People & perspectives: Matt Levy, Paralympic gold medalist

Matt Levy - Paralympian
 
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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When is a good time to invest?

When is a good time to invest

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.

Thankfully, there is a way you can avoid the anxiety of investing, closing your eyes and hoping for the best! This is a simple investment strategy called dollar cost averaging.
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ETFs continue to disrupt the asset management industry

2018 Australian ETF Report
 
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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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.

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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Stockspot: 4 years since our launch

Stockspot 4 years
 
This week we’re excited to share that Stockspot turns 4!

Here’s a quick look back at where we’ve come..

Helping Australians reach their potential

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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Where Are the Customers’ Yachts? The problem with wealth management in Australia

Royal Commission
 
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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Why tech shares are the worst investment today

Tech shares
 
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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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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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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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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Investment update and portfolio changes: November 2017

Performance update - Nov 17
 

For the latest performance update – Stockspot: 4 years since our launch

We’re pleased to provide our 3½ year performance update and explain some portfolio changes we’re making to reduce risk and keep the Stockspot portfolios in line with client goals.

This update will cover:

  • Portfolio performance

  • Our approach to reviewing the asset allocations

  • Changes to the portfolios and why we’re making them

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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 latest Fat Cat update – How to pick the best super fund

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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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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How to invest when markets go sideways

Sideways market
 
Sometimes markets don’t go up or down, they go sideways. Sideways markets can last weeks or even years. They can be particularly frustrating for a long-term investor.

As time passes and markets don’t go anywhere, it can be tempting to change your investment strategy or switch into cash. However like driving in heavy traffic, switching lanes is unlikely to get you there faster. The best investors resist the urge to change strategy during these times because they understand the secret to sideways markets.
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Why it pays to be a (lazy) investor

Better to be a relaxed lazy investor
 
In most of life’s pursuits, the harder you work the better your results. Work-out more and the fitter you become. Study harder and you can get better grades.

People apply the same logic to investing. If you watch and listen to as much market news as possible you can get ahead of everyone else. There is no shortage of share market newsletters, tipsters and TV commentators to help give you an ‘edge’ over the millions of other investors out there.

Since 1995 all the people reading, researching, charting, analysing, scouring the market for opportunities and actively trading have lost out to those investors who have done absolutely nothing. In fact those so called ‘lazy investors’ made triple the returns of their active counterparts.
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Blame it on the ETFs

ETFs - punching bag
 
They’ve been described as worse than communism, and more dangerous than the misuse of antibiotics. Some would have you believe that they cause trading glitches, are making the market dumb and dysfunctional and are leading the world toward imminent catastrophe.

It’s no coincidence that the groups most threatened by the groundswell of money into ETFs and index investing are also their staunchest and most vocal opponents. Any time there is hostile press on ETFs, you can be sure the author behind it is an active fund manager.

The irony is that the job of active fund managers is to identify and profit from market anomalies and trends. Yet they are ostriches in the sand when it comes to the colossal shift in their own industry.

The trend out of active management into indexing started gaining pace in the early 2000s. The pace has been accelerating since 2009. Regulatory change around best interests duty and growing awareness of the benefits of low-cost investing have both contributed to the success of indexing and ETFs.

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