you’ll pay for everything while travelling. If you’re jetsetting internationally it always makes sense to carry a small amount of local currency but it’s unwise to carry large sums, especially as travel insurance may only cover you for a limited amount if your wallet is lost or stolen. Traveller’s cheques were once a widely used form of travel money but they’re going the way of the dinosaur, says Finder. Thankfully there are still plenty of travel money options that combine wide acceptance, security and convenience. The best option will depend on your holiday destination as well as how you plan to use the card, says Finder. Prepaid travel cards, credit cards and debit cards…

When impatient children or grandchildren make a grab for a share of their parents’ or grandparents’ assets while they are still alive, it is dubbed “early inheritance syndrome” by lawyers. The other term for this increasingly common fraud is “financial elder abuse”. Elderly people who have had a serious accident or have dementia are most at risk as their families or carers take over their finances. Cases of greedy adult kids who feel “entitled” to their vulnerable parents’ assets are on the rise, particularly as significant amounts can be involved thanks to high property prices. It is believed to involve around 5% of older Australians. The effect can be devastating as it leaves parents short of money or without a home in their old age. It fractures families that have…

YES COLETTE COLMAN Executive director, Independent Schools Council of Australia It makes sense for governments to continue to support families who choose non-government schools for primary and secondary education. Economically, it saves governments around $8.7 billion a year from their educational budgets. Government funding to these schools represents one of the most successful long-term service delivery partnerships between government, parents and community. There is a common misconception, encouraged by the media, that independent (or “private” as they are often called) schools are large, urban schools which only cater to high-income families. This is far from the case. The sector is incredibly diverse, both in its make-up and fees. And government support is needs-based, with high-fee schools often only receiving around 10% of their income from government contributions. Yes, there are…

Retirees typically retain most of their savings in the superannuation system in an account-based pension. Most large funds offer an account-based pension with the range of investment options that exist in the accumulation phase. An account-based pension, which is easy to set up, pays an income stream. There are mandated minimum and maximum amounts that retirees have to draw down each year. The minimum amount depends on your age. It is 4% for 55- to 64-year-olds, 5% for 65 to 74, 6% for 75 to 79, 7% for 80 to 84, 9% for 85 to 89 and 11% for 90 to 94. Account-based pensions are not guaranteed to last for a set period of time. A small number of retirees have bought annuity products that do guarantee an income. How…

I have never told a personal story in this column – in fact, in any article I have ever written – because I’m a fairly private person. But I want to share one of the gold nuggets I’ve discovered in the investment world – it’s a self-managed super fund (SMSF). There are limitations to industry, corporate and retail funds and SMSFs lend themselves to more adventurous endeavours that can save you thousands of dollars in tax and add tens of thousands to your retirement savings. That being said, of course, SMSFs are not for everyone when you consider that just 4% of the population have one, although a telling statistic may be that 32% of all super money sits in SMSFs. Setting up and running an SMSF can be costly…

Imagine sitting down at a dinner party, and in answer to the question “What do you do?” you say, “I own Sydney’s M2 motorway.” Jaws would drop. Collectively the revenues from owning utility and infrastructure assets – those variously described as “defensive” or “stable” – amount to billions of dollars annually and constant growth in usage ensures demand is inelastic; if prices rise there is little or no impact on demand. For the real owners of these assets, including Transurban, Sydney Airport and Auckland International Airport, as well as utility companies such as Origin Energy, DUET Group and AGL Energy, monopolistic pricing power, inflation-protected revenues and immunity from macroeconomic fluctuations and the business cycle are all there to enjoy. Investors who purchased shares in “boring” businesses like Transurban and Sydney…

Alex Malley Alex is the chief executive of CPA Australia, one of the world’s largest accounting bodies with 19 offices globally and more than 155,000 members worldwide. He also heads its financial services subsidiary business, CPA Australia Advice. In addition, Alex is the host of the Nine Network Australia series In Conversation with Alex Malley, author of the best-selling book The Naked CEO and provides career mentoring to young people via thenakedceo.com. What was your first job? ‘In my teens I was a floor detective at a sports store during the school holidays. This involved roaming the aisles, keeping an eager eye out for shoplifters and reporting them to the store manager. It was my first ‘ foray into observing human behaviour. What’s the best money advice you’ve ever received?…