This article originally appeared in the ASX September 2018 newsletter.
Phenomenal ETF market growth of 70% over the past two years in Australia.
The growth of exchange-traded funds (ETFs) continues to be the biggest trend in asset management of recent decades. Their prominence has grown as the sector has matured and investors seek better diversification for their portfolios.
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There’s no shortage of investment websites and blogs out there.
Here are 3 of the best investment blogs that I love learning from each week and that I think should be high on every investors reading list.
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Investing is the best way to create long-term wealth and financial independence.
If you’re just starting out no doubt you’ve figured out that it can be confusing at first. There are lots of decisions to make so it’s important to make sure you’re prepared to give yourself the greatest chance of success.
With this in mind, here’s the five things we think everyone should consider before investing.
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It’s that time of the year again when super funds release their annual performance. This blog looks at how the funds twist their performance relative to other funds and indexing. The funds’ PR is parroted by the ratings agencies whose tables and good news story are accepted at face value by the media.
Firstly, we look at how funds manipulate their inclusion into the categories set by the ratings agencies.
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Something you may not put a lot of thought into when you invest is how those investments are held. Sometimes investments aren’t legally owned by you but instead owned by another entity on your behalf. That may sound like a minor difference however there can be significant consequences when it comes to security, tax, costs and the portability of your portfolio.
Broadly investments can be held in 2 ways:
Directly by you on your own HIN (Holder Identification Number)
Indirectly via a commingled fund or omnibus account structure
Historically stock brokers used a direct ownership model, so each of their clients had their own individual investment account or HIN and all investments were registered on the ASX’s computer system called CHESS (Clearing House Electronic Subregistry System). If the stock broker went bust it didn’t impact the end client because their investments were safely separated.
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Australian share ETFs continue to gain in popularity. As of May 2018 there is over $10 billion invested ETFs tracking Australian shares.
Each year we compare all 175+ ETFs in our Australian ETF Report. Here we road test 5 popular Australian share ETFs, comparing them across 6 factors:
“Rent money is dead money” or so the saying goes. It’s a popular myth perpetuated by plenty of people working in the real estate industry. However as at June 2018 capital city house prices experienced their first annual fall in 6 years, dropping -1.1%. With house prices cooling, renting is starting to look attractive again.
Like any financial decision, there are costs and benefits associated with buying or renting. Here we discuss some of the important pros and cons to consider when deciding whether to rent or buy and look at which one has really worked out better over the long term in Australia.
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Some people have unthinkable depths of grit, determination and talent. They achieve amazing feats while the rest of us shake our heads in wonder. Matt Levy is one of these people. Matt is a 6 time Paralympic swimming medallist, his most recent win saw him return home with the gold medal from the Commonwealth Games on the Gold Coast.
His days start at 4.30AM, consist of 5km of swim training, then he goes to his day job, or in his words “train, eat, sleep, repeat”.
Stockspot was lucky to talk to Matt about the incredible challenges he faced in early life and how he balances a professional sports career, charity work and managing his finances.
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One of the main challenges investors face is ‘when is the right time to invest?’
As an investor your aim is to make money, so naturally it’s tempting to try and time your entry into the market and wait for prices to fall to grab a bargain. The problem is investment markets can move quickly and you’re just as likely to miss out on making good returns by waiting to invest.
The truth is markets can go up, down and sideways over the short-term and it’s almost impossible to pick the top or bottom (even for professionals). However if you’re completely out of the market you have no way to benefit from the gradual increase in prices over time.
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ETFs continue to be the biggest disruptor to the asset management industry and at the same time are blurring the lines between different styles of investing.
Over the past 15 years, over US$2 trillion has moved out of active funds and into index funds and ETFs. Globally the ETF market is projected to reach US$10 trillion by 2020 and be larger than the active managed fund market by 2027.
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Not all industry super funds are equal, here’s how to spot a good one.
The Productivity Commission recently released their draft report on superannuation efficiency and competitiveness. What they found mirrors our Fat Cat Funds Research that shows that while Industry super funds outperform Retail funds, there are plenty of areas for improvement.
Our 5th annual Fat Cat Funds Report, 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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Over long periods of time, markets have always risen and generated wealth for investors. That’s much harder to see if you’re focused on market movements over a few days, weeks or even months.
In the 4 years since Stockspot launched, all 5 of our portfolios and all 5 of the the core ETF investments within our portfolios have risen in value.
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This week we’re excited to share that Stockspot turns 4!
Here’s a quick look back at where we’ve come..
Since Stockspot launched in 2014 I’m delighted we’ve been able to help thousands of Australians invest to get closer to the life they want to be living.
We’ve seen clients who have been able to fund all sorts of aspirations, including buying first homes (including one houseboat!), travelling, home renovations, take career breaks, buy a car, pay for school fees and retire.
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Five years ago this month I started Australia’s first online investment advice company. One of the reasons I set it up was that I saw too many people getting poor investment advice.
The traditional wealth management industry was positioned in TV advertisements as a way to get peace of mind and secure your future. Behind the scenes it was designed to do exactly the opposite. People were being overcharged, given poor advice and pushed into products that actually harmed their ability to reach their goals.
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Playing 2-up this Anzac Day? Here’s something you can throw back at anyone who questions your judgement to take part in this Aussie tradition.
You’ve got a better chance of success at 2-up than you do making money on picking shares. Your chance of making money buying shares is 42%. At least in 2-up you have a 50% chance of walking away ahead.
We’re creatures of habit. We gravitate towards things that we know and feel familiar with. If it makes us feel safe, warm and fuzzy we’re 100 percent in.
The technical term for our penchant for things we know is familiarity bias. We gravitate to “the devil we know”.
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One of the worrying trends we’ve seen lately is an unhealthy obsession with tech shares. Sure, their performance has been fabulous over the past decade and they’re accomplished and well known businesses, but that does not guarantee their success in the future.
Most people have already heard the reasons tech companies are hot right now. What you probably don’t hear are the arguments for why to avoid them. That in itself should be a red flag.
To play devil’s advocate these are 9 reasons to avoid over-investing in tech.
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The market has a tendency to surprise speculators, which is why most speculators lose out to investors over the long run.
After 2 years of steady returns and low volatility, US shares fell 8% in early February and speculators who poured US$33 billion into the market in the previous week wore some heavy losses.
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It’s fascinating to find out the reasons why people buy shares, ETFs, property, bitcoin or any other investment.
Take the pulse on people’s motivations for buying something and you’ll get a good insight to if they are actually an investor or a speculator.
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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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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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If you haven’t noticed Bitcoin and other ‘cryptocurrencies’ like Ethereum making headlines recently you may be living under a Bitcoin!
Even Alan Kohler’s nightly finance segment on ABC News now includes a snapshot of the price moves in Bitcoin and other obscure cryptocurrencies.
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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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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.
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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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.
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.