Innholdsfortegnelse for February 2017 i Money Magazine

A budget tells us what we can’t afford, but it doesn’t keep us from buying it. WILLIAM FEATHER, U.S. PUBLISHER & AUTHOR Welcome back! New year, new you. This year I promise to save more, spend less and accept any losses gracefully. Not that I’m expecting to lose anything but if I’m to anticipate any decent returns I will have to dial up the risk. For the first time since 2014, the interest paid on savings accounts has fallen below the official inflation rate. Meaning money in the bank will send you broke. According to figures from the Reserve Bank, the average interest rates paid by the banks on online savings accounts fell to 1.25% in December – below the annual inflation rate of 1.3%. So a lazy $1 million…

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…

I recently had the pleasure of assisting in the launch of the National Debt Helpline and the website that goes with it. I can’t tell you how important this initiative is. Debt is not a new thing. We have thousands of years of history showing the use of debt. Pretty obviously a business a few thousand years ago, or today, could not fund a major purchase such as a trading vessel or a large number of properties on cash alone. Equally, an individual’s ability to buy a home or a car would not happen without debt. And debt is not necessarily a bad thing – it is the type of debt. What is really sad is that our modern “have it now” society is driving the worst form of debt.…

Every February, as the property market gears up for the start of the trading year, prospective buyers invariably ask themselves the same question: should I wait to see how the market will perform or should I get cracking when the market does? It is wishful thinking to hope for the market to decline in 2017 given the likelihood of the continuation of the low-interest-rate environment, so you’re better off getting in early. While holding off may seem like the cautious approach, it could actually be doing your search and wallet more harm; you may even find that some property prices are 5% higher in April than they were when the market opened in mid-February. The 2016 property market ended on a high in Melbourne and Sydney with many buyers left…

If you’ll be travelling in 2017, get your hands on this app. When you’re exploring new cities, getting around on foot is often the easiest way to do it. Sidekix can help by providing you with curated navigation that is appropriate to your footwear. Simply select your destination and what kind of shoes you’re wearing (joggers indicates you’re up for a long walk; thongs not so much), and – voila – your map shows routes to the hippest restaurants, bars, shops and cultural attractions. As you move, the app updates the range of attractions, so you won’t miss anything. There are also curated guides you can download for certain cities. Need to find a friend? The app allows you to share routes with one another, so there’s less risk of…

Over the past 12 months, the words “property oversupply” have been bandied around a lot. However, recent data from SQM Research shows that most markets actually have an undersupply problem. According to the research, listings across the combined capital cities are down 4.2% over the past 12 months. Furthermore, CoreLogic found property listings across the country are down 2.1% over the 12 months to December 2016. In Sydney and Melbourne the story is even worse. Listings are down 9.4% and 2.9% respectively over that period. It would seem that the costs associated with selling and buying put people off selling their home. As a result, buyers are left to battle it out over fewer properties, forcing up the prices across most of the capital cities. In Sydney and Melbourne specifically,…

The best companies have one thing in common: they’re efficient. And that’s one reason we like Fisher & Paykel Healthcare, a leader in respiratory care devices and masks. Expenses have been cut significantly over the past two years by shifting manufacturing from Auckland to Mexico, where wages and operating costs are lower. The company recently announced plans to build a second factory in Mexico to boost the region’s production capacity. A cocktail of falling manufacturing costs and well-liked products – which help support high prices – has worked wonders on margins: the gross margin has increased from 55% to 65% in just three years, with an impressive current profit margin of 19%. The stock sports a price-earnings ratio of 30, so it isn’t exactly cheap. But given F&P Healthcare’s increasing…

Most people who buy into median-priced secondhand property in the inner suburbs of a major capital city make money, especially when they invest over the long term. Based on the information you have given and some basic assumptions, I consulted an experienced broker and he said you may find it difficult to buy an extra investment property in your current situation due to serviceability issues. This depends on your precise situation and when you apply for the mortgage, so take these as rough numbers. You could potentially buy a $290,000 property, assuming you get $300 a week rent from it. Suggestions for increasing your borrowing capacity: • Move your current loan to interest-only as this will cut repayments to $1600 a month. • This will improve your borrowing capacity to…

What is it? Take the edge off your cravings by participating in febfast, a month-long personal challenge to raise money for disadvantaged young people. Supported by Youth Support + Advocacy Service (YSAS), febfast encourages participants to give up alcohol, sugar or something of their choice. Where your money goes: For every dollar donated to YSAS and its partners, 89¢ will be invested in its campaigns, programs and advocacy work. The remaining 11¢ will cover administration costs. YSAS provides training and support to youth workers, who connect with disadvantaged young Australians to help them overcome mental health issues and drug and alcohol addictions. How to donate: Registration for febfast is open until February 28, and if you miss the start you can participate throughout March and be sponsored until April 1.…

For the sixth year, property guru Terry Ryder and sharemarket experts at Skaffold reveal where to find the greatest value in the next 12 months. The property winners in 2016 included Victoria’s Macedon Ranges (18% in Gisborne) and South Australia’s Charles Sturt area (Henley Beach 20%). In a year of mixed fortunes, the Top 5 share portfolio returned 12.1%, including franking credits. • 5 standout locations, p38 • 5 standout shares, p42 • Portfolio review: 19%pa over five years, p50…

A free $200 for every Australian baby born this year! While I may need just a tad more if I’m to try for a third child, it’s a very generous incentive for parents who are expecting to open an account with the bank that’s come up with this very clever idea. Westpac’s Bump Savings account initiative is intended to help parents and grandparents develop positive financial habits in their child from the beginning. You simply open an account for your child and Westpac will kickstart their savings with the $200 bonus. The cynic in me would suggest that this $200 baby bribe is a great way to secure future customers while at the same time gaining the loyalty of their parents. To be fair, though, any initiative that encourages savings…

There are plenty of ways to save for your child’s education but which one is the best? Parents can put regular amounts into a managed fund or a bank account or direct shares. Or they can set up a specialist scholarship fund that gives them a tax benefit. Another popular strategy is to pay more on the mortgage and draw down the excess funds later. What school you choose is a big decision for a host of reasons, particularly the costs. Most Australians – around 65% – opt for government schools. The parents of a child born in 2017 and finishing school at 18 will face costs of $68,613 at a metropolitan government school, according to Australian Scholarships Group (ASG), factoring in uniforms, extracurricular activities, travel, computers, trips, stationery and…

This is an edited extract from Scott Pape’s new book The Barefoot Investor: The Only Money Guide You’ll Ever Need (Wiley $29.95). Five readers can win a copy of the book signed by Scott Pape thanks to the team at educatedinvestor.com.au. Simply tell us in 25 words or less your best tip for getting on the property ladder. Send your entries to money@bauer-media.com.au or Barefoot Investor, Money magazine, GPO Box 4088, Sydney NSW 2001. Don’t forget to include your name and postal address. Entries close on March 1, 2017.…

YES TIM LAWLESS Director of research, CoreLogic One of the most substantial barriers to becoming a home owner is the burden of stamp duty. This is a tax that is levied by each state and territory (the rates vary remarkably) and is payable by the purchaser when a property is transferred. As an example, a residential property buyer in Sydney who is purchasing the median-priced dwelling ($800,000) will pay stamp duty of almost $32,000 on top of other transactional fees such as pest and building inspection, conveyancing fees and moving costs. Furthermore, if they already own a home and are selling it they will have to pay commission to an agent and potentially a fee to an auctioneer. Add a deposit of 10% or 20% ($80,000 to $160,000) and the…

The consumer group Choice favours anything that simplifies super and makes it more transparent. “This is exactly what dashboards were designed to do,” says Tom Godfrey, head of media communications. “They are a very short summary of the key features of a super product. “Otherwise consumers are left with a confusing product disclosure statement which might run over 100 pages. With research indicating 70% of consumers don’t read a PDS before selecting a fund, they’re in the dark without better disclosure through dashboards.” He says the one big failing of product dashboards at the moment is they don’t include information about life insurance, which is usually a key feature bundled with super. “People who sign up without reading a PDS are unlikely to know the cost or amount of coverage…

The rollout of the biggest shake-up to the super sector in 10 years has commenced. In short, it’s going to be a lot harder to get money into super but with five months to go using this year’s allowable non-concessional contribution limits may be the best way to boost your savings. Working out your capacity to contribute now is important, because the limits are shrinking. From July 1 if you have $1.6 million or more in total super you won’t be able to make non-concessional contributions. In assessing your total super balance, the tax office considers all account types – accumulation, pension, defined benefit and defined benefit pension. If you are below $1.6 million an annual non-concessional limit of $100,000 will apply, and if you are under 65 you can…

It takes confidence to invest. That should be obvious. If you are unconfident, you keep your money in the bank. The problem is that too many people never have enough confidence. Therefore they never put themselves in the right position to create wealth. Yes, they may never lose money but in a low-inflation, low-interest environment they inevitably go backwards. It takes fortitude to take the first step. But every investor should understand that to succeed you need a keen sense of value, a plan and a time horizon to weather any unexpected setbacks without panic or recrimination. Thinking about recrimination, I think it’s one reason some families don’t make bold moves and never create wealth. Investing is rarely a consensus thing. I’m passionate about this; you’re passionate about that. Unless…

We have now moved into the second month of the year but for many Australians the year has just begun. Such is the influence of summer holidays down-under. In fact, there’s still a month of summer left and no doubt some will be looking to make the most of the warmer weather. But February also signals a return to the monthly interest rate decisions by the Reserve Bank, a big month of economic data and the earnings or profit-reporting season for listed companies. First to the Reserve Bank. While the September quarter economic growth figures would have surprised (the data showing a contraction of the economy), interest rate settings shouldn’t change. And indeed it’s possible we could see the Reserve Bank on the rate sidelines for all of 2017. Simply,…

REAL THREAT OR HOT AIR? Donald Trump’s seven-point plan to rebuild the American economy by fighting for free trade (the one he took to the election) had China firmly in its sights. Three of the seven points were specifically about China. These included: • Instructing the treasury secretary to label China a currency manipulator. • Instructing the US trade representative to bring trade cases against China, both in the US and World Trade Organisation, targeting its “unfair subsidy behaviour”. • And using “every lawful presidential power to remedy trade disputes if China does not cease its illegal activities”, including the alleged theft of US trade secrets and the application of tariffs. Trump described China’s entry into the World Trade Organisation as “disastrous” and said it had enabled “the greatest jobs…

‘ What was your first job? My first real job, at 18, was working as an assistant to Max Raine from Raine & Horne collecting data on properties for sale throughout the Sydney CBD. I perused the real estate ads in the newspaper and wandered the streets compiling this data that Max would then pore over to analyse opportunities and competitors. I loved the autonomy of the job and was extremely fortunate to have worked with Max (many years my senior) when I was so young as he taught me so much, not just about real estate but about business and life. I learnt so much but what I keep coming back to is how Max had implored me to be happy every morning when I got up and would…

TERRY RYDER Terry is the founder of hotspotting.com.au and PropertyU, and author of four real estate books. Terry says: “My financial resolution for 2017 is to sharply reduce debt, especially the non-tax-deductible type, and to achieve by working smarter not harder.” CHRIS BATCHELOR Chris is a sharemarket expert and co-founder of Skaffold. Chris says: “My financial resolution is to grow my investment savings (both super and non-super) by at least 10% and also put enough aside to take the family to Thailand next Christmas.” NERIDA COLE Nerida is Dixon Advisory’s managing director – head of advice. Nerida says: “It’s a continuation from last year’s – to help more women feel confident making financial decisions and to make my money work harder for me by updating my budget and balance sheet.”…

Unless you have been living under a rock you would have heard about the debacle that is Centrelink’s debt recovery program, which matches Centrelink and Australian Tax Office records and sends out letters to recipients if a discrepancy is found. At the time of writing about 170,000 notices had been sent with more than 1 million more in the pipeline, leaving many recipients stressed and anxious about potentially having to repay debt that they may not even owe and also be hit with a 10% recovery fee. If they did not respond to the letter within the set period, debt collectors may have been called in. There has been a lot of opposition to the program from a number of groups including the Australian Council of Social Service (ACOSS), which…

Earn frequent flyer points for being active by participating in the Qantas Assure app’s 28-day free trial. Link your Fitbit or fitness-tracking app and earn points for everyday activities such as walking, running or cycling. If you do not purchase an eligible insurance product after the 28-day trial, points you earn through the app will become locked. ANZ has released a feature to push more of its customers towards mobile banking. Customers with lost or stolen cards will now instantly receive a new card for their digital wallet which they can use to make purchases via Apple Pay or Android Pay. ANZ is the only major bank to offer both Apple Pay and Android Pay. Every little bit helps! Extra assistance has arrived for first-home buyers in Western Australia, with…

New rules governing the way working holiday makers (those on a 417 or 462 visa) are taxed took effect on January 1. They will pay 15% on all income up to $37,000. Because the change occurred halfway through the tax year, they will have to account for their tax up to December 31, 2016, under the old rules, assessing themselves as either resident or non-resident. The tax rates they pay in the first half of the year will be different from the ones they pay in the second half. It’s not just working holiday makers who will be affected but also those who employ them. If you run a small business that employs working holiday makers, take note that: • You will need to give them two payment summaries this…

Where can you find some of Australia’s leading property experts including Ben Kingsley, Bruce Holdaway, Chris Gray and Margaret Lomas under one roof? At the Melbourne Property Buyer Expo which will be held at the Melbourne Convention and Exhibition Centre from February 24 to February 26, 10am to 5pm. The expo offers a number of free and paid seminars for home buyers and property investors who want to learn more about property. Exhibitors include mortgage brokers, buyers agents, developers and more. Money readers can get two tickets for the price of one – a saving of $20. Visit propertybuyerexpo.com.au and use the code MONEYVIP to grab two tickets for $20. Offer valid until February 26.…

The financial sector represents around 40% of the ASX/S&P 100 benchmark, providing a worrying level of concentration risk, says John Campbell, managing director of Avoca Investment Management. “The oligopolistic big four Australian banks have been a great long-term investment and self-managed super funds in particular have been a major beneficiary,” he says. “However, with ever increasing capital requirements, increasing government and APRA oversight, likely softening in mortgage lending and the spectre of encroaching ‘fintech’, it seems less likely that the returns of the past will be emulated going forward. Not surprisingly, all four CEOs of the big banks have voted with their feet and retired in the last two years.” Avoca manages a small companies fund and Campbell says the S&P/ASX Small Ordinaries Index is much more balanced and aligned…

“When I was young I had a camera but I never knew how to use it. It was just to take pictures of my friends in auto mode” Fact file Lauren Bath Social media influencer and former chef: Australia’s first professional Instagrammer. Age 36; lives on the Gold Coast. Earned pocket money aged 11 selling potpourri bags to neighbours using flowers snipped from their gardens. Radio shock jocks and newspaper columnists reigned supreme before the digital age turned everything on its head. Millions were swayed by their brash views, bestowing them with the power to make or break governments, social causes and personal reputations. But rivals are popping up in the form of social media influencers. These exalted newbies capture hoards of followers on platforms such as YouTube, Instagram, Facebook…

When it comes to investing, the hardest part can be deciding to start. Many people delay acting, trying to get the timing just right. But, often, how long you are in the market is more important than trying to time your entry. As such, it’s wonderful to see that Andrew has already made a start. But before considering his next steps, however, it’s important for Andrew to clarify his goals. Paying off the mortgage is an excellent risk management tool that will help reduce the impact when interest rates rise. Andrew has secured a low variable rate but setting some of his mortgage at a fixed rate should further reduce interest rate risk. Creating a large buffer to ensure he is prepared for a rate rise is also important, otherwise…

Paul’s verdict:Investing for kids is also about building skillsHarness the power of compound interest, one of the true money miracles In our mid-30s, we have just welcomed a baby, Elizabeth, into our family. We have been given about $2000 by family but we are unsure how best to invest it for her, or whether to make it work for the family instead. Interest rates are so low, we’re reluctant to leave it in the bank. Currently it’s sitting in our offset account for our home loan (about $450,000 left), and we are half-thinking of leaving it there and just taking note of how much to pull out for her later. We are hoping, when she is old enough, to pay for uni or an apprenticeship, and any savings on our…

This time last year I wrote: “The shallow forecasting of some economists would have us expect a fairly mellow year in all major markets. The more extreme naysayers have predicted (yet again) the bursting of a bubble. The most ill-informed will tell you that everything depends on interest rates. None of these predictions hits the mark.” There was certainly no collapse in the major markets. The various research sources indicated solid growth in Melbourne, Hobart and Canberra. Most reported a slowdown in Sydney, although one source recorded a continuation of double-digit price growth. Brisbane and Adelaide had moderate growth overall but individual precincts were much stronger. With Perth and Darwin continuing to go backwards, the evidence suggested that local economic conditions were much more influential than low interest rates. This…

Now that you’re a couple, there are a few things you should do to protect your personal finances: • Keep both names on all accounts. Don’t have all your debt and assets held in the name of one spouse. You may be part of a couple but it is still important to have your own savings and credit record. Without this, if you divorce or your spouse dies, it will be difficult for you to get a loan or credit card. • Be involved in household finances and make decisions together. If anything happens to one partner, and they are the designated bill payer, you should be able to take over. Know who is doing what. • Don’t automatically opt for couples health insurance. While it may reduce your paperwork,…

Has your credit card balance crept up after the recent festivities? With the silly season over, it’s a great time to tidy up any lingering debt so you’re ready to tackle the year ahead. One way to help tackle the credit card creep is to switch to a low-rate card that offers long-term value. Many balance transfer credit cards leave you with a high-rate hangover after just a few months, which can end up costing more over a year than a card with a set low rate. Keep in mind that many cards charge a substantially higher rate for cash advances than purchases, instead of a consistent rate across both. Doing the maths could help you avoid paying hundreds of dollars a year for using your credit card, particularly when…

Property investors can secure at least 40% higher rental income from short-stay guests than from letting their properties to long-term tenants, according to analysis undertaken by MadeComfy, a company specialising in short-term rentals, based on the properties it currently manages. So why don’t all landlords follow the short-stay trend and rent their investments on Airbnb and Stayz? First, not all properties are suitable for tourists and corporate travellers. Location, style and condition are the key determinants as to whether a property is suitable for short-term renting, says Quirin Schwaighofer, MadeComfy’s co-founder. Those in the CBD or inner-city suburbs are likely to be booked year round. And modern, styled and well-maintained properties will also secure more bookings than those that are old and rundown. “While guests want more authentic experiences staying…

Since it’s the beginning of the year and the future is still full of promise, why not take a fresh approach to your super: shake off inertia, hop onto the web and find out what member benefits await you. It’s painless and potentially rewarding. Whether you have just started your career or are heading for retirement, super funds have put a great deal of effort and skill into engaging with their members. Benefits range from free seminars to deals and discounts on things such as movie tickets, travel, health insurance, tax returns and home loans, as well as holiday rewards. “The challenge for super funds is how to engage with their members in ways that are interesting. Super can sometimes miss the excitement factor,” says Kirby Rappell, research manager at…

I get regular emails from Marcus Today members pointing out how bad broker recommendations have been in hindsight. Most of the finger pointing is simply an investor attempting to transfer the blame to someone else – anyone else but themselves. We all know the game, we all do it, but if an investor is ever going to learn from their mistakes and improve their investment outcome they need to take responsibility, and not pass it on to some Machiavellian stockmarket plot orchestrated by the so-called “smart money”, the company and the brokers. The investor is the gatekeeper and ultimately the only one who can take the blame. They are the one who is taking the risk and making the decisions, and to deflect the blame is to learn nothing. Yes,…

Money-saving tips have paid off Keeping a check on things can save us all money. Two things happened recently that have saved my wife and I money and may have gone unnoticed. The first: our toilet cistern was leaking straight into floor waste and was undiscovered for a couple of years. It is fixed and our water use has dropped by 30%. The second: an unknown debt from our credit card of $132. I advised the bank it was an illegal debit and it is being investigated. Thank you very much for a great magazine with lots of saving tips and information. Rob, email…

EDITORIAL Chairman & chief commentator Paul Clitheroe Editor Effie Zahos Deputy Editor Maria Bekiaris Art Director Ann Loveday Designer Chantelle Galaz Senior Sub-editors Bob Christensen, Janice Hogg Senior Writers Susan Hely, Pam Walkley Staff Writer Steph Nash Online Content Producer Sharyn McCowen CONTRIBUTING WRITERS Heidi Armstrong, Chris Batchelor, Nerida Cole, Alan Deans, Nicola Field, Ross Greenwood, Greg Hoffman, Craig James, Anthony O’Brien, Marcus Padley, Vita Palestrant, Scott Pape, Terry Ryder, Annette Sampson CONTRIBUTING ARTISTS Yianni Aspradakis, Reg Lynch, Jim Tsinganos, John Tiedemann, Richard Whitfield 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 MARKETING Brand Manager Georgia Mavrakakis…

In 2016 Brexit and the controversial US election demonstrated the folly of trying to beat the sharemarket and that making short-term market predictions is dangerous to your financial health. Most expert commentators misjudged the impact that these events would have on markets. Yet despite at least half the predictions being wrong, experts and do-it-yourselfers continue to make them due to optimism bias and hindsight bias. Hindsight bias tricks humans into thinking it’s easy to know when stocks and markets are too high or too low. People overestimate their ability to predict the future; they (falsely) believe they correctly foresaw the past rather than what it most likely was – good luck. Most people trying to time entry and exit points are whiplashed by the market and end up buying and…

Eager to jump into the property market but convinced that it’s out of reach? Peter Mastroianni’s guide is perfect for the anxious new kid on the block, as it debunks the myth that you have to be rich to invest. Mastroianni introduces readers to his five-step SMART strategy: know the steps to success; manage your money; accumulate your earnings; manage risk; and, finally, take off! The guide will help you to recognise and take advantage of opportunities when they arise. Mastroianni also delves into other strategies, such as developing, subdividing and investing in joint ventures. Ten readers can win a copy. What is your biggest financial regret? Entries should be 25 words or less and be sent to Book of the Month, Money, GPO Box 4088, Sydney, NSW 2001 or…

Wage theft is a serious issue affecting hundreds of thousands of Australians. Underpayment of hours of work, superannuation and overtime are just some of the ways in which workers are being robbed of their legal entitlements. With an impending decision from the Fair Work Commission (FWC) that could see crucial Sunday penalty rates slashed for thousands of hard-working Australians, there has never been a more important time to know your rights at work. Minimum wage and awards, penalty rates and entitlements are not simply at the discretion of an employer – they are legal requirements that must be met. Reports last year that workers had been cheated of $3.6 billion in unpaid super reveal the high stakes of letting entitlements slide and highlight the vital importance of understanding what you…

Australian government bond yields have moved meaningfully since the US election. But they had already moved higher before then, driven by a subtle but important change in stance by central banks globally. Unconventional policy, including quantitative easing, is now being reassessed. Central bankers and governments have started to talk about the need to move away from easier monetary policy and think more about fiscal policy. Then came the US election. The win by Donald Trump, and his focus on pro-growth policies, has given markets the confidence to believe that the growth tide has finally turned. As a result, equities have moved sharply higher and bond yields higher. Where to now? If Trump’s policies are enacted smoothly, they could add 0.5%- 0.75% to US growth, lifting it to 2.25%-2.5% in 2017.…

Keep an eye on the new floats for 2017. Already the ASX has over 30 companies lined up to list, including a number of mining and resources groups. Initial public offerings have, on average, consistently outperformed the broader sharemarket. “Given the strong opening to equity markets in 2017, and the number of IPOs that were pushed back in the fourth quarter last year, we anticipate a strong start to the year for new floats,” says Ben Bucknell, CEO of OnMarket BookBuilds. He expects investors will continue to support companies that are capitalising on strong growth trends in their industries or the broader economy. “If the commodity rally continues, the number of resource-based IPOs could pick up after a few lean years,” he says. “We also expect that more listed investment…

NAME: Andrew Ko STATUS: Aged 31; bought a home two years ago. QUESTIONS: What is the best investment for my money? What is the best way to leverage off my two-bedroom unit? ANSWERS: Pay off your mortgage, so you have a buffer for when rates rise. If you add $3000 a year extra to super, you will save $1000 in tax. Once you have a good chunk paid off your mortgage, invest in a range of Vanguard’s diversified, low-cost exchange traded funds (ETFs). You could afford an investment property worth $290,000 and – if you make some changes – up to $420,000. Consider the benefits of “rentvesting”, where you rent your home and live somewhere else. Make sure your renovations are covered by at least an equal rise in the…

Angela’s investment plan is a ... Serious step up the risk ladder Q I am a 64-year-old retiree with a 54-year-old working husband who has $190,000 in super and earns $79,000pa. I have $600,000 in a bank account earning 2.75%. I hesitate to put my money in superannuation because of the fees. I don’t like the idea of a self-managed super fund for the same reason. I am considering putting $500,000 into the AFI/Argo listed investment companies and using the dividends to live off after hubby retires in five years. You have me feeling nervous Angela. It is quite a switch from having 100% in a term deposit to more than 80% in shares. At 64 you are really moving up the risk ladder. I understand you would use the…

Growth in 2017 will be found in areas least expected. The story will be much less about Sydney and Melbourne and a lot more about Hobart, Canberra, Adelaide and some of our more vibrant regional cities. The 2016 calendar year sowed the first seeds of change. There was an undeniable slowdown in the momentum of the two biggest cities, although some of the more shallow commentators maintained the fiction that Sydney (and therefore Australia) was still having a price boom. The first clue to how things were changing came from sales volumes. Activity fell quite markedly in both Sydney and Melbourne. The second clue was a dissipation of price growth rates. Although one major source kept publishing inflated figures, the vast majority of research sources (including the Australian Bureau of…

• 1120 different franchise brands operate in Australia. • 90% of franchised brands originated in Australia. • Annual sales turnover for the franchise sector is estimated at $146 billion. • One-third of franchise brands engage in online sales. • 26% of franchise brands are in the retail (nonfood) industry. A further 19% are in accommodation and food services. • 60% of franchise brands have been franchising for more than 10 years. Source: Franchising Australia 2016 report, Griffith University – Asia-Pacific Centre for Franchising Excellence.…

We all invest time in building wealth and a career but can you make significant inroads with these without investing in that other all-important asset – you? In her recent book Thrive, Arianna Huffington, founder and CEO of Thrive Global and The Huffington Post, talks about a turning point in her life when she collapsed in her home office. She underwent MRI and CAT scans only to discover the problem was exhaustion. She had neglected to invest in herself and it gave her a serious health scare. Working 18 hours a day, seven days a week, can come at a cost. Nowadays the definition of “making it” has been reduced to your bank balance, how high up you are in the organisational chart, how many people report to you or…

How much of a deposit do I need? You need to save up 20% or you’ll pay thousands of dollars in lenders mortgage insurance (LMI). How much can I afford? Barefoot Rule 246 states: Always borrow less than the bank will lend you. The repayments should generally be less than 30% of your take-home pay. And if you’re planning on having kids in the next five years, factor in the drop in income and the increase in costs. Should I buy an investment property first? Not unless you plan on eventually moving into it. It gobbles up your savings and delays you getting into your own home. Should I wait for the housing market to crash? No – as long as you’ve saved up a deposit and you can afford…

Another way property investors can achieve higher rental returns than those available through long-term leases in Australia is to check out offshore investment opportunities. One currently being marketed is a new serviced apartment building in Dubai, UAE, which expects to achieve net rental returns of 10%-12%. By comparison many Australian property landlords are struggling to achieve 2%-3%. Montrell Apartments, in a prime location close to the prestigious Expo 2020 site and Dubai’s most iconic communities, such as the marina and Sports City, is being promoted internationally. The studios and one-bedroom apartments, complete with a furniture package, are being marketed by UK-based Aspen Woolf, a real estate marketing company claiming to have assisted clients in 120 countries. See aspenwoolf.co.uk.…

The Actuaries Institute wants to stop dashboards using figures for total fees and instead separate investment and administrative fees and costs. It also wants examples of different account balances to show the impact of both dollar-based and asset-based costs. It analysed the dashboards of 20 of MySuper’s largest funds to show how using total fees alone on a $50,000 balance is inadequate. The table (above left) shows total fees and costs on a $50,000 balance, listing the various fees separately. QSuper has total fees of $385 compared with $552 for Hostplus, which could tempt a Hostplus member to switch. The total fees also suggest that CFS FirstChoice Employer and Hostplus are equally attractive – $560 and $552 respectively. But the reason Hostplus has a higher total fee is that its…

• Healthscope (ASX: HSO) is a leading private healthcare provider in Australia, with 45 hospitals and 48 medical centres, and pathology operations in New Zealand, Malaysia, Singapore and Vietnam. Lower than expected hospital admissions in the September quarter triggered a 30% drop in its share price. But the long-term trend for admissions is solid and investors rarely get the chance to buy quality cheaply, says Roger Montgomery. It closed the year on $2.29, well down on its year high of $3.17. • Vita Group (VTG) runs 103 Telstra stores, making it Telstra’s largest licensee. Montgomery describes CEO Maxine Horne as “arguably one of this country’s best retail merchants and motivational leaders”. Its share price plunged 56% in the three months to early December to $2.17 before recovering some lost ground…

Super funds provide different types of advice. Each has a specific role so it’s worth knowing how they fit together and what you’ll receive: GENERAL SuperRatings’ Kirby Rappell says general advice is limited to providing factual information about a product or service. It does not take into account your personal circumstances or make recommendations. “It means you can find out key information but it does not consider whether this is the best product or service for you,” he says. Nevertheless, getting on top of the details is a necessary part of managing your super. Typically, general advice is free. But for recommendations that take your personal circumstances into account, you will have to pay. LIMITED OR “SCALED” This advice is tailored to your personal circumstances but the advice is limited…

It’s been a year since I took the plunge and made my first trade on the stock exchange. Looking back, I made a huge error when I was facilitating my trade. Three or four days went by after my order was executed and I still hadn’t settled my account. I was on holiday drinking wine in the Yarra Valley when CommSec hit me up for a failed settlement fee of $54. I pleaded with a service rep over dodgy reception to take pity on my ignorance and waive the fee. Lucky for me it worked but I could have saved myself the embarrassment by researching exactly how to facilitate a trade before jumping in. I believe investing is vital for first-home buyers like me who are struggling to save a…

Initial public offerings (IPOs) have performed pretty well over the past couple of years. They returned an impressive 35.8% in the year to November 30, 2016, compared with just 2.7% for the S&P/ASX 200, according to analysis by OnMarket BookBuilds. “These returns build on an impressive IPO performance in 2015, when the average return of the 93 companies that listed on the ASX that year was 23%. That compares to the S&P/ASX 200, which lost 3%,” says Ben Bucknell, chief executive of OnMarket BookBuilds. And there are already a number of floats on the horizon. The ASX has about 30 companies lined up. So how do you get a slice of the action? Traditionally it has been hard for “mum and dad” investors to buy shares in a float as…