ethical investing

Ethical Investing

We are used to thinking about the value of investment as measured by financial return. However, investing with an eye to environmental or social issues and ethical considerations has become more prominent.

Ethical investing has emerged as a response to investors’ will to combine ethical with financial considerations in investment decisions. It gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs.

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Home Loans 101: Part 2

For many Australians, purchasing a home is one of the biggest – and scariest – financial decisions they will make.

Previously I discussed considerations regarding how much to save and home loan approval criteria. In part 2 I look at how to select the best home loan that suits your personal circumstances.

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Home Loans 101: Part 1

For most Australians, choosing to purchase a home is one of the biggest financial decisions they will make. Home loans are an essential force in the real estate market, with few individuals able to afford a home without a mortgage.

Are you thinking about taking out a new home loan but have no idea where to start? Let’s go through some of the basics you should know before signing on the dotted line.

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Risk in Investing

What is the most I can lose on this investment? This is a question that almost every investor who has invested or is considering investing asks or should ask at some point in time.

When you invest, you’re exposed to different types of risk. Given how fundamental risk is to investments, many new investors assume that it is a well-defined and quantifiable idea. Unfortunately, it is not – there is no single measurement or scale on which you can measure risk.

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The Value of Checklists

“Avoidable failures continue to plague us in health care, government, the law, the financial industry – in almost every realm of organised activity. It is the simple checklist that can bring about striking improvements in a variety of fields.”

This quote is taken from The Checklist Manifesto by Atul Gawande, a book that argues we can do better by using the simple method of checklists.

In the increasing complexity of life, it has become increasingly important to use checklists – building a skyscraper, performing surgery, servicing a car, flying a plane, all these things have lower error rates when utilising a well-constructed checklist.

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Capital Allocation

One of the most important responsibilities of a company’s management team is capital allocation. The hallmark of an exceptional CEO are the returns generated for the shareholders of that company over the long term.

The book The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike details the wisdom of what makes a successful company, closely evaluating the performance of 8 outstanding companies and their leaders.

The 8 CEOs operated in different industries and markets and the returns made for shareholders over the long term were extraordinary. A common theme emerged – a strong focus on Capital Allocation.

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Long Term Returns from the Australian Equity Market

A recent publication of Australia’s investment risk and return data over the past 119 years showed 96 positive years compared with only 23 negative years. This roughly equates to 1 out of 5, with no more than two negative years in a row.

Sounds pretty good when considering a long -term investment strategy.

When I talk about the ‘long-term’, I am talking 7 plus years. However, I often have older clients who question whether they will be around in the long term to see their investment pay off.

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Allan Hanson | Brisbane Financial Advisor

What the HILDA survey reveals about Australian financial literacy

The Household, Income and Labour Dynamics in Australia (HILDA) Survey is Australia’s first national representative household-based longitudinal survey. Started in 2001 by the University of Melbourne, the HILDA Survey provides an ongoing picture of changing lives and social attitudes, as opposed to a cross-sectional snapshot or single point picture that most surveys give.

The survey tells the stories of the same group of Australians over the course of their lives. The survey now tracks more than 17,500 people in 9,500 households, asking about their household and family relationships, income and employment, and health and education.Continue reading

The tax system explained in beer

Oaktree’s Howard Marks recent newsletter (always worth a read) finished with a simplified example of a progressive tax system using the metaphor of beer.

While this example has been floating around for a while and used by many different people in different countries with progressive tax systems, I have altered the example to better reflect Australia’s tax system.

Like all illustrative examples, simplifying the issue means glossing over the complexities of the overall system, nevertheless it is interesting. I would like to emphasise here that the example below is a light hearted example of the tax system.Continue reading

Allan Hansen | Brisbane financial advisor

How is your super (really) going?

There has been a spotlight on Superannuation recently, with revelations of misbehaviour by retail fund managers coming to light as a result of the Banking Royal Commission.

ASIC (the Australian Securities and Investments Commission) is looking into how deals are struck between employers and super funds in Australia, following a year in which default superannuation arrangements became a point of focus.Continue reading