How much do you need for a rainy day fund

Umbrella for a rainy day
 
Sometimes the weather folk at the Bureau of Meteorology get it wrong and it rains when you least expect it. You’re caught outside in your thongs without an umbrella and frankly, it’s not fun.

What’s worse than being in the rain sans umbrella? Needing money in an emergency and not having any set aside to cover the cost of an urgent or unexpected expense.

That’s why having some money set aside for unexpected events is advice we give to all clients. This is money that should be readily available in a bank savings account rather than invested.
(more…)

Read more »

Finding freedom from the Bank of Mum and Dad

Parent and child - Future Affordability Report
 
Financial freedom is the most important factor in our ability to achieve our lifestyle goals and lead our life the way we should reasonably expect to. Yet, this is no longer guaranteed for future generations.

According to the 2016 HILDA Report, future generations of young people in Australia are, for the first time, set to be worse off than their parents.

To help understand parents’ views on their children’s financial future, Stockspot has partnered with Galaxy Research to produce the Future Affordability Report. We looked into parents’ concerns about young people’s finances, the cost of housing and living, and what do they think the fallout will be in later life for their children and themselves.
(more…)

Read more »

How reliable is past performance?

Rear view mirror
 
If you’ve ever read the fine print of a product disclosure statement (PDS) for a financial product, you’ve almost certainly seen ‘The past is not a reliable indicator of the future’. Admittedly, we even put it in the Stockspot documents because we’re obliged to do so.

But in fact past returns can give you a much better idea about future performance than almost anything else. Markets tend to move in cycles so when one asset does well for a while that’s almost always followed by a period of doing worse. It’s known as mean-reversion and it’s why we rebalance our client portfolios out of investments that are up, into ones that have lagged.
(more…)

Read more »

Stockspot celebrates 3 years…

Stockspot celebrates 3 years
 
This month marks the third anniversary since we started investing for clients. We’re humbled to have the opportunity to help thousands of Australians grow their savings every day.

Today our clients range from 18 to 80. They come from Alice Springs in the centre to Kalgoorlie in the west, Swansea down south in Tasmania and Townsville in North Queensland.

As we promised on day one, our investment philosophy and strategy haven’t strayed. Rather than trying to time the market or pick stocks (an expensive and dangerous endeavour), we’ve generated our consistent returns with a strategy based on decades of evidence and by not changing course.
We strongly believe that the most sensible investment advice for most people is to avoid trying pick winners, invest in a broad mix of assets, keep your costs low, rebalance occasionally to reduce risk and don’t worry about what happens in the short term because it’s meaningless noise.

This is a philosophy I’ve learned from my own years of investing and it’s one echoed by industry veterans like Warren Buffett, Charles Ellis, Burt Malkiel, Daniel Kahneman and many others…
(more…)

Read more »

Jargon busting the finance dictionary

finance dictionary
 
You’re watching the tele as you get ready for work. The 7.20AM finance news comes on and you dash to brush your teeth.

You know for the next 5 minutes the finance expert is going to stand in front of a ridiculous number of computer monitors and ‘blah blah blah’ their way through the ‘market update’ and use finance jargon you don’t understand. It’s enough to make you weep into your first coffee of the day.

It often seems like the finance industry is created on a house of jargon designed to keep people baffled to the point that they just give up and collectively say ‘take my money’.

Here’s a list of some financial jargon terms you’ll probably come across at some point and what they mean in plain English.
(more…)

Read more »

What are the best dividend ETFs?

Dividend ETFs and Dividend Harvesting
 
A client recently asked us if Stockspot would consider adding a pure income producing ETF to our portfolios to take advantage of ‘dividend harvesting’. We thought it was a great question so decided to share the answer with everyone!

Dividend harvesting is a strategy that involves buying shares just before they pay dividends and selling them just after dividends have been paid. At face value this sounds like a very sensible way to collect dividends without having to hang onto shares for too long.

However, like any investment strategy that involves timing your entry and exit points, dividend harvesting has risks. The biggest risk with dividend harvesting is shares tend to fall in price on the day they pay their dividend. Therefore any amount you gain in the dividend is likely to be lost on capital returns.
(more…)

Read more »

How portfolio rebalancing works

Rebalancing scales
 
Portfolio rebalancing is one of the most important jobs of an investment adviser. It involves selling investments that have grown faster than others in your portfolio and buying more of the investments that have fallen behind.

Portfolio rebalancing helps reduce the risk you need to take to earn a certain level of return. Portfolio rebalancing can be expensive, time consuming and emotionally exhausting to manage yourself. This is why rebalancing is hard to get right as a DIY investor.
(more…)

Read more »

3 fintech ingredients to make 2017 great

Ingredients for Australian fintech
 
At the start of 2017 I was appointed to the ASIC Digital Advisory Committee which consists of members from the fintech ecosystem and government. I hold strong opinions on the topic on good financial advice so naturally I attended my first meeting eager to contribute!

The ‘Fintech in Australia’ report by Frost & Sullivan predicts revenue from the Australian fintech sector will grow at a compound annual growth rate of 76% and reach A$4.2 billion by 2020. The potential of fintech to create competition, innovation and jobs for a 21st century Australian economy is huge and worth campaigning for.

So after hearing the views of many fintechs, government and consumer advocacy groups, here’s my top 3 ingredients to drive Australian fintech forward in 2017.
(more…)

Read more »

Meet the team: Matt

Meet the team: Matt
 
He’s a cricket fanatic and father of 3 up-and-coming sport stars. Meet Matt – our Head of Operations.

Like a few of us at Stockspot, Matt escaped the corporate banking world to help build a new modern investment service. He reckons not being stuck in endless meetings and getting stuff done is the way forward – we think so too!

(more…)

Read more »

Why you shouldn’t feel bad about renting

Renting a property
 
The property market is rarely out of the news in Australia, with regular predictions of house prices collapsing being followed by weekends of record auctions and prices.

Property has certainly had a good run over the past few years. According to CoreLogic RP Data, the average house in Sydney has increased in value from $650,000 in 2012 to over $1,066,000 in 2017. That’s a 64% rise in 5 years!

Average house prices in major Australian cities
Sources: CoreLogic RP Data; RBA

As property has become less affordable, more people are looking at a popular alternative which is to rent and invest their savings in a portfolio of shares instead.

Over the last 30 years, both property and shares in Australia have returned between 11.0% and 11.5% per year so both are proven ways to grow your long term wealth.

But which is better today?
(more…)

Read more »

Diversifying your investments – how to put eggs in different baskets

Eggs in one basket
 
You know the expression ‘don’t put all your eggs in one basket’? This should be the first lesson taught at investment school (if there were such a thing).

Placing your eggs in a variety of baskets or spreading your money across many different investments is diversification 101. If there are 2 lessons everyone should be required to learn before they invest they are:

1.  How compounding works
2. What is diversification and how does it work.

(more…)

Read more »

What I’ve learned from 21 years of investing

21 years of investing
 
It’s been 21 years since I made my first investment on January 1st 1996. At the time I was 10 years old. Not your standard primary school hobby.

I was sport obsessed and starting to realise girls weren’t as annoying as I thought, but for some reason I quickly became fascinated by what made share prices go up and down.

Neither of my parents worked in finance but I was lucky that my dad had some shares in his self managed super fund and decided to teach me and my brother some of the basics. He let us choose a stock from the newspaper and gave us $1,000 (which later, to my dismay, I found out was only theoretical).

I had a few stock market wins, a few losses and I was hooked!

I kept a diary of every investment I made between 1996 and 1999 which I still have today. It looks more like a colouring-in book than a trading diary because I gave each stock a different set of colours – but in it I kept track of my running profit or loss, dividends and company news cutouts.
(more…)

Read more »

The rise of socially responsible investing

Ethical investing
 
You may have heard some murmurs about socially responsible investing recently.

Given 2016 was the hottest year on record, Australia claiming the highest the gambling rate in the world and the recent scandals about labour standards, it’s fair to ask yourself:

“Are the companies I invest in helping the world?”

Enter socially responsible investing (SRI)

Known as ethical investing, sustainable investing or green investing, socially responsible investing is an investment strategy that considers both financial return and social good to bring about social change.

Its history is believed to date back to the Quaker Society in the late 18th Century when members were banned from participating in the slave trade. Seems fair enough today. Back then, it was a bold statement.

Fast forward a few hundred years we saw people question the ethics of companies during the Vietnam War. Dow Chemical, a napalm producer, was boycotted and the subject of protests across America for its war profiteering when a photo was released of a nine-year-old girl running naked and screaming with her back on fire from the napalm dropped on her village.

Recently fast fashion brands like H&M and Zara are under scrutiny for labour rights violations, some ethical funds have stopped investing in these brands.
(more…)

Read more »

ETFs trump managed funds in 2016

ETF Update - Quarter 4, 2016
 
Our quarterly update on the Australian ETF market as at December 2016 and performance of the Stockspot portfolios.

ETF market highlights

  • Quarterly FUM growth was +7%, from $23,971 million at the end of September to $25,291 million at the end of December 2016.
  • Total ETF FUM has now reached the $25 billion milstone, including adding almost $4.3 billion in 2016.
  • The top 5 ETFs for the past 12 months have all been resources focused, reversing a 5 year period of underperformance since 2010.
  • After some US election volatility, Australian and global share ETFs showed steady inflows during November and December.
  • Overall we have seen another positive quarter for ETF FUM growth and returns, continuing the steady drive forward of the Australian ETF market.
  • Globally investors have put more money into ETFs than actively managed funds in 2016 for the 10th straight year.

(more…)

Read more »

Best investment lessons from 2016

Best investment lessons from 2016
 
​2016 was the year of the unpredictable events. The world and financial markets were sent spinning several times over while commentators went into meltdown.

Who would have believed a year ago that​ Britain would leave the European Union, that Donald Trump will be next president of the United States​, and that both events would send global markets significantly higher!

There were many lessons to be learned from last year and we recently asked our clients to tell us the best investment lesson they’ve received in 2016. Here are some of their top learnings.
(more…)

Read more »

Procrastination is your financial enemy

Procrastination is your financial enemy
 
Procrastination is one of those human foibles we all do at some point. It’s something we all knowingly shake our heads and chuckle at because it’s not quite the same as being lazy or incompetent.

Weirdly it has almost become socially acceptable. When the tools of our productivity (our laptop and smartphone) also provide our entertainment, procrastination is as easy and tempting.

Even the most motivated people on Earth can tell you about ‘that one time’ they procrastinated. For more normal people we do it regularly over major and minor things and it’s hugely frustrating. When we’re honest with ourselves, we know we could have done better by starting earlier.
(more…)

Read more »

What is a MDA Service and how does it work?

Question - What is a MDA service?
 
When you invest with Stockspot, you sign-up online and answer some questions about your financial goals and personal circumstances, then you’re asked to review and sign an MDA Agreement before you can invest.

At this point, you ask yourself what is an MDA Agreement and what exactly am I tying myself into?

A good question you should ask before using any financial product is how exactly does the product work, is it the best product for me and is my money safe?

Here’s what a MDA service is, how your money is secured and why we think our MDA is the best way for many people invest.
(more…)

Read more »

2016 : Stockspot end-of-year update

2016 update
 
Back in 2013 I left my job as a portfolio manager to start a better wealth management service for Australians. It’s hard to believe Stockspot has now been up and running almost 3 years.

It is something I am immensely proud of and I want to thank the thousands of clients who have been on the journey with us. In 2014 when we launched, automated investing and robo-advice were new in Australia so we appreciate the support of our early clients who trusted us to help manage their savings.

We’ve generated annualised net returns for those early clients of 6.2% to 9.2% per year with much lower fees than traditional managed fund options. At the same time our portfolios have been much less risky than just owning Australian shares.

We’re also thankful to the 22,000 people who have subscribed to our newsletter for our monthly investment insights. And none of it could happen without the tireless effort of the Stockspot team.
(more…)

Read more »

Pay your future self – Best way to save money in your 20s & 30s

Saving money in your 20s and 30s
 
Saving money and getting started investing in your 20s and 30s is something everyone knows you should do. However life gets in the way and saving can take a back seat to fun and entertainment when you’re young.

There’s nothing wrong with clocking up experiences, smashed avo brunches and great dinners out, but living pay-cheque to pay-cheque isn’t sustainable as you get older.

As a (reformed) lover of spending my dosh I’m here to strongly encourage you to start saving now. Today! The reason why is simple, saving money earlier in life has an EXPONENTIAL impact on your long term wealth. Start 10 years later and the maths could make it impossible to get where you want to be.
(more…)

Read more »

Why you won’t beat the share market (but many still try)

Won't beat the share market

Four things you will learn:

  • Why picking stocks or trying to time the market is pointless
  • Why fund managers have become ‘the market’ (and what that means)
  • How behavioural biases lead us to make bad investment decisions
  • Why index investing is the smart investor’s choice

The US election is the perfect demonstration of the futility of trying to beat the share market.

Those who tried to time their market entry were whipsawed in all directions, share markets initially fell 6% before staging an 8% recovery to close up for the week. Not only did most ‘experts’ call the election result wrong, they completely misjudged the impact that Trump would have on markets.

Meanwhile those with portfolios focused in popular yield-sensitive sectors of the market like property saw their investments crushed due to events in bond markets that were completely outside of their control.

None of this is unusual… time after time, finance commentators have their predictions proved wrong by the market. Those who try and beat the market by timing entry and exit points, or picking stocks or sectors, are outsmarted by each other.

So why is it so difficult for even the experts to get it right?
(more…)

Read more »

Meet the team: Alice

Meet the team: Alice
 
It’s 30 degrees outside, the siren calls of delicious gelato are getting louder, the beach is on everyone’s mind in the Stockspot office, everyone’s that is, except for one person…

Enter Alice. Awesome snowboarder, adventure sports obsessed, epic coder and our resident front-end developer (the person who make things look good). Her advice to anyone considering a career as a developer – be passionate and write excellent code. Sounds spot on to us!

(more…)

Read more »