On January 3, 2009, the first bitcoins were created.
Ten years on the terms ‘bitcoin’ and ‘cryptocurrency’ are widely known. ‘How to buy bitcoin’ was the third most searched for ‘How to…’ phrase in Google in 2018. Indeed, there have certainly been miraculous stories of cryptocurrency catapulting individuals into millionaire status, however my perspective on this is that these are few and far between.
Crypto investments rarely end well.Continue reading
On 1 July, the RBA announced a record low cash rate of 1%, which brings mortgage rates to their lowest level in over half a century. The low rate also means your deposits in the bank will be earning less interest. Trying to secure a new term deposit over 2% is almost impossible.
Currently, the investment markets are predicting an 80% chance that the 1% rate will be cut to 0.75% at the next RBA meeting in October.
So, what do low interest rates mean for you and your financial goals?Continue reading
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.
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
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
Like in other areas of life, we see many cycles in the financial markets and the economy. Cyclical periods of borrowing – both literally and metaphorically speaking – can be observed in the economic world.Continue reading
I usually get asked the age-old question of “how much money will I need in retirement?”
Unfortunately like most important questions, the answer is ‘it depends’. Everyone is different, thus how much income a person needs or wants varies dramatically from person to person.
The two main things to consider are:
Many investors believe the value of seeing an Investment Advisor or Financial Planner is in the investment advice, such as choosing which funds to use or shares to buy.
Whilst this advice can make a difference and is an important part of the process, the greatest value is in planning to achieve core lifestyle goals and objectives.
Continue reading
I was recently asked to give an impromptu speech to share the words of wisdom I would give my 16-year old self.
My short speech was to explain the power of compounding.
It is an understanding I am trying to impart to my children of how compounding interest or returns work in your favour over time.
Of course, my children politely listen to me explain the power of compounding, roll their eyes and say, “Yes Daddy I understand.” I ask questions like, “Do you want me to buy that lego set now or a car when you turn 50?” I am not sure those questions help, turning 18 is an eternity when you are young.
Warren Buffet, the world’s third richest man, certainly understands the effect of compounding. As a child he gained an understanding of what compounding could do and it has shaped his whole life.
It is one thing to understand compound interest but applying it is where the magic happens. The sooner you start the greater the result. Continue reading
