Innholdsfortegnelse for December 2018 i Money Magazine

December is traditionally a very busy month but after all the events that have unfolded this year I say “bring on the silly season”. We saw our prime minister change – again. We were shocked by some of the revelations to come out of the royal commission into misconduct in the banking, super and financial services industry. The interim report confirmed that a culture of greed, compounded by inaction from regulators, was to blame. We felt the pain (either directly or indirectly via our super funds) when the sharemarket shed $50 billion in one day. The S&P/ASX 200 Index has been pedalling hard but is nowhere near its August high of 6352. We continued to be held down by sluggish wages, an unprecedented amount of personal debt and a softening…

EFFIE ZAHOS Money editor Effie says: “Being there for my daughter at 9am on Friday December 14 to remind her that no matter what ATAR she gets on this day, no number should ever define you. Exploring the ‘Pearl of the Andaman’ one of Thailand’s most iconic islands with my family and taking cooking lessons with a local in their own home.” MARIA BEKIARIS Maria, Money’s deputy editor, says: “Day trips to explore some of the fabulous beaches up and down the NSW coast, visits to the local pools with the kids and their friends, watching them enjoy their downtime after a busy year at school. And just getting to enjoy quality time with family and friends.” SUSAN HELY Susan, a senior writer at Money for more than 10 years,…

Digital technologies are ready to change housing systems in profound ways. Our recent research looked at how blockchain technology could enable the crowdfunding of property development, potentially allowing developers to attract micro investors (possibly from across the world) who would each own small parcels of shares in the development. This differs from existing real estate investment trusts in that blockchain tokenisation gives micro investors complete control over what they purchase with real-time information, without having to pay the high fees a portfolio manager might charge. Another possibility is that blockchain may one day provide an entry point into the property market for those who cannot afford an entire property, even allowing tenants to own a share of the property they live in. Giving tenants a stake in the property would…

Separation and divorce are never easy and the added pressure of getting your finances settled can be stressful. The book guides readers through the four financial phases of divorce: pre-settlement; negotiation; post-settlement; and rebuilding. Baker, a licensed financial adviser, says it isn’t about taking your ex to the cleaners, but about empowering women to make more educated and informed decisions about their financial situation. The book also looks at the financial foundations you must have in place. 10 readers can win a copy. In 25 words or less, tell us the first step you’d take to be financially independent after a divorce. Enter online at moneymag.com.au/win or send entries to Money, GPO Box 4088, Sydney, NSW 2001. Entries open November 26, 2018 and close on January 30, 2019.…

Life has a habit of throwing up financial challenges – some are planned, such as maternity leave or a career break; others are unexpected, such as an accident or illness. Whatever the reason, you can ask your lender to hit pause on your mortgage repayments, or reduce the amount you pay for an agreed period, usually between three months and a year. While the more common reasons are usually big “life” events such as maternity leave, you can still ask for a pause for more frivolous adventures such as extended travel, provided you have a reasonable plan to catch up once you are back at work. Around 40% of lenders in the RateCity database advertise repayment holidays or pregnancy pauses. However, even lenders who don’t promote this feature are likely…

The royal commission has made many Aussies cynical about getting financial advice. The most important step in finding an adviser you can trust is to remove any conflicts of interest. To be truly independent I believe the adviser needs to satisfy five conditions: Take no commissions, referral fees or kickbacks. This ensures they are impartial and have no personal stake in the advice outcome. They shouldn’t make any more or less money (fees/revenue) based on their recommendations. Offer fixed fees. They should not charge you a percentage fee on your investments because this creates a conflict too. They should charge you a fixed monthly, quarterly or annual fee for their service (or an hourly rate is fine, too). Have nothing to sell you. The adviser’s business shouldn’t make money from…

Technologies tend to get cheaper over time, and that goes for assisted breathing technologies too. We’ve lost track of how many ResMed results have included the line “gross margin was slightly lower than the prior year quarter mainly due to declines in average selling prices, which were partially offset by manufacturing and procurement efficiencies”. The company’s gross margin fell slightly from 58.4% to 58.3% in the three months to September, compared with the previous year. This tells us that ResMed is pretty good at cutting operating costs and taking advantage of operating leverage, with net profit margin slightly better today than it was 10 years ago, despite gross margin falling from 62% to 58%. Revenue rose 13% to $US588 million ($810 million) in the September quarter, while net profit increased…

I’m a 32-year-old first-time mum who’d like to gift at least $100,000 as a financial head-start on my child’s 25th birthday. What options would provide the best returns (shares, bank cash, bonds, etc) with an initial $10,000 investment, plus $200 every month? Ideally I’d like to do this for any future (two or three) kids as well. Overall I’m in a good financial position with a healthy amount in super and I own my two-bedroom apartment outright. Emma Hooray! Thanks, Emma, for my favourite question. I can leap straight onto my soapbox and carry on enthusiastically about your plan. I try hard to be real in my answers and a lot of them are based on personal experience. In this case, I can tell you that a big part of…

Six weeks of summer holidays is a long stretch to keep your kids entertained, active and away from their screens. Most of these activities are free, so you won’t break the budget. 1. CHILL OUT Head for the beach or local pool. Pack snacks and invite friends or family and their kids – the more the merrier. 2. RIDE OUT Get on your bikes. Find quiet, safe trails away from the traffic. Check your local council’s website for age-appropriate trails. 3. MUSEUMS AND ART GALLERIES Explore the many child-friendly museums and art galleries such as Sydney’s Maritime Museum, the National Museum in Canberra and the National Gallery of Victoria in Melbourne. It won’t cost anything to view permanent exhibitions but there may be a charge for the blockbusters. 4. FESTIVAL…

One of the things that really irks me is when so-called “experts” suggest that people who stop work should become more defensive with their investments. Now I get the idea that if income is not regularly coming in you must rely on your own investments – maybe topped up with the age pension. The traditional thinking is that when you stop work you need to reduce risk in your portfolio so that you limit the chance of significant capital loss. And I get this. Retirees generally should not be punting spec shares unless they have significant disposable assets. The problem, as I see it, is the time people spend in those non-working retirement years. The Bureau of Statistics publishes a periodical study of Australia’s retirement intentions. It shows that for…

Did you know that many investors simply don’t care about the share price? Let me say that again: in Australia there is a very large chunk of retiree investors who simply don’t care about the capital value of the shares they hold, because they are entirely focused on living off the income and the franking. Here are the traits of the income investor that allow them to ignore share prices: • Income investors are generally not interested in the stockmarket, beyond milking it for income. It might provide some intellectual stimulation once a weekend when they read the newspaper or chat about it at a dinner party but they do not wish to be watching the stockmarket, making decisions about the stockmarket or worrying about the stockmarket. There is tremendous value…

In 2001, the Best of the Best edition made its debut. Back then I said: “With the vast array of products around, it’s very easy to pay far more interest than you really need to, or not earn as much from your investments as you should.” Funnily enough, this still applies today. According to Canstar, just one of the seven research houses we rely on to put this edition together, October saw 220 rate changes from 23 lenders, even though the cash rate has been on hold for 27 consecutive months. How much are you paying for your mortgage? What about your credit card? You’d be mad not to at least have a sneak peek at some of the winners here to compare what you’re paying or earning. On the…

GOLD WINNER RUSSELL INVESTMENTS Andrew Sneddon likes to compare good investing to an A Grade footballer running for the ball. Just as the footballer knows to run to where the ball is going, he says a skilful investment manager is able to pick where investment markets are heading. Rather than focusing on past performance, an accomplished investment manager scours the globe and analyses emerging risks, adjusting the portfolio so it has the most appropriate factors, styles and managers across asset classes. “It sounds easy to do but behaviourally it is extremely difficult,” says Sneddon, a senior portfolio manager, multi-asset funds, at Russell Investments. This year Russell Investments has won Best Fund Manager as well as the best multi-sector fund category for two of its eight multi-sector funds: the Conservative A…

GOLD WINNER ARROWSTREET Diversification into overseas sharemarkets has paid off for more adventurous investors Most international share funds continued to provide stronger returns than local share funds over the past 12 months, so this is just one reason why investors seeking diversification need some exposure to overseas shares. The outright winner of this category, Arrowstreet Global Equity, has been the joint winner for the past three years. The fund is available both as a hedged and unhedged option and both have rated well. The fund is available through the Macquarie Professional Series. It provides exposure to a diversified portfolio of global equities, which may include emerging markets as well as small caps. The fund doesn’t invest in tobacco or “controversial weapons” securities. Arrowstreet’s stock selection models are designed to understand what…

GOLD WINNER LA TROBE Lock in for at least 12 months to gain capital stability and returns that beat cash For 10 years running, La Trobe’s 12 Month Term Account, formerly the Pooled Mortgages Fund, has won this award. As in previous years it’s the only mortgage fund that all the three judges – Lonsec, SQM Research and Zenith – rate as being worthy of an award. It pays distributions monthly and is mainly aimed at investors who are seeking regular income and are prepared to be locked in for at least 12 months, the minimum holding period. Your funds are automatically rolled over for a new term of 12 months unless you provide us the required notice to withdraw. La Trobe may consider early withdrawal on hardship grounds but…

GOLD WINNERS BENTHAM AND PIMCO A diversified portfolio of high-quality bonds keeps the cash flowing in Global income funds have had a mixed 12 months but over three years most have performed strongly, providing an alternative and reliable source of income for investors. Joint winners this year are PIMCO’s Wholesale Global Credit fund, which has also been a winner in the past two years, and the Bentham Global Income fund, second for the past two years. The PIMCO Global Credit fund aims to provide investors with attractive returns from high-quality corporate bonds. The fund has the ability to broadly diversify across industries, issuers and regions of the corporate bond sector and can seek to add value through investments in high-quality government bonds, mortgages and foreign bonds. It provides its investors…

GOLD WINNERS ISHARES, SPDR, VANECK AND VANGUARD These portfolio building blocks deliver diversification at a low cost This year’s gold ETF winners – iShares Core S&P/ASX 200, SPDR S&P/ASX 200, Vanguard’s Australian Shares Index, VanEck Vectors Australian Equal Weight – all performed well over the year, boosted by a solid Australian sharemarket. The VanEck Vectors Australian Equal Weight ETF has performed more strongly than the three other pure index winners this year because its equal weighting strategy was more successful when the share prices of the banks and AMP fell. The VanEck fund isn’t a pure index ETF but is a rules based product that tracks a specially designed index. It follows the performance of the 60 largest and most liquid ASX-listed companies across all sectors and weights them equally.…

GOLD WINNER ISHARES In volatile times, an index-tracking bond fund can help steady the nerves The winner, the iShares Core Composite Bond ETF, invests in quality AAA and AA Australian government and semi-government bonds. It follows the Bloomberg Aus-Bond Composite 0+ Year index, with roughly 73% in AAA-rated securities, 19% in AA bonds, 5% in A bonds, 2% in BBB and 1% not rated. The ETF holds 51% in treasury bonds, 37% in government-related bonds, 11% in corporate bonds and 1% in covered bonds. The bonds have a range of maturities with the biggest holding (22%) being seven to 10 years followed by three to five years (20%). The ETF charges an investment management fee of 0.20%pa. Returns from government bonds have been lacklustre over three years but the past year…

GOLD WINNER COMMSEC A host of research and education tools help investors make the right calls CommSec has won the award for the 12th year in a row. “It has continued to set the standard for the best feature-packed online broker award by providing tools and support to assist traders at all levels,” says Emily Horton, research analyst with Canstar. Users receive access to real-time updates, technical analyst reports on desktop and mobile, and live charting tools to help make more informed and timely decisions and take advantage of market opportunities, she says. It also provides access to industry reporting and commentary from experts who analyse the market and economy. “Education is paramount on the platform, with tools aimed to increase investor knowledge covering topics from trading fundamentals to advanced…

GOLD WINNER COMMSEC Borrowed funds can be used to build a larger portfolio diversified across a range of assets CommSec has taken out this award three years in a row. The broker provides investors with comprehensive market analysis tools and commentary, says Emily Horton, research analyst at Canstar. “With one of the most comprehensive lists of approved funds in the market, CommSec enables investors to diversify investments across a wider range of assets. For an investor, this provides greater exposure to various companies, industries and countries,” she says. With a CommSec margin loan you get access to a large number of tools to help you monitor your portfolio’s performance, including online summaries, gearing ratios, loan statements, notifications and research. And you can choose either a flexible or fixed interest rate…

Tax Calculator How much should your employer be paying you in super contributions each year? If you’re not sure, you need to find out so that you can keep an eye on your payslips. The free Tax Calculator app lets you input your salary then calculates your gross income, super, PAYG, Medicare levy and HELP. Compare the numbers with your payslip, and make sure you’re being paid the right super. The SMSF Podcast This aptly named fortnightly podcast covers investing for self-managed super funds with a focus on property. Host Jonathan Preston answers questions about when to buy and sell property through an SMSF, choosing the right assets for your risk profile, and the risks and rewards of commercial versus residential real estate. Cost of Living | Cities Living overseas…

GOLD WINNER HOSTPLUS A big exposure to growth assets, plus low fees, is a rewarding combination Hostplus’s winning balanced super fund has been the No. 1 performer over one, three, five, seven and 15 years, according to SuperRatings’ SR50 survey to June 30, 2018. Hostplus favours actively managed investments and this fund holds around 90% in growth assets and 10% in defensive assets such as credit and diversified fixed income. Over the past year, performance has been boosted by strong returns from its holdings in direct property (12% over the year to June 18), unlisted infrastructure (12%) and private equity (15%). Hostplus also has a large holding of venture capital companies with innovative products. It has committed over $1 billion to Australian venture capital managers, supporting innovation in biomed, fintech,…

Australians are reducing their voluntary superannuation contributions from the record highs during the bull market of recent years. The latest data from super research house SuperRatings reveals that the average voluntary contribution over the 2017-18 financial year was $1054, a 10% decline on the previous year but just $158pa less than the highest average contribution of $1212 in the 2008 financial year. After the GFC in 2008, voluntary contributions more than halved but have slowly climbed since then. Australians are permitted to make concessional contributions up to $25,000 to their superannuation fund or non-concessional amounts up to $100,000 a year (or $300,000 using the bring-forward rule). “It remains to be seen how volatility throughout 2018 has affected member contributions but super balances remain well ahead over the course of the…

GOLD WINNER HOSTPLUS Hard-to-beat fees help boost the returns from a diversified index-tracking strategy The Hostplus Indexed Balanced option, with low-cost passive investments, wins for the seventh consecutive year. Hostplus’s low fees are hard to beat with a 0.05% annual investment management fee as well as a weekly admin cost of $1.50. The Indexed Balanced option is diversified across Australian (32%) and international (43%) equities, fixed income (15%) and cash (10%). The fund managers are IFM Investors (Australian and international equities), BlackRock (fixed income) and Citi (cash). Over the past year the fund increased its asset allocation to international shares by 3% at the expense of Australian equities. The index strategy means that returns track the performance of each asset class. The fund doesn’t invest in any of the unlisted…

GOLD WINNER SUNSUPER A set-and-forget approach allows pensioners to get on with enjoying their lives Sunsuper for Life Income pension features include an incentive for signing up, a set-and-forget investment strategy and financial planner consultations. It offers a signing-on bonus of up to $4800 for Sunsuper members who activate the income account. But to qualify they need to have been with Sunsuper’s savings account for at least 12 months, and the higher the account balance the bigger the bonus (0.3%). A member with $200,000 receives $600, rising to $1500 for $500,000 up to a maximum of $4800 for $1.6 million. Pensioners can choose from a range of investment options or, to make their lives simpler, opt for the Today and Tomorrow strategy. This pays an income from the cash option…

Running late with just a single credit card payment can impact your credit score. It’s not usually an issue if you’re late by one or two days but if the payment is overdue by 14 days – or, worse, 30 days – your credit score could take a hit. Staying up to date with card payments is even more important if you are using a balance transfer. Being late with a card payment can potentially terminate the promotional rate on the transfer deal. That could mean losing the super low or even zero interest rate that attracted you to the balance transfer in the first place.…

GOLD WINNERS BANK HSBC NON-BANK AMERICAN EXPRESS Go shopping in the first month to make the most of a winner’s generosity Non-banks are strong in rewards-based credit cards, though reward chasers need to be sure their card is paid off in full each month to avoid high interest charges. Amex’s David Jones Card has risen from second place in 2018 by offering some serious bang for your buck. It helps if you’re a fan of retailer David Jones, though it’s not essential. Cardholders receive 20,000 membership reward points (or 15,000 Qantas points) when they spend three times outside of David Jones within the first month. Thereafter, earn three reward points per $1 spent at major supermarkets and petrol stations, or two points per $1 at David Jones and one point…

GOLD WINNERS BANK ME NON-BANK CUA Bonus interest can help build up that all-important financial buffer A recent ME Bank report found one in four households have less than $1000 in cash savings, leaving many Australians vulnerable to unexpected bills or emergencies. Clearly it’s time to get serious about saving, and plenty of accounts offer bonus interest as an incentive. ME’s Online Savings Account takes a different approach. The base rate is 1.30%; however, by opening an ME Everyday Account and using the linked debit card to make at least one tap&go payment each week, a bonus rate of 1.55% applies, bringing the total return to 2.85%. CUA’s eSaver Boost encourages regular deposits by paying a top rate of 2.75% in months when at least $250 is tucked away in…

GOLD WINNERS BANK BANK OF SYDNEY NON-BANK CUA If you shop around for a decent rate, you can actually get ahead with your savings Today’s low-rate environment makes it important to shop around for the best possible return on savings. The average rate on three-month term deposits is just 1.90%. To put it into perspective, inflation is sitting at 1.9%, so if you’re earning the market average you’re only treading water with your savings. Happily, our winners deliver more generous returns. Bank of Sydney’s 2.65% rate is available over a four-month term, and you can get started with deposits as low as $1000. You can access the funds before the fixed term ends without the need to give 31 days’ notice – a condition that applies to many other term…

While SMSFs hold, on average, 24.8% of their assets in cash, this percentage tends to be a lot higher among smaller funds. The latest tax office figures, at June 2016, show that SMSFs with balances up to $500,000 tend to favour cash, holding 32% of total assets in cash and term deposits. Larger funds tend to prefer shares and managed investments. Smaller funds are also less likely to be diversified across a broad range of investments. In 2016, cash and term deposits were the sole asset held by almost one in 10 SMSFs. While cash is safe, it generates low rates of interest, and holding a high proportion of cash can also negatively impact a fund’s overall returns. As a guide, SMSFs with more than $200,000 in assets earned positive returns…

GOLD WINNERS BANK ENDEAVOUR MUTUAL BANK NON-BANK MONEYPLACE/LIBERTY FINANCIAL Fees and approval time are also important to consider when you borrow funds Personal loans have traditionally been an area where non-bank lenders have excelled, but this is changing as a number of mutuals make the shift to become customer-owned banks. Nonetheless, our results highlight the value of looking outside the big banks for a personal loan with a highly competitive rate. If you plan to borrow small amounts, it pays to look at the loan application fee as closely as the interest rate. The less you borrow, the higher this fee becomes as a percentage of the loan. Endeavour Mutual Bank’s personal loan has no monthly fee and allows early repayment without penalty. The loan is unsecured, and Endeavour claims…

GOLD WINNERS BANK OF MELBOURNE, BANK SA AND ST.GEORGE Keep business and pleasure separate – and your bank will love you for it Using a personal credit card for business purchases is commonplace, and there’s nothing wrong with it. However, by using a personal card it can be harder to separate personal and business expenses. A business credit card from Bank of Melbourne, BankSA and St.George, therefore, can remove the risk and cost of mixing business with pleasure. Business credit cards enable owners to track costs and revenue through data feeds linked to accounting software packages such as Xero and MYOB. It’s worth noting the banks seem to prefer SMEs to use business rather than personal cards. In October, for instance, automated Commonwealth Bank personal credit card feeds ended for…

Hotspots in the west I love reading Money and have gained a lot of valuable knowledge and insight but every time real estate is mentioned, particularly good investment suburbs and regional hotspots, Western Australia is never even mentioned. I would love to know where our good regional investments and hotspots are. Carilyn Ed’s note: Look out for our February Top 50 Share Buys and Property Hotspots. Our property expert Terry Ryder will no doubt have a few picks in WA. This year he noted Joondalup as one of the standout precincts in WA. You’ll be able to read more in February as to how this tip panned out. See also page 96 in this issue for Peter Koulizos’s tip. Unfair Medicare slug My son recently changed jobs. He was on…

OK, here we go again. This is close to the 20th crack at my views on investing in the year ahead of us. Now that I think about it, 2019 will be Money magazine’s 20th birthday – who would have thought a magazine about money would go for two decades! First, I’ll cheer up our legal team no end by disclosing that my crystal ball is horribly flawed and I don’t really have the first clue about short-term investment trends anyway. I am not too bad at the long term. This is mainly because I am not very clever, and I am painfully aware that as I still work for a living my predictions can’t be much good anyway. So for the long term I rely on common sense. Fortunately, this…

GuildSuper has launched a new program, SUPERSUPER, which allows members to earn money towards their super when they shop. Members who sign up for the program can purchase eVouchers or gift cards to spend at participating retailers. A cash reward – calculated on a percentage of every dollar spent – then goes directly into their super. There are a few new ETFs on the ASX. There’s the VanEck Vectors China New Economy ETF (ASX: CNEW) which tracks the CSI MarketGrader China New Economy Index. This is a smart beta strategy and has a management fee of 0.95%pa. Fidelity International has launched its first active ETF – the Fidelity Global Emerging Markets Fund (ASX: FEMX) giving investors access to a concentrated portfolio of 30-50 quality emerging market companies. Service NSW now…

Buying Christmas presents for family and friends can be a big job, and with Australians spending, on average, a little over $600 each on gifts it’s not a cheap one either. This app helps you stay on top of gift giving by allowing you to set up helpful lists of each person you’ll be buying a gift for, how much you plan to spend on that person and whether your purchases have gone over or under budget. You can even track whose gifts still need to be wrapped. Best of all, the app is password protected so children and eager partners can’t snoop around and spoil the surprise. Your gift list is automatically saved, so when January 1 rolls around, this year’s recipients are carried over to a new list…

There’s no denying that it’s a tougher market for vendors. House prices have fallen around 2%-6% across Australia’s capital cities over the past 12 months and auction clearance rates show that buyers have the upper hand. In times like this, our advice is that if you don’t have to sell, don’t. The market is going through a correction but the demand drivers for property in Australia remain and we expect growth to return within a few years. However, some property owners will be in a situation where they simply must sell. So here are some tips to ensure you do it well: Aim for perfection. Fewer properties are being listed than was the case 12 months ago, which means vendors face less competition. But in today’s market, buyers know they…

There are inspirational stories. Then there is Dr Gillian Claire “Gill” Hicks, AM, MBE, FRSA. Born in Adelaide and battle-hardened in London, Hicks is the founder of the UK-based not-for-profit organisation M.A.D. for Peace and the owner of the Australian consulting firm M.A.D. Minds. To help pay the bills, Hicks is also a highly sought-after motivational speaker, as well as an author and the trustee of several cultural organisations. The peripatetic Hicks, who returned to live in Adelaide in 2012, started on the lucrative speaking tour after the shocking terrorist bombing attack on the London train she was taking to work on July 7, 2005. Instilled with an incredible life force, Hicks, who was employed by a British government quango, the Design Council, was the last living victim rescued. With…

Responsible lending or just plain annoying? In a recent home loan application, the lender identified a $59 purchase the applicant had made at a pet store. The lender went back to the broker and questioned why the applicant had made a purchase at a pet store but in their loan application did not reveal they had a pet. What the lender did not know is that the applicant had purchased a gift at the pet store and did not actually own any pets. The lender then requested a further 60 days’ history of that applicant’s accounts before approving their home loan. It’s hard to believe but, according to Australia’s largest mortgage broker, Mortgage Choice, this is just one of many examples of how hard it is to get a home…

DO WE HAVE A DEBT BUBBLE? Bubble might be a tad emotive but suffice to say we are borrowed to the gills. Household debt has been steadily rising in Australia for the past 30 years, even after the GFC, which saw debt fall in other developed economies. Australian households now hold debt on average of around 190% of household income – one of the highest levels in the developed world. By comparison, Morgan Stanley recently put US household debt at 101% of income, the UK at 125% and the euro area at 95%. Of the countries surveyed, only Switzerland (195%) and Norway (224%) had higher debt ratios. Our debt-servicing ratio was the highest of the countries listed, at 16% of income. Morgan Stanley found Australia had the highest risk of…

To what extent should super funds prepare their members for a market correction and give them strategies to minimise the impact? During the GFC many people panicked and fled to the safety of cash, only to lock in their losses. This was especially the case for pre-retirees and those in retirement. The prospect of taking another hit at the end of their working lives prompted many to become risk adverse and seek safe harbour in low- risk, low-return investments. Financial consultant Rice Warner says funds need to be more proactive and help members manage market volatility better. Its report “Preparing Members for a Market Downturn” shows how a “bucket strategy” of sticking to growth will outperform investing higher proportions in cash and switching to cash at the bottom of the…

Some of us (almost) superannuated market scribblers have for some time been fearful of what looks like the current inflection point in markets. This probably reflects our recollection of a time when things were different and, in my view, a whole lot worse – the 1970s. As if to prove the rock ’n’ roll maxim that “anyone who remembers the 1970s didn’t properly live them”, a lot has been written about how “unprecedentedly” bad the decade since the GFC has been economically. But by my reckoning it wasn’t as bad as the ’70s and, for that matter, the first couple of years of the ’80s. Those times were a real doozy: double-digit unemployment, double-digit inflation and double-digit interest rates, and if that weren’t enough to make the average punter miserable…

You’ve heard it before. I’ve heard it before. “If you keep going like that, you’re going to burn out.” There’s only so long you can keep going – working, exercising, partying – at full pace before things start to break down. It even impacts the humble production line: if you don’t shut it down from time to time, for preventive maintenance, you’re in for a helluva disaster. But does the same approach apply to companies? Or is this one area where you really can keep growing at fast rates, seemingly without consequence? And, most importantly from our perspective, should you invest in them, or head for the hills? The first thing we should tackle is “fast growing” and it’s here we need to make a clear distinction. We’re not –…

• Russell Investments was founded in 1936 in the US by Frank Russell. • $392 billion in assets under management. • Over 350 investment products around the world. • In Australia it has around 23 iQ super and retirement funds, eight multisector funds and five ETFs. • Provides asset allocation investment advice for $3.3 trillion and is ranked as the largest manager of outsourced institutional assets. • Russell Investments puts out a comprehensive long-term investing report comparing Australian residential property and key domestic and global asset classes.…

Australians usually invest in international shares in one of three ways: using a broker, through a managed fund or through an exchange traded fund (ETF). Most brokerage firms or online broking services can trade shares listed on major international exchanges but direct investing in individual international shares is significantly more expensive than investing in Australian shares, warns ASIC’s MoneySmart website. Costs can include brokerage, currency conversion fees, foreign security custody fees and internal transfer fees. Some managed funds focus on international shares, perhaps specific regions or industry sectors, while others simply include international shares as part of a diverse mix of assets. Fund managers may have strategies in place to limit the impact of exchange rate movements on your investment, says MoneySmart. ETFs, which are traded on the ASX, can be…

GOLD WINNER ZURICH Exposure to a range of sectors provides income and capital growth over time The winner of this category, the Zurich Investments Australian Property Securities Fund, was also last year’s winner. These funds, which mainly invest in listed Australia real estate trusts (A-REITs), have produced relatively strong 12-month returns for investors, well up on the previous 12 months. The Zurich fund aims to provide exposure to a range of property securities, including the commercial, industrial and retail sectors. It also seeks to produce capital growth and income over the medium to long term and outperform the benchmark (S&P/ASX 300 ARE-IT Accumulation Index) over a five-year period. Distributions are paid quarterly. Its investment team aims to identify and invest in property securities where their market prices, in its view,…

GOLD WINNER SPHERIA The focus is on companies that can generate plenty of cash and have growth potential Smaller companies funds bounced back in the past 12-months, providing investors with strong returns. The Spheria Australian Smaller Companies fund was outright winner of this category, after being in joint second place last year. Its portfolio consists of 25 to 45 stocks with an expected turnover of 30%-40% a year, says Morningstar analyst Michael Malseed. “Spheria Australian Smaller Companies continues to be an appealing option in the small-cap space as it remains nimbler than many peers,” says Malseed in an October 2018 report. Established in April 2016, the fund is still a relatively new boutique, backed by Pinnacle Investment Management. “Marcus Burns and Matthew Booker, the founders and portfolio managers, have extensive…

The ETF sector continues to grow strongly, with the total funds under management ($42.3 billion) exceeding that of the 82-year-old listed investment company (LIC) market by a good $60 million. The first LIC was listed in Australia in 1936 and the first ETF in 2001. Since the GFC in 2008 the ETF market has grown at an average of 39%pa compared with a more subdued 11.5%pa for LICs. A critical part of the appeal of ETFs is their cost effectiveness, according Alex Vynokur, CEO of BetaShares. The average asset-weighted fee in the ETF industry is 0.22%pa versus the average LIC fee of 0.66%pa, excluding any performance fees. There are double the number of ETFs, with 241 listed on the ASX compared with 110 LICs. Vynokur predicts that the ETF industry…

GOLD WINNER STATE STREET GLOBAL ADVISERS Assets such as property and infrastructure provide diversification and regular income State Street’s winning SPDR S&P/ASX 200 Listed Property ETF is a low-fee entry into 20 Australian listed property trusts that pay out a solid, tax-effective income. It paid a yield of 7.4% over the year to the end of September 2018. The ETF tracks the S&P/ ASX 200 A-REIT Index and includes A-REITs such as Scentre (19% of assets), Goodman (15%), Dexus (9%), GPT (8.5%), Unibail-Rodamco-Westfield (8%), Stockland (8%), Vicinity Centres (7%), Mirvac (7%), Charter Hall (3%) and Investa Office (2.6%). The companies are diversified across the retail, office and industrial sectors. The investment management fee of 0.40% is around a third of the average fee on an actively managed A-REIT. In equal…

GOLD WINNER SELFWEALTH TRADING With prices this low, the cost of trading shares won’t eat into your returns For the second year running, SelfWealth Trading has taken out the top award, offering a flat $9.50 fee for each trade, regardless of its size. “Fees this low are sure to attract plenty of attention, particularly from those dealing in high-value trades,” says Joshua Sale, senior research analyst with Canstar, which judged these awards. “Setting up a basic account with SelfWealth is quick, easy and free, so you can be up and trading in no time and at a fraction of the cost of many of their competitors.” Amscot has joined the winners’ circle, coming in second. It offers customers access to basic education and daily research reports. CMC Markets, a past…

GOLD WINNER WESTPAC Low rates plus a strong features list put the investor in the box seat Westpac has now won this award four years in a row. For investors who want to keep a tight rein on their costs, the Westpac product fits the bill, offering customers some of the cheapest variable and fixed rates in the market, says Emily Horton, a research analyst at Canstar. “For a loan amount of $50,000, Westpac’s variable rate was 1.49% lower than the market average, and its fixed rate was sitting 1.07% below the market average,” she says. Westpac gives its customers an array of features including the ability to transact on their loan account online 24 hours a day, seven days a week. It also gives them a complete picture of…

GOLD WINNER SUNSUPER Money magazine’s Best Super Fund Manager for 2019, Sunsuper, continues to be a leader in the superannuation market with a sharp focus on developing innovative ways to engage with customers while maintaining a clear commitment to delivering strong returns and maximising members’ retirement savings. Sunsuper currently has $58 billion in assets under management for more than 1.3 million members. “This year has been another one of strong growth for Sunsuper,” says Sunsuper CEO Scott Hartley. “We continue to be the fastest growing profit-for-members fund in Australia and one of the nation’s largest, which allows us to deliver industry-leading products and services for our members.” Sunsuper has a strong focus on improving the member experience and making it easier for them to interact with the fund across all…

Australians are financially much better off in retirement if they are in a good value, strongly performing not-for-profit MySuper superannuation fund rather than in one they construct themselves. Actuarial consultants Rice Warner estimate that the average choice member could be up to $50,000 worse off than a member in the MySuper sector. In a decade’s time, choice members as a whole could be as much as $52.5 billion worse off, believes Rice Warner. MySuper funds were set up to be low-fee products. Rice Warner CEO Michael Rice says there is a general view that members who choose to invest their super outside MySuper products should achieve a better outcome, as they are tailoring their investment decisions to their personal circumstances and financial goals. But the opposite is true. “Our research…

GOLD WINNER FIRST SUPER A risk-averse approach, coupled with low fees, proves a winning formula Strong investment performance and low fees have propelled First Super’s Conservative Balanced fund into the winning spot this year. The $3 billion fund, which has 64,000 members, is the result of the amalgamation in June 2008 of three smaller funds providing services for the furniture and joinery industry, the pulp and paper industry and the timber industry. First Super has spread the Conservative Balanced assets across 26 fund managers, which include big international investment houses such as BlackRock, Pimco and Capital Group, as well as Australian managers such as IFM Investors, Perpetual, Eley Griffiths and QIC. The Conservative Balanced fund holds 50% in defensive assets such as cash (22%) and Australian and international fixed interest…

GOLD WINNER AUSTRALIAN ETHICAL It’s not just members who benefit from an ethical approach to investing Dark green fund manager Australian Ethical, with a 32-year track record, has taken out the top award for its balanced super fund, which seeks out companies that will have a positive impact on the environment as well as screening out harmful ones. Australian Ethical takes a principled stand about its investing. For example, in May 2018 it sold out of AMP after the banking royal commission revealed that the financial services giant had been charging fees for no service and had misled the regulator ASIC. Australian Ethical invests in renewable energy, waste management, recycling, health and wellbeing companies, screening out businesses involved in cruelty to animals and many other environmental, sustainable and governance (ESG)…

GOLD WINNER SUNSUPER It’s quick and easy for employers to make contributions to their workers’ super accounts A service that makes it easier for employers to pay super contributions, saving them hours of repetitive work, wins this year’s innovation award. Sunsuper’s Beam is a straight-through transfer system that enables contributions to an employee’s nominated fund without the need to extract payroll data or visit third-party clearing house portals. Superannuation will be automatically calculated and tracked when employees’ pay is recorded; then when it’s time to make a contribution employers can process their payroll in a single batch at the click of a button. To enable Beam, employers have to be connected to Sunsuper’s payroll partners and complete a four-step sign-up wizard to start using the service through their existing payroll…

GETREMINDED If you’ve ever forgotten to pay a bill, you know how expensive it can be. The GetReminded app lets you set up alerts for everything from your phone plan to your passport and frequent flyer account. The free service sends you a reminder before your bill is due, along with offers from advertisers. Even better, you can set yourself annual reminders to compare your contracts. PIGLYBANK So you told your kids you would give them $10 if they washed the car but your wallet is empty and the workers want to be paid. Or you have the cash but you’re worried they will blow it at the shop. That’s where PiglyBank comes in. This free app ties chores with virtual banking. Set up an account for each of your…

GOLD WINNERS BANK TEACHERS MUTUAL BANK & UNIBANK NON-BANK HORIZON CREDIT UNION Low fees and a generous interest-free period are the keys to a good deal In the banking industry, “transactors” is the name given to cardholders who pay off their balance in full each month. If that sounds like you, the interest rate you pay on your card isn’t an issue. The key factors are fees, especially the annual fee, because this is chiefly how the card issuer will make money from your account. Also consider the number of interest-free days before you’re slugged. This year sees dual frontrunners among the banks: Teachers Mutual and UniBank. They were equal second in 2018, and once again there’s not much between them. Both have an introductory rate of 7.90% for the…

GOLD WINNER AMERICAN EXPRESS A generous travel credit gets the year off to a flying start American Express is clearly a dominant force in cards that offer frequent flyer rewards – so much so that this year’s results are the same as those for 2018. Amex’s Platinum Edge lets you start each year with a $200 travel credit. You’ll be enrolled in the membership rewards Ascent program with access to nine airline partner programs, including Virgin’s Velocity, Emirates’ Skywards and Singapore Airlines’ KrisFlyer. You need an income of at least $50,000pa to be eligible. The American Express Explorer Card rewards you with 50,000 bonus points when you apply (and are approved) online and spend $3000 on your new card within the first three months. Receive a $400 travel credit every…

GOLD WINNERS BANK ING NON-BANK NEWCASTLE PERMANENT The extras keep getting better – now there’s cover for a stolen wallet or handbag. Australians are increasingly paying for purchases electronically, and our winning everyday accounts recognise this by providing additional features and functions without a corresponding fee burden. ING’s Orange Everyday account has skyrocketed from third place in 2018 to take out the top award. This account comes packed with extras. Deposit $1000 or more per month and make five or more card purchases each month, and pay zero ING international transaction fees and zero ATM fees for machines anywhere in Australia or around the world. Macquarie Bank’s Transaction Account is runner-up among the banks for a second year. Good news for travellers: you pay zero international transaction fees when you shop…

GOLD WINNERS BANK ING NON-BANK THE MUTUAL In low-interest-rate times, even a modest loyalty bonus can ease the pain Low interest rates have been a sore point for savers, with Reserve Bank figures showing the average market rate of 2.2% on one-year term deposits hasn’t budged since October 2017 (when it dropped by 0.25%). This highlights the value of ING’s one-year term deposit, which lets savers earn 2.85%. As a bonus, if you roll over your ING deposit for the same or a different term on maturity, you have the opportunity to earn a loyalty bonus of 0.10%. You will need at least $10,000 to open an ING term deposit. ME also took out second place in 2018, and while the 2.80% your money earns over a 12-month term may…

GOLD WINNERS BANK POLICE BANK NON-BANK BCU Good money habits developed at an early age can last a lifetime Children love junior bank accounts – and so do financial institutions, because once a child signs up there is a strong likelihood they’ll stay with the same bank for life. This long-term loyalty has been a factor behind ASIC’s decision to review primary school banking programs. It’s also a reminder to parents and carers to choose children’s bank accounts with care. The recent negative publicity about school banking programs is quite separate from the issue of kids’ savings accounts. Studies show that youngsters who have their own bank account can have higher levels of financial literacy by their teens. However, it’s important to select an account that genuinely rewards children with conditions…

GOLD WINNERS BANK MOVE BANK NON-BANK HOLIDAY COAST CREDIT UNION Cars are expensive enough, so make sure you keep your finance costs as low as possible There’s nothing like the feel of driving a brand new car out of the dealer’s yard. But at that point your new set of wheels becomes a “used” vehicle and it can immediately drop around 10% in value. And by the time you’ve owned the car for five years it could be worth less than half of what you paid for it. So it makes sense to look for a low-cost car loan that doesn’t add to the expense of a rapidly depreciating asset. MOVE Bank’s new car loan is available for any vehicle aged up to and including 36 months. You won’t be…

I have taken your advice and stopped being lazy about the interest rate on my investment property. I have had a residential investment loan, capital and interest, since December 2013. The interest rate was 5.17% and I thought it was a bit high, so I walked into my local bank after going online and checking other institutions’ interest rates and asked what they could do. They immediately dropped the rate to 4.54%. (Not the cheapest but not the dearest, either.) How easy was that to save some money? I was guilty of inertia and just couldn’t be bothered but am now a much happier and wiser investor, thanks to your magazine. I thought it would be too hard and time consuming to change but, hey, everyone should have a go!…

Today there are more than 3 million people, including 739,000 children, living in poverty in Australia. This is one in eight adults and nearly one in five children. In a wealthy country such as our own, this is an unacceptable situation. The majority of people living in poverty receive a social security payment, such as Newstart, Youth Allowance or a family payment. Our social security payments are so low that they trap people in poverty – it’s incredibly difficult to get a job when you’re worrying about how to put food on the table or to make sure you have a roof over your head. The rate of Newstart has not increased in real terms in 24 years, while the cost of the basics of life have gone up. The…

Everyone is happy when house prices go up, except those who are trying to gain a foothold in the market. And prices have been moving steadily north, rising from two times annual disposable income in 1990 to more than five times this year. However, prices have suddenly dipped, particularly in the key markets of Sydney and Melbourne, and those who have taken on too much debt to finance a purchase may now struggle. Prices are falling but the debt remains the same. To add further pressure, borrowers on interest-only arrangements will be forced by the lenders onto principal and interest arrangements as their interest-only loans mature. This will put further pressure on household budgets. Meanwhile, the Reserve Bank continues to mention levels of household debt, including this monetary policy statement…

The taxation office has signed a data-sharing protocol with the Australian Securities and Investments Commission. This will give the ATO access to over 500 million items of data, including the price, quantity and time of individual share trades dating back to 2014. It will then be able to match the data with the information taxpayers disclose in their tax returns. Any mismatches are likely to generate a “please explain” letter to the taxpayer. With over five million Australians holding shares, this exercise highlights the dangers of failing to correctly record the tax consequences of share transactions. Here are three basic rules to follow if you buy and sell shares as an investment: • Keep good records of purchase and sale prices, as well as costs such as brokerage. If you…

Regional “bridesmaid” cities are beginning to rival the real estate brides of Sydney, Melbourne and Brisbane, with their impressive population growth, buzzing local economies, improved amenities and infrastructure, affordable housing and increasingly attractive lifestyle as our capital cities get busier and more expensive. Cities within two hours’ commute of primary metropolitan areas are the biggest winners of the metro-regional switch. While affordability remains a key reason to move, many say buyers are increasingly talking about escaping from city stress, traffic and the high cost of living. Improved infrastructure has reduced the commute from many regional areas to capital cities, enabling switchers to enjoy a big-city income with a relaxed small-town lifestyle. Geelong, 70km south-west of Melbourne, recorded the largest increase in dwelling values across non-capital-city Australia at 9.8% over the…

Tanya could build wealth outside the home, so … Don’t rush to pay off mortgage Q We are parents of two young children (aged two and five). We are 37 and 41 and owe $110,000 on our Sydney home, which is worth about $950,000. My husband earns about $2000 a week and I will return to part-time work at the beginning of 2019, earning about $400 a week. Besides super (combined total $350,000) we have no other investments. We want to prepare for the future (looking after our two daughters and our retirement). Considering our age, income and family status, should we look at an investment property, shares, or super, or focus on paying off our mortgage? You are in a terrific situation for people of your youthful age. You…

Just how hard is it to get a home loan? These real-life examples of applicants who have gone through the mortgage broker Mortgage Choice show how closely lenders are looking at your spending behaviour before they hand over any money. LOAN TOP-UP A couple had a mortgage for almost 10 years with the same lender. They had been saving for a few months to pay for a family holiday they had planned, were on time with their loan repayments and both had full-time, stable jobs with good tenure. The couple paid for their holiday with the savings they had set aside and shortly afterwards approached their broker for a top-up on their home loan for a small renovation. The lender, which had requested to see four months of the living…

Is the housing market facing a crisis of confidence, as some real estate commentators say? Or is it facing deeper and more widespread problems? Channel Nine’s 60 Minutes segment Bricks and Slaughter, which aired in September, claimed that house prices could fall by 40% in the next 12 months. It was widely slammed as irresponsible scaremongering by many notable analysts. Louis Christopher, managing director of SQM, who said on the program that Melbourne and Sydney house prices were heavily overvalued, told the ABC’s Media Watch that he “was disappointed and unhappy … the segment was sensationalist to say the least”. In A Crisis of Confidence in our Property Markets, a recent podcast by property commentator Michael Yardney, he started by saying: “Consumers are scared. Homeowners and property investors are worried.…

Shares are my bag. I love researching them, finding under-priced opportunities and combining them thoughtfully into a portfolio. But there’s an international shares-shaped hole in the portfolios I run. In more than 30 years of investing, I’ve never bought a share listed on an overseas exchange. It’s just been a bridge too far in terms of complexity and administration. It’s true that some stocks in my family portfolios have direct or indirect exposure to international markets (holdings such as Computershare, BHP Billiton, Virtus, Enero and Platinum Asset Management) but it’s only a by-product of my research and ad-hoc opportunities. When it comes to international shares, I’m happy to outsource. When assessing prospective investment funds or companies, many investors zone in on past performance, even though we’ve all read the disclaimers about past…

When it comes to stocks, the term “quality” has many definitions. Some investors adopt a flexible approach to the definition, being satisfied if quality management is running the business, a quality customer base exists or they can identify quality assets on the balance sheet. The most pragmatic investors will be satisfied if a company, even in an industry with poor economics, is good quality relative to its peers. At Montgomery we adhere to a very specific definition of quality: a company must be able to sustainably generate high rates of return on its incremental equity. We look for a company with a business that can not only retain a large proportion of its profits each year but can also generate a very high rate of return again on its now…

Fast business (as opposed to share price) growth tells you something very important: its products or services are increasing relevant to an increasing group of people. That’s a rare and valuable commodity. And, as a result, a very good place to look for a market-beating investment. Just be careful: price still matters. Even the best company won’t earn you decent returns if the price you pay is way too high. On the flipside, it’s hard to pay too low a price for a poor business. As super-investor Warren Buffett says, “Time is the friend of the wonderful company, the enemy of the mediocre.”…

SPACESHIP VOYAGER This is a simple, low-cost way to start investing in index funds. The app, from millennial super fund Spaceship, is free while your investment balance is under $5000, with management fees starting at 0.05% a year after that. You can choose from Spaceship Index Portfolio or the Spaceship Universe Portfolio, and manage it from the app. THE TIM FERRISS SHOW Author, motivational speaker and efficiency guru Tim Ferriss interviews finance and lifestyle experts. Find out why entrepreneur Scott Belsky decided to become an early investor in then startups Pinterest, Uber and Periscope, and how Howard Marks, co-chairman and co-founder of Oaktree Capital, learnt to read market cycles to invest wisely. ONMARKET Launched by Malcolm Turnbull in 2015, OnMarket opens up IPOs –previously the domain of the big end…

GOLD WINNERS GREENCAPE AND LAZARD Investors are spoilt for choice when looking for a strong performer There is always a big list of winners and placegetters in the Australian share funds category, giving investors an array of top funds from which to choose. Greencape Broadcap, a joint winner last year, has done it again this year. “Greencape's thorough fundamental process results in a growth-leaning portfolio particularly notable for its structural inclusion of small-cap stocks,” says Morningstar analyst Andrew Miles in a September 2018 report. “Typically small-cap stocks make up 6% to 9% of the portfolio versus about 3% to 5% for the average Australian equities manager covered by Morningstar. “Greencape Broadcap continues to reign supreme in its sector because of an outstanding investment team and thoughtful approach,” says Miles. “Portfolio…

GOLD WINNER RUSSELL A growing exposure to alternative assets gives a portfolio extra firepower Once again Russell heads the winners’ list for this award, as it has done for several years. And for good reason. “Russell multi-sector is a functional choice for investors seeking a one-stop shop,” says Morning-star analyst Tim Wong. Russell Balanced A invests roughly even amounts in local and global shares as well as listed property, fixed income and cash, as do most multi-sector funds. But where it differs from the norm is in its strategic allocation to alternatives, which was 12.5% at June 30, 2018. This is far more than what most other funds allocate, having grown steadily since 2013, says Morningstar in a July 2018 analyst report. “This was part of a broader set of…

GOLD WINNER JANUS HENDERSON Investing in quality interest-bearing securities maximises capital protection The Janus Henderson Australian Fixed Interest fund has taken out the award this year, after coming equal second last year. Fixed-interest funds, which investors look to for better interest rates than they can get from term deposits and online accounts, have produced healthy 12-month returns, following dismal returns in the previous year. The Janus Henderson fund comprises an actively managed portfolio of high-quality interest-bearing securities, including government, semi-government and credit, which aims to provide a high level of capital protection. The manager’s investment approach is fundamentally driven, aiming to take advantage of situations where market pricing has become misaligned with economic and investment fundamentals. The fund seeks to achieve a total return after fees that exceeds the total…

GOLD WINNER iSHARES BY BLACKROCK The royal commission into misconduct in the banking, superannuation and financial services industry has focused investors’ attention on high fees and transparency. “There still seems to be a lack of low-cost investment solutions,” says Christian Obrist, head of this year’s winning ETF provider, iShares Australia. He says ETFs tick the boxes for low fees, high diversification, convenience and transparency, showing the underlying investments. Obrist says it is too early to say what impact the royal commission will have on the ETF market but he expects it to be a “soft tailwind” rather than prompt a quick switch from high-fee to low-fee products. Certainly the take-up of ETFs accelerated after the Future of Financial Advice (FOFA) reforms of 2013, he says. Closer scrutiny of fees and the…

GOLD WINNER ISHARES Australians can get a stake in the world’s great technology companies The iShares S&P 500 exchange traded fund wins this year for providing low-cost access to the top 500 companies in the US, including Apple, Microsoft, Amazon, Berkshire Hathaway, Facebook, JP Morgan Chase & Co, Johnson & Johnson, Alphabet and Exxon Mobile. The US sharemarket soared in the year to the end of September before being sold down in October. The hedged version of the ETF (fee 0.10%pa) performed better than the unhedged version (0.04%pa) over the past year because of the strength of the US dollar. Twenty-six per cent of the iShares S&P 500 ETF is invested in information technology companies such as Apple, Microsoft, Amazon and Facebook – a sector that is largely missing in…

ETFs can vary widely. With 181 ETFs listed on the ASX, it is more important than ever to get to the bottom of what you are investing in. While there are plenty of broadly diversified, low-cost ETFs that track an index, there are also versions that are actively managed or ones that are based on investment criteria such as smart beta. For most investors, sticking to the broad-index ETFs is best. They are low cost and deliver the index return – no more but no less. This is a good strategy because Australia’s active investment managers rarely beat the index after fees over long periods of time such as five to 10 years. One of the advantages of ETFs is that they are transparent and typically much easier to research…

GOLD WINNER FP MARKETS There’s plenty of market information to digest before you make the all-important call If you prefer to conduct your share trades over the phone rather than online, than FP Markets, winner of this award for 10 years in a row, is the broker for you. When you trade with FP you pay the same brokerage fee regardless of whether it’s online or over the phone, a unique offering from an online broker in Australia. Not only does it suit those who want to trade over the phone, it’s also convenient for frequent travellers who don’t always have online connectivity. The broker also offers a comprehensive free education portal to help investors of all levels make better choices. Its week-ahead webinars, which are available every Monday, help…

GOLD WINNER QSUPER The Best Pension Fund Manager for 2019, QSuper, is a Queensland-based fund that manages over $80 billion on behalf of more than 580,000 members, including almost 50,000 pension members. Previously a closed fund, QSuper opened its doors to all Australians in 2017. SuperRatings considered over 180 pension products and found that the QSuper income account is competitively priced and has delivered strong retirement outcomes for members, in addition to offering flexible product features. “The award is fantastic recognition of the value-for-money products and services we’ve delivered to members for over 100 years, and since 2017 all Australians can share the strong performance and benefits of being a QSuper member,” says Michael Pennisi, QSuper’s CEO. “The trust that our members place in us as custodians of their retirement…

GOLD WINNER AUSTRALIANSUPER Greater risk is designed to bring greater reward for members with a long-term horizon Australia’s biggest super fund, AustralianSuper, wins this year’s best growth super fund category with its $8.5 billion high growth option. AustralianSuper has beaten many of its competitors to disclosing all investments and their value on its website. This high growth, pre-mixed diversified investment option has 94% in growth assets such as Australian shares (32%), international (47%), direct property (4%), infrastructure (7%), private equity (4%), cash and credit (6%). The heavy weighting to growth assets makes this a long-term investment option with the recommended time frame of 12 years, which suits many superannuation members with a long time horizon. The investment aim of the high growth option is to outperform the inflation rate by 4.5%pa…

GOLD WINNER LEGALSUPER Policyholders can be confident they’ll be covered in the event of an accident or illness Legalsuper has pushed past Intrust Super, which has won in the previous six years, to take the gold award for its low-cost, well-featured life, total and permanent disability (TPD), and income protection insurance. Legalsuper members get the protection of high cover for a great price because of their favourable risk profile. The 30-year-old fund, with $3 billion under management, was originally set up for employees in the legal sector but is now open to anyone as a public offer fund. New members can take up a special insurance offer if they are in the employer-sponsored division. It allows them to increase their death and TPD cover by up to four units depending…

GOLD WINNER HOSTPLUS A passive investment strategy with a strong growth focus has paid dividends Hostplus has bumped ANZ off its winning position, held for the past three years, with its strongly performing, low-priced, passively invested balanced pension. The diversified pension fund holds 75% in growth assets such as Australian shares (32%) and international shares (43%), with 25% in defensive assets such as fixed income (15%) and cash (10%). The index fund managers are IFM Investors (Australian and international equities), BlackRock (fixed income) and Citi (cash). Fund returns are tax exempt in the pension phase, which explains why they are higher (10.1%pa over the past five years) than Hostplus’s balanced indexed super fund (9%). The total investment fees for Hostplus’s pension product are a low 0.07%. The administration fee is…

GOLD WINNER BUSSQ With expert help, applying for the age pension won’t seem so daunting Eighty per cent of retired Australians receive either a part or full age pension but some new retirees find applying for the payments can be “daunting, demeaning and demoralising,” according to superannuation fund BUSSQ. It offers retiring super members a new service called Centre-link Assist, which handles the job of applying for and managing the age pension, disability pension plus health and concession cards. It is designed to avoid delays and provide prompt service so that it can be set up in a shorter time frame than if they were doing it on their own. For $300 ($450 for a couple) BUSSQ specialists help with filling out forms, submitting them online, tracking the application and…

GOLD WINNERS BANK G&C MUTUAL NON-BANK NEXUS MUTUAL If you choose carefully, you won’t be saddled with a daunting debt The way we use credit cards is changing. Not only do card issuers now compete with other payment methods, including digital wallets such as Afterpay, but a Reserve Bank of Australia (RBA) report found that homeowners are increasingly using the redraw facilities and offset accounts attached to their home loans to fund larger purchases. The result is that only 62% of total card debt attracts interest, down from 72% 10 years ago. The bad news is that RBA found that younger and lower-income Australians, especially those who rent rather than own their home, make up the largest share of cardholders who have an outstanding card debt. If you regularly owe…

GOLD WINNERS BANK ST.GEORGE, BANKSA, BANK OF MELBOURNE NON-BANK NEXUS MUTUAL Even with a generous interest-free period, it pays to crunch the numbers Balance transfer deals are a chance to get ahead with card debt and save on interest. Just be sure to knuckle down and clear the slate during the interest-free period. Cash advance rates often apply to any remaining amount transferred, potentially making it even harder to wipe out whatever remains of the original debt. St.George’s Vertigo Platinum Visa offers a whopping 26 months to pay off a transferred balance, and an automatic repayment plan is available to help you make the most of the zero-interest period. But if 26 months proves insufficient, you will be hit with a high cash advance rate of 19.49%. This card has…

GOLD WINNERS BANK RABODIRECT NON-BANK EASY STREET To help you resist temptation, an enforced waiting period can protect your stash In a low-interest-rate environment, it’s important to think about the best place to stash your cash, and a relatively new type of account – a notice saver – acts like a hybrid between a traditional savings account and a term deposit. With RaboDirect’s Notice Saver 31 Day, which won this award in 2018, you’ll need to provide 31 days’ notice, either via online banking or using a mobile app, to withdraw funds. That’s not a bad thing as it would make you think twice before dipping into cash reserves. However, the waiting period is applied strictly: RaboDirect warns that your money cannot be accessed early unless you provide a statutory declaration…

The latest card fraud data for 2017 shows “card not present” (CNP) accounts for 85% of fraud on Australian cards, adding up to $476 million annually – and rising. CNP fraud occurs when card details are stolen by crims to make purchases or other payments, typically online or by phone, without having your card in their possession. It can happen through large-scale data breaches of big companies, or when you provide personal details to dodgy emails infected with malware or computer viruses that let senders obtain your banking information. Simple ways to help fight CNP fraud include only giving your card details on secure and trusted websites – with the locked padlock icon. Be suspicious of unsolicited emails and text messages from people you don’t know, and don’t click on…

GOLD WINNERS BANK HSBC NON-BANK CUA Every dollar counts, so it pays for SMSFs to get their money working harder Australia’s 597,000 self-managed super funds (SMSFs) own total assets worth $697 billion, and cash remains an important investment for do-it-yourself funds. Tax office figures show that one in four dollars held by SMSFs is invested in cash. The problem is that not all savings accounts are open to super funds that’s why our list of winners is so valuable if you have – or are wanting to start – your own fund. HSBC’s Flexi Saver comes with a base rate of 1.25%. But SMSFs can earn bonus interest of 1.25% if the account balance is $300 higher on the last business day of the month than on the first business…

Parents aren’t always above board with their children when it comes to money. Research by the Financial Planning Association reveals two out of four adults have raided a child’s piggy bank or bank account to pay for urgent expenses. One in three have lied to their kids about money and 27% avoid talking about it. Paying pocket money can be a great way to start a conversation about money, budgeting and saving. When it’s paid in return for age-appropriate chores, it can also show that income needs to be earned. However, a few gold coins won’t cut the mustard with today’s youngsters. One in seven teens receive $40 a week, though the average ranges from $6 a week for four- to eight-year-olds to $18 for teenagers.…

GOLD WINNERS BANK BANKWEST NON-BANK SCU Data feeds to accounting software packages can save business owners both time and money Smart business owners always seek the best deals whether for an internet connection, property lease or bank fees. But when it comes to transaction accounts, cost is not necessarily a make-or-break factor. Whether you’re a tradesperson, farmer, in professional services or retail, getting your books right for the tax office should be a significant matter. To this end, Bankwest’s Business Zero transaction account and non-bank winner SCU’s Premier Business account enable SMEs to track their finances through data feeds to accounting software such as Xero and MYOB. So, if a transaction account doesn’t offer these feeds, look elsewhere. This tracking can cut the time and money you spend on bookkeeping.…