Innholdsfortegnelse for August 2015 i Money Magazine

LETTER OF THE MONTH Healthy approach As a recent subscriber to Money magazine, which I enjoy reading from cover to cover to gain valuable new tips, strategies and insights on wealth creation and wealth management, I notice one glaring omission from your articles. That is, no mention of the importance of one’s health and wellbeing to enjoy the fruits of wealth creation. As my dear deceased dad once said, “There are no rich people in the cemetery.” Maintaining a healthy lifestyle with a proper diet, nutrition, daily exercise, regular health checks and brain gym activities such as doing crosswords and word puzzles are paramount so that the fruits of wealth creation and wealth management can be fully utilised in all years of one's life. Simply put, what is the point…

MYTH BUSTING ECONOMICS Stephen Koukoulas WILEY • RRP $29.95 Stephen Koukoulas should know a thing or two about his subject. He has 30 years’ experience as an economist, starting with the Treasury in Canberra, then working as chief economist for two major Australian banks, a global head of economic and market research in London and economic adviser to former prime minister Julia Gillard. This easy-to-read guide looks at how economic trends affect you; what small lifestyle choices can make a big impact on your finances; how overseas markets can influence the currency; and which uncertainties create either opportunities or pitfalls. Koukoulas looks at the big picture and discusses the impact government has on the economy and the role of the Reserve Bank. He also tackles family concerns such as the…

The new Go-invest online portfolios from BT Investment Portfolios are aimed at those who want to invest in shares but want help to do it and don’t have a lot of spare cash. Four distinct portfolios – three built from exchange traded funds (ETFs) and one from Australian shares – are available for a minimum initial investment of $10,000 each. “Each portfolio targets a progressively higher return with a corresponding increase in risk,” says BT’s Anthony Potts. The three ETF portfolios (conservative, moderate and growth) target the Reserve Bank cash rate plus 2%, plus 4% and plus 5% respectively, before fees, costs and taxes. The annual fee is 0.5% and brokerage is $11, both to buy a portfolio and for transactions within a portfolio. Starting portfolios all comprise the same…

As thoughts turn to tax returns, the ATO has signalled a particular focus this year on people claiming deductions for working from home. Lots of people claim more than they should but, conversely, some people miss out on legitimate deductions. So, what are the rules? First, if you work solely or partly from home and are required to use your own computer, phone or other devices you may be able to claim a deduction for your costs. The other deductions you may be able to claim are the work-related portion of running expenses such as: Home office equipment such as computers, printers and phones. You can claim the full cost (for items up to $300) or the decline in value (for items costing $300 or more). If you’re self-employed, you…

Ian has a great foundation to really take control of his finances but needs to implement a structured plan. He has lots of drive and some clear goals but, since leaving the military, has lacked focus in devising a clear plan to help him achieve his goals. Ian’s experience is not unusual for those leaving the military and in many ways is similar to the experience of many undergraduates when they leave university. Given Ian’s interest in developing a career in the fitness industry, I would recommend he obtain a paid role as quickly as possible in a gym or fitness club. This will provide him with stable income in his field of interest and, after six months’ full-time work under his belt, potentially enable a flexible schedule once he…

Isabel’s super fund can help ... Plan the best strategy Q I am 59 and have only $45,000 in super. I own my own home, have $35,000 in cash and work casually, earning between $35,000 and $40,000. Should I buy some good shares with a dividend reinvestment plan, put the cash in an online high-interest account or put it in super? Should I be thinking about a transition to retirement (TTR) pension with my super? A I’m glad to hear you own your own home – it will certainly provide far more certainty in retirement and will allow you to save more effectively in the years leading to retirement, without needing to worry about mortgage repayments. The next issue is how to best use your existing savings and how to…

HAVE YOU EVER FOUND yourself daydreaming about earning an income without needing to drag yourself out of bed each day to trade your “time for money” to receive it? What if you had your money working for you, instead of you working for it? Imagine a passive income that turns up in your bank account whether or not you roll out or roll over each morning? In the 1990s, Canadian supermodel Linda Evangelista became famous for the comment “I don't get out of bed for less than $10,000 a day”. While this might be a fantasy for those of us who didn’t win the genetic lottery as she did, what if your version of this was simply saying “I wouldn’t get out of bed for less than $55,000 a year…

STRATEGY 3 DIVORCEE, 47, WORKING TEENAGER CATE, 47, IS RECENTLY divorced and lives in Melbourne in her own home, valued at $420,000 with a mortgage of $75,000, which she received as part of her divorce settlement. She has $35,000 in savings, works full time, earning $63,000 a year, and receives $50 a week board from her 18-year-old working son, who still lives at home. This is the scenario that I think is the most challenging. Not only for the fact that Cate has the least amount of time for the compounding effect of property to kick in – which therefore requires more investment properties in the portfolio – but she also has the additional challenge of going it alone after such a significant change to her life. That said, she…

Bitcoin has a torrid history with investors. After its epic debut, its price plunged by 70% in less than a month in 2013, thanks to a Japanese hacking scandal. Since then, the cryptocurrency has established a reputation as a risky, speculative asset, struggling to gain popularity outside the US. But it has made a comeback during the Greek debt crisis – up by 500% in four weeks. Bloomberg reports that in early June about 120,000 Bitcoin transactions took place in a single day, as Greeks searched for ways to access their money outside government control. BitPay statistics show that in just a few weeks, Bitcoin experienced 70% growth in Europe and 87% growth in Asia. The trend may catch on here, after Westpac’s recent investment in Coinbase, a leading Bitcoin…

ARE YOUR PERSONAL DEBTS spiralling because you have too many credit cards charging high interest rates? And, because the payments are due at different times, if you overlook any of them you may be slugged with penalties. Consolidating the debts could be the answer. It involves gathering together most debts – credit cards, personal loans and store credit but not business or investment loans or the home mortgage – to calculate how much is owed and what the loans are costing. You can roll them into one loan at a lower rate of interest so that the cost is lower and you can make repayments on the lot with one regular payment. The aim is to streamline payments, reduce the time taken to make them, lower the interest burden and…

Avoid global roaming at all costs. If you’re travelling, stick with free wi-fi. Limit your subscriptions to games, music streaming and content services and only keep the ones you use. If you’re running low on broadband data for the month, try hotspotting your phone data from time to time. Take advantage of provider-to-provider promotions. Get your kids onto rechargeable SIM cards with your provider, so they can contact you at no cost. Think twice about paying for an app update. Do you really use it that often? Always use free wi-fi when available. When you’re out and about, check every so often to see if any networks are nearby. Use Skype or Viber for your frequent international phone calls. For long calls, always use wi-fi. Appreciate your handset. Don’t upgrade…

PROPERTY INVESTORS SHOULD forget Sydney and Melbourne and head to Brisbane for the best house price growth over the next three years. The Sunshine State, especially Brisbane, but also the Gold Coast, Sunshine Coast and Cairns, is shaping up as the best market for investors. And apartment markets around the country – including Sydney and Melbourne – are the worst, according to the latest research from economic forecaster BIS Shrapnel. Everywhere you look in Queensland there is relatively good news, and BIS expects Brisbane to be the only capital city to avoid a fall in median house prices in real terms over the next three years. A forecast rise of 13% will mean real growth of 5% (assuming 8% inflation), reports BIS’s Residential Property Prospects 2015 to 2018. After three…

When it comes to property investments, research shows that Australian self-managed super funds (SMSFs) prefer to take a back seat. According to tax office data, only 13% of SMSFs invest in direct property; they are more likely to invest in real estate investment trusts or property funds than directly into property. For investors in SMSFs looking for reliable returns, AMP Capital suggests moving away from indirect shares into direct property. For the year ending in March 2014, its research shows that direct property investments outperformed other asset classes, such as shares, bonds, term deposits and listed property, over one-and five-year periods. In that year, direct property produced a total return of 9.3% for investors – only 2.1% of this was from capital growth. For SMSFs looking to invest in property,…

John and Mary are in their 60s. Both have adult children from a previous marriage, some of who have children of their own. They each have $1 million in their separate self-managed super fund. When one of them dies they want to make sure the survivor is looked after but, if the survivor dies or remarries, they want the money to go to their own children. At the same time they want to save tax. What can they do? 1. They need to check their SMSF trust deeds to ensure it is possible to make a non-lapsing binding nomination with special conditions attached. 2. Make a will that includes a testamentary discretionary trust that will benefit their children and grandchildren. 3. Make a non-lapsing binding nomination to say that their…

WITH THE SINGLE AGE pension around $23,000 a year and the average full-time wage sitting around $75,000, we have a retirement savings gap of at least $1 trillion! The retirement savings gap is the difference between what has been saved and what is needed to fund a satisfactory lifestyle in retirement. I know super can be very complex and confusing and access to super may be many years away for some people, but a few well-constructed actions can make all the difference to your retirement savings. Here are seven easy ways to make the most of your super: 1. Search for your super Do a super search on the tax office website. Go to ato.gov.au and type in “super search” in the search bar. Your tax file number, date of…

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Morningstar has placed all ASX-listed companies with material exposure to iron ore and coking coal under review. “We expect to lower our near- and longterm iron ore and coking coal forecasts by approximately $US5 to $US10 per tonne to account for currency movements and the general reduction in mining costs, which have been greater than expected,” says Matthew Hodge, Morningstar analyst. This may cause reductions in Morningstar’s fair-value estimates for “narrow moat” rated stocks, BHP Billiton and Rio Tinto, of about 10%. BHP’s 52-week range is $24.01 to $36. Morningstar issued its warning on July 10, when the stock closed at $26.65. The comparable figures for Rio are $49.13 to $67.89, closing at $52.07 on July 10. For “no moat” rated stocks with large exposure to iron ore and debt,…

Property Value’s premium service has five subscription levels, ranging from one week of access to 12 months. During that time, you can access statistical profiles on 98% of Australian suburbs, estimate the likely value of a home, as well as the risk profile and potential cash flow of your prospective investment, and view comparison reports on individual properties and suburbs. Select your subscription from Enter the promo code MONEY40 to save 40% on any subscription. Select “Pay now” and proceed with your payment. Get a one-month subscription for just $59 (save $40). Offer ends August 31, 2015.…

While I applaud the federal opposition for calling a senate inquiry into the growing gap between credit card interest rates and the official cash rate, I must say it’s about time! Credit cards have always been a cash cow for banks. Using the excuse that they are unsecured credit, and not aligned to the cash rate, just doesn’t fly with consumers anymore. Not so long ago credit card interest rates did move up and down in line with the RBA rate and if you can pick up an unsecured personal loan from as low as 7.10% why can’t you get an unsecured credit card at the same rate? Wait – you can! Low-rate credit cards start from 7.99% (see page 89). The rort is clearly with reward cards, because there…

In 2009, the Rudd government raised the age at which Australians could access the age pension to 67, starting in 2023, and last year in its first budget the Abbott government announced that it wanted to increase this age limit to 70. So it was only a matter of time before government policymakers and think tanks such as the Productivity Commission came up with proposals that would also raise, albeit not until 2040, the age at which people could access their super and so stop them “double-dipping” and spending their super early (not that there’s much evidence of this, mind you). Unsurprisingly, both the government and the opposition ran a mile when they first heard the proposal, as did some – but not all – superannuation lobby groups. But don’t…

Income stream reviews are undertaken when a customer or their partner own an income stream product such as account-based pensions and market-linked pensions (aka term allocated pensions). They are reviewed in February and August each year. You only need to complete a review if you receive a letter from us asking you to do so. The most convenient way to complete your review is through myGov. If you haven’t already signed up for myGov, this is a great opportunity to do so. To complete your review on myGov, access your reminders through your Centrelink online account then select “review reminder”. If you cannot complete your review through myGov or you would like a nominee to do it for you, the review can also be done online using the unique one-time…

Cost: Free to download; subscription fee OS: iOS, Android The term "yuccie" (young, urban creative) was invented by Mashable to describe the booming freelancing trend. According to a survey by Elance-oDesk, 3.7 million Australians undertake some form of freelance work, in a thriving $51 billion economy. To succeed as a freelancer, it’s important to keep on top of your “paperwork”. Invoice2Go allows you to draw up and send off invoices in minutes, from your smartphone, tablet or Apple Watch. Add a PayPal button to your invoice and your client can pay you instantly. All invoices can be tracked and stored on the app. Although the app is free to download, the invoicing service comes with a subscription fee. The first three invoices are free, so it’s worth checking it out…

POH LING YEOW Cook, artist, market stall proprietor. Aged 42. Lives Adelaide Host of Poh’s Kitchen (ABC TV) for three seasons and now host of Poh & Co (SBS). Author of two cookbooks, Poh’s Kitchen and Same Same But Different. First job, working at her parents’ newsagency and gift shop, aged 9. AMONG THE GROWING crowd of food celebrities, she has the distinction of being known by one name, Poh. As MasterChef’s dapper co-host, Matt Preston noted just weeks ago, introducing Poh Ling Yeow for a brief return gig on the show, she is one of the most loved contestants ever. Then in she swept to loud applause; attractive, vivacious, her trademark smile ablaze. Poh might have made her name on a popular TV cooking program but that’s not what’s…

Ian is in the Naval Reserve, which is a part-time commitment. He works part-time in a paleo cafe when not serving his country and he gives a couple of fitness training sessions each week in between those commitments. So how should he fund his study and how can he best help the most people? After an interview with Ian while in the reserve at sea, it sounds like the navy is a good place to be. Ian’s a gunnery sailor but he’s considering applying for a posting as a PT instructor. He loves being on a crew and he’d like to help get sailors fitter and in better shape through their diet and exercise. So, as a business coach, I advise him to ditch his business and go full time…

TIPS 1 THE SUN WON’T ALWAYS SHINE SO BRIGHTLY While interest rates are the lowest they’ve been for over 60 years, it’s important that you stress-test your budget to see what the impact would be if rates were higher than they are now and you suddenly had a bigger monthly outlay. It could cause cash-flow stress on your portfolio. If rates go up, will repaying your loan mean you can’t afford some of the finer things in life you enjoy doing? If even a modest increase in interest rates would put your monthly budget under pressure, then you should reduce the amount you are looking to borrow. At the very least, consider a fixed rate, perhaps over the medium term. 2 SEARCHING IS NOT RESEARCHING Looking for a property on…

According to the Australian Bankers’ Association, the average household pays $468 a year in banking fees, so if you’re looking for an easy way to save money, consider cutting up your high-fee credit card for a start. The latest Reserve Bank (RBA) statistics show that across 16 major lenders, fees increased by 5.9% in 2013-14, costing Australians a collective $12 billion. While the income from home loan and deposit fees appears to have dropped, increased demand for credit cards and personal loans are making fortunes for the banks. The RBA says the growth in credit card income is linked to an increase in the number of cards on issue. The banks also appear to be issuing more loans, which means more establishment fees and late fees. To save money on…

SELECTING SUITABLE accommodation is an important decision when starting out in small business. To save cash, you may want to operate from home. However, working from a kitchen table, spare bedroom or garage may not be appropriate for all businesses. Home-based business Nearly 1 million people operate from home, according to the Australian government website business.gov.au, so it is big business. A home-based business can make a whole lot of sense, as you won’t need to lock into a commercial lease so can reduce start-up costs. If you already own a desktop computer or laptop, you won’t need to buy or lease equipment. However, be sure to examine the regulations that may apply in your municipality, especially if you are hiring staff or meeting clients. If you do plan to…

Bernadette Schwerdt is an online marketing strategist, keynote speaker and the author of the new book, Secrets of Online Entrepreneurs, (RRP $29.95 published by John Wiley & Sons Australia. To download a sample chapter, go to bernadetteschwerdt. com.au. To win one of 10 copies, tell us in 25 words or less what you think the secret to a successful business is. Email money@bauer-media.com.au or send your entry to Money magazine, GPO Box 4088, Sydney NSW 2001. Entries close on September 2, 2015.…

Rising demand in the property market has seen an increase in the supply of new developments, with many spruiking the benefits of off-the-plan purchases. But there’s evidence that off-the-plan property may not necessarily be the best option for your investment portfolio. WBP Property Group’s research shows that two- and three-bedroom off-the-plan apartments in the $600,000-$800,000 price bracket tend to fall short at valuation by $50,000 to $80,000. This is due to the developer including marketing costs in the sale price. This is a non-transferable cost, which can far exceed any stamp duty savings and may take years to recoup in terms of capital growth. This insight reveals risks that leave many investors exposed to a loss. Buying off the plan may initially appeal to the novice investor due to small…

IF YOU THINK PEOPLE ARE OVERPAYING for houses and apartments, especially in Sydney and Melbourne, you should have a quick look at the stockmarket. The prices some people are paying are way beyond crazy – the housing markets look sane in comparison. That said, many people like the lack of volatility in property, but this is illusory. Shares appear volatile because they are on the market for sale every single trading day. If your house was on the market every day of the year you would also expect the price to jump around, depending on the mood and appetite of the prospective buyers. But stockmarket volatility is no bad thing. For those who have a strong sense of value of a company’s worth, it creates opportunity – for buyers and…

SHOULD I PUT MY SUPER INTO A LIFE-CYCLE OPTION? If you haven’t already heard of life-cycle or target-date investment options, get used to them. They are increasingly popular both in Australia and overseas. Statistics from the Australian Prudential Regulation Authority (APRA) show almost 30 MySuper funds have life-cycle investment strategies as their default option and a growing number of funds offer life-cycle investing as part of their investment menu. HOW IT WORKS Let’s look at how these funds differ from the standard balanced option. A balanced fund is a mix of growth assets such as shares and property and more conservative assets such as cash and bonds structured to give the best risk-return trade-off for the average member. They can work well. The only problem is that not all of…

Market Vectors, the ETF business of New York investment manager Van Eck Global, plans to cross-list three of its US ETFs on the ASX – each the first of its kind for Australian investors. They are: • China A-shares (CETF) is a portfolio of 300 China A-shares, giving exposure to the ever-changing Chinese economy. • Global Gold Miners (GDX) gives access to global gold equities. • Morningstar US Wide Moat (MOAT) gives access to the 20 most-attractively priced wide moat stocks selected by Morningstar’s equity research team. The “moat” concept was popularised by Warren Buffet and is used to identify companies with sustainable competitive advantages. And there are a number of new LICs in the pipeline. They include: • Contango’s Income Generator, based on Contango’s current income generator (ex-3) strategy,…

ON JULY 17, 1995, COMMSEC came into being. And to reflect on the 20th birthday we decided to look back at some changes that have occurred since that date, notably in the economy and financial markets. Sometimes it pays to look back and recognise where we have come from, what has changed and what has been achieved. Especially now, as in recent months Aussies have fretted about the state of the economy. But when you look back and compare the current situation with that of 20 years ago, it is clear that we are doing OK at present. When CommSec started in 1995, the economy was still in recovery mode after the 1991 recession (remember those?), with annual economic growth just below 3%. Underlying inflation was encouraging at 2.3%, although…

THE KIDS USED TO MAKE ME TELL them stories every night. The usual things: Why don’t boys care about love? Did you have any girlfriends before you met Mum? But one night I got: “Dad, what’s a stock exchange and what’s a share”. So here it is – one for the kids. Let me take you back to the 16th century. It was the era of the Elizabethan seaman and, in particular, Sir Francis Drake and his young nephew, Sir Walter Raleigh. Drake made a fortune shipping slaves; Raleigh used to plunder the New World for slaves, bananas and tobacco. It was an early tech boom. Easy pickings – if you could get there, barter for the stuff and get back alive. But to do that you needed a ship.…

GREECE – ITS EXIT FROM THE euro or not – has dominated the media lately. Its importance to the solidarity of the European Union I do get but, from an economic point of view, I have been quite perplexed by comments talking about a “global contagion”, where an exit could somehow drag down the world economy. The Greek situation is a personal tragedy for Greek citizens, in particular those reliant on a government pension paid electronically into a bank account, and unemployment is high, particularly among the young. But global contagion is a pretty far-fetched idea. We will have all enjoyed the tale of Chicken Little at some stage in our lives. This tale has circulated around the planet in many forms from its early oral folk tradition origins in…

While Australians who participated in the first home saver account (FHSA) scheme will no longer have a government-subsidised savings account earning a superb interest rate, the good news is these savings can now be put to other uses to maximise wealth. For those who have saved up a 20% deposit for a property, this could be a good time to buy. However, the average FHSA balance is just $12,800, so most participants will need to keep saving. For anyone within a few years of getting a deposit, a high-interest account is the lowest-risk option to grow your savings. But with property prices up 24% in the past three years, bank interest of 2%-4%pa means that it may take longer than expected to reach your goal. For those who are still…

Unlike a managed fund, you are the beneficial owner of the ETFs and shares in your portfolio, increasing the potential for better after-tax returns, because tax is not deducted from your portfolio when assets are sold in other investors’ portfolios. At tax time, each investor gets a consolidated summary, including a realised gains summary for capital gains tax. If you don’t want to build and manage your own portfolios, it’s worth investigating. But three of the portfolios are invested in diversified listed products – cheap and easy to access – so you need to decide if it’s worth paying the extra.…

Craft lovers and entrepreneurs, get excited! Etsy, the peer-to-peer e-commerce website, is running a crowdfunding pilot program. It’s a huge step for the platform, which focuses on handmade or vintage items, and if successful it may transform the dynamics of the site. Selected sellers will have the opportunity to crowdfund for new projects until mid-August, allowing buyers to invest in their favourite e-commerce labels. The labels currently trialling the platform are hoping to use the crowdsourced funds to expand their businesses, and one particular label has already exceeded its target by 732%. Etsy will review user feedback when the pilot ends on August 16, which will determine whether the feature is to be permanent. Too much testosterone Young male traders cause financial crises. Well, that’s what the Imperial College of…

NAME: Ian Cottam STATUS: Personal trainer, aged 28 QUESTIONS: How do I rev up my personal training business? How do I support myself while I study at university? What courses should I be considering? SOLUTIONS: Secure a job at a fitness centre. Set up a group class. Specialise in a niche area such as tactical conditioning. Build up personal recommendations and testimonials. Create and keep to a budget. Check with Centrelink about financial assistance for your studies. Or stay in the navy and be promoted to a PT instructor. Studying while working can be challenging, particularly if you are funding all your living expenses. Ian Cottam grew up in a country town and joined the navy at 18. He’s left the full-time service but is in the Naval Reserve, doing…

Ian has some key questions to consider to put him the right path for a new career: • How do I support myself while I study at university? Focus on establishing one great group program. Choose a niche from your repertoire and focus solely on its success. Consider your equipment needs and ability to transport that equipment. Work with a direct-debited or auto-invoicing system to help you keep track of your finances and even out your cash flow. • How do I rev up my personal training business? Devote your energy to making your niche a success. Be firm about your rates and terms of enrolment. Promote yourself and your specialty to the public. There will be clients who don’t want to train with other personal trainers and will want…

What should I do with a $350,000 inheritance? I am 46, separated with one dependent child. I have been with the same employer for 25 years and have defined-benefits super. I have multiple investment properties with about a 45% loan-to-value ratio (LVR). I have no nondeductible debt. Apart from a couple of businesses along the way I have always chosen property as it seemed to be the simplest and safest investment/wealth-building path. I will shortly receive an inheritance of about $350,000. I would now like to continue my wealth building outside property. I don't want to be constantly share trading and trying to outdo experts in this field. I would describe my investing style as “passive”. I would like to hold some of my inheritance in an offset account (so…

Choosing a broadband plan on the national broadband network (NBN) is something we’ll all end up doing at some point in the near future, but you needn’t worry about the plan until an NBN installer knocks on your door – sometime between now and 2020. If you’re lucky enough to have had your home or business connected to the NBN recently, you have an important decision to make: whether you want fast internet or really fast internet. Plans are split into five tiers and Tier 5 delivers data 10 times faster than existing ADSL technology. Faster plans are more expensive, and you’ll pay an extra $20 to $50 a month for Tier 5, depending on your supplier. You should also factor in an increase for the data your household needs.…

OFFICIAL CASH RATES WERE LEFT on hold last month. The Reserve Bank wasn’t so clear this time about its openness to another rate cut but, at the time of going to the printers, some economists were predicting that the next move would be up rather than down – and that would be significant for the Aussie dollar’s outlook. If the next rate move is up, then maybe my timing was good when I locked in my investment loan in April. I for one had never locked in a mortgage before but at such low fixed rates, I couldn’t resist. At this stage I’m not paying a premium for the certainty and, while fixed rates have flattened, the sharp deals remain on the shorter fixed terms, RateCity reports. You can get…

Home-based businesses are common in Australia and it’s easy to see why, as rental and other overhead costs can add up quickly. For home businesses, saving on fixed costs can free up funds that can be used for IT expenses such as broadband, telephony and cloud solutions. For a first-time entrepreneur, a stable internet connection, an efficient email service and a website are essentials that will help get a home-based business up and running. Depending on the type of business you’re engaged in, you may also need networking or cloud storage solutions if you need to connect with other offices or transfer a lot of data. So, if you’re starting a business, be sure to sort out your IT early so you can focus on your first sale and customer…

OUR 21ST-CENTURY LIFE is as wireless as it is highly connected. The identity of any man, woman or child is part real and part virtual and you can do almost anything at the touch of a digital screen. We are so addicted to mobile technology that the mere thought of losing or breaking our phone is paralysing. Admittedly, it can be very hard to function without a web-enabled device in hand. Amaysim research shows our mobile addiction costs us a fortune. More than one in 10 Australians regularly exceed their data limits and if you’re part of the Gen Y clan, you’re among the nation’s biggest culprits. Bill shock is rife and it’s a habit that costs us an extra $1.5 billion a year. So where are we going wrong?…

If you’re looking forward to lower property prices, the experts suggest it’s only a matter of time, with the latest Australian Bureau of Statistics figures showing a further drop in lending to owner-occupiers. This is the 14th consecutive month of modest drops in the financing of construction for owner-occupiers, with a decline of 5.4% in May. In seasonally adjusted terms, the total value of dwelling finance commitments for owner-occupiers, excluding alterations and additions, fell 5.3%. Lending for the purchase of new dwellings by owner-occupiers fell in May by 0.6%, as did lending for the purchase of established dwellings, down 5.6%. The Real Estate Institute of Australia says the figures suggest a gradual cooling of the market, with lower lending in all states except South Australia and the ACT and Northern…

Diversification is a frequently used word in the investment industry but it’s often taken at face value and misunderstood by investors. Common ways investors can get diversification wrong are: MYTH 1: Lots of colours on a pie chart equals diversification Some approaches claim to be diversified because they invest in a number of different positions, usually demonstrated by showing the portfolio using a pie chart with many different colours. In practice, however, these portfolios are often loaded with assets with common fundamental drivers, for example equities, rather than distinct assets with differing fundamental drivers. Potential diversification benefits are negated when the assets have the same fundamental return drivers. Breadth of holdings alone does not guarantee diversification. Rather, it is important to assess the underlying characteristics of assets and build a…

SAVINGS IN SELF-MANAGED SUPER funds have hit a huge $600 billion. With such big money at stake and after bitter court cases involving beneficiaries squabbling over SMSF death benefits, attention has shifted to estate planning and the measures members need to take to ensure their super goes where they want it to go when they die. Having the right advice, documentation and wording in place can save your beneficiaries from acrimonious family feuds and costly court battles. However, many fund members mistakenly believe that once they have a will, they are covered. Not so, says superannuation and estate planning specialist Brian Hor, at Townsends Business and Corporate Lawyers. Unless you have a binding death benefit nomination in place, the trustees of your SMSF can decide how your super balance should…

If you’re thinking of shifting funds, “cool your horses,” advises SuperRatings’ Kirby Rappell. “If you’re in a defined benefit fund don’t do anything until you’ve taken good quality, independent advice. “The main thing with defined benefits is the employer holds the investment risk, you don’t. So if investment markets don’t perform as expected the employer needs to make good on that. Defined benefit funds can be very, very valuable. “The second thing is, if you are in an employer’s corporate plan, be mindful that the employer might have negotiated a better deal with the provider and they may subsidise insurance and other benefits you wouldn’t get elsewhere. “The third thing is life insurance. The general trend in the past 18 months has been tighter terms and conditions. It’s harder to…

INVESTMENT MANAGERS often talk about looking under the bonnet when they research companies but there is a style of investing that literally looks in the fridge. It tracks what people are buying and eating. It’s a grassroots-style of investing called “fridgenomics” and invests in emerging consumers rather than emerging market companies. Instead of listening to companies talking about consumer trends, the investment managers at the AB (formerly Alliance Bernstein) Emerging Consumer Fund go into the field in emerging economies in Africa, Asia and South America, interviewing consumers in their homes about what they are buying and why. It involves looking inside their fridges and documenting their purchases. Tassos Stassopoulos, portfolio manager for AB’s emerging consumer, global growth and thematic teams, says it is a powerful style of investing. “Inside a…

Nathan Bell Research director at Peters MacGregor Capital Management In the stockmarket, it’s the things you don’t see coming that hurt the most, so while Greece and the big fall in the Chinese stockmarket have been hogging the headlines, bargains remain scarce as investors are familiar with the issues. It’s tough for major Western markets to rally materially, given current valuations, which means you need to be opportunistic about the businesses you buy. This is not the time to relax your standards and holding some cash for future opportunities is sensible. One high-quality business that we own in the Peters MacGregor Global Fund is Precision Castparts, which makes high-performance aeroplane engine parts. It’s been one of the best performers on the US market over the past 15 years under the…

A NUMBER OF STOCKS IN THE Australian market, including Amcor, ResMed, Brambles, CSL and James Hardie have benefited from the Australian dollar having fallen more than 30% from its high of just over $US1.10 in July 2011 to US75¢ at present. Movements in the $A have an impact on company earnings in a number of ways. The main two are through “translation” and “transactions” exposure. Translation exposure refers to companies with overseas operations. These companies have both revenue and costs denominated in foreign currencies. The impact of a fall in the $A will generally increase the $A profit generated by the business in line with revenue and costs. Transactions exposure generally refers to companies that export products from one country to another. As a result, a proportion of the company’s…

Australia has one of the highest levels of share ownership in the world – 33% of us own directly held shares, just behind Hong Kong (36%). 54% of direct sharemarket investors say they are optimistic about the market over the next 12 months. One in two (55%) shareholders say a long-term outlook and a disciplined approach (53%) are important for success. More investors trade online (58%) than through a broker or adviser (31%). 2.5 million non-investors are keen to get into shares but don’t know where to start.Source: ASX Australian Share Ownership Study, July 7, 2015.…