Innholdsfortegnelse for November 2022 i Money Magazine

MY MONEY, MY LIFE My financial literacy journey began in my 40s when I decided to put what I was hearing about super to the test. I was cynical and sceptical - people around me had had poor experiences with their super funds - but nevertheless I decided to gamble with money I didn’t have access to until retirement by changing from the default balanced plan to growth. I’ve always worked in the frontline service industry - hospitality and currently sport and recreation. I had finished an 18-month stint in fly in, fly out work (tourism), which had paid the most I’d ever earned, and was transitioning to part-time work. It was time to build financial security for my future. With limited knowledge of superannuation, other than it was compulsory…

The Reserve Bank rate decision in October marks the sixth consecutive lift in the cash rate target, placing the rate higher than the pre-Covid decade average. (It’s now at 2.6%). This is likely to place further downward pressure on Australian home values, as higher rates limit capacity from the buyer perspective and may trigger more selling decisions. The full impact of the recent rate rises will take a few more months to permeate the housing market, with some research suggesting there is an average lag of three months between a cash rate increase and higher mortgage repayments. The good news is that the pace of the rate tightening cycle has started to ease, as tight labour market conditions gradually unwind and elevated inflation shows early signs of easing. This “end…

MORE MONEY STORIES ON P42-51 TRANSPORT COSTS Disloyalty pays in car insurance The price of getting from A to B is rising. Tolls have increased with indexation, loan repayments are rising with rate hikes and fuel prices remain elevated as a result of the war in Ukraine and the recent removal of the fuel excise cut. According to the Australian Automobile Association, the average weekly expenditure on transport for households in capital cities was $412.21 in the second quarter of this year $74.94 higher than at the same time in 2020. Motorists may be able to trim their transport costs in one area, though: comprehensive car insurance. In a recent analysis of 55 car insurers, financial comparison website Mozo found a $696 difference between the average annual cost of a…

Olympia Yarger Founder and part-owner of Goterra, a waste food management start-up involving maggots. Lives on a sheep farm outside Cooma in NSW; age 46. Wanted to be a sheep farmer when she grew up and is driven by the desire to make the world a better place. Describes her attitude to life as dogged, determined and direct — a significant turning point was the death of her son at two-and-a-half Has set a challenge for Goterra to have a processing plant in e very state by the end of 2023. Enjoys horse-riding and tent pegging, an ancient game whereby a horse rider picks up a small target with a lance.…

SMART TECH Smartphones move on a notch or two The fact that the iPhone now comes with a 14 attached to its name tells you something. Smartphones, just like any other maturing technology, are in a constant state of improvement and refinement. Incremental developments end up pushing the products forward overtime. Sometimes these incremental steps are revolutionary; sometimes they’re truly only increments. Take the “Dynamic Island” on the new iPhone 14 Pro. Sure, it can be spun as a kind of breakthrough in user-interface design, but it’s also a band-aid feature, designed to hide the fact that the selfie camera still intrusively sits inside the display, much like the infamous “notch” before it. Other phone manufacturers are experimenting with workarounds, like mechanical pop-up cameras and under-display lenses. There’s no clear…

ASK THE EXPERTS WHERE TO INVEST $10K While we have not yet fully entered recession, we are on the cusp of it with runaway inflation posing a key threat. In response, the Reserve Bank has been aggressive in raising interest rates. We are all hoping that each further increase would not be the straw that breaks the camel’s back. Already, this has had a significant bearish effect on the markets as bond yields rise and equities get hammered due to the increased cost of borrowing. Despite economic uncertainties, some constants will remain. People will always need to eat, heat their homes and travel from point A to B. Furthermore, in times of global uncertainty, governments are also focused on controlling and managing their external threats. With that in mind, investors…

I would focus on quality companies with resilient cashflows, strong balance sheets and the capacity to generate dividend income growth or share buybacks, such as large-cap stocks like CSL, Telstra, BHP, Woolworths and Commonwealth Bank. In the technology sector, WiseTech Global and TechnologyOne are favourites, and data centre developer and operator NextDC. Other favourites to buy on weakness are ProMedicus, REA, Carsales and Seek. However, when central banks pivot - move from a tightening bias (raising interest rates) to a loosening bias (cutting interest rates) - the stocks that will rally the most will be cyclical companies, such as James Hardie (housing), Temple and Webster and Wesfarmers (consumer discretionary) and Goodman Group and Charter Hall (property). In the US, I continue to like the secular growth themes in decarbonisation, the…

COVER STORY High inflation has been the big surprise this year. It has driven an aggressive tightening in monetary policy and a sharp rise in the risk of recession, which has in turn driven a plunge in sharemarkets. The good news is that it’s likely to surprise on the downside in 2023. The surge in inflation has been driven by a combination of: supply-side disruptions flowing from the pandemic; strong goods demand through the pandemic that depleted inventories and then a surge in services demand on reopening at a time of limited spare capacity and now tight labour markets; higher commodity prices flowing from Russia’s invasion of Ukraine; and very strong money supply growth through the pandemic. Now there are indications that inflationary pressures are starting to top out or…

In 2022, my investing strategy remains largely the same, despite the constantly changing economic environment and world around us. Actually, 90% of my portfolio is fairly boring because I invest in low-cost ETFs that give me a diversified portfolio of Australian and international companies, plus some real estate, bonds and cash. And boring is good. In investing, boring gets the job done (it’s taken me years to realise I don’t need to keep overcomplicating my investment strategy). Here are some of my easy wins for investing when life feels uncertain:…

ASK THE EXPERTS WHERE TO INVEST $10K If I had to choose between gold and Bitcoin as an investment, it would be hard to go past the allure of the yellow metal. After all, gold has been around for millennia and has been widely used as both a store of wealth and medium of exchange. It also has some intrinsic worth as both jewellery and as a handy material in the manufacture of various products, such as electronics. In short, gold is pretty to look at, highly durable and a good conductor of electricity. That said, gold has seen fairly mixed price performance in recent years, even in the face of a post-Covid surge in global inflation. Whilst many thought gold should have done better given today’s high inflationary environment,…

To help encourage more women back into the workforce, momentum is building to lift paid parental leave by eight weeks to 26 weeks. At the September jobs summit, there was almost unanimous support from business, unions and employers for 26 weeks of paid parental leave. While it would cost the government around $600 million a year, according to the Grattan Institute, it could boost GDP by $900 million a year because more women would be working. It would also increase the average mother’s lifetime earnings by $30,000. Around half of employers pay new parents some form of parental leave - just how much depends on the employer. Typically it is offered to women as paid maternity leave but increasingly companies are ramping up paid leave to new dads. Companies such…

All lenders have their own retirement age policy, but this is a general guide to what you may expect at various ages. 35: Lenders will consider your profession and likely retirement age. Many lenders will shorten your loan term or require an exit strategy. 45: You may be required to show super-annuation statements or demonstrate that you have an exit strategy when you retire. 50: Most lenders will allow you to borrow, but some may decline your application due to your age. 55: Almost all lenders will require a written exit strategy, evidence of your superannuation and other assets that can be sold to repay the proposed debt. 60: Most banks are likely to decline your application due to your age. However, if you’ve got a continuing source of income…

This is provided by Services Australia and the Department of Veterans’ Affairs, it lets eligible older Australians get a voluntary non-taxable fortnightly loan, lump sum or combination of both from the federal government. To be eligible, you or your partner need to be of age pension age or older and get, or are eligible to get, a qualifying pension. You don’t actually need to get the age pension. For example, you may meet the qualifying rules but not receive a pension because your income or assets are over the thresholds set. The loan must be secured against real estate owned by you, which is adequately insured. You can use the Home Equity Access Scheme eligibility calculator on the Services Australia website (servicesaustralia.gov.au) to see if you want to apply. This…

REAL ESTATE Pam Walkley When we think property investment, we usually think houses and apartments. But commercial property is also a huge sector with many opportunities for retail investors, most of whom can’t individually afford to buy an office tower or a shopping centre. And with inflation rising, commercial real estate is generally well positioned to capture income growth because many commercial leases include annual fixed or CPI-linked rental reviews. Pooled investment - combining your dollars with those of others - is the main way retail investors access commercial property, which includes offices, retail centres, warehouses/logistic centres and tourism. Investing in good-quality, well-located commercial real estate should reward you in two ways. First, because these properties are leased, you receive your regular share of rental income (after fees) and, second,…

While everyone’s circumstances are different and require different solutions, super can be especially challenging for women. Time out of the workforce to raise kids and lower pay mean they retire with almost a third less super than men. Women in Super (WiS) has been shining a light on the inequality of the system and is lobbying for change, calling for super to be paid on parental leave. It advises young women to build their savings early with voluntary contributions to take advantage of compounding interest and cover future periods out of the workforce. Josh Parisotto, chief advice officer at HESTA, says more than 80% of the fund’s members are women working in the health and community sectors. “Many of our members have low super balances because they tend to work…

Ian Henschke, chief advocate for the National Seniors, has called for a simpler, fairer, easier-tounderstand retirement income system. “In Australia, we say if you work more than one day a week after you’ve reached pension age, we’re going to tax you 50 cents in the dollar from your pension and we’re going to tax your income as well,” he says. “There’s no incentive for anyone to work beyond the pension age.” Two-thirds of Australians rely on a full or part pension, but if they go back into the workforce they are penalised. “Australia is way behind Sweden, the US, Japan, South Korea and Israel. They have a higher workforce participation rate for the over-65s. “If we want a better retirement system and a better society, just let those who want…

1 Riparian Water Fund Riparian Capital Partners is a specialist water, agriculture and food investment firm. Its objective is to deliver competitive, sustainable returns to stakeholders through long-term investments across the agricultural sector. ESG objectives are embedded in the investment approach and processes. 2 Kilter Water Fund The fund utilises the investment manager’s extensive networks to secure attractive investment opportunities that deliver strong capital growth with superior returns generated through the distribution of proprietary water products to irrigators. 3 Warakirri Diversified Agriculture Fund It aims to purchase, develop and own a diversified portfolio of investment-grade Australian agricultural assets and lease to high-quality businesses. The strategy aims for a net return of 7%-ll%pa. Examples of assets include nuts, fruit, vineyards, agriculture infrastructure and water.…

“I keep pushing to see how far I can go. That’s exciting for me.” What was your first job? My first and only job is a freestyle BMX athlete. When I was about 17, I got a job as a cabinet maker but it only lasted half a day. I walked out at lunchtime and then never went back. When you started out with BMX, did you imagine it could turn into a career? I didn’t start out thinking that I wanted to be a professional BMX rider. I just started going to the skate park, started enjoying it and then obviously along the way realised I could make a living from it, but not initially. When did you first get into BMX? I was about 12 when my family…

CALENDAR OF EVENTS Tuesday, November 1 RBA interest rate decision Thursday, November 3 Balance of trade Wednesday, November 9 Westpac consumer confidence NAB business confidence Wednesday, November 16 Wage price index Thursday, November 17 Unemployment rate THE BUZZ Safeguard your credit score from fraud Following the Optus data breach, the federal government has prepared amendments to the Telecommunications Regulations 2021 to better protect Australians from hacks. Treasury says the suggested changes will improve communication and coordination between telcos and financial institutions when a cybersecurity or fraudulent incident occurs. But the incidents will keep occurring. And regardless of support by business or government institutions, at an individual level there are simple steps to take to safeguard our data, says Marianella Watman, head of product and marketing at Credit Savvy and creator…

BOOK OF THE MONTH MONEY MAGNET: HOW TO ATTRACT AND KEEP A FORTUNE THAT COUNTS by Steve McKnight (Wiley, RRP $32.95) Best-selling author and self-made millionaire Steve McKnight gives you the tools to develop a wealth mindset: find out how to make, manage and multiply your money. McKnight’s practical how-to guide helps you identify why you might be programmed to fail financially, what you can do to change, and how changing your mindset and the way you behave around money can attract more wealth. Discover a formula for investing success and easily keep track of your progress with the handy checklists and templates provided in the book. DEBRA DUNCAN Ten readers can win a copy. In 25 words or less, tell us what you do to make your money work…

As higher than normal living costs eat into household budgets, more people are turning to credit to cover their expenses, including buy now, pay later services. Nearly two in three Australian buy now, pay later users surveyed as part of a new report from payment solutions provider Marqeta said they had increased their use over the past year, while 45% admitted to having leant on it as a financial lifeline. James Hunt, public policy lead with Financial Counselling Australia, says financial counsellors are also witnessing a steady rise in Australians struggling with buy now, pay later repayments and accruing debt, usually on top of other credit. “What’s really worrying is that we’re seeing more people resorting to buy now, pay later to pay for essentials because they don’t have enough…

With most retailers complaining of higher costs, staff shortages and the now famous “supply chain issues”, we were unsure what to expect from Lovisa, We needn’t have worried. This was one of the best financial results of the season. Revenue was up over 55% and earnings before interest and tax (EBIT) leapt 81% higher to $77 million. A store count that grew by 85 helped with those numbers, as did normalisation of spending habits after pandemic measures. Importantly, the US rollout continues to impress and now boasts 118 stores, the second largest territory in a network of 629 stores. The US could ultimately have thousands of stores. We might only be in the early stages of the American rollout. Lovisa quietly added new trademarks to its arsenal, suggesting it could…

ASK PAUL Q&A NEED PAUL’S HELP? Send your questions to: Ask Paul, Money magazine, Level 7,55 Clarence Street, Sydney NSW 2000 or money@moneymag.com.au. Sorry, but Paul can’t personally answer your questions other than in the Q&A column. By submitting your question to Money, you consent to having your question and the response you receive from Paul published in the print and digital edition of Money. Q Iam being medically retired from NSW Police after some 35 years. I am 54 years of age and will have decent income protection insurance payments seeing me through to 60. We own our own house outright (valued $1.3 million) and have an investment property worth $600,000 with a mortgage of $260,000. Our super is relatively healthy with a balance of $700,000. When my discharge…

ASK PAUL Q&A Q I have been with my financial planner for about 10 years. I am retired. Across the financial planner’s company they are planning major changes to everyone’s portfolios. I don’t have any insight now on the exact changes, but they could be selling the whole portfolio and repurchasing new. Some will be the same but with a different name. My husband and I are very uncomfortable with this. We thought the best way to manage a portfolio is to look at the long term. They say they will be saving us fees in the long term. Not sure what other benefits there will be. The planner’s approach is to bombard us with numerous lengthy documents, asking us to get back to him with any questions. Between us,…

New vehicle warranties are getting longer and more generous than ever. All top 10 brands now offer a new vehicle warranty of at least five years, after Volkswagen, Subaru, Toyota and finally Nissan joined Ford, Honda, Hyundai, Mazda, Mitsubishi and Subaru in 2019. As for luxury brands, Genesis was the first to offer a five-year/unlimited-kilometre warranty when it launched in Australia. It was followed by Mercedes-Benz, Volvo, Jaguar and Land Rover, Lexus and Audi. That leaves BMW, Mini, Porsche, Lamborghini and Ferrari at three years, while Tesla halved its new-vehicle warranty to four years/80,000km in August 2019, but continues to offer an eight-year battery guarantee. There are plenty of warranty exclusions in the fine print. The obvious ones are any faults caused by abuse or neglect and fair wear and…

What is It? The idea has been around for more than a decade: instead of giving your brother-in-law yet another tie, you donate a goat or heifer to an underprivileged community. But British scientist Jane Goodall last year said these farm animal donations can place undue stress on villages. To best help those in need, the charity has expanded its Oxfam Unwrapped program, allowing you to donate towards a specific project. Where your money goes: You can, for example, help fund a faecal sludge plant. While your loved one will receive a card in honour of the contribution, the real gift - a gravity fed sewerage plant - will go to a displaced community in a refugee camp. Or you can help reforest the earth with a gift of at…

COVER STORY With $10,000 already put aside, you’ve already done one of the hardest things with money. We are humans and unlike many creatures on our planet we are just not programmed to save. Maybe because over thousands of years, having no savings may have limited our options but is rarely terminal. I appreciate this is not always the case, but thankfully there has often been family, friends, a community group, a charity or a government who will lend a hand. Many creatures have a pretty simple, instinctive drive to save, in the form of food for the winter ahead, or die. That is a very gloomy statement, but many of us find it really hard to save. There are plenty of good reasons for this and we have all…

I would generally put my money in companies with strong cashflows, supported by market and sectoral dynamics, as they will be the ones that can better weather the storm. While we support a transition to green energy, it will take some time to eventuate. In the interim, we will still have to depend on fossil fuels to power our homes and economy. To benefit from surging coal demand and prices, Whitehaven Coal is a stock to watch; its shares are trading at record highs in anticipation of another record profit. Other counters to consider include BHP, New Hope Coal and Coronado Global Resources. On the ASX, many players in the soft commodity space are agriculture companies, as well as those that support agricultural activities, such as GrainCorp and Elders. Other…

ASK THE EXPERTS WHERE TO INVEST $10K We know the cost of living is rising, wages have stagnated for decades and the entry point for Australia’s property market has raced out of reach for many. Yet, in the same breath, we see an ever higher spend across Uber, fashion and dining out than ever before. These realities make it very easy to frown upon, or worse, wag fingers at, the changing out-fits, social lives and consumer electronics of the younger people in our lives. But when it comes to wealth, I believe that rather than lecture we should attempt to understand young people’s environment and how we can effectively work within it. Micro-investment platforms offer a generationally appropriate wealth-building tool that can, if used properly, help young people overcome restrictive…

I like to keep it simple and invest in a well-diversified mix of Australian and global shares using actively managed and index funds. There is good reason for this. Five key things are essential for investing success. First, make the most of the power of compound interest. Second, don’t get blown off by cyclical swings. Third, invest for the long term. Fourth, diversify, and turn down the noise around investing. I would love to think I can pick the next best thing whether it’s a market or a stock - but it’s very hard. Rising bank deposit rates and bond yields are starting to make them look more attractive but they are still relatively low. Residential property prices, like shares, are falling and may provide opportunities over the next 12…

COVER STORY If you are like me, someone who joined the superannuation party only in their early 30s, this question concerns you more than others. When it comes to superannuation savings, there is a lot you can do that won’t cost you much effort but which will go a long way to helping you get on the right track. Start with an annual super health check-up - just like with your own health, your superannuation needs to undergo an annual check-up. It might sound trivial, but making sure you’re in the right fund is the biggest part of getting the job done. To determine if you are in the right fund you need to look at the returns your fund has earned and the fees you pay to get those…

Where one would best invest $10,000 obviously depends on one’s specific knowledge, time horizon and risk tolerance. If you’re risk averse and have a short time horizon, defensive assets - such as cash - seem to make the most sense at present. This is a result of the risk of continued aggressive central bank tightening to deal with inflation, which could see returns from traditional bond and equity investments weaken further. For those less risk averse and with a longer time horizon, today’s bout of equity market weakness likely represents a good buying opportunity, particularly among beaten up technology companies with still higher future growth potential. Another option for long-term investors who are willing to take on some short-term market volatility is geared exposure to the equity market, which should…

BANKING Michelle Baltazar It seems like only yesterday that the most exciting thing that could happen when you opened your banking app was that you could check your balance. Frequent visits to a bank branch or an ATM became a thing of the past, as everything you needed to know was right there on your phone. But then something happened a few years ago that made banking apps less sexy - the wave of budget and savings apps that helped people feel more in control of their bank balance. Features like how to track your spending, how to pay off your debt and where to get retailer discounts can all be done through finance apps outside traditional banking channels. But now banks are catching up and outdoing standalone finance apps…

Nearly all families will be winners from the $5.4 billion boost to the childcare subsidy over the next four years. The base rate is being lifted from 85% to 90%. A new cohort of higher-income families earning between $355,000 and $530,000 will for the first time benefit from subsidies. While details are yet to be finalised, the information provider Entitlemate estimates that a family with $200,000 of income who have a child in long daycare (100 hours a fortnight) will receive a maximum subsidy of $21,000 from the government and will be $5121 better off with the new subsidy. Families earning around $150,000 with one child will be $5600pa better off while a family with an income of $175,000 will have $6720 more. (See entitlemate.com for calculations.) The family with…

Anthony O’Brien SMALL BUSINESS You could be forgiven for thinking that small businesses have become a lower priority for the bureaucrats in Canberra with the closure of the SME loan guarantee scheme on June 30, especially as the conclusion of the loan recovery scheme followed hot on the heels of the demise of JobKeeper on March 31. But this isn’t the case, and there is still federal government money flushing around for small businesses if they know where to look, such as the Entrepreneurs’ Program and Landing Pads for those SMEs eyeing overseas markets. Supporting entrepreneurs The entrepreneurs’ Program gives businesses access to advice and grant funding of between $20,000 and $1 million to get a commercial idea to market. It is delivered through a national network of industry experts…

Senior equity access schemes, also known as reverse mortgages, can solve a lot of problems for asset-rich, cash-poor retirees, says Ray Taylor, from Reverse Mortgage Finance Solutions (RMFS). Home equity release lets you access some of your equity while you continue to live in your home, says Moneysmart (moneysmart.gov.au). There are many reasons you may require extra cash, including home modifications, medical expenses or living costs. Ways to access equity in your home include: reverse mortgage; home sale proceeds sharing (home reversion); equity release agreement; the federal government’s Home Equity Access Scheme. The amount of money you can get depends on: your age, the value of your home; and the type of equity release. “Your decision could affect your partner, family and anyone you live with,” says Moneysmart. “So take…

Here are four ways to improve your chances of getting a mortgage if you are over 50. I Have a defined exit strategy, which is effectively a back-up mortgage repayment plan. This can vary depending on factors including how many assets you own, your income and your expected superannuation position at your planned retirement age. According to mortgage broker Home Loan Experts (homeloanexperts.com.au), common strategies include: reducing the loan term; downsizing to a smaller home when you reach retirement (not accepted by all lenders); selling assets, such as an investment property or shares; Lump sum repayments from superannuation; • ongoing income from superannuation; • ongoing income from other sources, such as rental income, annuities, and dividends. 2 Repay the loan before retirement. Once you’re in your 40s, a typical 30-year…

Under new legislation, your first super fund will now move with you from job to job. These “stapling” laws will make it easier to keep track of your super. But they also make it important to ensure you are in the right fund and insured for the work you do, says Lynda Cross, head of advice at Cbus. Outlining the benefits, she says if you have more than one account, consolidating your super can save you time and money. Having all of your super in one account means you: save money by only paying one set of fees; have less paperwork; and can keep track of your super balance more easily. But before consolidating, check: employer contributions (some employers contribute more to certain funds); insurance cover (if you change funds,…

Salary sacrifice is a great way of putting extra concessional (pre-tax) contributions into super and potentially reducing your tax bill. Concessional contributions are taxed at 15%, which is lower than what most people pay on their income. It is especially attractive for high income earners. To “sacrifice” some of your regular pay, you need to enter into an arrangement with your employer. To ensure you don’t exceed the $27,500 a year cap on concessional contributions, including your SG payments, do your sums carefully. Alternatively, you can make a personal taxdeductible contribution directly into your super fund with after-tax money and claim a tax deduction on it in your annual tax return. Your fund can walk you through it. Fact box 20% of those surveyed have never consolidated super funds -…

THIS MONTH Marcus Padley The Investor One of my past clients was a bit of a legend at my broking house. He was focused. He was objective. He was an Australian who lived in Bali. He had inherited $500,000 that he didn’t expect or need, and with no stockmarket knowledge, he set about investing it. He found me. Sought me out. He even did his homework finding a broker. Mr Themes interestingly had all his own ideas and almost all of them were good. It got to a point where my broking colleagues started surreptitiously watching his account in the back end to find out what he was doing. The chatter in the lift was regularly about what “the Man in Bali” had just done. And he was a bit…

Source: Rainmaker Information. Data sourced as at July 31, 2022. *Numbers stated here depict averages, other than the Rank column, which is the total number of funds in the category. For any queries on these tables, please contact info@rainmaker.com.au. The tables on these pages contain data and information to help you compare managed funds, which are pooled funds managed professionally by investment experts. Managed funds displayed in these tables are multi-sector or asset class specific. Multi-sector managed funds invest across a diversified mix of asset types spanning eguities, property, bonds, cash, infrastructure, private equity and alternatives. Managed funds are normally set up as unit trusts. You may be able to invest in them directly or through a platform. These products may be recommended to you by a financial adviser. Top…

MAX RIAZ Contributing writer Inflation usually runs in 20-year cycles, so after 20-plus years of low inflation we may now be heading into a long period of high inflation. Money’s value will continue to diminish as its circulation increases to fund fiscal deficits. I would invest $10,000 in funds and ETFs that target real assets (for example, natural resources, precious metals, water, energy). Bitcoin also looks interesting at these levels. MARK CHAPMAN Contributing writer I’d invest the funds in paying down my mortgage. With interest rates nearing 6% and rising (meaning 6%-plus interest saved) and a tax-free return, there isn’t anywhere else where you can get such a low-risk, high-return investment on your money. MICHELLE BALTAZAR Editor-in-chief I would put $7000 into shares, $2000 in a couple of professional development…

Why are so many people getting caught out by taking advice on money matters from people who aren’t qualified to give it? The financial regulator ASIC has - finally - begun cracking down on so-called finfluencers: people using social and other media to peddle financial advice without having the required qualifications to do so. The problem is that the word “expert” is bandied around so much nowadays, and it’s often self-appointed. Expertise is earned through years of learning and practice, backed by professional qualifications, industry registrations and ongoing training. In Australia, only people with a current Australian Financial Services (AFS) licence, or their authorised representatives, are legally able to offer financial advice. Determining who is credible and worthy of your time is the best investment you can ever make. Check…

FRIENDS WITH MONEY #65: HOW TO BEAT THE HIGH COST OF LIVING Hosted by: Michelle Baltazar Guest: Kris Davant We can’t avoid the rising cost of living everything from our groceries and petrol to household goods and services has gone up - but we can find ways to take off some of the pressure. In this podcast, Michelle Baltazar, editor-in-chief of Money magazine, introduces us to the Frollo app, which is a big help when it comes to making our dollars go further. Kris Davant, the head of product at Frollo, chats to Michelle about how it works, how it can help us budget, how to protect our financial data and how tracking our expenses can help us save hundreds of dollars. DEBRA DUNCAN SCAN THIS CODE TO ACCESS ALL…

The number of Australians putting their money where their mouth is when it comes to matching their investments with their values is on the rise, with 17% now “investing responsibly”, according to a report from the Responsible Investment Association Australasia (RIAA). That figure has grown by 28% since 2020, with Simon O’Connor, chief executive of the RIAA, noting that the majority of Australians are also eager to avoid “greenwashing” by having companies’ sustainability claims scrutinised. “Australians are demanding more transparency from their providers, with 75% wanting to know which companies their super fund, bank or other investments are invested in,” says O’Connor. “Independent verification of sustainability claims is becoming key to winning trust. Three-quarters of Australians say they would be more likely to invest in responsible investment products that have…

Olympia Yarger reckons that she is onto something big. But there is plenty of hard work ahead, and her start-up business, Goterra, is anything but glamorous. It involves collecting food waste in converted shipping containers that contain thousands of hungry maggots - the larvae of flies. She invented an autonomous machine, tended by a robot inside each container, which moves the waste around and keeps the process running. What emerges are two very useful products: high-value fertiliser and protein for feeding farm animals. Her invention ticks many boxes when it comes to the circular economy, a term which involves sharing, leasing, reusing and recycling materials for as long as possible to address climate change. “It started as a very self-serving exercise,” explains Yarger. “I wanted to go back to farming.…

Q I am 67 years old and don’t have a large bank balance. When my funds dry out, is it safe to get a reverse mortgage? Not knowing whether it is a safe option, my thoughts were that it was best to ask your opinion on this situation. Thank you. What an excellent question, Hirani. Reverse mortgages can be an absolute disaster if used incorrectly, but in my opinion they are incredibly valuable if used well. Obviously, the longer you leave getting one and the less you take out, the slower the growth in the size of your loan. I would really like you to read the information on the Moneysmart website (moneysmart.gov.au) This is a government site, not a sales pitch from a reverse mortgage company, so you will…

This is a tribute to Sevenhill’s longtime winemaker, Brother John May, who devoted his life to the vineyards and cellar at the Clare Valley’s oldest vineyard (established 1851). The recent rejuvenation of its vineyards has made possible signficant improvements in the quality of its wines. At the pinnacle is this powerful, full-bodied red with amazing intensity and impeccable balance, showing some hints of characteristic chocmint flavours, before firmish tannins that suggest it will improve with age. PETER FORRESTAL…

Paul Clitheroe PAUL’S VERDICT CASE STUDY Two years ago, I set up an investment bond with Generation Life for my children. This is my first experience with investing, and it hasn’t gone very well. There haven’t been any gains in that time, only losses. The 12-month anniversary is coming up, so I need to decide whether I deposit more into the bond or cut my losses and let it sit for the next eight years, when I can cash it in. My husband thinks I’m mad to add more to it and better off putting it in a term deposit. Love to hear your thoughts. Some parts of investing are very technical, Rebecca, while other parts are personal. Generation Life offers an insurance bond with a wide range of investment options…

Right now this is not a simple question. War, inflation, cost of living pressure, energy prices, global warming … it is a volatile climate. No one can predict what happens next, so I’d stick to the proven history of money. With rising interest rates, adding it to your mortgage is a safe and sensible option. Falling property prices may give you a chance to buy, in which case keep your $10,000 safe and secure in a high-interest account. Markets have fallen and for all I know they may fall a lot further. Time is your friend here. Personally, at my age and given my risk profile and very long-term investment horizon, I’d be topping up my super or investing in a low-cost managed share fund or ETF while the prices…

COVER STORY The most important aspect for beginners to consider in investing is a process and a journey. Experience and achieving a greater appreciation of one’s risk tolerance, patience and emotional traits will assist you over the longer term in making more informed decisions. No matter what stage of investing you are at, the first thing to assess is how much time and effort you want to commit, bearing in mind that markets are ever changing and evolving. For a beginner, I always suggest a good starting point is investing indirectly through a one-size-fits-all financial product, such as an exchange traded fund (ETF). An ETF offers exposure to a basket or group of companies (shares) that reflect an index, such as the S&P/ASX 200 (the top 200 shares listed in…

This year and into the future, I will be making a concerted effort to “catch up” with my super and maximise the benefits of carry-forward contributions. As any small business owner, freelancer or working mother will attest, it can be extremely difficult to build retirement savings for individuals who take time out, work irregular hours or experience some other period when they make no, little, or limited contributions. While not available to everybody, carry-forward contributions were introduced to even the playing field, making it easier for people with irregular work patterns to save for retirement and benefit from tax concessions attached to super. Assuming I was in the highest tax bracket, if I was to make a $10,000 “catch-up” contribution taxed at 15% - rather than my marginal tax rate…

ASK THE EXPERTS WHERE TO INVEST $10K One of the questions I get asked a lot (as the friend who likes talking about money and investing) is whether now is the right time to invest. This question is asked during times when investing feels easy, but comes up a lot more often when things feel a little bit more uncomfortable, and your portfolio might not be looking as good anymore. This makes sense, because when we’re dealing with our financial future, things can feel overwhelming. We can get so tied up in knots when trying to decide whether to invest that we end up not making a decision at all and leaving it to an unknown date in the future. But here’s the crux of the matter: avoiding feelings of…

As interesting as a $10,000 windfall sounds, it could also quickly turn into a source of great stress if you don’t know what to do with it. That’s the unique quality of owning money - just owning it isn’t enough, it needs to constantly work for you. The key to investing, however, is to know a few of the basics, such as setting an investment objective based on your personal circumstances. This is not about just a number but also about your personal beliefs, length of time you are investing for, your risk appetite, ability to access information about your investment and the control you want to have over your investment in terms of withdrawal. Read the disclosure documents - even quickly scanning them could save you hundreds of dollars.…

FAMILY MONEY Susan Hely For many families with young children, the federal government’s new childcare arrangements can’t come soon enough. Ninety-six per cent of families (1.26 million) will be better off with the higher childcare subsidies, according to the government. The more generous payments for childcare means more women and men will be able to work additional hours and boost their family income. “There is an awful lot of talent we aren’t tapping into,” says Danielle Wood, CEO of the Grattan Institute, a policy think tank. Australian childcare is one of the most expensive in the OECD, particularly when measured against countries with leadingedge services, such as Sweden, Germany and Canada. Childcare costs Australian parents around 24% of their earnings, compared with 1% in Germany, 5% in Sweden and 16%…

MIND GAMES Phil Slade When I was a teenager, a relative owned a very successful retail franchise in Sydney. My parents decided to partner with him and started other franchises along the east coast. Together, they became so successful that, at some point, it appears they became viewed as a threat by the parent franchisor. Due to an unusual contractual loophole, and some major suppliers who were encouraged to delay stock delivery, the parent company was legally allowed to take control of all the successful franchises, cutting out my relative and parents and holding them responsible for all current liabilities. My parents went broke overnight, losing all their investment properties, our family home, shares and all accumulated wealth that had been built up over years of hard work and sacrifice.…

PROPERTY RENOVATIONS The prediction of a third La Niña event bringing above-average rainfall for northern and eastern parts of Australia is a big concern for homeowners. The ground is already very wet and creeks and dams are full, so we need to prepare our homes as best as we possibly can as surface run-off may occur quite quickly. Knowing the areas of your home that were impacted by storms and floods previously will help you get ready and potentially lessen the impact in the coming season. Perhaps you have moved house since the last storm season? Have you done your research on how your area was impacted by previous storms? Your local council can generally provide flood maps for your location. Storm-proofing your home is always money well spent. Designs…

UNLISTED Pros Direct exposure to real estate assets. Less price volatility than listed property. Regular income, sometimes tax-advantaged. Greater control over the investment with voting rights to determine such things as fund extension. Cons Illiquid - with openend funds there may be quarterly or yearly redemption options, but with closed-end funds you’re in for a set term, such as seven years. Higher initial outlay, often $10,000 to $20,000 or even more. Lack of diversification, especially with smaller closed-end syndicates. LISTED Pros Small minimum outlay for a lot of diversification. Very liquid - you can sell at any time with settlement within days if you require cash quickly. Regular income, sometimes including tax-deferred contributions. Cons Highly correlated to broader equities market, so if the ASX falls 20% it’s likely property stocks…

If you’re in your 20s and 30s, you are likely to be saving as hard as you can to buy your first home. Using the tax-friendly environment of super may help. “Any voluntary contributions you’ve made into your super from July 1, 2017, could be eligible to be taken out when you are ready to buy your first home,” says Lynda Cross, from Cbus. “Under the First Home Super Saver Scheme (FHSS), first home buyers who have made voluntary super contributions of up to $15,000 per financial year into their super can withdraw these amounts (plus associated earnings/ less tax) from their super fund to help with a deposit on their first home. "If you’re eligible, the maximum amount of contributions that can be withdrawn under the FHSS is broadly…

Some opportunities are time sensitive (and depend on your age, employment status and more), so don’t let them pass you by. If receiving the age pension is part of your plan, learn the thresholds now and sort out any financial gifts you wish to give early as they may affect the amount of pension you receive. “Even the most financially prepared retiree may be able to receive some extra support in retirement. Having a plan and getting good financial advice early can help set you up for a retirement even better than you imagined,” says Anderson. Know your numbers A large percentage of retirees qualify for some level of government age pension. A single person could get up to $936.80 a fortnight, while a couple could get $706.20 each. Centrelink…

If you’re new to super, it can be worth focusing on six aspects of your fund: 1 Membership number and account balance. Use your membership number to track your super’s progress online. 2 Does your super fund have an app? This makes it easier to check or add to your super on the go. 3 Valuable member resources. Your fund can be a source of helpful webinars and other valuable advice and resources to keep you informed on how to get the best out of your super. Some even offer reward programs you can take advantage of today. 4 Choice of investment options. Most Australians have their superannuation in the default “balanced” option. But you can select from growth or high-growth strategies with the potential to turbocharge your savings over…

MANAGED FUNDS Max Riaz For a range of economic and political reasons, volatility is at the forefont of investors’ concerns. Although the worst of the pandemic is (hopefully) behind us, share price volatility has been even higher in 2022 than it was in 2021. The problem with volatility is that it keeps you nervous and fearful of potential losses, even if at the end of the year your actual losses are not as bad as feared. That we feel the pain of actual and potential losses more than the joy of profits is often mentioned in behavioural finance. So, at times like these, you wish you had some investments in your portfolio that helped to at least partially offset the losses with some gains and you wish the price of…

BEST IN BREED Scott Phillips SECTOR US STOCKS You probably know that the ASX - the Australian Securities Exchange - is around 2% of the world’s stockmarkets, measured by market capitalisation (the value of all the companies on the exchange, added together). Now, don’t get me wrong; we have some wonderful companies listed and headquartered here, some true market leaders and world beaters. But, well, that still leaves 98% of the total global opportunity untapped. And, statistically speaking, the odds that there are some wonderful, potentially market-beating companies listed outside the ASX is, unsurprisingly, probably close to 98%. Not only that, but investing outside our own island also confers some wonderful opportunities we can’t get - at least at scale - here at home. The first, of course, is the opportunity…

The UK’s disastrous September mini-budget is a wake-up call for Australia’s economic leaders about the dangers of out-of-control debt. The crisis was sparked by what has been labelled a reckless mini-budget full of unfunded spending promises delivered by the new Chancellor of the Exchequer, Kwasi Kwarteng. (Australia’s treasurer was due to announce our own mini-budget on October 25, after Money went to print.) What made the UK mini-budget so disastrous was the near universal thumbs-down reaction it received from global capital markets, which believed the spending announcements were unaffordable. Within days, UK government Treasury bond yields surged from 3% to 5%, before settling back to 4%, and the pound, which has been in strategic decline against the US dollar for months, dropped like a stone to almost parity, its lowest…