Kids invest for free

Piggy bank
 
We’ve made investing for children free!

We all want the best for the little ones in our life. So naturally as investing evangelists we believe children should be able to benefit from investing in the same way adults can.

Which is why clients who invest on behalf of a child will no longer be charged fees for portfolios up to $10,000^.
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How super funds play the ratings game (Part 1)

Ferris wheel
 
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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Do you own your investments?

Blue fence and padlock
 
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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When is a good time to invest?

when-to-invest-banner

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 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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Can ETFs make the world a better place?

ETFs making the world a better place
 
ETFs are often considered ‘passive’ investments, but in recent years their issuers have become much more active when it comes to their voting rights.

As ETFs have become more popular, the big 3 issuers – Blackrock (iShares), Vanguard and State Street Global now own significant percentages of many large companies around the globe. These funds find themselves in a unusual position, their success depends on the returns of the companies they invest in, yet unlike active managers, index funds can’t sell to take a stand on particular issues.

ETF issuers are coming under more pressure to take action on corporate matters via their ‘proxy votes’.
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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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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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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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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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