Innholdsfortegnelse for December 2016 i Money Magazine

‘The ideal Christmas gift is money, but the trouble is you can’t charge it —’ Bill Vaughan, American columnist and author 1915-1977 Where did this year go? Well, if you believe French psychologist Pierre Janet the reason this year has gone so fast is because you’re a year older and as each year passes the next year becomes a smaller proportion of your total lifespan. So when you’re five, a year represents 20% of your life; when you’re 50, it’s a measly 2%. This made complete sense to me until my 10-year- old asked me the very same question. As we unwind, and for those of us lucky enough to be on a summer holiday, now is the time to reflect on how your finances fared in 2016 and, more…

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…

‘Spend less than you earn and invest the difference in decent assets’ This is always an alarming time of year for me. It is when I sit down with my very flawed crystal ball and take a look at the year to come. But first I drag out my words from a year ago, take a deep breath and re-read them. As regular readers know, I do not pretend to have magical insights into “get rich quick” ideas. Those who claim to possess such miraculous insights into the future always amuse me. I figure that if I or anyone else had such clarity, why on earth would we tell anyone? I’d just invest my own money and spend my time pottering around in my jet or my luxury yacht in…

Investing app Acorns has launched a new feature enabling users to make voluntary contributions to qualifying superannuation funds directly from their Acorns account. One of Australia’s largest funds, REST, is on board and is giving members who register their REST super fund for voluntary contributions in the app six months of fee-free use of Acorns’ services. Other funds that allow voluntary super contributions are North Super, Cbus, HESTA, Mercer, Prime Super and Christian Super. A new listed investment company is hitting the Aussie sharemarket. Watermark is seeking to raise up to $110 million for the Watermark Global Leaders Fund Ltd (ASX: WGF), which it says is the first locally managed global market neutral fund in Australia. The offer period is open until December 9, 2016. In what it describes as…

Food seems to taste even better when you’re getting it for a discount. If you’re stuck booking a venue a few hours before your rendezvous, you can browse the Clipp app to find a range of offers that need to be used that day. Each deal, valid until a certain time, usually offers a discount up to 40% that is applied after you spend a certain amount. It’s particularly good for groups, as the minimum spend is usually between $70 and $100. At the time of writing, there were deals in all states, with over 200 in Sydney, 150 in Melbourne, 100 in Brisbane and 63 in Perth. Payments are made through the app. When you select an offer, you open the “clipp”, which becomes your tab. All transactions are…

AFFORDABILITY Planning laws add to costs Zoning restrictions, height constraints, floor space ratio limits and a myriad other planning obstacles affect housing supply and affordability. Simply adding affordability to the stated objectives of state, territory and regional planning laws would go a long way in positioning the issue at every instance where planning decisions are made. • Remove, or at least reduce considerably, government infrastructure costs. Infrastructure fees, levies, charges and taxes are all input costs that inevitably flow through to the home buyer, usually with added costs due to holding charges and the unfortunate fact that some taxes are paid on taxes already charged. It’s mind-blowing, and it destroys housing affordability. State/territory governments charge them, as do many of their utilities, agencies and councils. Often these costs help fund…

“We talk about replacing pain, fear and stress with fun, laughter and joy” Fact file Louise Baxter CEO of Starlight Children’s Foundation. Age 55. Lives Longueville, Sydney Named not-for-profit executive of the year in 2015 by The CEO Magazine. Former senior marketing and advertising executive. First job: serving behind the counter at David Jones as a schoolgirl. Louise Baxter remembers a mother watching her child react to some silly antics in a Starlight Express room, a haven where kids can have fun while they’re in hospital. “She told me: ‘My daughter just smiled for the first time in six months and now I know my child is still in there, in this illness and all this stress and pain.’ ” It’s the kind of payoff that makes Baxter’s job rewarding.…

Living the dream of being your own boss may be costing you that other dream – home ownership. If you’re one of our 1.2 million sole traders or 2.1 million business owners, then you’ll know what I’m talking about: you’ve got no PAYG pay slips to prove your income, more than likely it fluctuates from month to month and your last tax return, which you probably lodged 12 to 18 months ago, does little to reflect where your business is now. So if you prove your income, how do you convince a lender to give you a home loan? The good news is that low-doc loans are making a comeback and, surprisingly, you don’t have to pay through the nose to get one. Canstar’s analysis has found that, on average,…

Australians are besotted with residential real estate. Just look at the incredible ratings chalked up by The Block TV show! And many still want to invest in bricks and mortar despite scare talk about a bust. There are plenty of markets that are not overheated, and those are the ones that savvy investors will turn to. Look to buy investment properties counter-cyclically in markets with strong fundamentals. A good place to identify areas where prices are on the up rather than heading south is a reputable “property cycle clock”. But remember the areas you choose should also be located near jobs and transport so there will be a good supply of tenants. Some regional areas provide this and are worth considering. Adelaide and Bundaberg are among the places where prices…

‘Unfortunately growth doesn’t pay the bills for retirees’ Should you invest in shares or property? This has been an age-old debate in finance, but retirement can offer a whole new set of issues that need to be addressed. With constantly altering superannuation laws, Centrelink changes in January and average super balances teetering on inadequate, today’s aspiring retirees have to consider if they’re going to work longer or invest better. For most people there’s no question about how to invest their super because their fund doesn’t allow for direct property investment, but there’s nothing stopping you investing outside super. Under super laws there’s only 15% tax on earnings and 10% on capital gains for assets held greater than 12 months. For retirees over 60 with assets less than the proposed $1.6…

I read a lot of stuff about traders and fund managers. There is nothing I love more than someone going through the same stresses as I do explaining how they find their way, because investment needs process. Fund managers have to have process – it’s why they exist – because investment doesn’t suit the seat of your pants. So let me pass on some of the common wisdoms I distilled from a number of fund managers. Valuation You have to have some concept of value. You may want a Ford Falcon XR8 – it’s a good looking car – but you need to know it costs $51,990 before you pay $60,000. With stocks you don’t have to do a discounted cash flow valuation yourself because valuations are available from many…

If there was everan issue that could help you make or save some serious coin, then this is it. for the biggest savings it’s hard to go past home loans. As Mitchell Watson, from Canstar, says, the average standard variable rate is more than 1% higher than the lowest. Identifying standout asset classes is made all the more easy with our award-winning investment products. If you’re not sure what you’re paying for your mobile phone plan, our Best-Value Mobile Phone – High Usage winner costs just $34.95 a month and comes with 8GB of data. As Watson says: “These awards are about highlighting the products that are leading the way in their space. These are the products that are going to help consumers get ahead, be it by having the…

GOLD WINNERS FIDELITY, GREENCAPE AND PERPETUAL The stock pickers’ skills and experience are the key to strong performance Four funds have tied for first place this year. Last year’s joint winner, Fidelity Australian Equities, offers a well-balanced portfolio with a bias towards growth-oriented companies, says Morningstar analyst Ross MacMillan. It typically holds 30 to 50 stocks picked by portfolio manager Paul Taylor. “Very few can match the vast knowledge, experience and enthusiasm for investing of Paul Taylor,” says MacMillan. “Long-term outperformance is extremely difficult to achieve but because of the skilful implementation of Taylor’s distinctive investment style, the strategy has attained top-quartile results for over a decade.” Greencape Wholesale Broadcap came third last year. Its growth-leaning portfolio is notable for its inclusion of small-cap stocks, says Morningstar analyst Tim Wong.…

GOLD WINNERS NOVAPORT AND SGH Skilled investment teams with proven strategies have produced strong returns Small companies performed well over the past year, meaning many of these funds produced good returns for their investors. NovaPort Wholesale Smaller Companies and SGH ICE share top spot in our awards. NovaPort is a concentrated portfolio typically holding 30 to 35 stocks, says Morningstar analyst Ross MacMillan. “The portfolio management duo [Alex Milton and Sinclair Currie] place little relevance on index weights, meaning the end result can at times bear little resemblance to either the S&P/ASX Small Ordinaries Accumulation Index or the wider peer group,” says MacMillan. “The fund’s unwavering commitment to its investment philosophy and processes has ensured some excellent returns but also the occasional disappointment. Nevertheless, our conviction is maintained that the…

GOLD WINNERS ARROWSTREET, IFP AND MAGELLAN A disciplined strategy and skilled staff identify the promising stocks Lacklustre performances from many overseas share-markets over the past 12 months saw international share funds turn in relatively weak returns for investors, although the three-year results are much stronger. Arrowstreet Global Equity, IFP Global Franchise and Magellan Global were joint winners last year and they have done it again in this year’s awards. Arrowstreet Global provides exposure to a diversified portfolio of 150 to 400 global equities, including emerging markets and small caps. Arrowstreet adopts an active, quantitative investment approach that seeks to consistently outperform through varying market conditions. Its quantitative models aim to exploit both informational and behavioural mispricings in the market. They combine investment intuition with rigorous quantitative research in an effort…

GOLD WINNERS SPDR AND VANGUARD Low-cost index trackers provide portfolios with diversification and transparency The winners were selected from those rated highest by research houses Lonsec, Morningstar and Zenith Investment Partners. The ETFs were ranked according to a points system based on the ratings. A further filtering process was then applied. Performance data is as at September 30, 2016. This year’s gold winners – SPDR S&P/ASX 200 and Vanguard Australian Shares – are the building blocks of many an investor’s portfolio. These straightforward, transparent index trackers provide instant exposure to the top 200 or 300 companies listed on the ASX for a tiny fee. Solid performers with low turnover – which keeps capital gains tax down – they are liquid investments that are easy to buy and sell, just like…

GOLD WINNER MAGELLAN A global fund with a strong record foresees technology as a key theme Magellan Global Equities (Hedged) is an actively managed exchange traded fund that offers Magellan’s flagship global equity strategy on the ASX. Magellan has been phenomenally successful since it launched 10 years ago, attracting $40 billion to its global equity and infrastructure funds. It started its active ETF in 2015. Hamish Douglass, the founder, chief executive and chief investment officer at Magellan, believes that one of the investment themes over the next 10 to 20 years is advancements in technology and how they disrupt many industries, particularly 3-D printing, driverless cars, robotics and virtual reality. The fund’s returns have been helped by strong performances from US retailing chain Lowe’s (19.8% for the 2015-16 year), Microsoft…

GOLD WINNER FP MARKETS Investors who trade over the phone, rather than online, needn’t pay extra The winners were ranked by the brokerage cost of a $10,000 phone trade. Ongoing and set-up fees were included. Some share traders still feel more comfortable buying and selling shares by placing orders over the phone rather than online, especially those new to the sharemarket. If that describes you, then First Prudential Markets is your kind of broker. First Prudential’s long-standing practice of not penalising phone traders – unlike other online brokers – has seen it win this category eight years in a row. “First Prudential Markets has the cheapest brokerage cost on a $10,000 phone trade of $14.95, $70.35 cheaper than the market average,” says Julie Nguyen, research analyst with Canstar. “And compared…

BEST SUPER FUND MANAGER GOLD WINNER CARESUPER JULIE LANDER CEO, CARESUPER Melbourne-based CareSuper has been named Money’s Best Super Fund Manager for the second year in a row. In a field of over 440 products, CareSuper’s strong investment performance, after fees and taxes, continued to see it rise above the pack. The fund has built on its strong member servicing capabilities, as well as enhancing its communications to members over the year. It has also managed to negotiate a new insurance contract with no major impact on sums insured, terms and conditions or premiums, which is a rarity in the challenging insurance market. In an increasingly competitive environment, CareSuper continues to demonstrate that members should focus on the total investment return after fees and taxes, rather than purely fees, when…

You can boost your retirement savings without making extra contributions: • Look for lost super at my.gov.au. • Check that your fund has your correct tax file number. • Check your pay slip to make sure your employer is contributing 9.5% to your fund. • If there haven’t been payments to your superannuation or if the amount is incorrect, follow it up with your employer. • If there are issues, contact your fund to find out the timing of your last payment. Download the fund’s app to make regular checks easier. • If you earn $37,000 or less a year, you are eligible for a low-income contribution of up to $500 from the government.…

GOLD WINNER INTRUST SUPER Generous protection is provided without the need for medical check-ups The winners were ranked on the value for money of the insurance they offered, both qualitatively and quantitatively. This includes insurance rates, terms and conditions and automatic acceptance levels. Intrust Super has won the gold award for the fifth consecutive year for its standout insurance. Intrust is a Queensland-based fund that was originally set up to cover hospitality workers and is now a public offer fund that accepts everyone. It offers three sorts of insurance – life, total and permanent disability (TPD) and income protection – without medical checks. Those under 40 receive default life and permanent disability default cover of $300,000. Two units of insurance cost $5.10 a week. Intrust’s PayGuard income protection insurance is…

GOLD WINNER ANZ A lifestyle product automatically adjusts your investment mix as you age The winners were chosen from SuperRatings’ platinum-, gold- and silver-rated balanced or default pension funds and ranked on their annual costs for a $250,000 balance. ANZ Smart Choice pension wins for the third consecutive year with low fees that include a flat $50 a year for administration, 0.5% on investments and no charges for cash. It allows members to choose either automatic lifestage investments that become more conservative as they age or their own personalised investment mix from particular asset classes or pre-mixed diversified options. For assets of $250,000, the ANZ pension costs $1400 a year – well below the $3104 charged by the average super fund and the $2264 charged by the average industry super…

GOLD WINNER WESTPAC A geared portfolio can benefit from low rates and online convenience The winners were ranked by a scoring system for loans of $50,000, $250,000 and $500,000 using a rate based on: the 6-month average historical variable rate (30%) and the variable rate at September 1 (30%); and the one-year, fixed-in-advance rate at June 1 (40%). The loan was required to allow borrowing against shares and funds. Westpac has won this award for the second year in a row and has done so by a large margin, says Julie Nguyen, research analyst with Canstar. “It offers consumers the cheapest variable and fixed rate. In comparison with the market average, Westpac’s variable rate at $50,000 was 1.58% cheaper and the fixed rate was 1.59% cheaper,” says Nguyen. There are…

MONEYSMART ASSET STOCKTAKE CALCULATOR This five-minute exercise can help you get a good idea of where you stand financially. There are a few things you’ll need to find out in advance, such as the value of your home, contents and vehicle. Plug in the numbers, including debts, and hopefully your net value isn’t too shocking.moneysmart.com.au/calculators ATO TAX CALCULATOR BY POCKETBOOK COST: FREE OS: iOS This uses up-to-date tax tables to give you a near-perfect estimation of how much tax you either owe or have overpaid. The simple version doesn’t tick all the boxes so make sure you select “advanced” mode. It takes everything into consideration including the Medicare levy, HELP debts and extra income. YOUR PROPERTY SUCCESS PODCAST ONLINE, iTUNES & SOUNDCLOUD Renovations gurus Jane Slack-Smith and John Hubbard give…

GOLD WINNERS BANK HERITAGE BANK NON-BANK STATE CUSTODIANS You can borrow up to 90% of your home’s value but financial discipline is vital The winners were ranked by the total cost of the loan, including fees and interest, using 50% advertised rate and 50% average six-month historical rate for a $350,000 loan over 25 years, 80% LVR. Variable-rate products must have six months’ history and transactional facilities. Line of credit loans work a little like an overdraft secured by your home, with the credit limit determined by the value of home equity. They often permit interest-only payments for an extended period, and money can be withdrawn from the loan for whatever purpose you like. That said, having money on tap calls for discipline, and a line of credit is only…

GOLD WINNERS BANK UBANK NON-BANK NEWCASTLE PERMANENT By locking in a low rate you can gain greater control over your cash flow The winners were ranked by the total five-year loan repayments – the interest cost plus fees, based on a 25-year term – using 50% advertised rate and 50% average 6-month historical rate for a $350,000 investment loan with a five-year fixed term. Products must be available for interest-only repayments. Investors are paying slightly higher rates than owner-occupiers at present. Nonetheless, with rates at historic lows it can make good sense for landlords to lock into a fixed rate. UBank’s five-year fixed investment loan comes with a $395 one-off rate-lock fee, which holds the rate at its current level even if rates rise in the period between loan approval…

GOLD WINNERS BANK ST.GEORGE, BANK SA, BANK OF MELBOURNE NON-BANK NORTHERN INLAND CREDIT UNION An interest rate of 0% for 18 months can help you climb out of debt The winners were ranked by the total cost of repaying a $10,000 debt over three years. If you use them wisely, balance transfers can be a great way to clear outstanding card debt and get your finances under better control. Offers of 0% for 18 months by St.George, BankSA and Bank of Melbourne take the top two spots in the bank category. The difference between the two that makes St.George’s Vertigo Platinum a little more expensive is the higher annual fee of $99 compared with $55, even though the revert rate for the platinum card is slightly lower. Both cards also…

GOLD WINNERS INTERNATIONAL AMERICAN EXPRESS DOMESTIC AMERICAN EXPRESS Free overseas and domestic flights, plus travel insurance, are up for grabs The winners were ranked on the net value towards flights that could be redeemed for a $60,000 annual spend, allowing for taxes and airline charges. 1. International: across 3 domestic and 3 international routes. 2. Domestic: across 3 domestic routes. Once again American Express dominates this category, taking out all three spots in the international category and the top two in the domestic category. You can earn anywhere from half a point to three points for each $1 spent, depending on where you use your card. American Express says you can earn points even faster by getting a supplementary card for other family members at no additional cost. Cardholders get…

GOLD WINNERS BANK BANKWEST NON-BANK FIRST OPTION CREDIT UNION Low fees, plus compatibility with an accounting platform, can help cut expenses The winners were ranked by fees then interest rate for 100 transactions a month and an average $10,000 balance and $100,000 monthly deposit; account must offer cheque deposits and withdrawals (no conditions), direct debit and direct credit. When choosing the right transaction account for your business, the decision should be based more on the fees charged than the interest paid on your cash holding. In this regard, Bankwest is a proven category winner. However, if you constantly hold more than $10,000 in cash, then Citibank, which charges no monthly fees, is worth a look. The Ultimate Business Saver pays 1.65% on balances between $10,000 and $999,999.99. A business transaction…

GOLD WINNERS BANK ME BANK NON-BANK MOVE Interest rates are wilting but access to your money has been made easier Starting with a $5000 balance and depositing $200pm, the winners were ranked by the average of their 2-year returns based on the current rates and those based on the 6-month average historical interest rates. One withdrawal in the 12 month period and one month without a deposit were assumed (based on current rate); conditional, promotional and other bonus rates are included. We can definitely see the impact of the Reserve Bank’s rate cuts on regular deposit accounts. The rates on offer from this year’s winners are only a little higher than those for our generic savings accounts although neither imposes the usual strict access conditions. Both ME Bank and MOVE…

GOLD WINNERS BANK ARAB BANK AUSTRALIA NON-BANK THE MUTUAL AND NEWCASTLE PERMANENT A high-interest account is a smart place to temporarily park your cash The winners were ranked by the average of the current rate and the historical 6-month nominal interest rate for a $25,000 balance and terms of 2 to 4 months. If you’ve got a bit of money sitting around, perhaps while you’re searching for a home to buy, why not have it sit in a high-interest term deposit? Our winners in the short-term category have highly competitive rates, so your savings will more than keep up with inflation. But both accounts have very strict break fees, so make sure you’re not going to need your funds until after maturity. The Mutual and Newcastle Permanent Building Society term…

GOLD WINNER SPINTEL Movies and games chew through the data, so make sure you’re covered The winners were ranked by monthly costs to receive at least 200GB of data, then by set-up cost. Plans must have an included landline phone service and unlimited national and mobile calls. Providers with more than 50% TIO complaints per 10,000 subscribers a year were excluded. You’d be hard-pressed to find an Aussie without the internet. In fact, the Australian Bureau of Statistics estimates 13.3 million of us currently have a broadband subscription, an increase of 4.2% since last year. Further, the amount of data we consume at home has skyrocketed: about 80GB a month, compared with just 50GB in 2015. Why the sudden surge? “Our habits have completely shifted,” says WhistleOut editor Joseph Hanlon.…

EFFIE ZAHOS Money editor Effie says: “Had a good laugh when my son gave his sister small change for Christmas. Literally 75 cents in an envelope. The best gift I’ve received, though, is letters from my children outlining why I’m the best mum. Not sure how they came up with the methodology for this award but I’m more than happy to take the title.” MARIA BEKIARIS Maria is Money’s deputy editor. She says: “When I was about eight my parents bought my sister and I with a swing set for the backyard. That brought us countless hours of fun over the years. Then of course there was the gift my daughter surprised me with last year – a Scholl Velvet Smooth Express Pedi – for my (in her words) ‘dirty…

We should be protective of our personal data, but important changes are afoot that will allow us to be more involved and empowered around its use. The digital revolution is driving so much change in our economies and societies and there’s a comparable consumer revolution. It’s giving us more information on prices, more places to transact and much more choice, but the sheer mass of it all makes it harder to decide. Hence the availability, sharing and interpretation of data is a key factor in driving this pro-consumer disruption even further than you might imagine. If you’ve ever been bored shopping around for better car insurance, sought keener pricing on an electricity tariff or wanted health insurance that suits your needs and pocket, then getting control of your data really…

In recent weeks we have seen a number of lenders pull out of the low-deposit home loan space. As a result, potential buyers are having to stump up property deposits in excess of 5% (plus costs) to buy property. To put this in perspective, borrowers in Sydney (where the average property price is $800,000) would need to have a deposit in excess of $40,000 to qualify for finance. Further, when you consider property prices are consistently rising across most of the capital cities, the deposits potential buyers need will continue to grow. But while some banks are no longer happy to play in the low-deposit space, there are still lenders that are. For anyone looking to buy property in the not-too-distant future, it is critical you do your due diligence.…

The tax office rarely gives away money but if you have a bit of spare cash and an outstanding student loan, you can take advantage of a government scheme that gives you exactly that – if you’re quick! Under the terms of the higher education loan program (HELP), you can make voluntary repayments at any time to reduce your debt. The effect of making a voluntary repayment is to reduce your loan balance immediately, which means that the debt will be paid off faster. Making a voluntary repayment doesn’t alter your need to make compulsory repayments each year that you have a debt and your repayment income is above the threshold (currently $54,869). Until December 31, 2016, if you make a voluntary HELP repayment of $500 or more the government…

RETURNS Obsession with yield will pass There’s likely to be a “changing of the guard” in 2017. As economic growth (albeit sluggish) continues and the US starts to increase interest rates, investors’ obsession with Australian equities that have high dividend rates, such as the banks, will finally pass. While Australians have been reluctant to invest offshore in recent years, 2017 will be a good time to look for managed funds with a US weighting. It’s also time investors looked outside the narrow world of residential property – office, commercial and industrial markets are all experiencing robust conditions (with some differences in geographical areas) and the right investments can offer yields of up to 8%. Another strong contender for high-yield opportunities is an option, largely overlooked since the GFC, that once…

Once Paula clears debt, she can ... Learn to save and ‘get rich slow’ QI always thought I was quite good with money but I have dug myself into a bit of a hole with credit card and personal loan debt. I have a $15,000 personal loan and $12,000 of credit card debt. I earn $69,000 and have a home loan on which I pay the minimum amount of $1320 a month. What is the best way forward? Paula, it’s time to knuckle down. You have achieved step one and you should be proud for “outing” yourself. Unless any of us admit we have a money problem, we can’t solve it. So I want you to go to the MoneySmart website and use the budget planner to get your cash…

With the end of the year just weeks away, many small businesses will be working on their marketing budgets and plans for 2017. There are more ways to spend your marketing dollars than you can poke a stick at, so the key for business owners is to settle on activities that generate leads and revenues within your budget. Avoid “spray and pray” Many small businesses fall into one of two camps: those that are happy with an “ostrich approach” to marketing and those that take a “spray and pray” standpoint. By sticking your head in the ground and spending nothing on marketing, you run the risk of shrivelling up your sales leads. On the flipside, the “spray and pray” approach, which typically involves splurging money on advertising campaigns, websites, social…

As an investor, you now have a choice. You can go to ground and seek cover, or you can take the optimistic view and hope things will get better – meaning the stockmarket. There are new rules to this game that you need to understand, anticipate and profit from. 1 There will be volatility, and you will not always be right The set-and-forget days are gone. You need to be nimble and capable of acting quickly and decisively. Having easy access to cash and a trading system is vital. My example of this is not having 10 minutes spare on the day Donald Trump was being elected to buy shares when they were being dumped. Despite knowing there were bargains in healthcare and resources stocks – and the market was…

During 2016, we have provided an insight into the competitive dynamics and aggregate prospects of the main industry sectors – from financial markets to supermarkets – listed on the Australian stockmarket. Any experienced value investor would know, however, that finding value in 2016 has been difficult. Indeed, I cannot readily recall a time in my career when so few opportunities were available. As a result we have been building cash and urging others to speak to their advisers about the possibility of large price falls, which would make the 2% earned on cash look like a comparatively attractive option. We accept that cash creates a drag on performance during rising markets and it can burn a hole sitting in your pocket, tempting you to stray from the patient investing path.…

Q WHAT WILL BE THE STANDOUT SECTORS IN 2017 AND WHAT ISSUES DO INVESTORS NEED TO WATCH OUT FOR? Identifying a standout asset class in 2017 is challenging because of the dramatic influence that lower bond yields have had on asset valuations over the past year. Most asset classes – bonds and equities – are already expensive and could be challenged if bond yields continue to rise through the year. One of the most critical issues that investors need to look out for is the extent to which bond yields rise further. In such an environment, having some cash on the sidelines – both for downside risk protection and buying power once assets get cheaper – would not be a bad option. Investors might also consider equity-related exposures that provide…

GOLD WINNER BT INVESTMENT MANAGEMENT EMILIO GONZALEZ CEO, BT INVESTMENT MANAGEMENT $84bn TO PLAY WITH BT Investment Management is a publicly listed company that manages $84 billion in investments. Westpac owns about 31% of the group. It paid a dividend of 42¢ for the 2015-6 financial year, an increase of 14% on the year before. Its performance fees rose by 49%. BTIM was created from three entities: Westpac Financial Services, Rothschild Australia Asset Management and BT Funds Management. It listed on the ASX in 2007. In 2011 BTIM acquired the global boutique active equity manager, JO Hambro Capital Management, based in London, to open up investment funds in the US, UK and European markets.…

GOLD WINNER PIMCO Regular income and low risk are prized in a volatile environment For investors who want to earn more than bank interest, combined with regular income and relatively low risk, this category fits the bill. PIMCO EQT Wholesale Australian Bond Fund, which was equal first last year, seeks to provide the benefits that investors expect from a core bond holding, including consistent income and low volatility, which can help stabilise portfolio returns. It pays quarterly distributions. The PIMCO fund invests predominantly in a wide range of high-quality bonds from issuers in Australia and New Zealand, ranging from federal and state government bonds to corporate bonds and mortgage-backed securities. Henderson Australian Fixed Interest, formerly known as the Perennial Fixed Interest Wholesale fund, has taken out second spot. A joint…

GOLD WINNER LA TROBE A strong track record reassures investors who want a regular income La Trobe’s 12 Month Term Account, formerly the Pooled Mortgages fund, has won this award eight years in a row. And again it’s the only mortgage fund that the three judges – Lon-sec, SQM Research and Zenith – deem worthy of an award in this category. Investors can access this fund with a minimum of $1000 and all money is invested in cash or loans secured by first mortgages in Australia. It pays monthly distributions, so particularly suits those living on a fixed income. The fund has a 4¼-star (superior) rating from SQM Research. It aims to provide investors with regular income streams coupled with low to medium levels of risk while outperforming the Bloomberg…

GOLD WINNER VANGUARD A strong performance from real estate helped push the annual return above 20% The Vanguard Australian Property Securities Index ETF has won the specialty category for the fifth consecutive year, reflecting the bumper year for Australian real estate investment trusts (A-REITs). In a low-return environment, double-digit investment returns are scarce. The 20.69% for the past year and 19.35%pa over the past five are outstanding. The fund gives investors a diversified range of 30 A-REITs spanning retail, office and industrial and including Scentre Group, Westfield, Goodman, Stockland and Vicinity, in Australia and overseas. Tracking the S&P/ASX 300 A-REIT Index, it paid investors a yield of 5.97% for the year. The ETF’s low investment management fee – well below that charged by the average actively managed A-REIT – means…

GOLD WINNER COMMSEC Education and research tools help investors stay on top of the action The winners scored points for features offered, based on a scenario for a casual investor (trading occasionally, with a long-term strategy). More than 100 features were considered. For a decade, CommSec, Australia’s largest online broker, has taken out the Best Feature-packed Online Broker award. “CommSec has maintained the lead this year through its extensive coverage in charting tools and options, access to market insights and comprehensive client services,” says Julie Nguyen, research analyst with Canstar. “Education is the key differentiator for CommSec, which continues to heighten the trading knowledge of its clients through online tutorials, seminars and educational materials.” CommSec’s features include its Learn tool, which is divided into three main categories: investing basics, choosing…

Q THE LOW-RATE ENVIRONMENT HAS BEEN TOUGH FOR SUPER FUNDS, ALTHOUGH MANY HAVE STILL HAD POSITIVE RETURNS. WHAT CAN WE EXPECT IN 2017 IN TERMS OF VOLATILITY AND RETURNS? It has been a more challenging year for superannuation funds, with subdued investment markets resulting in lower returns for many members. With the expectation of continued volatility and a lower-return environment for potentially longer, it is even more important for members to continue to closely monitor the performance of their fund to ensure it continues to deliver competitive returns. The top-performing funds for 2016 were generally the ones that maintained smaller allocations to listed equity markets. Instead, they had larger allocations to unlisted investments, such as direct property, infrastructure and private equity. The top-performing balanced fund (those with between 61% and…

BEST PENSION FUND MANAGER GOLD WINNER CATHOLIC SUPER FRANK PEGAN CEO, CATHOLIC SUPER Catholic Super has been named Best Pension Fund Manager for the first time. Among a field of over 175 pension offerings, Catholic Super’s pension has been recognised for its strong net investment outcomes, competitive fee structure and a high level of product flexibility. Catholic Super’s pension returns, net of fees and taxes, are strong across the shorter and longer term. As at June 30, 2016, the balanced option returned 7.1% a year over 10 years for pension members, which was well above the industry average of 5.7%. Catholic Super is known for having exposure to active investment managers and offers an investment option specifically for pension members that focuses on both achieving strong returns and protecting balances…

GOLD WINNER BUSSQ Diversification, including investment in sheep and cattle stations, boosts returns BUSSQ has been buoyed by good returns from its direct property, infrastructure and agricultural investments. The $3.8 billion fund was originally set up for Queensland construction and building workers but is now open to the public and has 90,000 members. One of BUSSQ’s advantages is that it has diversified away from traditional asset classes that are underperforming. It holds 34% in Australian shares, 30% in international shares, 12% in infrastructure, 12% in property, 5% in opportunistic debt, 4% in global private equity and 3% in agriculture. In a climate of low returns, BUSSQ’s portfolio of Australian property and infrastructure returned 11%, sheep and cattle stations earned 20% and shares returned around 5%, whereas the sharemarket generally returned…

GOLD WINNER LOCAL GOVERNMENT SUPER Take an ethical stand by avoiding companies with unsustainable practices The winners were chosen on the basis of the environmental and social responsibility of their investments. The winning Local Government Super (NSW) is deeply committed to investing along environmental, social and governance (ESG) guidelines because it believes these issues can pose significant risks to retirement savings. Since its inception in 2000 LGS has taken a negative screening approach across its $9 billion in assets and won this category numerous times. It screens out investment in tobacco, gambling, armaments, old-growth forests, high carbon-sensitive sectors such as coal mining, coal-fired utilities and oil tar sands, as well as excluding companies with poor management of ESG risks. The LGS Sustainable Australian Shares option now has an extra screen…

GOLD WINNER SUNSUPER A signing-on bonus complements the low fees and range of investment choices The winners were ranked on a combination of flexibility – such as an ATM card link to the account for easy access – and service features; costs were required to be competitive with peers. Sunsuper for Life Income pension’s winning features include a retirement bonus for signing up. These helped Sunsuper also pick up an innovation award (see page 93). The balanced option charges a low investment fee of 0.39%pa plus an extra 0.09%pa for managers who exceed their performance target. The signing-on bonus is for Sunsuper members who have been with the fund for at least 12 months before activating the income account. It amounts to 0.3% of your income account balance and is…

GOLD WINNER SUNSUPER Rather than taking a lump sum, retirees are encouraged to set up an income account Sunsuper wins the most innovative investing award for its easy-to-set-up pension called the Pre-allocated Retirement Income Account. About half of all super fund members don’t know they could be 60% better off in retirement if they set up a pension, according to research house SuperRatings. Instead they leave their savings in the accumulation account and eventually take a lump sum. As a result of its research, Sunsuper now pre-allocates a retirement income account to its members. As an incentive to activate a pension, it offers a bonus for signing up for it online. The bonus, for members who have been with the fund for at least 12 months, is 0.3% of their…

GOLD WINNERS BANK UBANK NON-BANK REDUCE HOME LOANS Borrowers with a decent deposit have never had it so good The winners were ranked by the total cost of the loan – the interest cost plus fees – using 50% advertised rate and 50% average 6-month historical rate, for a $350,000 mortgage over 25 years, 80% LVR. Loans had to offer redraw. Interest rates are the lowest in memory, leaving home buyers well placed to scoop a great deal. As our winners show, if you’re paying more than 4% on your home loan you’re being ripped off. In the non-bank category, Queensland-based Reduce Home Loans has picked up the top award for the second year in a row. The Rate Buster permits unlimited extra repayments and redraw, and borrowers who maintain…

GOLD WINNERS BANK ING DIRECT NON-BANK PACIFIC MORTGAGE GROUP A competitive rate, coupled with a range of extras, can mean big savings The winners were ranked by the total cost of the loan – the interest cost plus fees – using 50% advertised rate and 50% average 6-month historical rate, for a $350,000 mortgage for 25 years, 80% LVR. Loans had to offer free redraw, free offset, free portability and a free split facility. Not only do flexible features make a home loan easier to live with, they can also be instrumental in allowing you to pay off the balance sooner, and that’s when the big savings kick in. As our winners demonstrate, it’s possible to enjoy a decent range of features without sacrificing a low rate. Highlighting the strength…

GOLD WINNER HEARTLAND SENIORS FINANCE Drawing on equity in their home can provide retirees with a better lifestyle The winners were ranked by scores for product features (30%) and cost (70%), based on a variable-rate 10-year loan for a $50,000 lump-sum payment. Products were required to have a no negative equity guarantee and be available in NSW, Victoria and Queensland. The latest annual Reverse Mortgage Report from Deloitte found that for many retirees home equity represents two-thirds or more of their entire wealth – well in excess of personal super savings. For these seniors, a reverse mortgage can help fund a more comfortable and fulfilling retirement. Reverse mortgages let seniors dip into home equity by providing a loan secured by their property. Interest charges and fees are capitalised (added to…

GOLD WINNERS BANK BEYOND BANK NON-BANK COLES A long interest-free period comes with a handy set of extras The winners were ranked by a score for interest-free days (80%) and annual fee (20%) and then by rate. The category includes charge cards. They’re back! Our best transactor card gold winners appear together on this page for the third time running for the same products. If you’re a smart spender but you need a credit card to help with cash flow, the ideal card is low-fee and easy to manage. Our two winners offer 62 interest-free days, which is a week longer than most. With more time to pay back your money, you can stress less about your debt and concentrate on other things – such as the jazzy extras offered…

GOLD WINNERS BANK POLICE BANK NON-BANK LIBERTY FINANCIAL Borrowers benefit from a low interest rate and repayment flexibility The winners were ranked by cost of repayment of an unsecured loan of $10,000 over 3 years, based on 50% advertised fixed and variable rates and 50% average 6-month historical fixed and variable rates (average taken if range applied) and fees. It feels good to reduce your debts, especially if you manage to get ahead of your repayments. Fortunately, our two winners advertise zero penalties for paying out your loan early. Also they both offer fixed loans, so over the term you don’t have to worry about your interest rate going higher. Police Bank’s personal loan provides amounts over $5000 with the option to be financed 100% – just make sure you…

GOLD WINNERS BANK BANK OF MELBOURNE, BANKSA, ST.GEORGE NON-BANK NEWCASTLE PERMANENT As scammers find new ways to strike, fraud cover is a comforting bonus The winners were ranked on the total cost over 12 months of revolving a $3000 debt, including interest and annual fee. The interest rate used was 50% current interest rate and 50% six-month historical average interest rate. If you’re using a business credit card, it might be time to consider Bank of Melbourne BankSA and St.George. The three have secured the gold for a third year in a row, thanks to their low interest rates. With these cards, you’ll receive complimentary insurance against fraudulent use and unauthorised transactions. It is essential for businesses to be aware that fraud is a threat to profits, especially if you’re…

GOLD WINNERS BANK HUME BANK NON-BANK FIRST OPTION CREDIT UNION Start early if you aim to improve your children’s financial literacy The winners were ranked by their 2-year balances using 6-month historical average interest rates, including bonus rate if applicable, on monthly $30 deposits for the period; then by total rates, then by base rates. Financial literacy is a crucial facet of your child’s education. According to the Commonwealth Bank, if just 10% of children with poor financial literacy are taught to be money smart, it could create 15,000 new jobs and increase GDP by $6.2 billion. Adolescents and young adults represent 42% of the least financially literate, so it’s important for parents to start teaching money management skills early. Our winning accounts have strict bonus rate conditions that should…

GOLD WINNERS BANK ME BANK NON-BANK GATEWAY CREDIT UNION Lock away your precious savings for 12 months and watch them grow The winners were ranked by the average of the current rate and the historical 6-month effective interest rate for a $25,000 balance and terms from 11 to 13 months. They don’t pay as much as they used to but term deposits are still a great way to maximise your savings. A longer term deposit not only locks in your interest rate but it also keeps your savings in the bank and out of your wallet. ME Bank’s term deposit pays an ultra-competitive of 3% for 12 months. Its terms and conditions state that your balance at maturity can be automatically reinvested at the same rate, which would be perfect…

Thank you for your travel awards articles (“Ready, set … and now you can go”, November). As I am now retired and my wife, after 45 years in the education profession, is retiring this year, we are really looking forward to a bit more travelling, albeit balancing the joys of being doting grandparents with the possibilities of lengthy absences. Anyway, on a recent trip to the US and Canada we took travel cards, preloaded with the appropriate currencies. The only mistake we made was to use them for “holding deposits” for the sea cruise and hotel accommodation. The way a holding deposit works is the amount of deposit is “held” against your funds and even though your account is not debited the funds are unavailable to you until the holding…

EDITORIAL Chairman & chief commentator Paul Clitheroe Editor Effie Zahos Deputy Editor Maria Bekiaris Art Director Ann Loveday Deputy Art Director Tim Verrender Designer Young-Sun Hwang Senior Sub-editors Bob Christensen, Janice Hogg Senior Writers Susan Hely, Pam Walkley Staff Writer Steph Nash Online Content Producer Sharyn McCowen CONTRIBUTING WRITERS Chris Batchelor, Nicola Field, Peter Forrestal, Adam Gee, Ross Greenwood, Sam Henderson, Greg Hoffman, Deborah Light, Roger Montgomery, Anthony O’Brien, Marcus Padley, Vita Palestrant, Richard Scott, James Whitbourn CONTRIBUTING ARTISTS Andrew Finlayson, Reg Lynch, Rodney Macuja, 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 Rosanna Quinzon Advertising Production Dominic Roy…

It’s not a thought that sits comfortably with most, but early forward planning for entering into aged care can take a lot of the stress out of it when the time comes. Too often I particularly hear stories from within my department of families having to make rushed decisions when an older relative is faced with urgent medical care or can no longer live independently, and this greatly concerns me. The amount of information to absorb and the decisions to make can be overwhelming when you’re not familiar with the process, but there’s no reason not to get a head start in researching and making plans. A great place to start is the myagedcare.gov.au website, which has a wealth of information to help navigate the aged care system, including an…

Scott Pape is a rough-around-the-edges finance guru with a few newspaper columns and a regular stint on Triple M radio. Here he tells the heartbreaking story of how his family lost everything in a bushfire in 2014. He’ll rattle you with stories of scorched earth and blackened sheep but it’s all background to the real story of how he rebuilt everything he’d lost. The 300-page guide is filled with practical personal finance strategies, covering topics such as super, debt consolidation and mortgages. And 10% of all royalties goes to the non-profit service Financial Counselling Australia. Ten readers can win a copy. How have you fireproofed your finances? Entries should be 25 words or less and be sent to Book of the Month, Money, GPO Box 4088, Sydney, NSW 2001 or…

AGE PENSION Get ready for assets change If you are near the assets test threshold and wish to continue to receive your age pension at the same level, you may want to consider spending some money by bringing forward your planned purchases such as a car, home improvements or holiday, or gifting a small amount of money. You can give away up to $10,000 provided you meet the gifting rules. You could also consider prepayment on a burial plot or other things that are not counted as assets for test purposes, and may legitimately depreciate values of some assets. If you have an income stream product such as an annuity, look at when and by how much you can adjust the amount of income you receive against your needs to…

SERVICES Tourism set for further growth Australian service industries grew strongly in 2016. Tourism has had something of a renaissance in recent years, helped by a cheaper currency and a re-focus on the sector from the government down. This looks set to continue, with continuing strong inbound tourist numbers underpinned by the long-projected growth from our largest market, the Chinese. The growing number of tourists has allowed hoteliers, tourist operators and other companies to improve their profitability. It has also encouraged new capital investment in the sector. Many tourist businesses are quite capital intensive and thus highly leveraged, meaning a rise or fall in demand goes straight to the bottom line. This is great when numbers are rising. However, many are also exposed to new supply. For example, new hotel…

PAUL’S VERDICT: Mum and dad could be the bank and lend you the money It is likely to get messy if you and your partner split My partner and I are both 25, earn about $150,000 gross and are looking to get into the hot Sydney housing market. I am in a fortunate position where my parents are financially well off and are able to assist us, and they are also looking for an investment property. I think I have come up with a variant of a co-ownership model which allows everyone to “win”. Say we purchase an apartment in a middle-ring suburb and we borrow $700,000 for 25 years at 4%. If the arrangement was a 50/50 split, this would represent a payment of $1850 a month each. Under…

Our children’s summer holidays stretch over at least 50 days, and more if they are at private schools. How do you keep them busy – and away from the mobile, iPad and computer – without breaking the bank? Luckily it’s easy in summer to find activities that don’t cost a fortune. Schedule in plenty of downtime as well as energetic outings. Talk to relatives, school parents and friends about pooling resources so that you can share the load when you are working. It is always easier to send the kids to football, swimming or drama camp if they have a friend. HERE ARE 35 FREE SUMMER ACTIVITIES TO CONSIDER: 1. SWIM Visit the beach, ocean baths or river. Meet up with other parents or take your kids’ friends. 2. WALK…

Splitting concessional contributions with your spouse may offer tax savings as well as earlier access to super. But first you have to understand the rules and decide whether it’s worth doing. A fund member can split up to 85% of their concessional contributions up to their cap each year. For 2016-17 the cap is $35,000 for those over 50 and $30,000 for younger members. It includes employer and salary sacrifice contributions. CareSuper says couples use contribution splitting for two main purposes: to take advantage of the lower tax thresholds that may apply when drawing down a super benefit between age 55 and 60; or to access super earlier by redirecting contributions to an older spouse. For instance, if a couple is thinking of retiring before 60 and taking all or…

It has been another rough year for investors. It started very messily with sharemarkets falling in February due to worries about Fed rate hikes, China, global growth and strengthening deflationary pressures. While these fears receded and sharemarkets staged a rebound, the uncertainty lingered on the back of political events including the Brexit vote, the US election and the close Australian election outcome along with falling profits in Australia. No doubt 2017 will have its share of political uncertainty. In particular, key elections in Europe will keep eurozone break-up fears alive and uncertainty will at least initially be high around President Trump’s economic policies. And worries about the Fed, Chinese growth and the impact in Australia as the property construction cycle starts to turn down, along with concerns about how much…

SIMPLY WALL ST Cost: free OS: iOS and Android This app provides investors with information on exchange traded companies and funds (there’s not much on ETFs just yet). Each company, whether listed on the ASX, NYSE, LSE or NASDAQ, is represented by a snowflake chart showing its estimated value, performance and predicted longevity. Swipe right to add, swipe up to reject – a bit like Tinder for your portfolio. BRICKX.COM This new investment platform can help you invest in residential property without committing to a mortgage. Investors can buy a “brick” – a fraction of a property – for less than $100. BrickX currently has properties in Sydney and Melbourne open for investment but plans to add more. At the end of every month, investors get a cut of the…

GOLD WINNER RUSSELL Diversified asset allocation caters to different appetites for risk The funds were selected from those highest rated by research houses Morningstar (excluding mortgage funds), Zenith Investment Partners and Lonsec. For the Mortgage Fund and Property Securities Funds awards, SQM Research joined the panel. To qualify, each fund had to be open to new investment with a minimum initial investment of $25,000 or less. Funds were ranked using a points system based on their rating by each research house. A further filtering process was then applied. Performance data is as at September 30, 2016. No winning fund or placegetter charges an entry fee. Russell has dominated this category, as it did last year, with two of its funds sharing the top spot. Russell Balanced A aims to provide…

GOLD WINNER PIMCO A portfolio of investment-grade bonds supports regular distributions For investors who want strong returns from income funds over the long term, the winner and placegetters in this category are all certainly worthy of consideration. This year PIMCO’s Wholesale Global Credit Fund has taken top spot after coming second last year. The fund invests in a diversified portfolio of predominantly investment-grade bonds including corporate, mortgage and asset-backed securities. It aims to provide investors with greater income potential relative to government bonds and cash, as well as more income and less volatility in returns when compared with equities. The fund can diversify across industries, issuers and regions and can access PIMCO’s team of more than 50 analysts. Distributions are quarterly. Bentham Global Income, a joint winner for the past…

GOLD WINNERS APN AND BT Australian real estate underpins the attractive, consistent returns Property securities funds, which mainly invest in Australian real estate investment trusts, have provided attractive returns for investors over the past few years. The joint winners this year, APN A-REIT and BT Wholesale Property Securities, have been at or near the top of this category for several years. APN A-REIT, which has been either a winner or placegetter for the past seven years, focuses on property trusts that get most of their earnings from passive rental activity, not foreign or corporate earnings, says Morningstar analyst Alexander Prineas. This provides greater earnings certainty compared with developing properties. “We’re fans of APN A-REIT’s experienced investment team and the flexibility of its approach,” says Prineas. BT Property Securities came first…

GOLD WINNER VANGUARD RODNEY COMEGYS HEAD OF INVESTMENTS FOR ASIA-PACIFIC BIG NUMBERS Globally, Vanguard has more than $5 trillion under management (as at September 30, 2016), including more than $795 billion in ETFs. Vanguard Group was established in the US in 1975 and Vanguard Australia commenced operating 20 years ago, in 1996. This year marks the 40th anniversary of the launch of the first retail index fund by Vanguard. Around the world Vanguard has about 14,000 employees (or “crew”, as the company has a nautical theme expressed in its philosophy for investors “to stay the course” or stick to their financial plan), with about 400 in Australia. Vanguard Australia manages more than $110 billion, including more than $5.9 billion in ETFs.…

GOLD WINNER VANGUARD A mix of high-quality bonds provides investors with a steady cash flow The Vanguard Australian Fixed Interest Index ETF wins the gold award for its quality Australian bond fund, with produced returns almost four times the cash rate. It invests in an income-generating diversified portfolio that is made up of highly rated Australian federal government, state government and treasury corporation bonds. It also holds a small percentage of investment-grade corporate issuers. The investments are predominantly rated BBB- or higher by Standard & Poor’s or an equivalent agency. The fund tracks the Bloomberg Australian Bond Composite Index. It charges an annual investment management fee of 0.20% and suits investors who want a stable quarterly income from an investment with relatively reliable returns. Vanguard says it is suitable for…

GOLD WINNER CMC MARKETS Access to a wide range of investments and services comes at a bargain price The winners were ranked by the cost of a $10,000 trade. Ongoing and set-up fees were included. For seven years in a row CMC Markets has taken the crown as Australia’s cheapest broker, making it a great choice for frequent traders. “On a $10,000 trade, CMC Markets’ brokerage cost of $11 was below the market average by $44.25,” says Julie Nguyen, research analyst with Canstar. “And there was a $127.95 margin between CMC and the most expensive.” Apart from its bargain-basement brokerage charges, CMC has wide appeal with an array of features, which has seen it win Canstar’s best-value online share trading award six years in a row. Features include a dedicated…

SuperBoosterDay. com.au Launched in September 2016, Super Booster Day is an educational campaign brought to you by Money and the Association of Superannuation Funds of Australia. Our website directs you straight to the resources you need to maintain a healthy super balance, including detailed directions on how and why you should make extra contributions. Responsible Investment.org If you’re passionate about ethical investing, Responsible Investment Association Australasia, which has over 160 members and manages more than $1 trillion in assets, lists all funds that it has certified. Using the “certification” tab you can pull up a file showing how long a fund has been certified and its investment exclusions, such as tobacco and weapons. Mad Fientist podcast Online, iTunes While this podcast is pretty US-centric, it still…

GOLD WINNER CBUS Property and alternative assets have been good for retirement savings The winners were selected from SuperRatings’ platinum-, gold- and silver-rated funds. To qualify, each fund had to be a public-offer fund with more than $3 million under management and to have at least a five-year track record. Winners were chosen on the basis of five-year performance, net of all fees and fund taxes – except in the lowest-cost, pension, insurance and green categories. Returns and fees are as at June 30, 2016. Fees and other features may have changed since that date. Fees include an estimate of performance fees based on most recent fund report. C bus Growth wins the award for best-performing balanced fund with 67% in growth assets and the remainder in conservative investments. The…

GOLD WINNER VICSUPER Defensive assets help reduce the risk of negative investment returns VicSuper FutureSaver Capital Stable wins for the second consecutive year for its conservative investment option that has a low risk of negative returns. FutureSaver holds 62% of the portfolio in defensive investments and 38% in growth assets, which include 6% in alternatives. Index and enhanced index investments help keep the investment fee at a low 0.38%. The admin fee is $1.50 a week, plus an asset-based fee of 0.28% that is capped at $125 a month. VicSuper is a $16 billion former Victorian public sector fund that has 240,000 members. It uses environmental, social and governance (ESG) factors in its investment process. VicSuper provides financial advice and education that is typically free. It holds seminars throughout Victoria…

GOLD WINNER HOSTPLUS Cut-price fees for investments that track an index mean higher returns for members The winners were chosen from SuperRatings’ platinum-, gold- and silver-rated balanced funds and ranked on their annual costs associated with a $50,000 balance. The Hostplus Indexed Balanced option’s rock-bottom fees assured its fifth consecutive winning year as the lowest-cost balanced super fund. The investment management fee is only 0.015%pa, down from 0.02%. The administration cost of a flat $1.50 a week ($78pa) is unchanged since 2004. Hostplus stands out among funds, many of which now also charge an asset-based administration fee: commendably it has retained the fixed amount. The option keeps costs down by using passive rather than active investments. Hostplus currently has an asset allocation of 37.5% to Australian shares with IFM, 37.5%…

GOLD WINNER COMMSEC Access to online tools, plus a rewards program, help investors manage their portfolio The winners were ranked by their scores for features offered and securities accepted. This category has been dominated by CommSec and ANZ, with CommSec this year regaining top spot after coming second to ANZ last year. “CommSec exhibited comprehensiveness in its offering of services, options, flexibilities and function, contributing to their achievement of a top score in seven of the nine categories considered,” says Julie Nguyen, research analyst with Canstar. Margin loan customers get access to online tools to help them maximise and manage their investments, plus rewards for holding a diversified portfolio. ANZ’s Cross-Rewards program is designed to appeal to frequent traders and offers a discounted interest rate on the margin loan for…

Q HOW WILL AUSTRALIA’S RESIDENTIAL MARKETS SHAPE UP IN 2017, AND WHAT ARE THE BEST SUBURBS AND REGIONAL CENTRES FOR INVESTORS? To determine what may happen to the residential property market in 2017, we first need to consider what has happened during the past year. According to the Bureau of Statistics, there have been some ups and downs. The Sydney market dipped at the beginning of the year but has since recovered. Melbourne prices continue to move along quickly but the puff is about to come out of this market. Dark clouds hang over the Brisbane and Melbourne apartment markets due to an oversupply. Perth property was in the doldrums this year and property prices are now at the same levels they were four years ago. Adelaide property prices are…

GOLD WINNERS BANK BANK OF SYDNEY NON-BANK GATEWAY CREDIT UNION The sharpest deals provide discounts and other perks without an annual fee The winners were ranked by the total cost of the loan – the interest cost plus fees – using 50% advertised rate and 50% average 6-month historical rate for a $350,000 loan over 25 years, 80% LVR. All packages had to offer a discount on the mortgage rate, a credit card with no annual fees and a deposit account with no account-keeping fees. Package loans bundle a range of benefits, including a discount on the mortgage rate, typically in return for an annual package fee. The comparison rate is especially useful with these loans because it takes the package fee into account, making it easier to rate them.…

GOLD WINNERS BANK UBANK NON-BANK PACIFIC MORTGAGE GROUP A “rate lock” and loyalty discount add to the low-cost appeal The winners were ranked by the total three-year loan repayments – the principal plus interest cost plus fees, based on a 25-year term – using 50% advertised rate and 50% average six-month historical rate for a $350,000 loan and a three-year fixed term. The non-banks may be making a big push into the home loan market but, as our results show, when it comes to three-year fixed rates, the banks are streets ahead in terms of value. UBank, the online arm of NAB, continues its winning streak, having taken out this award last year. While it comes with a $395 upfront fee, it’s not a traditional establishment fee but rather the…

GOLD WINNERS BANK TEACHERS MUTUAL AND UNIBANK NON-BANK COMMUNITY FIRST CU The good news is that interest rates and annual fees haven’t increased The winners were ranked by the total cost of revolving a $2500 debt over the past 12 months, including interest and annual fees. The interest rate used was 50% current interest rate and 50% 6m historical average interest rate. The three winners this year – Teachers Mutual Bank, UniBank and Community First Credit Union – were runners-up last year. Interestingly the rates and annual fee charged by all three cards remains unchanged from last year. Both the Teachers Mutual Bank and UniBank cards offer an introductory rate of 7.90% a year for the first six months for new customers. After that it reverts to the standard rate…

GOLD WINNERS BANK HSBC NON-BANK COLES Shoppers who regularly pay with plastic can collect a bonus The winners were ranked by their average reward returns after fees, based on a $2000pm spend across all categories, with rewards available in at least two categories out of cashback, gift card, merchandise, entertainment and lifestyle. For companion cards a 60/40 split between American Express and Visa/MasterCard has been assumed. The rewards cards from the non-banks offer the most bang for your buck. The Coles Rewards MasterCard takes top spot with a return of just over $238. You earn two points towards flybuys for every $1 you spend on the card. You can use flybuys for a range of rewards, including gift cards and products from the flybuys “store”. You can get $10 off…

GOLD WINNERS BANK BEYOND BANK NON-BANK LOANS.COM.AU If you choose a product with the best features you’ll have a smooth ride The winners were ranked by the total cost of repayment of a 5-year loan for a new car purchase of $30,000, based on 50% advertised rates and 50% average 6-month historical rate (average taken if range applied) and fees. Fixed and variable rates were included. If you want to buy a car, opting for a specific car loan over a personal loan can work out to be cheaper and more efficient. The low-rate special offer from Beyond Bank, our bank winner, provides loans of $25,000 or more over a maximum seven-year term for new cars and cars up to two years old. There are no early payout fees and…

GOLD WINNERS BANK RABODIRECT NON-BANK MOVE An “untouchable” nest egg will help keep you focused on saving The winners were ranked on the average of the 2-year return based on the current base rate for a $5000 balance and the 2-year return based on the 6-month historical standard base interest rate. Promotional rates were ignored. This year’s best savings accounts are paying more interest than last year’s, despite two Reserve Bank cuts. Three RaboDirect Notice accounts take out the top spot in the bank category, with a maximum rate of 2.75%pa. These accounts require you to give a certain amount of notice before you can make a withdrawal. They allow you to top up the balance and earn interest until your money is withdrawn. RaboDirect requires you to open a…

GOLD WINNERS BANK SUNCORP NON-BANK MOVE A self-managed fund needs a ready supply of cash to cover expenses The winners were ranked by their interest rates – 50% 6-month historical average interest rates and 50% current rates – for a balance of $50,000; accounts must be available for a trust. Conditional bonus – but not promotional – rates were taken into consideration and it is assumed the conditions are met. Notice accounts were included. If you’re running a self-managed super fund (SMSF), it’s important to have a good supply of cash on hand to cover the regulatory and administration costs. Managing an SMSF is a highly demanding job, so while you’re busy attending to your portfolio it’s good to know that your cash can look after itself. Suncorp’s flexiRate feature…

GOLD WINNERS BANK ME BANK NON-BANK CUA Get back to the basics by going for low fees and access to extras The winners were ranked by an average dollar cost based on 30 transactions a month and a zero balance, then by ATM network, then branch network and then by availability of phone banking. The cost of using ATMs outside of the institution’s ATM network and agreements is considered. With interest rates on savings accounts at an all-time low, it’s more important than ever to nail the basics. Your everyday account is where it all starts. Ideally it has low fees and optimised access conditions and should be able to hook you up with member-only extras. ME Bank’s Everyday account can give you the trifecta: no fee, a full refund…

Q WHAT CAN WE EXPECT TO SEE IN TERMS OF MOBILE PLANS AND BROADBAND OFFERINGS IN 2017? Telco is the industry that never sleeps, and for as many big changes as we saw in 2016 you can be sure there will be plenty more in 2017. The price of mobile phone plans may get even cheaper but recent trends suggest we should expect much higher data inclusions rather than a big price decrease. We tend to look overseas to spot upcoming trends in the structure of phone plans, and recent shifts in the US market would be very interesting if introduced in Australia. A key difference is the removal of all excess usage fees. The major US telcos now throttle the speed of mobile data when customers reach their limit,…

MONEYSMART CARS Cost: Free OS: iOS and Android The new MoneySmart app takes your registration, insurance, car history report and running costs to help you calculate exactly how much your car will cost you per month. Running costs are particularly detailed, taking everything from the cost of a car wash to your parking fines (paid and unpaid) into consideration. PREZZEE Cost: Free OS: iOS and Android Prezzee is a digital wallet and e-commerce platform for store gift cards. The app is partnered with about 30 retailers, including a few Australian fashion labels. David Jones and Myer gift cards seem to always be popular Christmas presents, so ditch the plastic this year and give your loved one an e-gift card. TEDTALKS TECHNOLOGY Online, iTunes and SoundCloud The non-profit ideas house TED…