How to handle money and relationships

Money and relationships
 
Let’s face it, money talk in any relationship or friendship can be a mood killer. When the dreaded money topic comes up it’s normal to try and shrink into your shirt and hope the conversation soon turns to fun things like happy hour and buffalo mozzarella.

I’ve said it before and I’ll say it again, we need to talk about money.

How you deal with money can impact your relationships. Infact Relationships Australia says financial stress is the number one cause of relationship breakdown. I’d wager that if it were more socially acceptable to be open about money, fewer people would struggle with debt.
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Best ways to deal with a credit card debt

Credit card debt
 
Paying on plastic can be a useful way to free up cash, particularly over Christmas and the holiday season.

However, many Australians will have to pay off credit card debt from the festive season well into 2018. It’s scarily easy to overspend on credit cards and it can be incredibly overwhelming to get on top of credit card debt once you’re in it.

We asked Sally McMullen, resident credit card expert for finder.com.au to explain some of the best ways to get your debt under control cheaper and faster.
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What is cryptocurrency?

Cryptocurrencies - taking photo of a bitcoin
 
We recently wrote about why we think blockchain has the potential to transform all sorts of industries including our own but also why bitcoin may not be a great investment right now.

Markets have a tendency to get ahead of themselves when it comes to valuing new technologies. Sometimes it’s not the early bird who gets the worm, but the second mouse that gets the cheese.

This leads us into a related topic – cryptocurrency!

We have been asked by quite a few clients what they are, how they differ and how an initial coin offering (ICO) works?
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Asian market ETFs +34% in 2017

ETF Update - Quarter 4, 2017
 
Our quarterly update on the Australian ETF market as at December 2017.

ETF market highlights

  • ETF funds in Australia hit the $35 billion milestone, adding almost $10 billion in 2017.
  • Quarterly ETF growth was 12%, from $31.7 billion to $35.7 million at the end of December 2017. The additional $4 billion came from a combination of strong markets and consistent ETF inflows.
  • Many Asian share ETFs had an exceptional year, returning 25% to 38%.
  • Active asset allocation ETFs have fizzled due to poor performance from having a high allocation to cash in a year when markets rose strongly.

ETF funds under management since December 2013
Source: ASX
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How to invest in Bitcoin (if you insist!)

Bitcoin
 
Following on from our discussion on whether you should invest in Bitcoin and the difference between investing and speculation, we share our tips on how to be a smarter speculator.

We know Bitcoin probably got mentioned at least once at your office Christmas party this year. It did at ours.

You might be feeling down that you missed out or envious others around you have hit the jackpot. That’s a normal feeling. Those types of emotions are the fuel that drives speculation.

Our advice on speculating in Bitcoin (if you can’t resist the temptation) is the same as the advice we would give on investing in any other undiversified risky asset like individual shares, equity crowdfunding or art. You should still follow a sensible investment process to give you the best chance of success.
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The role of shares, bonds and gold in your portfolio

Coming together
 
Different asset classes have different jobs to do in your portfolio. Understanding what those jobs are will help you make sense of why all assets don’t rise at the same rate or the same time.

The 3 broad assets in Stockspot’s portfolios are shares, bond and gold. We explain the role of each in your portfolio and how they can balance each other at different times of the market cycle to smooth your returns and keep you invested to help reach your goals.
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How to safeguard your investments

Protecting your investment portfolio
 
This year market volatility has been almost non existent. Share markets have risen with little sign of worry.

The US share market has only moved by 1% or more 8 times this year, the fewest since 1964. It has also gone more than a full year without a 3% move, which is the longest stretch on record.

Calm markets means 2017 may go down in history as the most boring year in market history.

Number of S&P 500 Index moves per year

This is of course fantastic news for investors who have enjoyed great returns and very few hiccups along the way. However, history suggests the current period of market calm won’t last forever. Chances are we are getting closer to the next period of volatility, even if we don’t know exactly when it will take place.
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Why is financial advice important?

Importance of financial advice
 
Getting the right financial advice is important for people of all ages. Whether you’re starting out or well into your wealth creation journey, good financial advice defines your goals and the path to getting there. It gives you a map and ongoing support to help you take control of your future.

Financial advice encompasses many areas including investing, insurance and estate planning. It should be personalised to your individual situation based on your needs and goals.

Stockspot provides personalised advice on one particular part of your financial life which is investing. To provide advice we take into account other areas of your financial life like your debts and cashflow but our advice centers around whether you should invest and what you should invest in.

Regardless of where you get investment advice from if you’re not given a statement of advice (SOA) and investment plan then it’s not advice and you will need to decide yourself whether a product is suitable for you.
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What to consider when getting a mortgage

Mortgages - things to consider
 
Saving up for a deposit is the first major milestone to getting a mortgage (or home loan) and is one of the toughest to achieve. Frustratingly, getting a mortgage involves far more than simply achieving a savings goal; the approval process can be tedious and emotionally draining.

Here are some factors that can make the mortgage approval process easier.

Show you are reliable

A home loan is the biggest financial commitment most people ever make and lenders want reliable candidates. The application process is designed to prove this reliability, so having all the required payslips, IDs, and general proof of all your financial activity on hand, in chronological order can speed it up.
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Should I borrow to invest?

Should I borrow to invest
 

Whether you’re borrowing to invest in property, shares or a diversified portfolio of ETFs, the principles of borrowing to invest (also known as leverage or gearing) are similar.

Why would I borrow to invest?

Borrowing gives you the ability to invest more money than you currently have saved.

The basic idea is you can benefit if the value of what you’ve invested in rises more than the the interest you pay on the borrowed money.

People usually consider borrowing to invest for a couple of reasons:

  • To access the increase in the value of an investment over time without needing to pay for it entirely upfront, ie a house.

  • To access tax benefits – sometimes you can get a tax deduction for interest payments on the loaned amount when the interest is larger than any income earned. This is known as negative gearing.

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Meet the team: Sarah

Meet the team: Sarah
 
Friday afternoon drinks in the Stockspot office has been taken up a notch now that we’ve got a resident wine connoisseur working with us. Sarah is our Head of Client Care and also a massive yoga fan.

We’ve challenged Sarah to tackle her passions at the same time – attempt an upside-down yoga pose while sipping wine in-between answering client queries.
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What are the best industry super funds?

Not all industry funds are equal
 
Not all industry super funds are equal, here’s how to spot a good one.

This month we released our 5th annual Fat Cat Funds Report, it analysed over 2,000 super funds and 2,000 managed funds to see how they performed over 5 years.

Once again we found industry super funds beat retail super funds across 10 of 11 investment categories. Industry funds had a smaller percentage of Fat Cat Funds and more Fit Cat Funds.
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How do you prepare financially for a divorce?

Time to go -
 divorce
 
Divorce is an unpleasant topic and one most people avoid discussing. However it is a reality for many people and one that could leave you reeling financially if you’re not prepared. If you’re in the midst of a marriage breakdown understanding your financial position is vital but not widely understood.

To delve into this tricky subject I spoke to Cathryn Gross, who is a member of ASIC’s Financial Advisers Consultative Committee and the founder of Twelve Wealth, a boutique financial advice business committed to helping women achieve their goals in life.

Cathryn shares what you need to understand about your joint finances before getting married and the steps to take to prepare yourself financially in the event of a divorce.
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Global ETFs surge ahead

ETF Update - Quarter 3, 2017
 
Our quarterly update on the Australian ETF market as at September 2017.

ETF market highlights

  • Quarterly growth for ETFs listed in Australia was 8.9%, from $29.3 billion at the end of June to $31.7 billion at the end of September 2017.
  • The total size of global share ETFs listed on the ASX overtook Australian share ETFs for the first time. Global share ETFs continue to be embraced by Australian investors for better diversification in their portfolios.
  • The latest report from S&P showed that 75% of Australian equity managers, 90% of Global share managers and 86% of Bond managers underperformed their respective benchmarks over the 10 years to 30 June 2017. This trend has continued to support evidence based investing using ETFs.

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Property investment falls out of favour

Property - Melbourne
 
We launched Stockspot Themes in April 2016 and became the first digital investment adviser in the world to offer a range of curated investment options that clients could use to personalise their portfolio. We’ve developed sophisticated portfolio tracking and risk management software to enable us to manage this.

Stockspot Themes have given our clients access to 1,000 different portfolio combinations and allowed them to include a range of different markets and assets.

We’ve carefully selected 14 theme options from over 150 different ETFs available on the ASX. These ETFs complement our model portfolios and offer additional diversification benefits across markets, assets, sectors and personal preferences (like socially responsible investing). You can see our methodology for selecting the best ETFs in our annual ETF report.

We’ve seen great take-up of Stockspot Themes, particularly from our individual and SMSF clients that want to have more control over where they are invested.
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Over 4,000 funds analysed in our 5th Fat Cat Funds Report

2017 Fat Cat Funds Report
 
For the past 5 years, Stockspot has been campaigning to raise awareness of the impact of Fat Cat Fund fees on everyday Australians.

This year, our Fat Cat Funds Report looked at a record 4,102 funds to assess how they have performed after fees since 2012. By shining a light on the Fat Cat Funds our aim is cause some changes either by funds reducing their fees, by encouraging consumers to consider their options, or by Government intervening to improve education, awareness and transparency.
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How to manage opinions playing rugby and investing

Stirling Mortlock - rugby and managing money
 
Nobody can prepare you for becoming a professional athlete. Literally everything is put under a microscope from what goes into your body from a diet and hydration point of view to every single detail of the team’s and your own individual preparation each week.

The objective for everything that comes under this microscope is about constant improvement and how it ultimately benefits the team. This includes how you handle the media attention. For many players one of the hardest skills to develop (and one of the most crucial) is effectively interacting with reporters and how you manage the constant commentary (both positive and negative) from the media.
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Investing your savings doesn’t need to be daunting

Investing doesn't have to be scary
 

Investing isn’t scary, but a lot of people think it is

Risky, time consuming and emotionally exhausting. Sounds like a bad relationship or like attempting Everest. Not what most people would like to associate with growing their savings.

Unfortunately, these are the feelings many Australians associate with investing. When asked why they are not interested in investing, most Australians cite lack of knowledge, disinterest and fear.

Many people still have memories of the global financial crisis and the effect that had on their own investments or those of family and friends.

These are all natural and very human feelings. Loss aversion or fear of the unknown is something that has helped us survive through history – it’s evolutionary. However that same fear holds us back when it comes to investing. We refuse to take a well calculated risk that could immensely benefit and enrich our lives because we are fearful of losing money.

If this sounds familiar you are potentially missing the most effective way to grow your wealth.
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Investing when you’re over 50

Investing in your 50's
 
It would be great if everyone started saving money early to take advantage of compound returns but it’s easy to see how people fall behind. The typical financial lifecycle involves saving up for a house deposit, having children, and all of the expenses that come along with raising a family.

Meanwhile for many people in their 50s and 60s, compulsory superannuation didn’t kick in until much later in life…

Plenty of parents reach the empty nest phase of their life once the kids are out of the house and slowly realise they are completely unready for retirement. The average superannuation balance for someone who is 50-54 in Australia is $142,644. That falls a long way short of the amount needed to generate a comfortable income in retirement.
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Generation rent – get ahead while renting

Renting property
 
If you’re one of the many young people renting and locked out of homeownership you’re undoubtedly aware of all barriers.

Homeownership for under 40s has plunged from 36% to 25% since 2002. The median price of a residential home in Australia’s cities is in excess of $700,000 (if you’re in Sydney the median cost is $1.1m).

To put this in context you’ll need $140,000 in the bank plus some to put down a 20% deposit on a $700,000 home. If you don’t have 20%, you can still get a mortgage but you’ll pay mortgage insurance (this protects the bank not you) and you’ll get a higher interest rate to boot.

These are just some of the many facts and stats coming out of recent reports such as HILDA and ABS which all make for pretty grim reading.
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