A quarter of a century ago, a young(ish) buck named Paul Clitheroe parlayed his success with the TV show Money (three million regular viewers!) into print.
Money, the magazine you now hold in your hands, was born in July 1999. This month we celebrate our silver milestone with a personal piece by Paul on his own financial and life journey. After all, for 25 years he has dispensed Paul’s Verdict – we thought it was timely to turn the spotlight on him. It’s a beautiful appraisal of a life well lived, demonstrating the importance of understanding personal finance to prosper financially, emotionally and physically.
Our beloved Family Money columnist, Susan Hely, shares the hard-won money lessons she wants to have with her EDITOR’S NOTE
children (if only they listened). My personal favourite is simply to be aware of your consumption. That old trope about forgoing smashed avo on toast to save for a house is an exaggeration, but it does hold a fundamental truth. Be intentional about your spending and reaching your goal will be so much easier.
We have also snuck in three suggestions for red wines to cellar now so they will be fully ripe and ready in 25 years. Because we intend to be around when you pop the cork to celebrate your financial freedom.
PS: The results of our annual Consumer Finance Awards are out! Turn to pages 54-78 for the winners.
Michelle Baltazar, Editor-in-chief
WE’D LOVE TO HEAR FROM YOU
Tell us what you like about Money, or let us know when we get it wrong. Share how the magazine has helped you, stories you’d like to see, and what you’re facing on your own personal finance journey. If your letter is chosen as our Letter of the Month, you’ll receive a 12-month subscription to Money magazine.
Email: money@moneymag.com.au or write to: Money, Level 7, 55 Clarence Street, Sydney NSW 2000. Remember to include your name, address and phone number. Letters may be edited for clarity or space. Because of the high number of letters received, no personal replies are possible.
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YOUR SAY
Letter of the month
Urgent need to improve financial literacy
I really am fond of Money magazine. It gives insightful news and views, interviews and strategies for achieving financial independence and making the right investment decisions. My favourite is the Ask Paul column.
As a father of three children, I agree with Michelle Baltazar that there is a dearth of financial literacy in Australia and (for the sake of our future generations) individual schools should invite experts in for short sessions to fill in the gaps. I wish such a magazine could be placed in schools to educate children about saving and investing. Good money management will certainly help survival and bring less stress.
Munir
Under the influence
Loved the May issue with its generous focus on money psychology and the rise of financial influencers. The rise of ‘pink money’ aimed at women in my daily feeds makes me particularly angry, as it taps into the fear of women of all ages about their financial wellbeing and literacy. I loved that you gave readers a clear, practical way to assess the good from the bad. Bravo, Money, for keeping us in the know.
Susan
Scarce land is a problem
It was pleasing to read Tom Watson’s piece (‘Building better foundations’, March) . We keep hearing that the dream of home ownership is shattered and there is the need to build more housing, but this is hampered by a lack of tradespeople and supply chain issues, among other things.
However, what never seems to be highlighted enough is the question of where we are going to find the land in commutable distance from jobs to build these homes. If you are lucky enough to find a block of land in the capital cities, you will pay from $700,000 to $1 million for the plot. And how can that lead to affordable housing?
Ian
From our online readers…
Landlords: the good and bad
Jordan van den Berg (Hot Seat, May) makes all landlords sound like complete devils. This is far from the truth. Landlords take all the risk when putting in tenants who may trash the place and not pay rent. If we had no landlords and all us mum and dad investors sold our properties and invested in the sharemarket, where would the renters sleep? This story was so one-sided from someone who lives off the taxpayer dollar in a cushy government job, stirring up trouble with his unionist mates.
Annette
Taking only the tenant’s side is unfair. There are two types of landlords and two types of tenants. People without big incomes can build some wealth through buying the right properties, but the wrong properties can be a nightmare. Some landlords (not us) can forget their obligations to the tenant. They are often wealthy and don’t give a stuff. From experience, many tenants are also a nightmare.
Let’s face it, some people are untrustworthy whether they are tenants or landlords. It’s hard work putting up with
some tenants, and if you don’t think that you have obviously have never tried it.
Robert
Why is being a landlord the only service or product supplier in Australia who is allowed to provide an inferior, defective, rundown, worn-out, sometimes dangerous product, with barely any regulation or oversight, for a premium price, and then increase that price on a whim, also unregulated? And when the consumer complains about an inferior or defective product or service, the producer (landlord) is allowed to just snatch the product back, without repercussions.
David
I’m a landlord and I try to be a good one when it comes to property condition and maintenance, as well as charging a fair rent. I get it that not all landlords are the same and that there is a power imbalance. Government should enforce laws and the failure to do this results in the need for people to have a voice; I don’t have an issue with this. I assume most landlords, like most drivers, are okay; for everyone who isn’t, there’s Shitrentals. If you’re a landlord, do the right thing and you won’t have an issue.
James
POINT OF VIEW
‘What’s a new product, service or innovation that has impressed you?’
Contributor
Chat GPT-4o’s new voice assistant. Where other companies like Google have been super careful not to make their AI bots sound human, Open AI has gone completely the other way, making GPT-4o flirt and sound emotional and completely likeable. Scary, but also massively impressive. Harks back to the movie Her, a sci-fi cautionary tale about the pitfalls of an AI that people will fall in love with. This is not sci-fi; it’s just been released.
Read Phil’s column on crypto’s emotional ride on page 48.
THE MONEY TEAM
EDITORIAL
Founder & editorial adviser
Paul Clitheroe
Editor-in-chief
Michelle Baltazar
michelle.baltazar@ moneymag.com.au
Managing editor
Vanessa Walker
vanessa.walker@ moneymag.com.au
Art director
Ann Loveday
Contributor
In an effort to track my spending – in particular those little daily amounts that decimate my bank balance by the end of every month – I downloaded the Crunchr app. Designed as a receipt-tracking tool, it also lets you add in costs for items you don’t have receipts for (read: serious daily coffee habit), breaking down your spending by category, week, month and year. It’s been an eye-opener. I’ve now ditched the spreadsheets and do all my budgeting on my phone.
Read Georgia’s tips for boosting your home’s value, page 80.
Designer
David Matthews
Senior sub-editors
Bob Christensen, Debra Duncan
Senior journalist
Tom Watson
Digital editor
Sharyn McCowen
Multimedia producer
Michael Lynch
CONTRIBUTORS
Mark Chapman, Peter Dockrill, Nikki Edwards, Peter Forrestal, Susan Hely,
Senior writer
I can’t stress how much I love my banking app’s round-up feature. Every purchase I make is rounded up to the nearest dollar and transferred into the savings account I use to build up funds for travelling. It’s literally small change, but it all adds up. I average $31 each month in round-ups, which comes out at $372 a year. Better still, my bank recently added a feature that lets me automatically direct the interest I earn on other savers towards that travel account.
Read Tom’s cover story on cryptocurrency, page 34.
Georgia Madden, Anthony O’Brien, Marcus Padley, Vita Palestrant, Scott Phillips, Zach Riaz, Annette Sampson, Phil Slade, Gaurav Sodhi, Pam Walkley, Graham Witcomb
PHOTOGRAPHS/ ILLUSTRATIONS
Getty Images, John Tiedemann, Reg Lynch
PRE-PRESS
Peter Suchecki
Contributor
I’m looking forward to using a new feature of my Ubank app, Spotted Bills, to help me budget – something I’m not good at. Spotted Bills will automatically search my accounts to find recurring payments to add to my Ubank bill planner. I can also connect my eligible external bank accounts so it can spot bills across them as well. The more expenses I add, the better I’ll know how much to set aside for expenses and what I have left to play with.
Read Pam’s advice for cracking the housing market, page 82.
Taking time to understand the symptoms, diagnose and treat a problem, then review the results, could be a healthier way forward for policy makers.
Housing under the microscope
In recent weeks, both sides of politics have proposed policy changes that, if implemented, would significantly impact immigration rates, population growth, international student numbers, housing construction and overall economic growth in coming years. At the heart of these decisions is the housing crisis.
In the 2024 Federal budget, the government signalled an increase in: funding for new housing construction; rental assistance; regulation to increase student accommodation and fee-free TAFE places for those studying trades; and it anticipates an easing in net overseas migration in the next financial year.
The Opposition went further, committing to cut the permanent migration intake by 25% for the next two years and to ban foreign investors
and temporary residents from buying established housing for the next two years.
Are these policy decisions sensible or are they potentially over-reactions to shorter-term pressures that may have longer-term unintended consequences?
The medical model
The medical model is a useful construct for analysing economic policy issues. The model mirrors the steps a health professional takes when a patient presents with an illness: 1) consider the symptoms; 2) diagnose the illness given the understanding of the symptoms; 3) prescribe a course of treatment; and 4) review the results of the treatment. If the diagnosis was correct, then the treatment should result in the patient’s health improving.
It’s a simple model and what I like is the diagnosis step, which seeks to understand the underlying reasons for the symptoms, before beginning treatment. Too often decision makers jump straight from the symptoms to the treatment. If the reasons for the symptoms are not well understood, it can result in poor policy decisions, and not only fail to resolve the initial problem but may have negative consequences.
Symptom 1 The housing crisis
Numerous indicators of the housing sector reveal significant pressures have arisen in recent years. Nationwide house prices have risen by 40% to 45% since immediately before Covid. Various authorities report around a 40% increase in rents over the same period, while SQM Research estimates a near record low rental vacancy rate of 1.1% in April 2024.
Symptom 2 Recent population growth
Australia’s population has increased by just over 1.1 million (4.3%) over the two years to the third quarter of 2023. The working age population has increased by 1.2 million (5.7%) over the 24 months to April 2024. These are the fastest two-year rates of growth these sectors have experienced since the Australian Bureau of Statistics started producing quarterly population and monthly labour force data. Previous very strong rates of population growth have occurred in times of strong economic growth and tight labour markets.
Diagnosis 1 The housing crisis
Whenever I’m asked how we could solve housing affordability or the housing crisis, I offer three perspectives. First, if there was a simple solution, it would have been solved long ago. Second, property in Sydney seemed expensive when I moved here in the mid-1980s. And third, at its heart, it’s a supply problem – we are simply not building enough houses to meet the population’s demand. That demand however has numerous aspects including immigration and foreign students, but also encompasses average household size (this dropped significantly during Covid and has yet to reverse); sea change and tree change requirements for second properties; the rise of Airbnb and even divorce rates and the ageing population. We can also add into the mix, taxation (negative gearing and the capital gains tax discount), zoning, land release and planning laws, infrastructure spending, labour availability and the failure of building companies.
Diagnosis 2 Population growth
The chart shows two important aspects of Australia’s current population growth: i) the current strong growth period follows an extremely slow period of growth experienced during the pandemic when the international border was closed; and (ii) the population hasn’t yet regained its pre-Covid trend (though the latest data is from three quarters ago). In formulating policy about either housing or immigration, it would be important to understand to what extent recent growth simply reflects a catch up after that slow period and should not be extrapolated or to what extent it reflects a permanent shift higher, together with the sources of that recent very strong population growth.
When we dig behind the recent increase in population, we find that foreign student numbers, while recovering rapidly in the third quarter in 2023 had not quite regained pre-Covid levels or trends. The categories that are above pre-Covid levels include those on temporary work visas and temporary other visas. There are also fewer
residents leaving Australia than before Covid. These are all trends that often occur when the Australian labour market is tight.
Bringing it all together
The vacancy rate is a great measure for assessing the overall position of the housing market as it effectively measures the net of all the demand and supply influences. At a seasonally adjusted 1.1% in April (first quarter is 1.2%), it’s at its lowest level in almost 20 years. Very interestingly, much of the drop occurred before or shortly after the border reopened, suggesting a significant part of the current pressure reflects the increased demand for space that occurred during the pandemic due to working from home.
Easing the pressure
Fixing the housing crisis is not likely to be simple or achieved in a short period of time, given the many complex factors underpinning the current situation. Both sides of politics need to be wary of knee-jerk reactions. The government’s longer-term plans to increase the supply of housing and increase student accommodation seem sensible, while the Opposition’s proposed reductions in migration numbers might alleviate some near-term pressures. However, it doesn’t seem appropriate to impose a significant part of the short-term adjustment on the education sector without further consideration, given changed preferences for housing during the pandemic are important in the current extremes and these could partially reverse, as could other pressures as the labour market eases. n
(number of people)
The medical model is a useful construct for analysing economic policy issues.
Border reopens:
Source: SQM Research, Macobond
Ivan Colhoun is an independent economist who has worked in chief economist roles for Qantas, NAB, ANZ and Deutsche Bank. He has also consulted for SEEK, Virgin Australia and IATA.
Pre-Covid trend Long-run
NEWS & VIEWS
Buy now, pay later users to be given greater protection
Whether you want to call them innovators, disruptors or something else, there’s no doubt that buy now, pay later (BNPL) players have shaken up the payments landscape with their short-term, instalment-based finance, which particularly appeals to younger Australians.
But almost 10 years on from the founding of what is without a doubt Australia’s most well-known BNPL provider, Afterpay, the industry is finally being ushered under the credit umbrella.
In early June, the Federal government introduced legislation that will see BNPL services such as Afterpay, Klarna and Zip regulated as a form of consumer credit, joining more traditional options such as credit cards and personal loans under the Consumer Credit Protection Act.
The government admits that it’s attempting to strike a fine balance here. On the one hand
ON MY MIND
Tuesday, July 2
RBA meeting minutes
Thursday, July 4
Balance of trade
Thursday, July 11
Westpac consumer confidence
NAB business confidence
Friday, July 18 Unemployment rate
it acknowledges the need to strengthen protections for users against the potential harms of BNPL, but it still wants these kinds of services to be competitive in the payments space.
From a practical perspective, the reforms will mean that customers will need to pass income and credit checks before they’re given the green light to start spending.
They’ll also be able to make use of more expansive dispute resolution and hardship provisions, such as the ones that already exist for customers who use other forms of credit.
Paying for essentials
Financial advocacy groups claim that these safeguards are well overdue given the troubles that some Australians have experienced with BNPL.
In a 2023 survey of more than 500 financial counsellors undertaken by Financial
Counselling Australia, counsellors noted that a ‘concerning’ number of clients were using BNPL to pay for essential items, while 95% of those surveyed reported that BNPL debts were leaving their clients worse off.
For their part, providers argue that the invention of BNPL has helped Australians reduce the amount of money they would have paid to use other forms of credit. For example, research commissioned by Afterpay found that its users would have paid $127 million in fees and interest in 2023 alone if they’d used a credit card for their purchases rather than Afterpay.
And it’s here that the battle for hearts, minds and retail dollars may continue to play out in the years to come: BNPL versus credit cards, at least, when it comes to credit. After all, debit cards are by far the most popular payment mechanism today.
Tom Watson
How coffee drinkers can help charities
The latest findings from TPG Telecom Foundation’s Philanthropy Pulse Survey paint a challenging picture for charities.
Amid rising living costs, 39% of Australians have cut back on charitable donations to manage household bills. Alarmingly, donation cuts come before people cut back on coffee and the gym. This trend puts significant pressure on charities, which are already struggling during the cost-ofliving crisis. Families facing disadvantage are often the first to feel the pinch and they need help more than ever. Infoxchange, one of the TPG Telecom Foundation’s charity partners, runs the Ask Izzy
digital platform, a vital service connecting people with housing, meals and financial support. It expects the demand for assistance to continue growing. What is also clear from the foundation’s research is that Australians love coffee, with 75% of adults buying at least one cup daily. Imagine if every coffee drinker gave up just one cup a week and gave that money to charity? This could result in an extra $79.1 million donated to charities each week. By making small sacrifices such as this, we can collectively make a significant difference in these tough times.
Jonathan Kirkham heads the TPG Telecom Foundation, which aims to improve the wellbeing of communities in need.
SCAMWATCH
Watch out for these super rip-offs
As more people retire, super scams are increasing. They tend to come in three varieties. Here’s what you need to know. Phishing: Often a scammer will pretend to be from a financial services company such as a bank or super fund. They request your personal details, often through an email with a link. When you click on that link, they will be able to access your computer. They create a super account in your name with another fund, then transfer funds to this account before withdrawing the money. Open an SMSF: A scammer may have created a trusting relationship with you.
They encourage you to transfer your super into a self-managed fund or bank account run by them so they can make your money ‘grow’. They then withdraw your money. Early withdrawal: Someone offers to access your super early, although this may not satisfy a condition of release. They provide the genuine documents to facilitate this as well as request your identity documents. They tell you that you can access the funds for personal use, such as to pay for a holiday house. This process is illegal, and you will end up paying extra tax and penalties, plus potentially lose your savings. Vanessa Walker
MARKCHAP MANTAXTIP
Airbnb hosts can get a nasty shock when they sell
One of the success stories of the sharing economy has been Airbnb, the organisation that matches private accommodation to potential renters. But letting part of your home through Airbnb (or Stayz, or any similar platform) can deliver a nasty, and little understood, sting in the tail when it comes to tax.
Broadly, if you own an investment property, you will pay capital gains tax (CGT) when you dispose of it based on the profit you make on sale. This, in simple terms, is the difference between the amount you sold it for and the amount you paid for it. With property prices having risen rapidly in recent years, it is easy to make substantial profits on sale and equally easy to forget that the tax office will want a slice of those profits.
In most cases, when you sell your private residence, the sale is free of CGT. However, if you have used part of the property for income-earning activities – such as renting it out through Airbnb – part of the gain will be taxable. This might mean that you have to do a tricky calculation on sale to work out how much of the gain is taxable and how much is covered by the main residence exemption.
This is an area that catches out many Airbnb hosts, who may be completely unaware of the CGT implications of renting out part of their home.
Given the potentially long time lag between starting to rent out the property and selling it, CGT can be a costly trap for those who haven’t factored it into their costbenefit analysis when they first decided to make part of the property available for rent.
Director of tax communications at H&R Block. mchapman@hrblock.com.au
NEWS & VIEWS
BOOK OF THE MONTH
WPROPERTY INVESTING ROADMAP
by Damian Collins (Damian Collins, $32.95)
hen it comes to this nation’s favourite investment –property – one of Australia’s most respected experts, Damian Collins, is best placed to explain how to reap the rewards. He guides readers through property-related choices, from how to buy your first rental property to strategies such as leveraging equity, property development and diversifying a portfolio through commercial property.
As the former president of the Real Estate Institute of Western Australia and a director of the Real Estate Institute of Australia, Collins has plenty of sound advice to offer.
Ten readers can win a copy. In 25 words or less, share a tip that has helped you get into the property market. Enter online at moneymag. com.au/win or send entries to Money, Level 7, 55 Clarence Street, Sydney, NSW, 2000. Entries open on June 24, 2024 and close on July 31, 2024.
PODCAST OF THE MONTH
FRIENDS WITH MONEY
#151: THE EMOTIONAL ROLLERCOASTER OF YOUR FINANCES
Guest: Dawn Thomas
Hosted by: Joanna Tovia
Most of us have experienced moments when our emotions get the better of us, but did you know that feelings can get in the way of how well we manage our money? The money lessons we learned during childhood and the feelings we experience when we think or talk about money, such as guilt, shame and apathy, go a long way to explaining our moneymanagement style.
Financial adviser Dawn Thomas from The Wealth Designers talks about how emotions get in the way of sound financial management and explains what a healthy relationship with money looks like.
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SNAPSHOT Setting their sights on retirement
NEWS BITES
Property company LongView has developed a shared equity platform, Buying Boost, to help aspiring homeowners who can’t save enough for a deposit. “Buying Boost was created to help people who are ready and willing to buy a home, but through a variety of circumstances can’t come up with all the money they need,” says chief executive Evan Thornley. Prime candidates are divorced people who, due to financial separation, are struggling to purchase a home.
When times are tough, we tend to treat ourselves and, if Finder survey results are anything to go by, Aussies are in full treat mode. We are spending $47 billion a year on impulse purchases such as chocolate and beauty products –that’s roughly $2278 each per year or $44 every week.
TaxTank is a property management software platform designed so individuals can take charge of their finances and make informed decisions at tax time. The software simplifies tax management by allowing you to use live bank feeds to easily track your income, expenses and investments in a single hub without juggling spreadsheets or wading through multiple records.
TO READ MORE DAILY NEWS GO TO moneymag.com.au
Average age workers aged 45 years and over intended to retire by selected industry
& fishing
Source: ABS SNAPSHOT Heading...?
Households reluctant to seek help
As households continue to struggle with cost-of-living pressures, new research by ASIC’s Moneysmart reveals that nearly half (47%) of Australians with personal loans or other debts have struggled to make their repayments over the past year.
ASIC also found that a majority of people aren’t aware of the support that lenders are required to provide customers who are experiencing financial hardship. For example, lenders may be able to temporarily alter a customer’s loan repayments or set up a payment plan.
Even with that knowledge, 30% of Australians say they wouldn’t reach out for hardship support, citing concerns about the potential long-term cost of seeking help and impact on their credit score.
“It is concerning that people would rather sell their personal belongings or get a second job than seek financial hardship assistance,” says ASIC commissioner Alan Kirkland.
“The message for Australians experiencing financial stress is that banks or lenders have a responsibility to support customers. If you are worried about being
able to make your repayments, you’re entitled to ask your bank or lender for help.”
Encouragingly, ASIC did find that nearly two-thirds (65%) of borrowers who sought support from their lender felt more positive for doing so.
ASIC encourages anyone who is unhappy with the hardship support they receive to contact their lender or to lodge a complaint with the Australian Financial Complaints Authority (AFCA).
When loyalty is worth $407 a year
Just how rewarding are loyalty programs? It’s a question that many inquisitive consumers will have asked and, according to new research by ING, there’s an answer.
After crunching the numbers, the bank found that loyalty program members had saved a collective $7.1 billion over the past 12 months. That works out at roughly $407 per member.
Queenslanders were found to be saving the most from loyalty programs at $426.10 per person on average, while Victorians were saving the least at $383.43 per person.
ING also found that half of existing loyalty program members were more likely to sign up to a new program as a result of higher living costs.
“The cost of living and price inflation for everyday essentials are making Aussies much more savvy on how and where they spend their hard-earned dollars,” says Matt Bowen, ING’s head of consumer and market insights.
To extract the most value for money out of these programs, Bowen recommends opting for digital loyalty programs that allow
customers to automatically earn points or rewards, and suggests spending points on a regular basis in case their value is watered down over time.
Which programs do Aussies think offer the most value?
• Fashion and accessories: Kmart
• Food and beverage: McDonald’s
• Grocery or supermarket: Woolworths
• Pharmaceutical and beauty: Priceline
• Travel: Qantas
Source: ING Bank Australia
HOUSE PRICES
Migration drives Brisbane surge
Another month of strong property price growth has propelled Brisbane to second spot on the list of most expensive capital cities for the first time since 1997.
The median value of a dwelling in Brisbane rose 1.4% to $843,231 in May, according to CoreLogic’s Home Value Index. The change means that Brisbane has leapfrogged Canberra ($840,100), though it remains well behind Sydney ($1,156,020).
Since the start of the Covid pandemic in early 2020, CoreLogic found that Brisbane home values (up 59.8%) have increased at almost double the rate of those in Canberra (up 31.8%).
One of the drivers behind Brisbane price growth has been migration-driven demand – much of it from interstate – combined with supply problems.
Capital city median home values
Sydney
$1,156,020
Brisbane $843,231
Canberra
Melbourne
$840,100
$780,437
Adelaide $757,448
Perth $736,649
Hobart
$655,170
Darwin $502,120
Source: CoreLogic, May 2024
Tim Lawless, CoreLogic’s research director, says Brisbane isn’t the only city where supply issues have pushed up prices.
“The number of properties available for sale in Perth and Adelaide remains more than 40% below the five-year average for this time of the year, while Brisbane listings are 34% below average.
“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year. Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”
10 quick and easy ways to add value, page 80.
Rooftop homes could ease the shortage
Australia has typically looked to the fringes of its cities to build new homes, but as housing supply shortfalls have intensified that focus has turned towards infilling existing suburbs with higher-density properties, such as townhouses and smaller unit blocks.
Could part of the solution be creating more rooftop homes by way of ‘airspace development’ on top of existing buildings?
According to Warren Livesey, founder of the Association of Rooftop and Airspace Development, there are roughly 100 million square metres on top of strata and commercial buildings
that could be used for dwellings –space that cities such as London, New York and Toronto have been utilising for years.
“The present housing solution is to knock buildings down and rebuild bigger to create density.
Airspace development is typically only one or two additional lightweight levels and creates gentle density,” he says.
And though it’s obviously not without hurdles, such as obtaining strata and council approval, Livesey says there are benefits for owners and buyers.
“Existing owners can replace an old rooftop with a new rooftop home, which will generate the funds to repair and rejuvenate their building. Potential buyers will get prime locations, access to light, views and locations that would normally not be available.”
The less-travelled path to home ownership, page 82.
TAX CUTS
Big rewards from extra income
From July 1, taxpayers will begin to notice a change in their payslips as the reworked stage three tax cuts take effect.
For some, that extra money will go towards bills and everyday expenses. Others may be looking to invest it. So, how much could that money generate over time?
The online investment platform Sharesies crunched the numbers and found that a regular investment in the sharemarket could grow substantially (based on the average rate of return generated by the S&P/ ASX 200) over the years.
“Australians who earn the average wage (about $90,000 a year) will get $160 back each month in tax cuts,” says Brendan Doggett, Australian country manager at Sharesies.
“With dollar-cost averaging, this extra cash can be easily added to your ongoing investment strategy with little effort and result in high rewards in the long run. If invested every month, $160 could turn into $11,396 in five years’ time and $31,493 in 10 years’ time, thanks to compound interest.”
Some people may be looking for a lower-risk option, though. Research by NAB found that one in three Australians plans to stash the extra income they get from the tax cuts into a savings account.
Based on the same figure of $160 each month, but this time put into a savings account with a 4.50%pa interest rate instead of the sharemarket, that money would grow to $10,743 over five years or $24,192 over 10 years.
$72,663 needed to retire ‘comfortably’
The amount of money needed to fund retirement has edged up again, according to the latest figures from the Association of Superannuation Funds of Australia (ASFA).
$690K
The super balance needed for a couple at age 67 to fund a comfortable retirement.
Source: ASFA
Over the first three months of the year, ASFA’s ‘comfortable’ retirement standard rose 0.7% to $72,663 a year for couples and $51,630pa for singles.
The figure takes into account the kind of budget that retirees who are around 65 and own their home would need to fund essential expenses, as well as private health insurance, leisure activities and some
international and domestic travel. The money needed to fund a more modest retirement also rose over the quarter to $51,630 a year
for couples and $32,915pa for singles. Higher costs for vehicle, home and contents insurance were among the leading contributors to the latest increases, as were rising medical costs.
However, ASFA’s chief executive, Mary Delahunty, noted that some areas were improving.
“Retirees continue to feel considerable cost-of-living pressure on their household budgets. Fortunately, in the past three months, we’ve seen the pace of price rises ease somewhat in key spending categories, namely food and fuel.”
Benefits of insurance in super, page 84.
IStruggling countries at a turning point
nvestors who are considering an emerging markets play could be in for sunnier days ahead, according to the fund manager Maple-Brown Abbott.
John Moorhead, Maple-Brown Abbott’s head of global emerging markets, says that after a disappointing run in recent years, the outlook for some emerging markets is rosier.
“The past decade was relatively challenging for any market outside the US; the next decade is likely to be better for emerging markets.”
Some words just go well with a morning coffee, and two of them are ‘strategic review’.
Aristocrat has outlined plans for a strategic review – code for a possible sale – of its casual and mid-core gaming segments, Big Fish Games and Plarium Global. We consider these the weakest areas of the business, so we would be glad to see them off the books.
Management said that while no firm decisions have been made, it intends to focus on the ‘clear opportunities’ it sees in regulated gaming content, which is where most of the business’ competitive advantages lie.
This follows the $1.8 billion acquisition of NeoGames in April. Aristocrat’s Anaxi segment will be
The firm highlights Eastern Europe and Latin America as two regions with the most potential, while Hungary, Argentina, Greece, Egypt and the Czech Republic are among the most promising individual markets.
This is, in part, thanks to the way some emerging markets have positioned themselves, relative to developed markets, in tackling inflation. “Select emerging markets are well ahead of developed markets in raising interest rates and they are also ahead of the curve in fighting inflation,” says Moorhead.
“We think we’ll see capital flows pick up in key markets, which will likely strengthen their currencies and help to lower inflation further. We could potentially then see more rate cuts, which would support local economies, corporate earnings growth and sharemarkets.”
India, which has strong corporate and economic fundamentals, has enjoyed a stellar run of late. But Moorhead says the firm’s position on India is mixed because of its high sharemarket valuations.
HOLD Aristocrat (ALL)
Intelligent Investor Graham Witcomb
joined by the company’s Interactive segment to form a new division called Aristocrat Interactive.
All three of Aristocrat’s divisions – Gaming, Pixel United and Interactive – performed well in the six months to March. The core gaming operation was the highlight, with revenue up 8% and operating profit up 13%. As well as a 20%
boost to the dividend, we were also pleased to see the company extend its stock buyback to February 2025 with an additional $350 million of expected repurchases.
MORE SHARES STORIES ON P88-93
With Aristocrat now above our recommended buy price of $40, we’re downgrading to HOLD.
Graham Witcomb is an analyst at Intelligent Investor.
STORY TOM WATSON
Life in the extra-fast lane
Some families are united by a passion across generations. For some, it’s a love of music or art. For others, it’s volunteering in the community or supporting a particular sports team. For Matt Campbell and his family, it’s motor racing.
Growing up in the country town of Warwick, two hours south-west of Brisbane near the Queensland-NSW border, motorsport was a big part of his life. Thankfully for Campbell, that wasn’t a bad thing.
“Fortunately enough, my family had a large involvement with my local racetrack, Morgan Park Raceway. They didn’t own it, but it was run by the Warwick District Sporting Car Club, which they were heavily involved in.
“My grandfather was the president for many years, my aunt was the treasurer and my mum and my grandmother were also involved. It was a big family thing, that’s for sure. So that’s how I got the bug and got into racing.”
Even early on it was clear that Campbell was blessed with a healthy dose of passion and skill for racing. But, like cracking the big time in any sport, the journey to
Matt Campbell
Porsche factory racing driver Matt Campbell, 29, doesn’t come from a wealthy family. So, he came up with a unique way to fund his career in this highly competitive sport. Matt (pictured above early in his motorsport journey) currently lives in London.
becoming a professional driver is not an easy one. Perhaps even more so in motorsport because of the additional hurdle involved: the cost.
This reality wasn’t lost on Campbell. In fact, he says it’s part of the reason why it
took so long for him to come to terms with the idea that he really might be able to forge a career in motorsport.
“When I was younger, I was quite realistic about the time and the financial cost that would be required to make it to the professional level. So, I was just doing it because I loved the sport and obviously seeing what I could do and where I could end up.
“It wasn’t until about 2016, when I was around 21, that it really become clear I could make something of it.”
Outside the box
It can easily take hundreds of thousands, if not millions, of dollars to fund the travel, competition, training and other needs required of budding drivers. That’s why many Formula 1 drivers, for instance, come from affluent families.
Though they provided an incredible amount of support during the early stages of his career, Campbell’s family weren’t among the ultra-wealthy. So, he needed to think outside the box when it came to funding his dream.
“Basically, in Australia you’ve got a couple of different routes to go down, like Super2 or the Carrera Cup, but to do
either of those championships the financial costs are quite high.
“So, we had to try and do something a little different to be able to raise the budget, while also thinking about the years ahead. So, essentially, Andy McElrea from McElrea Racing – the team I was with at the time – came up with the idea of an equity program.”
That idea became a reality in the form of Matt Campbell Racing – Campbell’s own company in which a number of
initial supporters purchased a small stake. As Campbell explains, they were essentially helping to fund his career in exchange for a return on his future earnings.
“The idea was that I would use the money from the units purchased to be able to fund my racing. And then, if and when I was able to make a living through motorsport, my partners would obviously get a return on the investment they had made. So, a little bit of a different
structure, and something that hadn’t been done for a very long time in motorsports.”
Reaching top gear
For Campbell and his investors, the strategy seems to have paid off.
After tasting success in the Carrera Cup in Australia, Campbell moved to Stuttgart, Germany, in 2017 to become a factory driver for Porsche. Simply put, that means he’s sponsored by Porsche to drive competitively using its cars.
INTERVIEW
Test of endurance... from top, the Penske Motorsport Porsche 963 at the 12 Hours of Sebring in the US in March; the Penske team at Daytona in the US in January; Campbell and his fellow drivers celebrate victory at the Bathurst 12 Hour in February.
“I’m obviously used to living in Europe now, but when I left Australia in 2017 I literally had a bag and a boarding pass – that was it.”
In the years since, he has made a name for himself while moving up the ladder from a junior to a works driver at Porsche, amassing outright victories in numerous races as well as some major class wins in the World Endurance Championship.
So far, though, 2024 is proving to be a special year in Campbell’s career. Not that he sells it. For someone who makes a living racing cars that would turn heads anywhere, he’s infinitely modest.
“The start of this year has been a big highlight. I really hit the ground running with a win at Daytona in January and then took out the Bathurst 12 Hour back home in February. It’s also been a strong start in the World Endurance Championship with a couple of pole positions now.”
Both wins are a big deal. Putting aside the satisfaction of a home victory at the Bathurst 12 Hour, an overall win at the Daytona 24 Hour is one of the biggest coups in endurance racing. And one that comes with a special memento.
“Something a little bit different compared to a lot of other races is that you actually win a Rolex Daytona for class victories or the overall,” says Campbell.
“I’ve been fortunate enough to win that race twice now – once in class in 2022 and then this year in overall. So, I’m pretty lucky to be able to have a couple of Rolex Daytonas hidden away because they’re a very special and unique piece in the world of motorsport. It’s not often you get something like that.”
Life on the road
Being a young, successful athlete based in Europe, travelling the world and driving Porsches for a living will sound like a dream job to many. And for Campbell it is.
That doesn’t mean it isn’t hard work, though. Endurance racing is a gruelling sport, mentally and physically, and requires incredible concentration from drivers over the hours and hours they spend behind the wheel.
Outside of races, there’s testing, preparing for races and all the travel involved. It’s a life that doesn’t leave Campbell with a whole lot of downtime.
“I feel like it’s always different. Being in motorsport, no two days are the same,” he says.
“We spend a lot of time on the road, though. So, a lot of flights each year, a lot of events, and if you get a couple of days off in between you’re quite lucky.”
If his busy schedule needed ramming home any further, our interview took place while he was in the back of an Uber in London on the way to the airport for his latest flight – just one of many so far this year.
“Over the past couple of months, I started off in America then followed up in Australia. I was in Belgium last week racing, then a couple of days before that I was in Germany. We’ve had testing in Spain, testing and racing in Italy and also racing in Qatar. So, yeah, it’s been a very busy start to the year.”
While Campbell’s globetrotting could make a travel influencer envious, it’s taken years of dedication and hard work to get to the point he’s now reached – a journey that has largely meant he’s been a long way from home and family.
“I’m obviously used to living in Europe now, but when I left Australia in 2017 I literally had a bag and a boarding pass – that was it.”
Even with overall wins in Daytona and Bathurst already under his belt this year, Campbell’s clearly not satisfied yet. Not when he’s got another big race to prepare for – and not just any race.
Looming large on his schedule when we talked was a trip to north-western France to challenge for what is without a doubt endurance racing’s most coveted prize: an overall victory at the 24 Hours of Le Mans.
“The Le Mans 24 Hour is more or less the Super Bowl of our sport in sports car endurance racing. I think this year’s race sold out in about two days, so there’ll be a huge amount of people there, which will
be really cool. I’ve been lucky enough to be able to be on the podium and win that event before in class, but this year will be something new for me racing overall. So, it’s really exciting and it’s something very special.”
And among the thousands of spectators in the Le Mans crowd this year there will be a few very familiar faces cheering Campbell on.
“I’ll have my mum and aunt there as well as my girlfriend, which will be really cool. It’s not often that my mum is able to get over to watch me, so obviously having her here this year at Le Mans will be pretty special.”
Le Mans – which took place in mid-June after Money went to the printers – may be a world away from Morgan Park Raceway in Warwick, but the presence of his mum and aunt always serves as a reminder to Campbell of how far he’s come and, ultimately, just how important his family have been to his career and success.
“I’m very grateful to my family. In the end, they’re the reason that I’m in this position. They risked a hell of a lot to give me the opportunity to try and see what I could do in motorsports.
“So, I’m obviously really happy that it’s paid off and I’m forever grateful to them. It means a lot to have people like that around you in life.” n
Flying the flags... Matt Campbell (right) and teammates Josef Newgarden (US), Dane Cameron (US) and Felipe Nasr (Brazil) celebrate at Daytona.
ASK PAUL
At 32, Nick wants to retire early with an income from his investments.
How to
QNeed Paul’s help?
Send your questions to:
Ask Paul, Money magazine, Level 7, 55 Clarence Street, Sydney NSW 2000 or money@ moneymag.com.au.
Sorry, but Paul can’t personally answer your questions other than in the Q&A column. By submitting your question to Money, you consent to having your question and the response you receive from Paul published in the print and digital edition of Money
be debt free in 10 years
I am 32 and chasing a debt-free future ASAP. My goal is to be debt free by my early 40s. I own a house worth $675,000 with $330,000 owing (this is my only debt), $116,000 in cash (mortgage offset), a $85,000 share portfolio ($1000 monthly deposits) and $225,000 in super. What do you think the best approach to achieving this goal would be, while also creating accessible income to facilitate early retirement before being able to access superannuation?
You have set yourself a realistic challenge here, Nick. We’ll allow for the offset account, so your mortgage is effectively $114,000. The good news is that gives you equity in your home of some $560,000. Then you have your share portfolio of $85,000, savings of $1000 a month and a good super balance for a 32-year-old.
I am impressed. This is a terrific financial position at a young age. I love the fact that you are building super, adding to your offset account and adding $1000 a month to your share portfolio.
To be debt free will be easy. If you take your $1000 a month and add it to your offset account, you will be debt free in 114 months or a bit under 10 years – job done.
But my suspicion is you would prefer to keep building super and your portfolio while becoming debt free, so that you have shares to generate income for you. This gets straight back to your budget; do you have the capacity to save another $1000 a month?
Looking at your super balance, I would think you are making voluntary contributions. Super is indeed super, but you can’t access it until your preservation age, which is many decades away. I’d hate you to miss the fantastic tax breaks in voluntary contributions to super, but have a think about whether you should pause these, use the after-tax money to remove debt and build your share portfolio to give you access to the income stream.
I see zero issue in becoming debt free in a decade. But you won’t get income from your house unless you rent it or rent rooms. You won’t get income from super. So, it is just your shares. In about 10 years, history indicates that with your $1000 a month being added, you will have, with today’s buying power, about $270,000 in shares. That would give you about $10,000 of passive income from dividends.
There are no miracles here, just numbers. What I’d like you to do is to set up an income target that would allow you to be financially independent. As an example, let’s go for $50,000 a year. To keep pace with inflation and pay you that amount each year, you’d need about $800,000 invested. Best you have an income target and then turn that into a capital target.
Age is a funny thing. In my case, at 69, I’d only need about half that, $400,000, because my life expectancy is 15.7 years. Sure, I hope to live longer, but it is quite okay for me to sensibly spend my capital. I’ll die before we run out of money. At 32, your life expectancy is more than 50 years. You need to have wealth that will keep pace with inflation and you certainly can’t spend your capital.
After defying a terminal diagnosis, Emma is worried about her financial future.
Don’t be too frugal: enjoy your life now
QI’m in desperate and urgent need of advice. I’m 53 and divorced. Nine years ago, I was given a terminal prognosis, which I have defied. I stopped work and have not returned.
All super and terminal benefits paid off my mortgage and I’m debt free. I will receive $45,000 from income protection insurance until age 65.
The $100,000 I have sitting in the bank has attracted zero interest in an interest offset account. I’m now scrambling to determine if there’s any way I can use this small amount to set up a better future for myself.
I’m especially concerned about providing for myself once my income insurance stops in 12 years. I’ve just transferred my cash into a bank account attracting 5% interest (variable).
I’m wondering whether I should put maybe $70,000 into a high-growth portfolio, with monthly contributions of $2000. I’m not sure whether it’s wise or foolish to take on that level of risk at this late stage. Are there alternative strategies I could consider to improve my financial future?
I’m even wondering if trying to re-enter the workforce to grow wages and super over the next 12 years might be financially necessary if my health allows.
My unique situation seems a good case study in worst-case scenarios of not investing early and not having adequate (in my strange case, any) superannuation as ‘retirement age’ looms.
Goodness, Emma, you have experienced some of the most dramatic highs and lows that life can offer. My heart skipped a beat when I read your opening comment about a terminal diagnosis, then I was so pleased to read that you have defied that prognosis.
It is easy for me to bang on about health being the most valuable asset we have and you having a second life. While that is true, you’ve been knocked down, have bounced back with your health, but the reality is that we can’t live on health alone, we need to live a life. And that takes us to the pretty dry subject of money.
You have a terrific base in a fully paid off home and no debts. Using your super and terminal benefits to pay off your mortgage was a great decision. I suspect, given your prognosis, you may have thought of a very expensive holiday to enjoy your predicted short life expectancy.
From this base it makes a lot of sense to look forward and build on your $100,000 in savings and ability to save $2000 a month. What interests me, though, is that with your disability income of $45,000 a year, after savings, you must be living on not much more than $20,000. If we move to retirement age, and think about adding an age pension, a single pension will provide a similar level of income.
Given what you have been through, and the certainty of a secure government pension in the future, are you stressing your life today by being too frugal? I know this is not what you were expecting to hear, but if you saved, say, $1000 or $1500 a month until age 65, would it make a lot of difference? Yes, more
saving means more dollars, but does this suit how you want to live today?
At a practical level, yes, history would say you should own growth assets for long-term investment. So, a high-growth fund makes sense. But I imagine you are paying some tax on your income; would you be better off making some super contributions into a high-growth fund and saving on tax? Obviously going back to work will help you build assets and super. But is this what you want to do and would it impact your income protection payments?
These things I cannot answer. My broad advice is to enjoy your life today and set a future plan including accessing an age pension. Yours is a classic case where you need to sit down with a professional planner, or at least do online modelling that sets out a strategy to enjoy life, while building reserves and planning for the age pension for future years.
Most importantly, I hope you continue to enjoy good health.
Connie would like to put her whole wage into her superannuation account.
Great idea, but there are
limits on contributions
QIs it possible to save all of my wages into my super and request my super provider pay me a lower amount each month from the age of 60 to my retirement age at 67. The purpose is to provide better super when I do retire by investing more into my account.
That is a ripper idea, Connie, but in regard to employer contributions, the maximum any of us can put into super from our salary is $30,000 (2024-25).
Super is pretty complicated, so you would need to check your personal situation with your super fund or adviser, but depending on how much you have in your account, you could add your own money, after tax is taken out, up to $120,000 a year
Again, it is a bit complex, so you should check your personal situation. But, in general, anyone younger than 65 will need to take out 4% a year of their super. This increases steadily until age 80, when this becomes 7%.
Trevor is looking after his mother’s financial affairs.
Shares have been dreadful, so get rid of them
QMy elderly mother has a small holding of around 640 AMP shares, which she would now like to sell. Managing her own financial affairs is becoming too difficult for her, so my wife and I assist her under an enduring power of attorney.
I’m wondering what would be a simple and cost-effective way to cash these out for her.
We’d like to pay a minimum in fees and commission so that she can retain maximum benefit. She has no other shares and won’t need to do any other trades in the future.
This is a good idea, Trevor; AMP shares have been a dreadful investment for the past decade or so. Sure, they may rise or fall in value in the future, but with a holding of just 640 shares this is hardly likely to make much difference to your mum.
Selling them makes sense to me. I am sure your mum could use a little bit of money, but the real issue is tidying up her financial affairs.
An easy and cheap way of selling would be to look at the share services offered by your bank. As an example, Commonwealth Bank’s CommSec would charge you around $29.95 online to sell her shares, but there are many other companies offering cheap brokerage fees.
Greg wants to help his children and still have enough money for retirement.
Rule No. 1 is to treat the kids equally
QI am 64 and retired last year. I have $1.7 million in super in a retirement income account.
My wife has been a full-time babysitter for our grandchildren for many years and only has $60,000 in super. We own our home, which is worth about $1.1 million.
We also have an investment property worth about $750,000. We have a mortgage on this property (secured by our home) but the full amount owed ($200,000) is in an offset account and being paid off at the agreed monthly rate.
We have rented the investment property to one of our two kids for 12 years at about 75% market rent, which has caused a little friction with the other child.
My question is whether there is a way we could sell the investment property to the child who is renting it as they have little hope of being able to purchase another property with current market prices and interest rates.
I need to ensure there is some balance in the amount of help given to the two kids and will need to keep the purchase close to market value so we have funds for our future needs.
I’m also considering the option of downsizing our home in six years and moving into the investment property to help avoid capital gains tax (CGT).
Do you have thoughts on what to do, or not to do, to help our kids but ensure we have enough money to see us through the rest of our lives?
Goodness, Greg, you have given me some solid facts, but here the wisdom of Solomon is required, which, sadly, I do not possess. Anyway, I’ll have a crack!
The key missing fact is what you and your wife spend each year, but I can reverse-engineer that and talk about what you could spend.
History indicates that you could draw about 5% of your super, if it’s in a balanced-type fund, pretty much forever and still have $1.7 million, plus inflation. Again, looking at historic returns, you could probably draw about 8% and still have $1.7 million but not keep pace with inflation. I know others who are perfectly happy to draw well above 8% from super, run down their capital to the age pension assets test limits and then draw an aged pension to top up the later stage of their lives. These are all valid strategies, with the most important issue being not to die too rich.
With super alone, a 5% drawdown gives you, tax free, $85,000 a year; 8% would give you a pretty handsome $136,000. To that add the discounted rent from your son. If this is enough to fund your lifestyle, great!
We have three adult kids, and grandkids, so Vicki and I face the same issues. Our absolute rule No. 1 is that, regardless of their own financial success, all three kids are always treated equally. As you mention, it causes huge problems if one child is favoured. I’ve seen the best of families fall apart over this.
Sure, you could sell the investment property to the child living in it and then establish in your estate an amount, allowing for inflation, to rebalance your other child.
What I am unsure about is how moving into it works with your child living there? Where do they go? It sounds as if they need your rent subsidy as it is.
I would not get too wrapped up about future CGT when the investment property is sold; it is the big picture that I think is important. I want you to look at your spending. It may be that super, plus rent, does the heavy lifting for you. Then you and your wife need to consider where you want to live. Don’t sell your home if you prefer living there. That would be silly. If you choose not to move, freeing up capital to balance out your children’s level of support, I really wonder if you would not be better off to just keep renting the investment property to your child and let both kids know the rent subsidy will rebalance the help for your other child in your estate planning.
My suspicion is that drawing from super and the rent from your investment property probably solves your income needs. Next, you need to decide where you prefer to live. Then, in your shoes, we’d be renting, not selling, the investment property to one child, unless we could give the other child the same financial benefit.
Finally, when you do decide to give substantial assets, be it cash or property, to either child, please talk to a good estate planning lawyer. These big moves must be legally documented and I would suggest family wealth is protected from relationship break-ups and business-related issues with appropriate legal protection to keep family money in the family. n
SMART SPENDING Destination Packing tips
There’s an art to travelling light. Here’s a clever way to avoid a wardrobe crisis on an international trip.
Spending Christmas in London and the New Year in Paris is the ultimate dream holiday, but it does not make for light packing.
I knew I would need to think long and hard about what to take and how to pack it all, so I decided to put together my first capsule travel wardrobe. Now, this requires some careful planning but I can confirm that it is possible. The prerequisite, of course, is that everything can be mixed and matched.
• It would be cold, so first up is a warm jacket – I went for my favourite rainbow puffer jacket. The best colour in the world is pink, so I started with that, then added chocolate brown and cream tops and bottoms to the mix, with gold accessories.
• The shoes! That’s always tricky because, of course, I wanted to take them all. I decided on pink runners, gold runners, and a pair of cream ankle boots. All super comfortable and good for walking.
• So, brown jeans, cream jeans, and knits in various shades of pink, with a selection of cream T-shirts and tops. I also packed one pair of regular blue jeans with gold detailing, along with a gold belt and a sparkly scarf.
• The key to capsule wardrobe success, I quickly learned, is to start planning it well in advance. I kept everything on a rack in my room and experimented with different combinations. Packing at the last minute invariably ends up with me taking my whole wardrobe (which has happened on many occasions). I made sure everything I chose was non-iron and made from natural fibres. And I knew it would be cold at that time of year in Europe, but I was aware that indoor areas would be heated, so being able to layer my outfits was crucial.
• Next is the handy packing cubes. These are genius and a game changer. I wouldn’t be able to fully unpack anywhere on this trip so my suitcase became my mini wardrobe. The bigger cubes were for jeans and knits, while the smaller cubes fitted snugly around them in my suitcase like puzzle pieces. And there it was… a travelling wardrobe.
I can report that it worked brilliantly and I didn’t experience a single clothing crisis. I highly recommend it as a way to travel lightly but smartly. My suitcase wasn’t bursting at the seams and I even had room to spare for some shopping in Paris. NIKKI EDWARDS
BIRTHDAY
2022
WINES TO CELLAR
These three outstanding Australian reds will be at their best and ready to enjoy just in time to celebrate Money magazine’s 50th birthday. These wineries in the Yarra, Hunter Valley and Margaret River were each planted just over 50 years ago and have long been regarded as among Australia’s finest. Each wine is sourced from the finest plot in the vineyard and is always in short supply. Experience has shown that these wines can be cellared with confidence for 25 years or more.
Yarra Yering
‘Carrodus’ Cabernet
Sauvignon $275
Regularly one of the Yarra Valley’s greatest and most ageworthy reds, with winemaker Sarah Crowe at the height of her powers. This has vibrant raspberry and mulberry aromatics that are intense and immaculately balanced. There is great depth of flavour in the mid-palate before a finish that shows restraint, yet is long, sleek and fine. It will age gracefully.
2022 Brokenwood ‘Graveyard Vineyard’ Shiraz $350
A Hunter Valley classic, with a proven track record for ageing marvellously, this Brokenwood ‘Graveyard’ Shiraz is impeccably balanced with blackberry, blackcurrant and dark plum aromas that are intense and powerful yet not overwhelming. The palate shows incredible depth of flavour and a finish that is long and satisfying.
2021 Moss Wood Cabernet Sauvignon $160
Here is Margaret River cabernet at its best: powerfully scented with blackcurrant and dark plum aromas and complex dark berry fruits. Still tight and fine in the mid-palate, yet showing promise of its future. There is depth, power and purity that suggests time in the cellar will be well rewarded.
PETER FORRESTAL
DRIVING PASSION
How to find a car’s VIN
Your car’s vehicle identification number, or VIN, is an important identifier. You may from time to time need to provide it to authorities, lenders or insurers. Finding a VIN is not hard – you just need to know where to look.
Australia adopted the International Standards Organisation 17-character VIN more than 30 years ago. All cars sold here since that time have it. Typically, each car’s VIN is displayed in a small metal plaque that can be viewed from the outside through the windscreen at the bottom corner near the front passenger door. If the VIN cannot be found there, open the driver’s door and look at the door post (where the door latches when it is closed). It is likely that the VIN will also be displayed in this location.
INDULGE
Pitcher perfect
Danish sculptor and designer Henning Koppel created these elegant beauties in 1952, pictured here in mirror-polished stainless steel and Iconic Blue. Mid-century Scandinavian design at its most striking.
How much: $485 (silver); $330 (blue) Where from: georgjensen.com/en-au
Once you have found the VIN, use your smartphone to take a picture of it. Alternatively, write it down or use the voicetranscription function to read the VIN into the ‘notes’ app on your phone.
Your vehicle’s VIN is also often reproduced in the front of your owner’s manual, which is also where you’ll find all the locations where the VIN is reproduced. Just look up ‘vehicle identification number’ in the index and it will direct you to the page where all the locations are listed. The VIN is also found on build plates and compliance plates, which are fastened to the car.
CARSALES.COM.AU
SMART SPENDING
SMART TECH
Winter essentials
Outdoor camera
What is it: Lorex 4K indoor/outdoor spotlight wi-fi camera. It gets dark early these days, providing handy cover for all the parcel-stealing types. Stop them in their tracks with the Lorex wi-fi camera. This little beauty boasts a 4K 8MP camera with a 140-degree field of view. It also includes security features such as person, vehicle, animal and package detection. Using the Lorex app, you can also have a two-way conversation with welcome guests.
Cost: $317. Officeworks.com.au
Bottom warmer
What is it: the Stoov Ploov infrared cushion.
Let’s begin by saying not all tech is sexy tech. What the Stoov Ploov infrared cushion offers is a comfy way to get around cold-bum situations, be that in the stands at a footy match, on a camping trip or a mid-winter picnic in the park. The cushions, which can be used both indoors and out, come in three sizes, 45x45cm, 60x25cm and 90x60cm, and have three temperature settings (up to 42˚C). Cordless and powered by a rechargeable battery, they are ultra-mobile.
Cost: From $174. Stoov.com.au
Get help to tackle tough issues
The Ethics Centre is an important charity that is largely funded by donations and bequests. Its objective is to relieve the significant distress associated with making decisions. Its tagline is: Human Choice is the Most Powerful Force in the World.
The charity offers Ethi-call, a free one-hour phone call that aims to help callers find clarity when facing a difficult decision. It is an impartial and confidential service whereby a counsellor takes the caller through a decision-making framework to help them when faced with a dilemma.
The types of issues it covers range from birth, parenting and family issues, work, conflicts of interest, trust, privacy, negligence and fraud as well as addiction, end of life, duty of care and more.
Sounds
What is it: Sonos Ace headphones. Lauded for its wired home sound system, Sonos has released the Ace, its long-awaited headphone. The company has leveraged cutting-edge technology to produce superior sound (for the tech types, this means the two custom-designed drivers can render each frequency with impeccable precision and clarity). It has ‘active noise cancellation’ and ultra-fast charging – a three-minute charge gives you three hours of battery life while a full charge lasts for up to 30 hours.
Cost: $699. Harveynorman.com.au
VANESSA WALKER
been offered another opportunity elsewhere, which she plans to reject out of loyalty to her current employer. Should he break his boss’s confidence for the sake of his friend? Undeniably tricky.
Here’s an example Peter has been informed in confidence by his boss that a colleague and close friend, a recently single parent, is more than likely to lose her job in the next few months. He knows she has
Tough decision to make?
You can book a time and a date at ethics.org.au/consulting-andleadership/ethi-call and a counsellor will contact you then.
WALKER
VANESSA
Safeguard your account
Hackers aren’t lone operators, they are sophisticated enterprises determined to separate you from your hard-earned money. Here are three ways to bulletproof your bank account from online criminals.
After I tapped my credit card at the ticket booth at Taronga Zoo in Sydney on a recent visit, the dreaded beep-beep-beep of the machine made my heart skip a beat.
Last time I checked, I was pretty sure I had funds in my account, but knowing what I know about banking scams – more than $3 billion lost through scams in 2022 – my mind went straight to the worst-case scenario: my bank account has been emptied out by some nefarious organised crime ring in Russia.
Not quite.
As it turned out, my bank had blocked my account after I missed its text message asking me to confirm whether it was really me – I hadn’t been to a zoo for a couple of decades – who just bought six tickets to see tigers, seals and maybe some reptiles.
My bank and I had a common fear: online banking scams. In November last year, my bank cemented its frenemy status with other banks when they joined forces to seal the Scam-Safe Accord.
The accord, which provides broadly standardised fraud prevention measures in the banking system, is non-binding. However, the government is already in heavy discussions to legislate similar rules anyway, so the accord just gave banks a head start.
Besides the altruistic benefits, the banks also win because less fraud that is taking place at points of transaction, the less to worry about later. The pact is only seven months old and some banks are better at promoting it than others. Here are three ways the agreement will change how we bank.
1At least one biometric check for new accounts.
Pin codes are out, face ID is in. This makes me nervous about losing my mobile phone as the desired effect of this new rule is to make sure you’re logging in from a known device with a matching face or fingerprint ID. This significantly reduces the chance of someone logging in from another country though, which can be an immediate foil to banking scams.
2 It’s not an emergency, it’s social engineering.
Thankfully, romance scams have fallen in the past 12 months but a decent amount –$40 million – made its way to fake gigolos and pretend princesses. Starting later this year, banks will now delay transactions to new payees and what its algorithm
identifies as suspicious transactions. In some cases, this could be four hours and, for larger sums, as long as three days. It can be inconvenient but effective.
3 A new name-checking technology and intelligence sharing.
We are all too familiar with the banking prompt to double-check that you are transferring funds to the right recipient. But that may not be enough if there is a real intention to defraud. Last year, a young couple lost their deposit for a property after they received a phishing email purported to have come from their real estate agent. It turned out to be a scam. With the ‘confirm-to-payee’ name-checking technology, coupled with banks sharing data to verify name and account details, more people will be protected from phishing scams.
Of course, nothing beats doing sensible checks through text alerts on all transactions, checking your bank account statements regularly and changing your passwords every six months (at least). These precautions may sound unnecessary, until you become a victim of an online scam. This brings me to my last tip: check the website haveibeenpwned.com to find out if your most-often used email has been compromised. If that’s the case, update your password or get a new email address. At a time when we are busy and easily distracted, the accord is a welcome safeguard to our finances. n
See Scamwatch on page 13 to read about superannuation scams.
Michelle Baltazar is editor-in-chief of Money.
MY MONEY JOURNEY
Lucky in life and Money
In
honour of the magazine’s 25th birthday, the Money team has turned the tables on our beloved columnist and founding editor,
Paul Clitheroe. In this special birthday issue, Paul, now 69, reflects on the trials and tribulations of his own life and financial journey.
As the old saying goes, better to be lucky than clever. The first piece of luck you need is in choosing your parents. Obviously, we can’t do this, but in my case, I got pretty lucky. I was born in Nottingham, in the UK, on July 7, 1955, so 7/7/55. Astrology, numerology and that sort of stuff are not my thing, but these seem like pretty good numbers. Far more importantly, my mum and dad were well-educated people, Mum a nursing sister and Dad a doctor. My early life in England was very enjoyable. We lived near Nottingham in the little village of Huthwaite. I had cousins nearby, and one set of grandparents lived close to us in a pretty big country home, so lots to do.
My parents were fond of the warmth, and with quite a few of my dad’s mates doctoring in the NSW country town of Griffith, we moved out as 10 Pound Poms in 1963. As I recall, the 10 quid included flying our family, my mum, dad, me and little sister, to Australia, in one of the early passenger jets, a Comet, while our furniture and cat arrived a couple of months later.
The next piece of luck was arriving in Griffith – this was great. A few kids at North Griffith Primary were asked to look out for me, which they did and, thankfully, 60 years later they
still do. They are great mates. I found the freedom of an Aussie country town really suited me, learning to swim in rivers, creeks and canals, sailing and water-skiing at Lake Wyangan, plus golf at the Griffith course, made for a lovely life for a youngster. As is so often the case, these sports are things I still enjoy, though waterskiing changed to snow skiing. This has been a great family activity for us for many decades. Academically, I cruised along, nothing terrific, but with quite adequate results. This left ample time for sport and time with friends on farms, pushbike riding and socialising. It is fair to say that Griffith High School was a fun place to be in the late 1960s and early 1970s, but it was not exactly a hive of academic excellence back then.
A job to earn beer money
My last year of school required some decisions. With parents who had benefited from higher education, going to university was a given and Sydney was the nearest place to study then. So, one of my mates and I jumped in his little Mini Minor and off we went to Philip Baxter College at University of NSW. My parents paid my fees, a very grand $24 a week in first year (1974), and a bit of spending money, but not too much. Good call on their part. I got a job at the Regent Hotel serving drinks a couple of nights a week – ironically, serving beers to give me money to buy beers.
I had no idea what to study, so I took my parents’ advice and did a general degree, a BA. The 12 hours or so a week were not very taxing, which was not the case for my friends doing engineering, architecture and medicine.
The next issue as I finally completed my degree was getting a real job, an alarming prospect. Again, in a lucky moment, one of my Baxter mates showed me an ad he had cut out. It was for an investment researcher. With my BA, I was a bit curious about this, but Col (a lifelong friend and best man at our wedding) said, “You know more about money than anyone I know.”
This caused me to scratch my head a fair bit. I suspect Col probably did not know anyone who knew anything about money. Fortunately, that did not occur to me at the time,
Growing up in country NSW... from top, Paul Clitheroe as a child and, again, as a 21-year-old in 1976.
so I trotted off, had an interview and got the job.
Grabbing an opportunity
The next bit is really luck. My boss hated the idea of media interviews, so in about 1981 I found myself doing short and probably pretty terrible radio ‘grabs’. You know the sort of stuff; about interest rates and so on. This led to meeting three terrific guys who planned to start up a fee-for-service investment business, ipac Securities.
short format in which to give people enough information. The magazine allows us to flesh out what on TV are often pretty skimpy details.
The next bit is not really luck. My parents had always put a few dollars into shares each year for me and my sister. They were ‘money smart’. By age 27, this had turned into enough money for my share in the company we started, plus a small deposit for a tiny semi on a busy road in Artarmon, Sydney.
The rest is pretty well-publicised history. Channel 9 started getting me to pop into the Today Show and Midday to do small segments in about 1990. Then I was asked to do a part in a pilot for a show called Money. That did not look good. Channel 9 owner Kerry Packer hated it. But David Leckie, the CEO, persisted and, under the threat of being sacked, he ran the first episode in 1993. Money rated its head off. With no internet, Foxtel or social media, it regularly attracted more than three million viewers at 8pm on Wednesdays.
For me, TV was a part-time job. My main focus was on growing ipac with my partners, but hosting Money was a hoot. I got to talk money all over the world with all sorts of people. A real highlight was a few days with Warren Buffett in Omaha and Richard Branson in London. As we were wrapping up after a couple of days with Richard, there was a knock on his door. It was Jennifer Aniston arriving to film a piece with Richard for the TV show Friends In 1999, we launched Money magazine, which is, of course, the reason I am writing this article. I really enjoy the magazine. TV is a very
So, at age 69, here I am. Still doing what I love with work and mucking around with my old mates. But during these decades a really wonderful thing happened. I met Vicki. We were married in 1982 and have three beaut grown-up kids and are just thrilled to have four granddaughters, aged five,
BIRTHDAY TH
three, two and a baby, and a couple of grand-dogs.
It’s okay to make mistakes
I’ve been lucky enough to have a bunch of good stuff happen to me outside of my family and work life.
A few highlights: being made a life member of my financial services body (FINSIA); chairing the Australian Government Financial Literacy Board for well over a decade; being appointed by Macquarie University to the Chair in Financial Literacy; and (much to the amusement of family and friends) a professorship – nice recognition from my old UNSW; and an Order of Australia back in 2008.
Outside of family and work, one of my fondest and hardest achievements was winning the Rolex Sydney to Hobart yacht race in 2015. This was a tough year, with some 32 yachts retiring in a horrible gale, but we battled on through Bass Strait and had the joy of arriving in Hobart mid-afternoon to a horde of well-wishers, to find we had won the overall honours. This felt a long way from sailing my little boat on Lake Wyangan.
Every life has problems and challenges. The main takeaway for me is an optimistic view, taking a good crack at opportunities and taking sensible risks. We’ll all make mistakes and have failures, that is okay.
One thing is for sure. As I look back, valuing and investing time in relationships has made my life much better. As for money... it gives us choices. But it is just part of the pie, not most of it. Health, family, friendships and a good community around us are the critical things.
One of those important relationships has been with Money and its many viewers, readers and listeners. I thank you for being in this part of my life. n
Life and times... from top, Paul on his boat Balance; doing what he loves most; and in the studio with Ross Greenwood (left) and David Koch.
The first edition of Money magazine, July 1999.
Crypto has arrived
Once dismissed as a passing fad, cryptocurrencies are here to stay. Some people have made fortunes while others have lost out, but the digital tokens are gaining greater acceptance as an investment and a form of payment. As the trend strengthens, the likes of Bitcoin and Ethereum are set to become part of our day-to-day lives. Here’s what the future would look like.
STORY TOM WATSON
It’s hard to think of a topic in the financial world that has sparked as much discussion, debate and controversy over the past decade as cryptocurrency.
And no wonder. For many, their first introduction to cryptocurrency, and Bitcoin in particular, will have come in the early 2010s through headlines about its use in funding illicit purchases made on underground marketplaces such as Silk Road.
Others may have watched the wild run-ups in 2018 or 2020 when investors jumped on the crypto bandwagon, only to see the value of their investments nosedive. And some will have read about the numerous scams and scandals that have plagued the sector in recent years.
It’s fair to say, then, that there are plenty of people who view cryptocurrency with a healthy dose of scepticism.
There is, of course, the other side of the coin. Cryptocurrency has delivered substantial returns and, in a handful of cases, serious wealth to some investors. It also represents a future payments
world which, some hope, will be less beholden to traditional financial players and middlemen.
Love it or loathe it, one of the big questions is whether cryptocurrency is here to stay. At this point, it’s hard to argue that it isn’t – an argument that has been lent more credence by some major recent decisions from financial agencies and governments.
Most notable among those is the US Securities and Exchange Commission’s decision to greenlight the first crypto-backed spot exchange traded funds (ETFs), which – though not the intention of the SEC – has boosted the legitimacy of certain cryptocurrencies as an investment vehicle in the eyes of some.
So, for the crypto curious or crypto latecomers, what is worth knowing about cryptocurrency itself, the technology behind it, its popularity as an asset and its potential as a payment tool? Let’s dig in.
What is cryptocurrency?
Cryptocurrency means different things to different people, but looking to the Reserve Bank of Australia,
people are willing to pay for them.
For Karl Mohan, the general manager, Asia Pacific, of cryptocurrency exchange Crypto.com, cryptocurrency is ultimately a payment vehicle purpose-built for the digital age. “If I can synthesise it in a single sentence, it’s money created for the digital world. The whole premise of moving money or creating payments in a world that is connected to the internet is, inherently, that there’s no trust, right?
“You don’t trust the other party; you don’t know who they are. But to be able to transact with each other is what cryptocurrency does. That’s its basic, fundamental value. It enables consumers to transact with each other in a world where you don’t inherently know or trust the other person.”
As Mohan explains, this theme of trust has been at the core of cryptocurrency’s evolution since it
hypothesis, the creators of Bitcoin talked of replacing the flawed financial system at the time.”
Since its beginnings, Bitcoin and other cryptocurrencies have evolved to the point that, according to Mohan, they’re now largely viewed as having two different purposes or uses.
The first is a store of value, which is obviously part of the reason they’ve proved so attractive with some investors. The second, and arguably less adopted use so far, is a payment instrument.
Bitcoin and beyond
The cryptocurrency universe is vast. The pricetracking website CoinMarketCap, for instance, is currently tracking more than 10,000 crypto assets, though many of these are relatively tiny and infrequently traded.
UPFRONT COVER STORY
The most prominent though is, without a doubt, Bitcoin. Aside from its name recognition, Bitcoin has the largest market cap of any cryptocurrency: more than $2 trillion at the time of writing.
To give some context to that figure, it’s three times larger than the second-largest cryptocurrency by market cap, Ethereum ($680 billion), and a whopping 84 times larger than the tenth-largest cryptocurrency by market cap, Cardano ($24 billion).
While there are simply too many different assets to name, one useful way to break down the world of cryptocurrency and crypto assets is by type.
Like defining cryptocurrency itself, grouping different assets (such as altcoins, stablecoins and meme coins) can be a bit subjective, but Mohan thinks it’s worth highlighting three broad categories.
“The behemoth is, of course, Bitcoin, which accounts for roughly 70% of all cryptocurrency market value. The next category is what I’d call smart contracts or ‘Layer 1’ blockchains. Ethereum is one of them, and they can be thought of as computerbased systems that have their own tokens to reward.
“The third is stable coins, which are paired against currencies like the Australian dollar or US dollar. Think of them like a digital bank cheque that is good for the value it represents. So, let’s say you wanted to pay someone $US100 dollars. Rather than sending them cash or making a bank transfer, you could choose to pay with a stable coin such as Tether or USD Coin.”
Where blockchain fits in
An understanding of the various uses and types of cryptocurrency is important, but it’s hard to really get to grips with crypto without understanding blockchain. After all, it enables cryptocurrency to exist.
Blockchain is the underlying technology: the decentralised digital ledger that records cryptocurrency transactions using a network of computers and is fundamentally transparent.
Amy-Rose Goodey, chief operating officer at Blockchain Australia, the industry body that advocates for the technology, sees a blockchain like a series of notes.
“The way I envisage a blockchain is like a notepad where you record your transactions. You can think of every page in this notebook as a block, so all of these pages together make up the blockchain.
“Every time a transaction happens it gets added to a new block, and once a block is full, or the notepad is full, it just gets linked to another different pile of notebooks.
“And no one can ever tear a page out because it’s encrypted – it can’t be changed. But it also can’t be changed because millions of people all over the world have copies and are powering this network.”
“So that decentralised nature and the fact that you can’t change anything is really what makes it special,” says Goodey.
In the case of Bitcoin, so-called ‘miners’ play a crucial role in validating transactions made on the Bitcoin blockchain. For instance, when someone makes a transaction, it needs to be verified and added to the blockchain, so miners compete to facilitate this process in exchange for a reward (Bitcoin).
Aussies test the water
As the world of cryptocurrency has grown in size and prominence over the past 15 years, it’s hardly surprising that many Australians have decided to dip their toes in.
The exact number, though, is hard to pin down. In 2021, for instance, the Australian Taxation Office estimated that more than 600,000 taxpayers had invested in various crypto assets in recent years.
More recently, research by crypto exchange Swyftx in 2023 found that Australians were among the largest adopters in the world, with 23% of adults reportedly owning crypto or other digital assets. Meanwhile, Swyftx found that, as of July last year, nearly a third of Australians were holding crypto assets.
Whatever the true number is, it’s fair to say that a decent number of Australians are holding cryptocurrency. But what does that mean in practice?
There are a couple of different ways to hold crypto assets. The first is through a custodial wallet. These are typically offered by third parties such as cryptocurrency exchanges, which ultimately have custody of the assets. They are generally an easy option for newcomers to use, though if something goes wrong with the exchange, users can lose their holdings.
Non-custodial or private wallets, on the other hand, give crypto holders full control of their assets. They may prove harder to set up for some, though, and users will need to ensure that they don’t lose access to their private keys lest they be locked out of forever.
Holdings can also be kept in a ‘hot’ wallet connected to the internet through an online platform or a mobile app, or in a ‘cold’ wallet, which is a hardware device that is largely kept offline.
Payments: novelty or innovation?
Much of the focus on cryptocurrency has been on its value as an investment.
“The fascination with these currencies appears to have been more speculative (buying cryptocurrencies to make a profit) than related to their use as a new and unique system for making payments,” the Reserve Bank notes on its website.
That’s not to say there aren’t people who have dabbled, or continue to use, crypto as a payment tool though. Haseeb Ikram (see case study, left) is one of them. “I’ve used crypto to make payments, like buying coffee in the US,” he says. “I’ve used it to transfer money as well, mainly because it’s a cheaper and more convenient option compared to transferring bank-to-bank to an overseas country.”
In April, Crypto.com launched a new venture with the Adelaide Crows AFL club to facilitate crypto payments for food and drink at the Adelaide Oval. But, realistically, the number of businesses that accept cryptocurrency in Australia are few and far between.
For Crypto.com’s Karl Mohan, though, the potential of cryptocurrency as a payment instrument is huge, whether that’s paying for everyday goods and services or making transfers abroad.
“Payments are critical for the lifeblood of our economy and cryptocurrency is perfect for payments. The reason being is the speed of transfer because you can program it to transfer based on certain criteria, and there’s no repudiation.
“It also removes all sorts of intermediaries. For example, my parents are in Malaysia and sending them money can sometimes take three days. But with cryptocurrency, it arrives instantaneously. So, the future of cryptocurrency is definitely in payments.
That’s my belief.”
How banks are reacting
Cryptocurrency may have been conceived as a disruptor and alternative to the banking status quo, but traditional financial institutions have certainly begun to explore the possibilities that cryptocurrency and related technologies present. At least, in some ways.
Australia’s Reserve Bank, for one, has been exploring use cases for a Central Bank
UPFRONT COVER STORY
Digital Currency (CBDC). In theory, the RBA says this could act like a digital equivalent of cash that would be issued by the Australian government and used for both in-person and digital transactions.
In its latest research paper published in April, the RBA noted that while Australians are interested in the potential privacy benefits that a CBDC could offer, they’re not particularly fussed about it being government-issued given that there’s already a substantial level of trust in commercial banks.
A handful of Australian banks have also been making moves in the digital asset space, with both ANZ (A$DC) and NAB (AUDN) experimenting with their own Australian dollar stablecoins.
In many ways, blockchain appears to be the real star to emerge from the advent of cryptocurrency. Blockchain Australia’s Amy-Rose Goodey says there are countless examples of blockchain experimentation and implementation among the world’s largest companies, and not just in the financial sphere.
“If you think of a blockchain as a foundational technology like the internet, you can build things on top of it like apps and programmable money like cryptocurrency. But, really, the potential is unlimited in terms of what you can build on it.
“So, as a use case, it’s across every single industry. And now with all of these other technologies coming out, like artificial intelligence, where proof of where your data came from and where it’s going is so important, it’s probably the most important time ever for blockchain to be rolled out.
“The immutable nature of blockchain –that visibility and record keeping – is what people are seeking at the moment. We want to know what the truth is, and we want to know the source, and I think blockchain is the perfect mechanism for that.”
Tune in from July 24 for a deep (but easy-to-understand) dive into crypto as we chat to expert
Janine Grainger,
co-founder and chief executive of Easy Crypto. Friends With Money podcast #161
A high return, but ‘dumb luck’ plays a part
Haseeb Ikram is one of the many Australians who has invested in cryptocurrency over the years, though his interest in crypto began earlier than most.
“I first heard about Bitcoin in 2012, which piqued my interest a bit because I thought it sounded like interesting technology. My dad works as a cryptographer, so I sent a link to him, but when he didn’t really seem that interested I sort of stopped thinking about it.”
Over the next few years, as he undertook an economics and finance degree at university in Canberra, Ikram’s interest was rekindled. But despite flirting with the idea of investing, he didn’t take the plunge.
“I finally mustered the courage to get into it in 2017, but I ended up losing my login details. Then I used an exchange in 2019, and that was when I really got into it.
“At that point I was done with uni and I was working, so I was actually in a position where I was able to save and invest money,” says Ikram.
Ikram invested in a different cryptocurrencies and rode an upward wave as prices increased, before deciding to cash out a significant proportion of his holdings.
“I went up to an all-time high in the six-figure region, so I ended up pulling my initial investment out and pulling a lot of my profits out as well. It’s good to attribute it to dumb luck, though, because that’s literally what happened. I made a bit of money and I cashed out. So I think my biggest achievement was really just knowing when to cash out.”
While Ikram is no longer actively investing, he maintains a much smaller portfolio of Bitcoin, Ethereum, Litecoin, Ripple and Solana. Though because of his earlier success, he’s not quite as invested in its performance as he used to be.
“My view is probably different to a lot of people because I did cash out a few years ago and made a pretty high return. So the holdings that I still have, for me, it’s money I feel that I can lose and not really worry too much about.”
Investing and the rise of ETFs
As the tax office indicated, a significant numbers of Aussies are holding cryptocurrency as an investment. And given the meteoric price rises we’ve witnessed with various crypto assets over the years, it’s easy to see why many have been attracted to the potential returns.
Take the value of Bitcoin as one example. In early June 2016, one Bitcoin was trading for around $820. At roughly the same time in 2020, that had gone up to $13,800. Fast-forward to 2024 and the price is hovering over $100,000.
Of course, there have been plenty of dips along the way.
As Hebe Chen, a market analyst for the brokerage IG Australia, explains, the potentially significant ups and downs are a factor that investors will need to take into account.
“Cryptocurrency markets are well-known for their high volatility, which can be sweet candy for some investors but poison for others.
Understanding and strictly assessing your risk tolerance is the first and most crucial step before diving into the world of crypto,” she says. (See What’s Love Got To Do With It, page 48.)
While many earlier investors had to purchase cryptocurrency through a brokerage platform, the various options for prospective investors only seem to be growing and growing.
“Australian investors have a number of avenues to get involved with the crypto world and related technology, including direct ownership, which involves buying and holding various digital currencies on reputable cryptocurrency exchange platforms,” says Chen.
“Then there’s investing in listed companies on the ASX or any global indices that are involved in blockchain or technology crypto-related businesses. And some managed funds and ETFs offer exposure to cryptocurrency or blockchain technology as a key component of their portfolio.”
And a recent decision in the US is likely to pave the way for even more crypto-related ETF options for Australian investors.
In January, the US Securities and Exchange Commission approved the listing and trading of 11 spot Bitcoin exchange traded products from the likes of Blackrock and Fidelity. Then, in May, the SEC also paved the way for the approval of similar Ethereum products.
Despite these approvals, SEC chair Gary Gensler warned investors to “remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto”.
In essence, a spot Bitcoin ETF or ETP is designed to reflect the price of Bitcoin. The fund will generally hold actual Bitcoins as the underlying security and issue shares in the fund to investors like a regular ETF, making it a relatively accessible way for investors to get exposure to Bitcoin.
Since their inception earlier in the year, the funds have collectively attracted billions of dollars from investors.
“The approval of spot Bitcoin ETFs early this year, coupled with their demonstrated popularity, marks the dawn of cryptocurrency’s maturity as a mainstream investment tool,” says Chen.
“It’s also foreseeable that the debut of spot Ethereum ETFs in the near future will only reinforce this shift and propel major cryptocurrencies into an ever-growing number of investment portfolios. Either the evolving maturity or the surging demand will likely lead to the birth of Australian-listed ETFs.”
UPFRONT COVER STORY
Keep your eye on the ball to avoid risks
As with many emerging technologies and industries, cryptocurrency has had its fair share of controversy. More than its fair share, some would argue. The list is vast, but it includes everything from exchange collapses and ponzi schemes to crypto-related scams.
In 2014, the Japanese-based Bitcoin exchange Mt. Gox, which was the world’s largest exchange at the time, abruptly suspended trading and filed for bankruptcy. It announced that it had lost about 750,000 of its customers’ Bitcoins, alleging that some had been stolen. Ten years later, many customers are still waiting for payments to be made by the Mt. Gox trustee.
Perhaps most well-known is the collapse at the end of 2022 of cryptocurrency exchange FTX, which was the world’s third largest exchange at that point. Hundreds of thousands of users, including many Australians, lost billions of dollars’ worth of holdings. The company’s former chief executive, Sam Bankman-Fried, has since been convicted of fraud and sent to prison.
Beyond the high-profile scandals, scams involving cryptocurrency also continue to plague individual investors. According to the Australian Competition and Consumer Commission (ACCC), there are a few main crypto scams to watch out for.
The first are fake cryptocurrency exchanges or apps that are designed to mimic real equivalents in order to either capture people’s details and steal their crypto, or get people to invest money in a fake exchange or product.
Another is similar to a pump-and-dump scheme with shares. People will be offered the chance to buy into a much-hyped
initial coin offering, but once the value of the coin hits a certain level, the scammers will cash out, leaving other participants high and dry.
Fraudsters pulling other scams, such as a romance or extortion, will also try to convince their victims to send them cryptocurrency, which the ACCC says is harder to track and easier to move overseas.
Australia’s National Anti-Scam Centre reports that in 2023 there were 3195 scam reports involving cryptocurrency as the payment method. In total, $171 million was reported lost, which was 6.5% higher than in 2022.
Road to regulation
These sorts of incidents – whether at an individual or institutional level –have led to calls for tighter government regulation of digital assets and the cryptocurrency industry. The process is under way in Australia.
In October last year, the Federal government released a consultation paper which outlined a proposal to establish a regulatory framework for organisations, like cryptocurrency exchanges, which facilitate the trading of digital assets and hold those assets as custodians on behalf of individuals.
Stephen Jones, the assistant treasurer and minister for financial services, said the government was focusing on exchanges in particular because of the number of large-scale failures in recent years and the harm that they have caused consumers.
“Collapses of crypto platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn among long lines of creditors. The proposed reforms seek to reduce the risk
of these collapses happening by lifting the standard of the operation of platforms and increasing oversight.”
The government noted last year that further consultation on draft legislation related to the proposal would take place at some point in 2024.
What the future holds
So greater regulation almost certainly looms on the horizon for players in the industry, as does the likely rollout of more crypto-related spot ETFs for Australian investors. But what else could the future hold for cryptocurrency?
“I think that payments really are going to be the future of cryptocurrency. They’re already here, of course, but I think it’s just going to increase in adoption, especially when it comes to commerce and crossborder payments,” says Karl Mohan, from the exchange Crypto.com.
Beyond the payments potential, he believes a second major trend that will continue to emerge relates to real-world asset tokenisation.
“What does tokenising real-world assets mean? You could have things like shares and bonds being built on the same infrastructure and technology that cryptocurrencies have been built upon. The reason being is that the blockchain is faster and simpler to transact with.
“For example, if you had shares that you wanted to transfer to someone else, it would be easier to transfer them directly rather than going through a number of intermediaries, as is the case today. And because these transactions would be recorded on the blockchain, that would make it simple to identify who owns the shares, as well as information such as the dividends being paid out.
“It’s in its infancy at the moment, but I believe that’s going to be one of the other future directions of cryptocurrency technology: being adopted for real-world use cases,” says Mohan.
$171M
Total reported amount lost to crypto scams in 2023.
Source: National Anti-Scam Centre.
Tips
Cryptocurrency scams are an unfortunate reality, which is why Crypto.com’s Karl Mohan says it’s important for holders to understand the consequences involved and the basic steps they can take to avoid scams.
1Practise good online hygiene
“The first part is getting the basics right. It’s critical to never, ever share security details like your password with others or to click on links from unknown parties. And if someone contacts you directly purporting to be from an exchange or somewhere else, ignore it and reach out to the organisation directly if you have concerns.”
2 Be wary of unrealistic returns
“When it comes to investments scams, it goes back to the basic premise: there’s no such thing as easy, fast returns. If someone’s promising you returns of 50%, 100%, 200%, it’s not real. You might read about some crypto bro earning that, but that’s pure luck, or at least it’s not the norm.”
3
Once it’s gone, it’s gone
“If you send someone some Bitcoin because you believed who they said they were, there’s no clawback. It’s very different to a bank transfer where you can call up your bank to try and reverse it. We’ve put in systems to try to prevent this, such as having a 24-hour lock before a transaction can be made and sophisticated tools that can see if the person you’re sending crypto to has been flagged as suspicious. But once those funds leave, they’re gone.” n
MY MONEY PET COSTS
Fur baby or financial millstone?
STORY NICOLA FIELD
Whether it’s puppy love or a kitten craving, owning a pet means committing to long-term costs.
My friend Rhonda recently raved about the $40 shampoo she purchased for George – the love of her life. “The fragrance is amazing. I just want to run my hands through his hair,” she said, giggling. “Awesome!” I gushed, inwardly cringing at the expense. I’m not convinced her extravagance will be appreciated, let alone noticed. George is not Rhonda’s husband. He’s not even her boyfriend. George is a Cocker Spaniel. Rhonda is not alone. Pets outnumber people in Australia by about three million. RSPCA data shows close to one in two of us owns a dog. A further one in three shares their home with a cat. Many more own birds, fish or reptiles. Add in the 400,000 people who keep backyard chickens, and it’s easy to see how the nation’s 29 million pets play a huge role in our lives. They can also punch a big hole in our household finances.
Hard-claw spending
Commonwealth Bank research found that pet owners lavish about 10% of take-home pay on their pets. All up, dogs cost about $4247 annually, while cats demand a yearly spend of about $2718. (See table, right.)
It’s a meaty chunk of cash, so where is all the money going? As the table shows, food is the main expense, followed by vet bills – more on this later. However, we are also forking out on pet-related costs that would have been unthinkable a generation ago.
Gone are the days when Spot would be home alone for 10 hours each day, digging holes in the backyard while his owners were at work. Doggie daycare is thriving, with half-day ‘play sessions’ often costing upwards of $50. The websites of providers use terms, such as ‘enrichment’ and ‘socialisation’, that you’re more likely to see on childcare organisation’s website.
No time for walkies? No problem. Professional dog walkers will happily step in at a cost of about $30 per walk.
We are also taking our pets on vacation. Virgin Australia let the cat out of the bag earlier this year, announcing plans to allow pets to travel alongside their owners. It will cost extra for your pooch to share the skies, though it won’t be a luxury experience for little Rex, who will be shoved under the seat in front in a dedicated pet carrier.
At the extreme end of the wedge, a more luxurious experience is offered by BARK Air, a new airline in the US that kicked off in May. With aircraft cabins featuring ‘calming aids’, such as lavender-scented refreshment towels, and bone broth to ensure four-legged passengers don’t experience discomfort from changes in cabin pressure, this sort of luxury isn’t cheap. A six-hour flight from New York to Los Angeles for one dog and their human chaperone costs $US6000 – about $9050.
The expense isn’t limited to the living. When Fluffy finally passes away, with the promise of freeing his owner from financial servitude, a new cost arises. Instead of burying the dearly departed in a corner of the garden, we can now have our pets cremated.
Pearly Mates Cremation Services, for instance, charges bereaved owners about $150 to cremate smaller pets, such as a mouse or guinea pig, or about $500 for the cremation of larger pets, with their ashes stored in a commemorative urn.
Average annual household spend – dogs and cats
Products and accessories $349 $181
Healthcare products
Clipping/grooming
Pet insurance
Training/behaviour/therapy
Boarding/minding
Competitions/memberships
Walking
$323 $280
$196 $70
$152 $94
$166 $22
$104 $53
$71 $6
$95 –Transport
Alternative healthcare treatments
Other
$70 $16
$65 $7
$2 $6
Total per household $4248 $2718
Source: Animal Medicines Australia
MY
The bottom line is that pets and pet care are a $33 billion industry in Australia, and it’s attracting plenty of corporate attention. Bunnings unleashed a line of pet supplies in 2023, as the hardware giant cashes in on what is proving to be a near recessionproof market.
Giving back
Our willingness to fork out for pets reflects a growing trend of ‘pet humanisation’. It’s all about a shift from pet ownership to pet ‘parenthood’. A variety of theories have aimed to explain this phenomenon, with some suggesting that pets fill the gap created by increasing levels of loneliness and declining birth rates.
A study by Animal Medicines Australia confirmed that companionship tends to be the number one reason for getting a dog (52%). But once pets come into our lives, they have a way of ingratiating themselves. According to ING, one in three owners says they love their dog or cat more than family members, while a further third considers their pet to be their child.
It’s unclear what our animals make of all this, though to be fair, pets give plenty back. According to Healthdirect, pet ownership provides genuine health benefits, helping to lower stress, and improve symptoms of depression and anxiety. Dog ownership has been shown to decrease cardiovascular risk. Cats do their bit for our health too. US research found cat
owners are less likely to die from heart attacks and strokes compared to people who don’t have a cat.
High cost of vet care
The health benefits of ownership, while compelling, can rapidly fly out the window when a pet becomes sick or injured. At that point, owners can face mammoth stress and significant bills.
This is not a gripe against vets. The reality is that unlike human medical bills, which are heavily subsidised by Medicare, the full burden of veterinary costs falls on owners. And according to PetSure, vet bills are rising. It’s a function of several factors including the ageing of our pets, the increased cost and uptake of diagnostic testing, and technological advancements that improve the quality and sophistication of pet patient care, but which come with higher costs.
Member-based programs are available that can take the sting out of regular vet bills. Greencross Vets offers Healthy Pets Plus costing $45 per month for dogs and cats. It includes vaccinations, microchipping, and consultations at Greencross Vets clinics plus a range of discounts. The critical issue is what happens if your pet falls seriously ill? A generation ago, owners often had few choices beyond euthanasia. That is no longer the case – if you have the capacity to pay.
Treating serious pet ailments is not a cheap business. Claims data from PetSure shows treatments
for mast cell tumours topped cancer claims for dogs in 2023, with an average cost of $2859 though the highest claim was for $39,769. Among cats, lymphoma was the most common cancer-related claim, with an average cost of $3636, and a maximum of $41,701. It is worth stressing that pet owners have the option to euthanise an extremely sick animal. An option that can cost around $100. Of course, it is distressing, but it ends the pain and suffering as well as the financial strain.
Nonetheless, a Finder survey found Australian pet owners are prepared to wear high treatment costs. On average, we are willing to spend $6219 to save a furry friend from euthanasia. It’s one thing, however, to say we would pay this amount. It’s another to find the money if a veterinary emergency arises. That’s where pet insurance can give owners options.
Once a niche product, there are now more than 70 different pet insurance policies with brands as varied as Medibank Pet Insurance through to Everyday Pet Insurance from Woolworths. Scratch the surface though, and a far smaller number of underlying insurance companies are behind pet cover. As a guide, Hollard Insurance is the company behind RSPCA Pet Insurance, Bow Wow Meow pet cover, and Petbarn Pet Insurance to name a few. Even so, it’s important to shop around for cover. Compare the Market (CTM) says premiums can cost between $25 and $80 per month, with the cost shaped by a pet’s age, breed, health, and the type of cover.
Adrian Taylor, CTM’s executive general manager of general insurance, says that it’s possible to lower premiums by opting for a higher excess, and by insuring your pet from a young age before they start to experience health issues. He adds that pet insurance “generally covers 70% to 90% of eligible vet bills up to an annual limit”. So even with protection in place, owners can expect to wear out-of-pocket costs.
Alternatives to pet cover
Instead of paying regular insurance premiums, owners could turn to a payment plan when, and if, pets need serious veterinary care. Plans are offered by the likes of VetPay and MediPay. In most cases, they work like an unsecured personal loan. Pet owners can have the fees of a participating vet clinic added to their account, with the cost paid off gradually.
While payment plans can be convenient, high rates of interest can see the initial cost of care escalate. VetPay charges 18.4% on outstanding balances. With MediPay you could pay as much as 23.79%. These rates are up there with some of the more expensive credit cards.
As an alternative, a variety of non-bank lenders offer unsecured loans for vet bills at rates that are
CASE STUDY MY PUPPY IS LIKE A CLOSE FRIEND
It’s been a long wait, but Sydneysider Ayushma Rana, 28, has finally realised her dream of owning a pooch. “I’ve wanted a dog for so long,” says Rana. “But I waited until I was able to buy an apartment of my own. It’s just too hard when you’re renting.”
Having researched breeds that would match her needs, Rana picked up ‘Momo’, her chihuahua puppy, in February this year. Already, the costs have passed the $1000 mark including $800 for the puppy, three sets of vaccines at $170 each, assorted puppy gear including a crate, wardrobe of doggie clothes, various beds/ leads and collars and, of course, food. Although a 900g chihuahua doesn’t eat a great deal. Momo is also a graduate of puppy school, which came with an enrolment fee of $150.
Rana knows more expenses lie ahead. Momo will need to be desexed in a few months. Has the outlay been worthwhile? She doesn’t hesitate. “My puppy is like a best friend,” she says. “It’s a big commitment, but my partner and I are in our late 20s, and we don’t go out as much as we used to. Having a puppy is a different kind of adventure for us.”
Rana says she has saved on costs by purchasing pet supplies from discount stores like Kmart, which she believes are “much cheaper than pet shops”. Most importantly, Rana says the key to fulfilment as a pet owner is buying a breed that suits your lifestyle. She explains, “I noticed at puppy school that people had chosen large breeds even though they live in small apartments or townhouses. It was clear this was starting to create problems from an early stage.”
MY MONEY PET COSTS
5 WAYS TO TRIM THE COST
If you are keen to get a pet – or add to your brood of fur kids – there are ways to enjoy their company without spending a fortune:
1BUY A SHELTER PET
Buying a purebred or ‘designer’ dog will cost you. Golden Retriever pups can cost about $3500. Purebred cats can be just as expensive. A Maine Coon kitten can set you back $4000. Buying from a shelter, such as the RSPCA or Animal Welfare League, is vastly cheaper. You could pay less than $500, which usually includes desexing, microchipping and vaccinations. But the best thing about getting your new pet from a shelter is saving their life and giving them a loving, safe home.
2 CONSIDER REGULAR MAINTENANCE COSTS
As the table (right) shows, poodle crosses are popular right now. But whether you opt for a Cavoodle, Groodle or Labradoodle, be prepared for regular grooming costs. Poodle crosses may shed less hair than other breeds (which accounts for their popularity) but this also means your pooch may need to be clipped several times a year to avoid matting.
3 SHOP AROUND BETWEEN VET CLINICS
Keeping your pet healthy is the best way to save on vet fees. For non-urgent treatments, such as
desexing and vaccinations, contact different clinics to compare prices.
4 BE WARY OF THE HYPE AROUND PET FOODS
Pet food can be purchased from vet clinics, pet shops, the supermarket or online. The common thread is that many pet foods promote ingredients that wouldn’t be out of place in a 5-star restaurant. Whether it is green-lipped mussels or kale, these tasty morsels may appeal to humans, but your furry friend is unlikely to appreciate the gourmet touch. The American Kennel Club even advises that leafy greens such as kale can cause medical problems for dogs. Talk to your dog’s breeder, rescue society or your vet for advice on the best diet for your pet. As consumer group Choice points out, a chief risk for our pets is not malnutrition, but rather obesity from being overfed.
5 GIVE YOUR PET A HAPPY, HEALTHY
LIFESTYLE
The Actuaries Institute of Australia says pet insurance claims are usually processed quickly, which can increase the “perceived value of pet insurance”. However, according to the Institute with good care, regular exercise and an appropriate diet, pets are likely to be healthier, happier, and less prone to accidents or illness, which reduces the need for pet insurance.
more affordable. Revolut has loan rates starting from 6.99%, other options include OurMoneyMarket (from 6.57%) and Harmoney (from 5.76%).
Unexpected financial impacts
For all the unconditional love animals give, pets can have unexpected impacts on our finances.
The money we are lavishing on our dogs and cats hasn’t escaped the attention of banks.
Julian Finch, founder and chief executive of Finch Financial, says: “What most people don’t realise is that some financial institutions take into account pet expenses when calculating your ability to afford a home loan, whether it be for a new loan or refinancing.
“The high cost of owning a pet can have a significant impact on household finances and your ability to meet loan repayments.” Finch notes that some pet breeds are known to be more expensive to maintain than others, adding, “Cavoodles fit into this category”. Lenders don’t just look at obvious expenses like pet food. Finch explains: “Whether we like to admit it or not, pets can cause wear and tear on a home, leading to increased maintenance and repair costs.
“Pets may scratch floors, damage carpets, chew on furniture or create messes that require cleaning or replacement. This all adds to the cost of pet ownership, and financial institutions are well aware of this.”
To ease the financial impact of pet ownership, Finch advises budgeting carefully. Plan for anticipated expenses and consider the long-term costs associated with pet care. n
Top 10 most popular dog and cat breeds
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.
When was the last time you paid for a purchase with cash?
Chances are that it was a while ago. According to the Reserve Bank’s (RBA) most recent data, in 2022 cash was used for just 13% of consumer payments, down from 27% in 2019.
As the graph shows, every sector has experienced a downturn in the use of cash. Covid may have hastened the decline, but cash was starting to fall off a cliff long before the pandemic.
Amanda Rose, chief executive of advocacy platform Entrepreneurial & Small Business Women, believes the decline in the use of cash is seeing small businesses hit with high merchant fees and the risk of losing business when payment systems are down.
“This premature pull towards a cashless society will hit business owners at a time when profit margins are already thin,” says Rose.
“A large segment of Australian customers, such as elderly people, still use cash – going cashless means businesses and customers both stand to lose.”
However, RBA research found otherwise. It notes that those Australians who have traditionally been associated with using cash more frequently, such as the elderly, low-income earners and regional residents, have recorded the largest decline in cash transactions.
Many businesses have responded by choosing to go cashless. Payment platform Square found one in 12 Australian businesses was cashless pre-Covid. By 2021, that figure had risen to one in four.
Dealing with the downsides
It’s true that businesses face costs for accepting card payments. However, the expense is typically passed on to consumers by way of a card surcharge. This can be about 1.5% for Visa and Mastercard credit cards, and slightly less for debit cards. There are two important issues to be aware of here.
of the telco’s small business customers unable to process electronic payments. The possibility of such outages makes it critical for small businesses to have backup options, such as a secondary telco provider or electronic fallback capability that allows EFTPOS terminals to continue processing transactions in the event of a network failure.
Is this legal? Yes. Consumer watchdog, the ACCC, says businesses don’t have to accept cash if they make it clear which types of payments they accept before consumers make a purchase.
First, small businesses cannot profit from surcharges. They can only recoup the cost of having a payment processed. More importantly, a business cannot apply a surcharge if it doesn’t accept cash. As Anna Bligh, chief executive of the Australian Banking Association, observed in May this year, many small businesses may be unaware of this rule.
Second, as Rose points out, one of the biggest risks of cashless trading is a failure of online systems as occurred in late 2023, when a day-long Optus outage left many
It’s worth remembering that in our post-piggy-bank world, the ‘good old days’ of cash came with costs of their own. Seasoned business owners will recall lengthy bank queues to deposit the day’s takings, and even lengthier delays between depositing handwritten credit card payment slips and the payment landing in a business bank account. n
Source: R BA Bullet in June 2023
Source: RBA Bulletin, June 2023
What’s love got to do with it?
A
rollercoaster of emotions could be driving poor crypto behaviour.
The Hollywood portrayal of romantic love is a potent mix of excitement, hope, fear, and delight. The thrill of the chase, the possibility of rejection and loss, and the validation felt when mutual-connection sparks fly – it’s a rollercoaster of emotions that we are all drawn to and want to experience.
Interestingly, the emotions we feel with romantic love are not too dissimilar to those seen in crypto enthusiasts. This begs the question – are people ‘in love’ with crypto, and does the blindness we see in the heat of relationships also manifest in crypto traders? Is crypto love blind? The truth is, yes, the emotional states of fear, hope, delight, and excitement all play pivotal roles in influencing
the judgement and decision-making of people in the cryptocurrency market, just as they do in the dating market.
Of all three emotions – fear, hope/delight, excitement – it is fear that has the most significant influence, such as the fear of losing money or the fear of missing opportunities. The presence of fear can lead to panic selling during market downturns, exacerbating price declines. Research indicates that fear and worry are more prevalent in traders when more rational risk-control measures such as stoploss orders are not applied, highlighting the emotional impact of market volatility.
Hope and delight drive us to seek higher returns, often leading to speculative investments in highly
volatile assets. The skewness index, which measures market sentiment, has been found to capture hope and delight more than fear, indicating that positive returns are often associated with increased excitement and speculative behaviours.
Then there is the thrill of the chase – the excitement of potential high returns that can lead to impulsive trading decisions. This excitement is fuelled by social media and sensational news stories, which can amplify emotional responses and lead to irrational trading behaviours. Studies have shown that individual investors are more susceptible to the emotional sway of online news, leading to increased trading intensity and market volatility. The ‘love’ phenomenon is driven by several psychological processes and behavioural biases that significantly influence our judgement and decision-making.
Anyone with experience in cryptocurrency knows that its trading is characterised by high volatility and the continuous availability of new and unknown markets, which can lead to excessive over-spending and compulsive checking. Traders often overestimate their knowledge and skills, believing they can predict market movements more accurately than they can. The fear of missing out (FOMO) on potential profits can lead to impulsive buying decisions, even when market conditions are unfavourable. This often leads to people becoming compulsive and obsessive with the things they’ve invested time and money into.
Sounds like the dating behaviour of someone living in a big city, doesn’t it?
So, what should we do about it? How do we ensure the love of crypto isn’t blinding us to things that seem obvious to those not in love? Well, maybe we need to take a leaf out of the dating-advice book and look at the three things that blind us to good decision-making in matters of the heart.
• Optimism and overconfidence bias This leads us to believe we have a superior advantage over others, overestimating our knowledge, influence, or skills, resulting in excessive risktaking. This bias has been shown to be particularly
significant among young investors who tend to be a little ‘loose’ in what they are attracted to (cryptowise, that is). One good strategy to mitigate this bias is to look at what the worst-case scenario is, and then assume that the truth is halfway between what you want and what the worst could be.
• Herding effect This is really strong in crypto, where people are more attracted to things that others are attracted to. If others show an attraction for something (or someone), we’re more likely to rate the focus of attention as more attractive, irrespective of the reality. This is what leads to market bubbles and crashes, amplifying market trends and contributing to extreme price movements. To counter this, try to focus more on the raw data and the facts rather than what news or social media might be presenting to you. Ask yourself if this was a stock in any other industry (such as finance or commodities), would you think the same way?
• FOMO This causes us to avoid actions that might result in regret or loss. Regret aversion can lead to holding onto losing positions for too long, while loss aversion can result in selling winning positions too early. To reduce the impact of FOMO, set up a decision-making framework before you invest, which will trigger different sell or buy rules based on pre-determined numbers rather than relying on your decision making when you’re in the heat of the moment.
It’s no wonder engaging with cryptocurrency is complex, it plays on the same emotions that make navigating romantic relationships so interesting and confusing. Understanding and more skilfully dealing with these psychological influences is crucial for better decision making in all areas of our life. Crypto love is blind – making sure you’re not ‘in love’ with crypto will go a long way to ironing out the rollercoaster of crypto fortunes. n
Phil Slade is a behavioural economist, psychologist and co-founder of Emotional Intelligence company Switch4Schools.
People are more attracted to things that others are attracted to.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
But as then Labor leader Bill Shorten discovered in the 2019 election, cuts to property tax concessions are electoral poison. (Labor also took the property investment changes to the 2016 election.) In 2021, Labor officially dropped the investment property changes from its policies, and it would seem unlikely they will be resurrected.
THE CONCESSIONS IN SHORT
The arguments centre around two key tax benefits: negative gearing and the capital gains discount.
First, negative gearing. Property investors are allowed under our tax rules to claim a deduction for the costs of their investment, in much the same way that business owners can claim their expenses. So, along with things such as maintenance and agent fees, they can claim the interest paid on borrowings to buy the property.
It’s worth noting that not everyone who owns an investment property is negatively geared. If the rent you get from the property is more than those expenses, you will pay tax on what is left after claiming your deductions. But when you’re making a loss on your investment because your expenses exceed the rent you receive, you can claim the extra deductions against other income, such as salary or wages.
The upshot is that you pay less tax than you otherwise would on your normal income, which has led to claims that taxpayers are helping to fund investment property purchases.
The capital gains tax discount sweetens the deal as property investors only pay tax on half of any capital gains they make, meaning you pay your full tax rate on your income but only half on your capital gains. Again, it’s worth noting that the discounted capital gain is added to your other income at tax time, which often means you get pushed into a higher tax bracket and pay a higher tax rate on the gain than your other income. But even so, this still makes investing in property much more taxeffective than working for a living.
NOT JUST PROPERTY
Critics of negative gearing and the capital gains tax discount often neglect to
mention that these rules don’t just apply to property. They also apply to other income-producing investments, such as shares and managed investments. So any reforms would either require property to be treated differently to other investments or result in an unintended crackdown on these investments too.
WEIGHING UP THE OPTIONS
Many proposals have been put forward over recent years, but a common theme is to quarantine negative gearing so it can only be used as a deduction against income from the underlying investment. So if you bought a rental unit, you could still deduct your interest and other expenses against the rent you earn each year. But any extra deductions are held aside and can only be used to offset future income (or gains) from the property.
As this would be an unpopular option with existing investors, most proposals advocate a phasing in of any changes. The simplest proposal by Senators Pocock and Lambie grandfathered all existing investors so that they would be exempt from the proposed changes to both negative gearing and the capital gains tax discount.
Other proposals would distinguish between different types of property investment. For example, the nowditched Labor policy would have limited negative gearing to new properties purchased after a certain date. In theory this would free up existing home purchases for first home buyers.
Some proposals have also canvassed limiting the benefits to one investment property or disallowing deductions on vacant properties – currently a
property must be available to rent for deductions to be claimed. Both proposals were among the Pocock/Lambie options. Labor had also proposed reducing the CGT discount to 25%.
WOULD IT WORK?
There are two main reasons cited for cutting back these tax concessions. Soaring home prices are making it difficult for first home buyers to get into the market. Reformers say these buyers are competing against investors who have an unfair advantage. Removing those tax breaks would level the playing field. The other argument is the cost of these concessions to the Federal budget and whether that money would be better used elsewhere.
The housing industry has warned, however, that policies discouraging people from becoming landlords would push up rents and make life tougher for people who don’t own their own homes.
DID YOU KNOW?
According to Treasury, an estimated 2.4 million people claimed $48.1 billion of rental deductions in 2020-21. This resulted in a total tax reduction of $17.1 billion. Of the total number of people with rental deductions, almost half (1.1 million) were negatively geared, which added up to total rental losses of $7.8 billion. These rental losses provided a tax benefit of about $2.7 billion.
The experience with cutbacks is inconclusive. New Zealand reined in property tax concessions in 2021, a decision that was overturned earlier this year. While the evidence shows a lower proportion of loans went to property investors during this period, so many other factors were at play that the effect the policy change had on prices and rents is unclear. Similarly, when the Hawke government reined in negative gearing in 1985, rents went up in Sydney and Perth but not nationally, suggesting more localised factors were at play. With the sharemarket booming at this time, and interest rates high, it was also more
BEST-CASE SCENARIO
It’s an interesting question and it depends on your perspective. First home buyers would probably champion anything that resulted in fewer investors competing against them in the market, especially if it made homes more affordable. But investors would be up in arms, in particular if it threatened their existing investment strategy.
WORST-CASE SCENARIO
As past experiences here and in New Zealand have shown, changes need to be widely accepted and long lasting to have any real impact. On-off changes just disrupt people’s financial decisions and have questionable outcomes.
THE WILD CARD
Despite the arguments that can be mounted on both sides of this debate, politics will be the big decider.
attractive for investors to switch out of property into shares than it might otherwise have been. n
Read more of Annette’s columns online at moneymag.com.au/author/ annette-sampson.
Fidelity
Money lessons the kids need to
know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
My kids switch off when I bring up topics such as superannuation, insurance, spending and saving. I have to choose a time when they are receptive to a dose of parental wisdom, otherwise they claim to be too busy to chat. They are working full-time: exhausted and snowed under. But I don’t want my kids making the same mistakes I made, some of which have been shockers, particularly when I was young and didn’t take much notice of what my parents told me. So here are eight important financial conversations to have with your children:
1Be aware of your consumption
I spent a lot of money on clothes and shoes in my early adult years and I dined
out at the drop of a hat. I was in a pattern of unhealthy consumption, using shopping as a compensation for life’s stresses, which kept me juggling credit card debt. Credit cards and buy now, pay later programs are not a good idea for young people. Being aware of why they are spending money and their black-hole shopping patterns can help curb their spending. Spending apps that categorise where their money is going can help.
2 Don’t spend too much on cars
I bought a cheap, old car from an unknown private seller and had to replace the engine a couple of months later. On the rebound I bought an unattractive, discounted new car. It is
easy to get into debt paying for a car and its running costs. I often refer to annual data on the costs of running a vehicle because it is sobering. For instance, the cost of running a medium-size car in Australia is $431 per week, according to Compare the Market.
I tell my kids and their partners not to get emotional about cars and to find ways to keep their transport costs down. Even if you own a car, living on a good public transport route can cut costs for fuel, insurance, tolls, parking and the depreciation of a car.
3 Keep an eye on your super Raiding your superannuation balance derails the momentum of
compounding interest. I took out my superannuation early to pay a large overseas phone bill that I’d run up with my then fiancé. We broke up. It was in the days when you could withdraw your super for no reason because preservation wasn’t in effect. And when I decided to check my payslip one day, I discovered to my horror that one of my employers was paying my super to someone else in the company by mistake. Super is important and I want my kids to stay on top of it so that they are on track for a comfortable retirement.
They should check that their employer is paying the 11% (11.5% from July 1), and that their insurance covering death, total and permanent disability insurance is through their super. If they elect to, salary continuance can be bought through super too.
4
Learn to cook
My mother cooked the same meal for dinner five or six nights a week. I wasn’t a great cook when I was a young adult. When my kids were small, I cooked pasta and bought sweet muffins every day. I have become a better cook and am aware of the health consequences of what we eat, and don’t spend much on eating out and takeaway.
As parents we need to be good cooks and encourage our kids to cook too. One way to get them on board is to ask them to cook a meal once a week, starting in their teenage years, so when they become independent, they will know how to plan and cook meals. Instead of going out to restaurants, they can invite friends for a
potluck dinner where everyone brings a plate to the table.
5 Be proactive about promotions
I didn’t actively manage my promotions at work. In the competitive world of journalism, I tended to rely on job offers from other employers to wrangle a pay rise. My bosses – like so many – weren’t great at focusing on staff development. Making it crystal clear that you want to move ahead and are prepared to take on extra responsibilities and training to equip you for the next step is a better approach than waiting to be noticed.
6 Don’t neglect insurance
I have had two new cars stolen, three home burglaries and a fire in my kitchen that almost got out of hand.
Insurance is valuable and it’s not a good idea to ignore it. The cost of insurance can be reduced by accepting a higher excess. Young people might need help from their parents to understand the importance of insurance. They may not see the point of taking out travel or home and contents insurance or private health insurance, but it can help them avoid a big hit to their finances if there is a disaster.
7 Holiday better and cheaper
I have booked last-minute holidays and paid a premium for airfares and accommodation. A hidden cost of holidays is the opportunity cost – annual
BIRTHDAY TH
leave is finite so if you choose a bad holiday experience, you may not have a second chance for another year. Shortterm accommodation, such as Airbnb, gives people more options than hotels, motels and resorts. A holiday apartment with some kitchen facilities means every meal doesn’t need to be in a restaurant. Australia has plenty of great natural sights that are affordable to explore.
8 Don’t fall for hot investment tips
I’ve bought shares in companies because a friend or an ‘expert’ said it was a sure thing. I believed the hype. I lost all my money on two of them – a painful but valuable lesson.
There is nothing you will hear about a large, listed company on the ASX that is not already reflected in its share price. If you hear a hot tip about a lesser known company, you could easily be a victim of a ‘pump and dump’ where you are enticed to be a financial lemming following the price up a hill and over a cliff. If you hear about a private investment opportunity in a small business or property syndicate, chances are it is desperate to raise money because larger investors with deeper pockets don’t like the look of it.
Instead of giving into a fear of missing out, stick to traditional diversified, lowfee investments such as exchange traded funds. n
Read more of Susan’s columns online at moneymag.com.au/author/susan-hely.
CONSUMER FINANCE AWARDS 2023
HOW WE CHOSE THE BEST
To bring you this year’s Consumer Finance Awards, Rainmaker Information worked with Money to develop a readership questionnaire to find out from subscribers which banks they used and how they rated them for products and features, customer service and more. The life insurance awards research was conducted by Rainmaker Information in partnership with Plan For Life. Rainmaker’s managing director CHRISTOPHER PAGE explains how we did it.
NON-BANK LENDER OF THE YEAR
BANK OF THE YEAR –CUSTOMER SERVICE
MONEY MINDER OF THE YEAR
BANK OF THE YEAR
The winner had the highest overall composite rating scores across product and features, customer service and digital experience. Only national full-service banks were eligible to win this premier award.
WINNER: MACQUARIE BANK
CUSTOMER-OWNED INSTITUTION OF THE YEAR
Similar to Bank of the Year but only full-service customer-owned banks were eligible to win this premier award.
WINNER: BANK AUSTRALIA
BUSINESS BANK OF THE YEAR
There’s more to being a leading business bank than just offering a good deal on business accounts and loans. This is why this year Rainmaker’s methodology identified the leading national full-service business banks that offered the most comprehensive services across business accounts, loans, credit cards, term deposits, currency management, cyber risk and fraud protection, pointof-sale and ecommerce, international transactions and merchant support.
WINNER: COMMONWEALTH BANK
The winner was the nonbank lending institution judged by Rainmaker research to score highest across seven core dimensions: product range, business strength, ability to raise lending capital, innovation, corporate transparency, loan quality and customer depth.
WINNER: LA TROBE FINANCIAL
BANK OF THE YEAR – YOUNG PEOPLE
The banking provider that achieved the highest overall composite rating scores across products and features, customer service and digital experience from Money subscribers aged 18 to 34 years.
WINNER: ING BANK
BANK OF THE YEAR – RETIREES
The banking provider that achieved the highest overall composite rating scores across products and features, customer service and digital experience from subscribers aged 55 or older.
WINNER: BENDIGO BANK
BANK OF THE YEAR – PRODUCT
The banking provider that achieved the highest overall rating scores for products and features.
WINNER: UBANK
The banking provider that achieved the highest overall ratings for customer service.
WINNER: BANK AUSTRALIA
BANK
OF THE YEAR – DIGITAL
The banking provider that achieved the highest overall rating scores for digital experience.
WINNER: UBANK
BANK OF THE YEAR – SAVERS
The banking provider that achieved the highest overall composite rating scores across products and features, customer service and digital experience from Money subscribers aged 35 to 54 years.
WINNER: GREAT SOUTHERN BANK
HOME LENDER OF THE YEAR
The banking provider that achieved the highest overall composite rating scores from Money subscribers for mortgage products and features, customer service and digital experience.
WINNER: MACQUARIE BANK
CREDIT CARD ISSUER OF
THE YEAR
The banking provider that achieved the highest overall composite rating scores from Money subscribers for credit card products and features, customer service and digital experience.
WINNER: COMMONWEALTH BANK
The banking provider that achieved the highest overall composite rating scores from Money subscribers for everyday savings accounts and term deposit products and features, customer service and digital experience.
WINNER: MACQUARIE BANK
INVESTMENT PROPERTY LENDER OF THE YEAR
The banking provider that achieved the highest overall composite rating scores from Money subscribers for investment mortgage products and features, customer service and digital experience.
WINNER: COMMONWEALTH BANK
INSURER OF THE YEAR
This category took into consideration home and contents and car insurance premium rates as well as holistic factors such as corporate strength, breadth of what the insurers deliver and how they support customers, customer engagement and reliability in paying claims.
WINNER: BUDGET DIRECT
DIRECT LIFE INSURANCE COVER OF THE YEAR
The winner was judged to be the best life insurance company across the key product sets of life insurance, funeral, trauma,
income protection and accident insurance, where these products are marketed directly to consumers, for example, online. Products were assessed across financial strength, product features, premium rates, service and market strength.
WINNER: NOBLEOAK
HEALTH AND WELLNESS COVER OF THE YEAR
The winner was judged to be the health and wellness life insurance product with the best overall scores across financial strength, product features, premium rates, service and market strength.
WINNER: METLIFE
LONGEVITY COVER OF THE YEAR
The winner was judged to be the best life insurance product designed to assist retirees in meeting the challenges of longevity, meaning ‘life expectancy’, by providing flexible and reliable incomestream solutions.
WINNER: CHALLENGER
MARGIN LENDER OF THE YEAR
The winner was judged by Rainmaker Information to achieve the highest score across core dimensions, spanning product and investment choice breadth, depth, research services, type of investment available, access to international markets and interest rates payable on loan products.
WINNER: LEVERAGED EQUITIES
INVESTMENT BOND PROVIDER OF THE YEAR
The winner was judged to be the investment bond with the best financial and strengths, product benefits, customer service, and support and training of financial advisers.
WINNER: GENERATION LIFE
The power of feedback
As you dive into this year’s Consumer Finance Awards, you’ll spot a clear trend: customers are reshaping the financial landscape. From banking apps that hide emergency savings to curb impulse spending to lightning-fast turnarounds on home loan applications, savvy customers are in a stronger position today to save time and earn more from their banking accounts. Fees are also sharper. No-frills banking comes with zero to negligible fees, while those with bells and whistles have lower fees, on average. In some cases, banks waive the charges when certain conditions are met.
Besides better features and lower fees, this year’s winners also stand out for their competitive rates, from high savings rates to low home loan rates.
We’d like to thank readers who participated in the Money banking preferences survey conducted in April this year. The 3300 responses are the cornerstone of this year’s results. For insurance and additional research on banking, thanks go to Christopher Page and Pooja Antil from Rainmaker and Plan For Life. They helped us assemble a formidable line-up of financial institutions worthy of your attention.
Above all, it’s the power of customer feedback that defined this year’s awards. Plenty of strong insights ahead to help you crank up your savings.
CONSUMER FINANCE AWARDS 2024
Michelle Baltazar, Editor-in-chief
Macquarie Bank
More than 90 different banks operate across Australia, leaving us spoilt for choice. Yet we also have one of the most concentrated banking sectors in the world. One bank is tackling the challenge head on and looks primed to turn the big four into the big five with its fresh approach to consumer banking.
In 2024, Macquarie Bank returns to the winner’s podium as Bank of the Year for the second consecutive year. It’s no mean feat in our competitive market and Ben Perham, head of personal banking at Macquarie Banking and Financial Services Group, says the win “demonstrates that our leading digital banking experience continues to resonate with our customers”.
It’s not just about a seamless digital experience. Macquarie is offering value for money. The Macquarie Transaction account is a game changer, allowing customers to earn a high return (4.75% at the time of writing) on their everyday money with no strings attached.
Macquarie’s Savings account dials the return up even higher, with bonus interest for the first four months, followed by a revert rate that matches the Transaction account. For savers who are wary of having to meet strict conditions to earn a decent return on their cash, both these Macquarie accounts will be very appealing.
“Customers don’t need to jump through hoops or meet a range of deposit requirements to receive a competitive rate,” says Perham. “Macquarie pays the same rate on both (savings and transaction) accounts, with no fees. So, Macquarie customers can have confidence that their savings are working hard for them however they choose to manage their money.”
On the mortgage front, Macquarie Bank’s home loans come with digital features and functionality designed to let borrowers manage their account in a way that best suits their personal circumstances.
As a guide, Macquarie’s Offset Home Loan allows borrowers to have up to 10 offset accounts. This may sound a lot, but it lets homeowners create different savings buckets to tick off a variety of personal goals while still cutting the cost of their home loan.
Instead of focusing solely on loan rates or fees, Macquarie Bank has made its fast loan turnaround times a key point of difference. Perham explains: “Customers tell us they love the market-leading turnaround times in the application stage, which enables them to make decisions with confidence.”
Macquarie is also working hard to protect customers’ money, with its digital verification app. “Customers have access to Macquarie Authenticator, our market-leading digital verification app, which provides actionable, real-time push notifications for transactions and account activity,” notes Perham.
“It means they can have peace of mind knowing they have control over their accounts.”
Bank Australia
Australia’s customer-owned institutions, also known as ‘mutuals’, have collectively amassed more than $131 billion in customer deposits. And they are living up to their reputation for having a laserlike focus on customer needs. A report by accounting firm KPMG found the top three contributors to growth across the mutuals in 2023 were better product pricing, new and tailored products, and better customer service.
This year’s winner, Bank Australia, has climbed from runner-up in 2023, and managing director Damien Walsh has a simple explanation for why the bank has hit the top of the leaderboard. Walsh says: “We know there have been a lot of changes for customers over the past couple of years. Increases to interest rates and a rising cost of living have put pressure on Australian households and the economy, and we’ve worked hard to make sure we’re supporting our customers in a range of ways.”
According to Walsh, a large portion of Bank Australia’s new customers have joined the bank based on “our commitment to make a positive impact for people and the planet”. He adds: “While we need to make sure our banking products are competitive, we know our customers want to see us use their money to provide products like our Clean Energy Home Loan, which offers a discounted rate to customers building sustainable homes.”
The upshot, according to Walsh, is that Bank Australia’s product offering is “aligned with our values, which connects us with our customers”.
Interestingly, Walsh says Bank Australia is seeing customers be more selective about where and how they choose to do their banking.
“With so much choice in the market, and the changing needs of consumers, we know each person needs to make financial decisions that best support their circumstances and values,” he says.
Importantly, Bank Australia is committed to supporting customers to have a positive impact on the world. As a guide, Bank Australia invests in industries that do good, not harm. That means no fossil fuels, weapons, tobacco or gambling.
The bank also claims to pay no executive bonuses. In addition, Bank Australia is the first Australian bank to own a conservation reserve; 2117 hectares located in Victoria, which is home to 283 species of native animals.
In terms of financial support, Bank Australia offers a range of savings accounts that can pay bonus interest when account holders deposit as little as $10 each month.
On the home loan front, Bank Australia offers customer-centric features such as an ‘eco pause’ that puts loan repayments on hold to help homeowners fund ‘green’ additions such as solar power or water tanks. A parental pause can see new mums and dads catch their breath in the early days of parenthood by pausing or halving mortgage repayments.
BUSINESS BANK OF THE YEAR
Commonwealth Bank
Australia’s 2.5 million-plus small businesses may not have the same capital or access to technology as the nation’s largest companies.
But the support and resources of a business-focused bank can help small enterprises compete with the big end of town.
Running a business is not for the fainthearted. But with more than 1 million small business customers, Commonwealth Bank is well-placed to understand and meet the needs of small ventures.
One in four businesses in Australia banks with Commonwealth Bank. Mike Vacy-Lyle, group executive for business banking, says, “Each one of these customers has CommBank’s core business banking product – a business transaction account.”
He explains: “This account is important to us and our customers. It allows customers to make and receive payments, so helps them run their business. For us, it is at the centre of our business banking strategy. By having a transaction account, we can get better insights into our customers’ businesses, which allows us to provide better products and services to meet their needs.”
Time is money, and when a small business wants finance to help run or expand the venture, they need access to funds quickly and efficiently. “That’s why we have delivered BizExpress,” says Vacy-Lyle. “It allows small
business customers to receive a real-time credit decision, and have the funds credited to their account within 20 minutes. This helps small businesses get immediate access to funding to support and grow their operations.”
The CommBank app is streamlining money management for small enterprises. It allows business owners to make and take payments, check statements, and access features to stay on top of cashflow. “Small business owners don’t want to have to visit a branch or call in order to contact their bank,” says Vacy-Lyle. “That’s why we focus so much on the CommBank app, which is designed to make it easier for business owners to do business, with new features and tools to help them access information and insights on the go.”
Scams and fraud are one area where a bank can offer vital support. In 2023, close to 5000 Australian businesses were impacted by scams, with total reported losses amounting to $29.5 million. Commonwealth Bank is taking action. “In the past year we invested $750 million to help protect customers against cybercrime, fraud and scams,” says Vacy-Lyle. “And we prevented or recovered more than $220 million in scams for our retail and business customers.”
Commonwealth Bank recently announced NameCheck, a security tool that helps reduce false billing scams – known as business-email compromise – as well as mistaken payments.
NON-BANK LENDER OF THE YEAR 2024
La Trobe Financial
Borrowers who can’t tick all the boxes that major banks require, including many self-employed people, often find solutions from non-bank lenders such as La Trobe Financial, 2024’s winner in this category. La Trobe, which has been part of Australia’s lending landscape since 1952, has won this award five years in a row.
“As Australia’s longest standing non-bank credit lender of size, with seven decades of experience building and innovating finance products, and now with more than $19 billion of assets under management, we have the heft and scale to be regularly considered as top choice by brokers and borrowers across Australia,” says Cory Bannister, La Trobe’s chief lending officer.
The breadth and depth of its product range –the broadest in the non-bank market – provides a product for every life stage, Bannister says. “We continue to write loans based on our ability to look at a scenario and provide an appropriately tailored solution for a borrower. We do not walk away when the scenario is complex or does not quite fit the box. In fact, that is where we excel.”
Automated lending, a feature of the major banks, is great for those who want to make a square peg fit into a square hole, Bannister says: “But there are a lot of ‘round peg’ borrowers who still need access to capital, and that has presented a unique opportunity for La Trobe to service those borrowers and
segments that have been left with little credit availability or support.”
One of the most popular products continues to be the Lite Doc loan, developed in the early 1990s. This caters for a wide range of selfemployed, from sole traders through to individuals. “For the self-employed, meeting the traditional income verification requirements (tax returns, payslips etc) can be challenging, but using the alternative methods of verification available under our Lite Doc loans, we are often able to assist what is a sizeable, and critical part of our economy, says Bannister.
La Trobe’s Bridging loan also continues to be popular. “There is a growing number of Australians looking to upgrade, or downsize, but who are reluctant to make a move in case they are left stranded, says Bannister. “Our Bridging loan can provide a buffer that provides the confidence required to initiate the transaction.”
In the current environment, La Trobe also sees some potential opportunities developing for investors, particularly self-managed super funds (SMSFs), looking to purchase residential property. “With property values having moderated, combined with record low vacancy rates providing a boost to rental yields, it can make residential property investment increasingly attractive,” says Bannister. “And for SMSFs, there is an additional benefit that they are somewhat insulated from the current inflationary pressures on living expenses.”
BANK OF THE YEAR – YOUNG PEOPLE
ING Bank
Soaring living costs have hit young
Australians particularly hard.
Research by Finder shows seven out of 10 Gen Zs are experiencing financial strain compared to one in four Baby Boomers.
At times like the present, when we’re in the midst of navigating a cost-of-living crisis, it’s worth looking for a bank account that can lend a helping hand to save on regular costs.
Hats off to ING Bank, which sees back-toback wins for this award. It’s no mean feat, but ING has pulled off Bank of the Year – Young People in 2023 and 2024 with products and features that deliver exceptional value.
The thing is that you don’t need to be young to benefit from the savings ING delivers.
An ING spokesperson says: “We don’t charge any monthly or account-keeping fees for our Orange Everyday account or on any of our savings products. We offer some of the best ongoing savings rates in the market and we have a seamless digital experience.”
When it comes to perks, the Orange Everyday account dishes up considerable benefits. Account holders can save on utility bills with a 1% cashback on eligible gas, electricity and water bill payments made from an Orange Everyday account using BPAY, direct debit or PayTo.
The maximum benefit is $100 per financial year, but every dollar saved counts. According to ING, in 2023 the bank returned an
impressive $7.8 million to customers through its 1% cashback on utilities feature.
For travellers (young and old), one of the star features of ING’s Orange Everyday account is unlimited international transaction fee rebates, and zero international transaction fees. It makes the Orange Everyday account a serious money saver if you’re planning a trip overseas.
Orange Everyday has a round-up feature that makes it possible to save while making purchases. Round each spend to the nearest $1 or $5, and have the spare change paid into your choice of an ING Savings Maximiser, ING home loan or your favourite charity.
By teaming an Orange Everyday account with ING’s Savings Maximiser, young savers can earn healthy bonus interest. Deposit at least $1000 monthly into an ING account and make at least five purchases with an ING card to earn 5.50% including bonus interest of 4.95%.
ING says the bank has “maintained one of the most competitive ongoing savings rates through our Savings Maximiser bonus rate, which has delivered approximately $650 million in bonus interest to customers”.
ING also offers a range of home loans to help first home buyers get onto the property ladder. The Mortgage Simplifier loan comes with no ongoing fees, unlimited additional repayments and free redraw. Pair it with the round-up feature of the Orange Everyday account to enjoy effortless home loan savings.
Bendigo Bank
Australia’s 4.1 million retirees may be relishing higher returns on deposits, but it’s still important for seniors to look for a bank that understands – and meets – their broader financial needs.
Richard Fennell, Bendigo Bank’s chief customer officer of consumer banking, points to a key reason why Bendigo Bank is so appealing for retirees. He says: “Many of our retiree customers are highly active in their local communities, and our philosophy of feeding into community prosperity – not off it – resonates very strongly with them.”
He adds that Bendigo Bank operates more full-service branches per customer than the other banks, and says, “Growing numbers of retirees love the convenience of our app and the easy accessibility of our competitive online products and services.”
Of course, after what may be years of banking with the same institution, retirees may be tempted to stick with the status quo. But this sort of rusted-on loyalty can come at a cost.
“We’ve all heard of the ‘loyalty tax’ when it comes to staying with the same provider year after year, whether that be for utilities or banking. But loyalty to one bank could be costing you valuable interest,” says Fennell. It’s not just about the potential to miss out on competitive returns. Fennell says that banks regularly introduce new or updated products.
WHY THEY WON
By sticking with outdated ‘legacy’ products, retirees can miss out on the latest account features and functions.
“That’s why we encourage our customers to get in touch with us periodically to review their current needs and ensure the banking products they have with us are still the right fit and best value for their needs,” says Fennell.
A number of Bendigo Bank’s products are well-suited to retirees. Fennell says the bank’s EasySaver, Reward Saver and Easy Retirement accounts can tick plenty of boxes for self-funded retirees, or those who receive the age pension or Department of Veterans’ Affairs service pension.
He adds, “Our Bendigo Bank savings accounts are fully featured transaction accounts that include a Mastercard debit card, with access to e-banking or our full-service branch network.
“Points of difference include an attractive interest rate no matter how much you save or how much you transact, eligibility for a bonus rate to help you save more and reach your goals sooner, or stepped interest rates, depending on the product.”
As Fennell observes, the nature of retirement has changed. “Many retirees have very active lifestyles with complex financial needs that we can still help them with, either online, over the phone or over the counter. As a bank, we are digital by design, and human when it matters, and we recognise that customer preferences and behaviours are changing rapidly.”
Ubank
Life is complicated enough without having to switch between banks to manage our money. When a bank offers a variety of products it can become a one-stop shop. But when it includes features and functions that make money management easier, it’s a win for customers.
Ubank has been part of Australia’s banking scene since 2008. And backed by the support of its far bigger owner NAB, Ubank has developed a product range that offers real innovations.
As a guide, Ubank’s Bills account offers a separate place, which works in conjunction with the bank’s Spend and Save accounts, to set aside money for bills and help customers clearly see what can be spent or saved.
Connect Account allows customers to connect to accounts from more than 140 other financial institutions, including super and investments, to get the whole picture of their finances within the Ubank app. Plus, with an easy savings graph, customers can see their total savings across all their connected accounts.
These innovations reflect recent Ubank research, which found the main pain points for money management, particularly among 18- to 35-year-olds, are saving money (77%), knowing if bills and expenses are covered (44%) and knowing how much is left to spend after bills and savings (40%).
WHY THEY WON
“We also know that our customers are increasingly facing the same challenges week on week,” says Andrew Morrison, Ubank’s chief product and growth officer. “That’s why we launched new app features and functionality including Pay Cycle and Bill Planner. “Now customers can log into the Ubank app and manually add and edit bill reminders, aligning them with their pay cycles for better budgeting.”
According to Morrison, Ubank customers are frequently using buy now, pay later and subscription services, making split payments and micro transactions, and paying with their digital wallets and wearables. “This can lead to incremental and sometimes unintended spending,” he explains. “Often we don’t realise the impact this has on achieving bigger goals, such as saving for a car, holiday or first home. We want to help our customers make thoughtful spending decisions in the day-to-day,” he adds.
Morrison says the bank’s climb from second place in this award category in 2023, reflects Ubank’s “refreshed strategy and a mandate to grow and scale”. He adds: “With the completion of our migration onto new technology to improve the customer experience, we have been working hard to deliver products and services designed to serve Australia’s tech-savvy demographic.” Ubank isn’t resting on its laurels. “We have new and improved features and functionality rolling out over the coming months,” says Morrison.
BANK OF THE YEAR – CUSTOMER SERVICE
Bank Australia
Customer service that keeps pace with the changing way customers are banking is a key strength of Bank Australia, winner of Bank of the Year – Customer Service.
“How customers are banking across the industry is changing and we’re committed to investing in our contact centre and technology to ensure that we are keeping pace with customer growth, demand and expectations into the future,” says Damien Walsh, managing director of Bank Australia, which placed second last year.
Walsh points to the work of the bank’s customerfacing teams to support customers. “We have strong customer satisfaction ratings, and our team plays a huge part in that as the first point of contact for many of our customers.” Bank Australia’s most recent customer satisfaction score of 88.6% demonstrates the great job our people are doing to help our customers, Walsh says. “As we’ve grown quickly, we’ve worked hard to increase customer-service capacity through recruitment and establishing diverse locations for our contact centres and operations to serve a greater number of customers more efficiently.
“We’re lucky to have passionate, caring and values-aligned staff who are committed to supporting our customers. We provide a range of training and resources that support our people, and as the banking sector changes, we’re looking to continue to provide the best environment, technology and staff support we can.”
Being a customer-owned bank means putting customers at the centre of operations, Walsh says. “Whether it’s hearing how our customers feel about our products and services, or the areas they want to see have greater impact, we know it’s important to ensure we provide the best experience we can.”
On handling customer complaints, Walsh says the bank works closely with dissatisfied customers, with several formal and informal avenues to provide a resolution.
“We’re also proud to be a part of the customerowned banking community, says Walsh. “With people as their priority, customer-owned banks have always put customers first and we’re looking forward to continuing this focus into the future.
“This award is a great acknowledgement of the work our team is doing for our customers and how we’ll continue to play a part across the sector.”
Bendigo Bank placed second, after coming in third last year. It is now one of Australia’s biggest banks but retains a strong community focus with more than 300 community branches and returns some profits to the communities that have generated them.
Online bank Ubank, which is owned by NAB, took out third place. It aims to put customers’ interests at the forefront of everything it does. “We’re working towards empowering the digital generation to be more successful with money,” says the Ubank website.
BANK OF THE YEAR – DIGITAL 2024
Ubank
Technology is reshaping the way we manage our money, and a survey of the major banks found 98.9% of banking transactions are made online and through apps. Just 0.7% of transactions are completed in branches, which means all banks need a strong digital offering, and it’s no surprise that an online-only bank, Ubank, has trumped this award category.
At the heart of its digital offering is Ubank’s app, which has progressively rolled out new features and functionality to help customers better manage their bills.
The rising cost of living is seeing Gen Z Australians embrace cash-conscious behaviours such as ‘loud budgeting’ and ‘no- and lowspending’ months. Andrew Morrison, Ubank’s chief product and growth officer, says, “The first thing our customers want to know is how long the money they have in their Spend account has to last until they get paid next.” Ubank has responded with app features such as Pay Cycle and Bill Planner that support cash-conscious approaches and help alleviate the stress of making financial decisions.
Unlike some digital-only banks, Ubank, which is owned by NAB, offers a wide product suite. “We offer competitive rates on our deposit and home-lending products, and we have our sights set on becoming the leading digital lender in the Australian market for simple loans,” says Morrison.
WON
Amid the tech advances, Ubank isn’t losing sight of the need for great service. “As a digital-only bank we differentiate ourselves on customer experience,” notes Morrison. “We listen to feedback from customers, employees, and partners. For example, we recently launched a research panel where we actively engage with them to understand app usability. Based on this, we can make fast improvements and add new features that our customers are asking for.”
Morrison adds that Ubank is taking a frontfoot approach to security. “We work closely with industry, regulators, and law enforcement to help keep our customers and the community safe,” he explains. “We’re blocking payments to certain high risk crypto exchanges in line with industry and we use biometrics security to prevent misuse of accounts through our partner BioCatch. We’ve also strengthened support from our Contact Centre, have a dedicated fraud line and we have joined the Fraud Reporting Exchange.”
Morrison points out that the bank is seeing fraud and scams occur on newer platforms such as Instagram and TikTok. And it’s taking early action. “Ubank is the most followed bank in Australia with more than 160,000 followers; 90% of whom are based in Australia,” he says. “So, we use this channel to educate our customers to be cautious and vigilant when it comes to their banking activities and sharing personal information, and our scams awareness posts are some of our most engaged-with posts to date.”
BANK OF THE YEAR – SAVERS
Great Southern Bank
The cost-of-living crunch may be putting pressure on household budgets, but Australians are sitting on a mountain of cash savings worth more than $1.6 trillion. It’s worth putting that spare cash to work while interest rates remain high, and a savings account with smart features lets us do just that.
Great Southern Bank offers a suite of savings accounts including a Home Saver plus a Goal Saver. It reflects the bank’s research, which found Australians require distinctly different types of savings accounts at different points in their lives.
Megan Keleher, chief customer officer at Great Southern Bank, says, “We’ve created a savings journey for customers that seeks to provide them with the options tailored to their different needs over time”. The common thread is that Great Southern Bank’s savings accounts all pay competitive rates, charge zero monthly account fees, and allow customers to access their account online at any time.
Great Southern Bank customers can start their savings journey with a Youth eSaver account designed for savers up to the age of 17 years.
As the bank’s customers grow older, Keleher says they often transition to the Goal Saver account, aimed at 18- to 24-year-olds. She adds: “By that time, customers are often saving for something specific, a car, for example, or saving up to pay for higher education. The Goal Saver account encourages saving by paying bonus
WHY THEY WON
interest when the customer makes regular monthly deposits.”
From there, Keleher says customers often move on to the Home Saver account, which is “aligned to the bank’s purpose of helping all Australians own their own home”.
Complementing these accounts are Great Southern Bank’s other savings accounts – the eSaver Flexi and Advantage Saver as well as a range of term deposits.
Along with high rates, Great Southern Bank’s savings accounts feature innovative tools, such as The Vault and The Boost, that support customers looking for clever ways to grow savings.
The Vault hides savings from customers when they login to mobile or online banking, removing the temptation to spend. As Keleher says, “out of sight means out of mind”. Customers can still access their funds in an emergency and create a motivational message in The Vault to reduce the urge to dip into their cash stash.
The Boost is essentially a round-up feature that lets customers automatically save when they spend. Account holders can select an amount between 1 cent and $5 that automatically transfers to their savings account every time they make a purchase using their Great Southern Bank Visa Debit card. It’s possible to boost multiple accounts, enabling customers to top up, say, their home deposit, their holiday fund, and still save for something special all at the same time.
HOME LENDER OF THE YEAR 2024
Macquarie Bank
Despite rising property values, Australia’s home loan market continues to soar. The 12 months to March 2024 saw an 18% jump in mortgage lending, equal to an extra $27.64 billion in new home loans. Given today’s high interest rates, borrowers need to cast their net wide, and it makes financial sense to look for a lender offering that rare combination of value, rapid turnarounds, and useful loan features that allow homeowners to kick personal goals.
Macquarie Bank has climbed from runner up in 2023 to take out this award in 2024. In a competitive home loan market, it’s testament to Macquarie’s determination to deliver what today’s home buyers are looking for.
Ben Perham, the head of personal banking at Macquarie Banking and Financial Services Group, says: “As a tier one lender, we continue to enhance our offering to ensure we’re providing an exceptional digital banking experience for our home loan customers.”
Unlike some lenders, Macquarie Bank doesn’t have an overly extensive menu of mortgages, but the must-haves are all there including a variable loan, offset home loan, split loan and fixed rate options.
Perham believes the range of “intuitive” digital features that come with a Macquarie home loan is proving to be a strong differentiator in the market. He explains: “Macquarie home loan customers can add
up to 10 offset accounts to enable their savings to reduce the amount of interest they pay on the variable portion of their loan, as well as being able to divide their home loan into multiple accounts so they can take advantage of the benefits of both fixed and variable loan accounts.”
One aspect of lending that Macquarie is capitalising on is the bank’s commitment to fast loan turnaround times. This has become something of a hallmark for Macquarie Bank, and it makes sense in today’s environment where homes are selling in as little as 10 days, according to CoreLogic. A bank that drags the chain with loan approval can see home buyers miss out on their preferred property.
Perham adds: “By delivering market-leading turnaround times, competitive rates and fees, and digital self-service options, Macquarie customers can manage their home loans with confidence and in a way that best suits their circumstances.”
Macquarie Bank is also rewarding savers who can stump up a big deposit, while not turning its back on home buyers with more modest savings.
As a guide, Macquarie offers its best owneroccupied rates for customers who need to borrow 60% or less of a property’s value. However, first home buyers with a small deposit are not overlooked and can take advantage of a loan option to buy with a minimum 5% deposit.
CREDIT CARD ISSUER OF THE YEAR
Australia’s credit card market is undergoing a revival. Following a downturn in card use between 2017 and 2022, cost-of-living pressures have seen growing numbers of Australians embrace credit cards.
Finder’s 2024 Credit Card Report reveals that since April 2022 Australians have opened more than 356,000 new credit card accounts.
Increased use of credit cards can set off alarm bells, but when used wisely, credit cards have plenty of advantages. Pay off purchases within the interest-free period and it’s possible to avoid interest charges altogether. Pick a low-rate or lowfee card, and ongoing costs can be minimised.
Commonwealth Bank makes all these options – and more – achievable through its extensive suite of credit cards. In fact, with six credit cards to choose from, it’s fair to say Commonwealth Bank has a card for everyone.
Vibha Kanwar, general manager of credit cards, says, “We believe CommBank credit cards resonate with consumers for a few reasons.”
The first is variety. “We offer a wide range of cards to suit different customer needs and goals, from rewards to low-interest, low-fee and no-interest credit cards,” says Kanwar.
Commonwealth Bank also makes a point of giving credit card customers value for money. “We strive to provide competitive rates, rewards programs and cardholder benefits that deliver real savings and perks,” notes Kanwar.
She adds: “We lead the market in offering monthly card fees across all our cards, which can make them more affordable, especially when combined with fee-waiver options on our Low Fee, Smart and Ultimate credit cards.”
Commonwealth Bank’s credit cards offer SurePay, a feature that gives customers greater control of card repayments by allowing them to put eligible purchases or balances on a structured monthly repayment plan over a set term.
A range of tools including a spend tracker are also available to help Commonwealth Bank customers effectively manage their credit card while keeping a lid on interest costs. “Our integrated Spend Tracker automatically categorises your transactions, giving you clear insights into your spending habits,” says Kanwar.
More broadly though, there is something for everyone. Commonwealth Bank’s Neo card has a 0% purchase interest rate, and instead charges a flat monthly fee as low as $15. Cash advances aren’t usually on the menu, but cardholders can also save with $0 international transaction fees.
At the other end of the spectrum, the bank’s Ultimate Awards credit card lets cardholders earn up to three Awards points or 1.2 Qantas Points for every dollar spent on eligible purchases. The card rate is 20.99% but there are 44 days interest-free to take advantage of.
Commonwealth Bank’s online card-selector tool that compares features and benefits makes it easier to pick the right card for your needs.
MONEY MINDER OF THE YEAR 2024
Macquarie Bank
Australians are collectively sitting on a $1.4 trillion mountain of bank deposits. But a scathing report in late 2023 by competition watchdog the Australian Competition & Consumer Commission (ACCC) found plenty of savers are being short-changed on their spare cash. Our Money Minder of the Year is putting the power to earn high interest back into the hands of consumers. Macquarie Bank has climbed from runner-up in this award category last year to hit the top spot in 2024. And it’s easy to see why. At a time when Australians are battling higher living costs, Macquarie Bank is helping consumers put every dollar to work, earning a decent return. Macquarie Bank’s Transaction account has thrown the ‘rule book’ out the window, paying a whopping 4.75% on everyday money. Yes, this is a transaction account. It comes with a digital debit card so you can put the account to work straightaway without having to check the mailbox to see when your card has arrived. But what really sets Macquarie’s Transaction account apart is that it pays a high return. No minimum withdrawals. No maximum deposits each month. Just a healthy return from day one. Keen to earn more? Macquarie delivers with a Savings account that pays bonus interest for the first four months, and then reverts to the same high rate as the Transaction account.
Olivia McArdle, the head of payments and deposits at Macquarie Banking and Financial Services Group, says: “With the Macquarie Savings and Transaction accounts, customers don’t have to jump through hoops or meet a range of conditions to access the rate on offer.
“Macquarie customers receive a competitive rate, but they choose to manage their money, and the feedback from customers is that they love the transparency and simplicity of these products.”
McArdle cautions: “It’s important for consumers to be aware of conditions that can come with some savings accounts, such as deposit, withdrawal or minimum balance requirements.” It’s a reasonable warning given that the ACCC found seven out of 10 ‘bonus interest’ accounts paid no bonus interest in any given month in the first six months of 2023.
Looking beyond healthy returns, McArdle says consumers should consider “whether an account offers additional perks”. As a true money minder, Macquarie has stepped up to the plate, giving customers fee-free access to more than 24,000 ATMs across Australia. If you’re charged a fee, Macquarie will automatically refund the cost to your account.
If you’re keen to resist the urge to dip into savings, Macquarie’s term deposits are worth a look. McArdle says, “Customers with a transaction account can apply with just a few clicks for a term deposit through the Macquarie Mobile Banking app.”
INVESTMENT PROPERTY LENDER OF THE YEAR
Commonwealth Bank
Property investors accounted for 36% of all housing finance in December 2023, according to Australian Bureau of Statistics figures. This was a six-year high and double the 18% share of housing finance that went to first home buyers. Money has recognised the importance of property investors by introducing a new award, Investment Property Lender of the Year, which has been won by Commonwealth Bank. “We have a range of different home loans to suit property investors, including our wealth package, standard variable or extra and fixed rate home loans,” says Dr Michael Baumann, Commonwealth Bank’s executive general manager of home buying.
“All of our products can be tailored to suit an investor’s unique financial situation with features like multiple offset accounts, unlimited redraws, additional repayments, top-ups, and the option to split their loan.”
Commonwealth Bank is always looking for ways to enhance and evolve its product and service offering in line with customers’ changing needs, Dr Baumann says. “In recent years, we launched our Property Share loan product that helps buyers split the cost of buying a home with their family and friends; as well as the CommBank Home Hub, which provides property buyers with all the tools and information that they need to make informed purchasing decisions.”
Another feature of Home Hub is that it enables property investors to get an understanding of
the current value of their investment property and the available equity, Dr Baumann says. Millennials are the most active generation when it comes to buying investment properties, adds Dr Baumann. According to Commonwealth Bank data, 46% of the bank’s new property investors in 2023 were made up of Millennials, followed by Gen X who accounted for 37% of all new investment property purchases throughout the calendar year. Nationally, the average age of property investors was 43 years, and the average loan size was just over $500,000.
“Interestingly, what we continue to see from many Australians is the inclination to ‘rentvest’, buying property where they can afford and then renting where they wish to live,” says Dr Baumann. “Rentvesting gives Australians the chance to get their foot on the property ladder sooner rather than later, and purchase a property in a lower cost area without having to give up the lifestyle they have become accustomed to when renting.”
In second place, Westpac provides information, research, and calculators for property investors.
There are tips and guides, such as reports on properties you may be considering purchasing. Coming in third, ANZ offers investors a range of loans, including a fixed residential investment loan, which allows you to pre-pay the following year’s interest, enabling you to structure your interest payments for tax purposes.
Budget Direct
With insurance premiums rising faster than inflation adding to cost-of-living pressures being felt by many Australians, it’s important to look for value in your insurer. According to Budget Direct, which has won this award for eight consecutive years, it offers award-winning insurance for less. “Budget Direct’s continual focus on process improvement allows us to pass savings onto customers, resulting in greatvalue reliable insurance for Australians,” says Jonathan Kerr, chief growth officer at Auto & General, the brand’s underwriter.
The insurer offers a wide range of coverage including car and motorbike insurance, roadside assistance, home and contents insurance, pet insurance and travel insurance. “We are particularly excited by our new pet insurance product line, launched in June 2023,” says Kerr.
Customers who buy their policies online receive sizeable discounts on their first year’s premiums ranging from 15% on car, motorcycle, pet and travel to 30% on a combined home and contents policy.
Known for its innovative advertising with the theme ‘Insurance Solved’, Budget Direct says it has provided solutions for more than three million Australians since 2000.
“We work hard to find the right balance between people-delivered care and attention, and really smart technology behind the scenes to accelerate the process,” says Kerr.
Save on your insurance premiums by only paying for what you want, it says on budgetdirect. com.au. For example, you can customise your insurance cover by adding one or more optional extras to your policy, such as a hire car following an accident, or flood cover for your home.
“Put Budget Direct to the test, compare your current renewal with our price and if it’s right for you, join the millions of Australians already with Budget Direct,” says Kerr.
Regarding claims, the insurer advises policy holders to make contact as soon as they need to make a claim. “You can lodge your claim over the phone or online at any time of the day or night, 365 days a year,” it says on the website.
QBE , which has been insuring Australians for more than 130 years, came in second place. Its coverage includes cars, motorcycles, home and contents, and business insurance. Its standard home and contents insurance includes flood and storm damage. Customers who want to reduce the cost of their home and contents insurance should consider choosing a higher basic excess to lower their premiums, it says on QBE’s website (qbe.com). You can also pay less for your home insurance premium if you pay annually. And if you buy your policy online you will get a 10% discount.
AAMI, part of the Suncorp Group, placed third. It also has a full suite of products, including health insurance. It offers discounts for customers who receive a quote and buy online.
NobleOak
Reducing life insurance premiums is a good move, particularly during a costof-living crisis. This year’s direct life insurance winner, NobleOak, says its premiums are more than 20% lower on average than the average premiums of 15 comparable direct insurance products without personal financial advice.
NobleOak offers life insurance directly to customers either online or over the phone, which means people don’t have to go through a broker or a financial adviser to get cover, explains Emily MacPherson, general manager of strategy and deputy chief financial officer at NobleOak. “This helps us reduce costs as it removes the need to deal with intermediaries. This approach also allows customers to select the coverage that best suits their needs at a competitive price.”
The findings are calculated by actuarial research firm Plan For Life, and are based on insurance premiums paid by males and females, smoker and non-smoker, from ages 30 to 60, with sums insured from $100,000 to $1.5 million.
Some of the standout features of NobleOak’s direct life insurance include being able to take out life cover up to age 74 – it can be renewed up to age 99. It also offers life cover up to $25 million and advances a funeral benefit of $15,000 and a terminal illness benefit if given less than 24 months to live.
When making a claim, all claimants are assigned a dedicated claims consultant, based in Australia, to help them through the process at what can often be a very difficult time. “Our business is underpinned by a customer-centric philosophy, with a desire to genuinely help individuals and their family,” says MacPherson.
Life insurance isn’t for the policy holder, it is designed to cover the costs of their dependants when they die and aren’t around to support them. Ideally it should be enough to cover the ongoing household expenses such as utility bills, groceries and, if there are children, education and childcare. It should also be enough to pay current debts, such as the mortgage, personal loans and credit cards.
Many Australians hold life insurance through their super fund rather than having a personal life insurance policy. NobleOak says that the default coverage levels through superannuation funds may be lower than people need, with potentially less flexible terms and possible restrictions on claim payouts. “Additionally, paying premiums from superannuation can reduce retirement savings. Regularly reviewing and possibly supplementing insurance in super with additional coverage can help to ensure adequate financial protection is in place,” says MacPherson.
“There are also additional benefits to taking out cover outside of super, such as the ability to keep the cover in place for longer as cover in super generally ends at 70, whereas outside of super it can usually be held until age 99.”
HEALTH AND WELLNESS COVER OF THE YEAR 2024
MetLife
There’s a new focus for life insurance cover: the health and wellness services for its members. This year’s winner of health and wellness cover, MetLife, not only offers a range of services for its life insurance members, but it has also extended them to their partners, children and now their parents and in-laws. Called 360Health, the services include medical and mental health through to nutrition and fitness advice.
MetLife’s chief customer and marketing officer, Lina Saliba, says that regardless of a person’s stage of their health journey, the idea is that 360Health is there to support them with specific information.
She gives an example of a young family who contacted the service for help with a child who was a fussy eater. It is designed to help people dealing with serious health conditions as well.
Saliba says the wellness program grew out of helping support members with serious problems and to prevent and recover from illness and injury. Then during Covid, there was a surge in mental health issues and a huge demand for support.
“Many of these services can be used whenever or wherever required irrespective of whether you are healthy or making a claim. They complement existing treatments to help support health and wellbeing goals,” says Saliba.
In the case of members needing support with mental health, the process starts with an online request, then a health professional, often a nurse, will contact the person. Saliba says the health professional won’t replace their ongoing support, but they could create recommendations, and work closely and share those with their GP, along with giving them guidance.
She says to date 80% of consultations resort to diagnosis and treatment. “We find that these services are utilised quite a lot.”
While many of the support services are virtual, including video services, some are face to face. “People are living longer, so we want to support people to live healthier for longer and make it as easy as possible for them to access support,” says Saliba. She points out that the service works well for people outside metro areas.
She says that expanding eligibility to 360Health to parents and parents-in-law helps its life insurance members who are increasingly becoming carers of ageing or ill parents. She says, in Australia, one in 10 people is a carer, and research shows they are two and a half times more likely to have low wellbeing when compared with the average Australian.
“We know that family plays an important role in the health and wellbeing of customers. Caring for a parent can be difficult, and this is another way to support our customers.”
LONGEVITY COVER OF THE YEAR
Challenger
If you worry that your superannuation savings are inadequate and you will run out of money in your old age, there are investments that pay you an income for life.
Fifty-three per cent of older Australians think they will outlive their savings, according to research from National Seniors and this year’s longevity cover of the year winner, Challenger.
Longevity or annuity products are designed to ease the risk of having no additional income to the age pension in old age, by preserving some savings to provide a lifetime income stream.
Annuities have become more popular with higher interest rates as people can lock in these healthy rates for life. They particularly suit people who are concerned about market volatility. And annuities have evolved over time, adding more features including death benefits, or the ability to withdraw capital if needed, explains Mandy Mannix, chief executive, customer, at Challenger.
“Other enhancements include aligning with the age-pension means tests through innovative superannuation income streams and options for income deferral or linking the income to inflation or investment markets,” says Mannix. She says including a lifetime annuity as part of a retirement income portfolio is becoming a more popular strategy used by financial advisers and some superannuation funds for retirees.
“Bearing in mind annuities are usually a part of the portfolio, alongside bonds, equities and
property, it’s the security of the annuity income stream that is sought and continues to deliver,” says Mannix.
Challenger’s most popular annuity option is its CPI-linked guaranteed lifetime income product, because Mannix says it offers peace of mind.
“It’s not surprising given the interest in inflation. When investors are more confident in their outlook for markets, you would expect the market-linked annuity to gain in popularity.”
Challenger’s market-linked lifetime annuity guarantees income payments for life, indexed annually by the performance of a specific portfolio of market indices from the year before.
“While the money is invested in the insurance company’s statutory fund, the market-linked payments provide income equivalent to investing in the portfolio of assets,” says Mannix.
There are five different mixes to suit various risk profiles. One choice is for payments to be linked to the Reserve Bank’s cash rate.
One of the great unknowns of ageing is the rising cost of healthcare and potential need for government-subsidised residential and home aged care services. “A Challenger CarePlus annuity provides guaranteed regular payments for life to help pay aged-care costs ... and it may increase the age pension,” says Mannix.
Another popular annuity is the deferred lifetime annuity that provides a retiree with the ability to lock in an income today but defer the payment of that income until a future date.
MARGIN LENDER OF THE YEAR
Leveraged Equities
Experienced investors who want to speed up their wealthcreation strategies have long used margin loans to help them achieve their aims.
“Margin loans are commonly used by investors seeking to increase their market exposure,” says Lily Elliott, general manager of brokerage firm Leveraged Equities. “Typically, they’ll have a higher risk appetite, a medium- to long-term investment approach and a sound understanding of the equity markets and gearing strategies.”
Leveraged Equities has won the Margin Lender of the Year award five years in a row.
The broker’s extensive experience and dedication has enabled it to set its offering apart from competitors by expanding its product suite, says Elliott. “Features include the ability to utilise selected exchange-traded-options strategies on the margin loan, building investment growth through instalment gearing and introducing a loyalty program that enables customers to earn Qantas Frequent Flyer points. We also offer lending on a large range of international shares that are held via a number of platforms.”
Borrowing to invest in exchange traded funds (ETFs) is on the rise as the popularity of these products increases, says Elliott. There is also a growing trend among self-directed investors to use margin loans, stemming from an increased awareness of wealth creation opportunities among these investors, she says.
Leveraged offers three products, the Margin Loan, the Investment Funds Multiplier, and the Direct Investment Loan. “Each has a point of difference allowing advisers and/or investors to select the product that best aligns with their requirements,” says Elliott.
“The Margin Loan is our most comprehensive product for borrowing to invest into either equities or managed funds, and the Investment Funds Multiplier allows you to borrow to invest primarily into a wide range of managed funds, with the benefit of managing the loan through a repayment plan,” says Elliott. If your loan facility requires a payment instead of triggering a margin call, you have the option to repay 1% of the outstanding amount each month until the gearing position is restored to an acceptable level, explains Elliott.
“Additionally, for self-directed investors who don’t require additional features, we provide the Direct Investment Loan, which offers a lower variable rate compared to the standard margin loan.
The Leveraged team consistently evaluates its products and features by incorporating feedback from customers and partners, says Elliott.
Service is also very important to Leveraged Equities, which is owned by Bendigo and Adelaide Bank. “At Leveraged we differentiate our offering by the service we offer and the tools available to better manage gearing levels,” says Elliott. “For example, our customers can elect to receive targeted gearing alerts if their gearing level exceeds a nominated level. ”
INVESTMENT BOND
PROVIDER OF THE YEAR 2024
Generation Life
There are only a few tax-effective investments on offer in Australia and one of these is investment bonds.
Winning for the third year, Generation Life manages $3.2 billion of investment bonds and offers features such as 69 different investment options across all the major asset classes including diversified funds and single sector funds.
While Generation Life has popular investment bonds to save for funerals and children’s milestone expenses, such as education, it is the estate planning and tax-optimised features of its LifeBuilder investment bonds that are catching the attention of financial planners and families.
Grant Hackett, chief executive of Generation Life, points out that an investment bond can be structured as a non-estate asset, so it doesn’t have to be a part of a person’s estate or included in a will.
Hackett describes it as a “really costeffective testamentary trust where you can control distributions and vesting periods when people receive money from the bond”.
Investment bonds are attractive for families who have built up several assets, such as a house, superannuation and other investments, who don’t want their hardearned assets ending up in the marital
pool that can be split if the relationship between their kids and their partners break up.
“It’s great for situations around high-conflict families or blended families or kids from a previous relationship, particularly when there is a lot of money that they could fight one another over,” says Hackett.
Hackett says families can set up investment bonds so that the distributions are managed even when the parents or grandparents die.
“So, you can design it and distribute those funds with certainty, what we call from the grave.”
Hackett says the tax-optimised investment bonds are Generation Life’s “big ticket item”. Investors purchase investment bonds, which are a single premium life insurance policy that were once called insurance bonds, with after-tax money.
The life insurance company pays tax on the investment earnings. The tax rate is 30%, a decent saving for investors on high marginal tax rates of 45% or even 37%.
The 30% tax rate on 26 of the growth options can be brought down to 12-15% by offsetting capital losses against income as well as franking credits.
In order for investors to receive the maximum tax benefits, it is best to hold an investment bond for 10 years, which makes it a long-term investment.
PROPERTY HOME IMPROVEMENTS
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
If you plan to sell your home in 2024, you’ll want to get the best price possible. This invariably involves making a few upgrades to enhance its appeal. Fortunately, you don’t need to spend a fortune to get your home market-ready. Focus on areas that matter the most to buyers and you’ll find that small, cost-effective updates can pay off.
Zero in on key areas
The first step is understanding what your target buyers want in a home. Researching your local market will give you the answers, says Kristen Jackson, pre-sale renovation consultant at Wealth House. “Take a look at similar homes on sale in your market or ones that recently sold. What features do they have? What is the condition of the home? If your home is missing key features local buyers are looking for, it’s worth exploring whether you can add them in.”
Also recognise the difference between upgrading your home to live in versus selling it. “When you’re renovating to live in a home, the focus is on personalisation and enhancing functionality to suit your lifestyle. When you’re selling, the aim is to appeal to the broadest range of potential buyers, focusing on neutral designs and cost-effective upgrades that offer the best return on investment,” says Mike Turner, managing director at Nouvelle Kitchens and Bathrooms.
“The kitchen, bathrooms, laundry and facade are the four most important areas to focus on as they significantly influence buyers’ impressions and can add immediate value to your property,” says Cherie Barber, chief executive of Renovating For Profit. “Fresh paint, updated lighting, new flooring and window furnishings can transform a space and make it feel more valuable.”
Deep-clean and declutter
“When presenting your home to sell, don’t underestimate the power of cleanliness,” says Sarah Jobse, interior designer and co-founder of Oak & Orange. “Ensure the windows are professionally cleaned, the lawns and gardens are tidy, and that you’ve deep-cleaned areas like walls, grout and doors.”
Buyers are far more likely to imagine themselves living in a clutter-free home, so remove any mess, particularly in high-traffic spots like hallways and living areas, so they can move through comfortably. Investing in decent storage can help, and it doesn’t have to cost the earth: think freestanding shelves, lidded storage boxes and hooks on walls or the back of doors.
Update the kitchen
For most buyers, the kitchen is the most important room in the home, so you’ll want yours looking its best. “A modern, updated kitchen can increase a home’s value by 10% to 15%,” says Shiv Nair, director of Ray White TNG and a member of LocalAgentFinder.
If a full renovation isn’t on the cards, there’s still plenty you can do. “A kitchen refresh can be done for just a few
STORY GEORGIA MADDEN
thousand dollars,” says Barber. “Painting cabinets generally costs between $150 and $300, inclusive of specialty paint and brushes. Door hardware can be easily replaced for around $50 to $200. Changing your benchtops can range from $500 to several thousand, depending on the material and size of your benchtops.”
You can save in other ways too, says Turner. “Opting for a top-mount sink over an undermount sink can save you $500, while choosing laminate doors and benchtops over costlier options like solid timber or veneer can save around 20%.”
Spruce up the bathrooms
“Clean, modern bathrooms are a priority for many buyers and can be a worthwhile investment. Updating your bathrooms can typically add about 5% to 10% to a home’s value,” says Nair.
“The best bang-for-your-buck bathroom updates include painting wall and floor tiles, upgrading fixtures such as your vanity, toilet and mirror, and installing a modern shower screen. “These combined updates can range from $2500 to $5000, depending on the quality of fixtures,” says Barber.
Other budget-savvy upgrades, says Turner, include updating old taps and showerheads, improving lighting and regrouting rather than replacing tiles. “And opt for off-the-shelf where you can – say, for vanities – which can be up to 30% cheaper than custom styles.”
Make sure everything works
“Buyers often expect some features to be dated in an older home. But they do expect everything to be in good working order,” says Jobse. “Ensure that all functional aspects of your home, such as plumbing, heating and electrical systems, are in good working order,” says Turner.
A fresh lick of paint
Repainting is the easiest and most cost-effective way to refresh your home and boost its value. When it comes to colour, opt for neutrals with broad appeal and keep an eye on the quality of the paint finish. And don’t forget your exterior; products such as the Dulux concrete and paving range let you easily rejuvenate concrete driveways, paths, patios, steps and garage floors.
Redo tatty flooring
Replacing tired flooring can make a big impact due to the large surface area it covers.
“For cost savings and durability, explore options such as vinyl timber-look flooring over solid and engineered wood,” says Turner. “The cost difference can be substantial – between $30 and $70 per square metre for vinyl, compared with around $70 to $200-plus per square metre for solid or engineered timber. Vinyl is also quicker and easier to install.”
Be savvy about tech
“Basic tech upgrades such as security systems –CCTV and alarms – can add value. However, high-end automation systems are generally more suited to luxury homes and may not significantly increase value in mid-range properties,” says Nair. Wireless ‘plug in and go’ automation systems can be an appealing option if you want to add smart-home functionality, without knocking down any walls – Clipsal Wiser Smart Home system, which lets you control everything from blinds, heating/ cooling and lighting with an app on your smartphone or voice command, is a great example.
Staging and lighting
Natural light is key to making your home feel bigger, brighter and more inviting to buyers, say the experts. “Older homes typically have smaller and fewer windows and doors. Ensure all blinds and curtains are open to allow as much natural light in as possible, and style with lighter colours,” says Jobse.
“Consider adding decorative wall panelling, paint colours, new lighting and window furnishings in living spaces – these changes can typically be made for $2000 to $5000 and will significantly alter the way the room looks and feels,” says Barber. Or take a tip from design pros and add strategically placed mirrors to maximise light and reflect views. “Installing plantation shutters is another way you can elevate the feel of your home,” says Marty Fox, chief executive at Whitefox Real Estate. “Choose PVC over timber, which can be installed in weeks rather than months.”
Considering new windows to bring in more light? If so, look at double-glazed styles. They are an appealing feature for buyers who prioritise energy efficiency and can boost your home’s value by between 2% and 5%, says Nair.
Exterior deserves some TLC
Leaving your exterior in a shabby condition will have buyers questioning the interior before they even step inside, so show it some love. “Outdoor updates like external painting, pruning and removing unruly landscaping, painting your front door, and adding a new letterbox are all affordable updates that can radically improve your property’s kerb appeal,” says Barber. n
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Australian house prices are among the highest in the world, making it increasingly difficult for aspiring first home buyers to get into the market. This robs many people of the benefits of home ownership. It can also impact your ability to build wealth because one of the most common ways to do this in Australia is to buy a family home and pay it off. The security of owning your own home is a big plus when you retire.
So if you’ve found yourself locked out of home ownership because of affordability or the inability to save for the substantial deposit required, there are a number of strategies you can employ to tap into the wealth-building benefits of property. Here are three to consider:
1
Rentvest
This enables you to live where you prefer – perhaps it’s with family to keep costs down or close to where you work – but still enjoy the benefits of property ownership through owning a residential investment in an area you can afford. For example, you may work in a major capital city but can only afford to buy a small regional property.
Evaluating location, price, and potential growth is crucial for choosing a suitable property for rentvesting. You need to make sure it will always be in demand by tenants who can afford the rent. Be careful to choose areas with diverse employment opportunities, growth potential and, in the case of outer suburbs or regional areas, with good transport routes to major hubs.
Your tenant’s rent will go towards paying your mortgage and you will enjoy the tax benefits of being a landlord. This includes deducting costs, such as the interest on your mortgage, from the rent to determine the income you receive from
your property. If this is a negative figure it can be deducted from your other earnings, such as your salary, to reduce your tax bill. Drawing up a depreciation schedule for your investment property will allow you to claim depreciation deductions, likely further reducing your tax bill.
Make sure you budget for expenses such as rates, maintenance and repairs. Keeping your investment property in good order will attract good tenants and achieve strong rental returns. Keep in mind that when you sell your investment property, any profit will be subject to capital gains tax (CGT). So keep good records of your expenditure because you can include capital costs of improving your asset in your cost base for calculating CGT.
2
Rent-to-own
Rent-to-own or rent-to-buy is an alternative pathway to home ownership that requires little or no deposit. It allows you to rent a home but with the option to purchase the property, usually at a predetermined price at the end of the rental period, delaying the need for a mortgage. A platform with a rent-to-buy scheme will typically offer to buy a home that a customer then rents, while also paying an equity contribution. At the end of an agreed period, the customer – who should have built up enough ownership in the home and made a capital gain – takes out a standard commercial mortgage and pays out the rent-to-own platform. These schemes are hugely popular in the US, where it is big business, but in Australia the offerings are spasmodic, though they are growing.
PublicSquare, a Brisbane-based technology company, is one example. It aims to bridge the gap between renting and owning by allowing applicants to
choose a home, for up to $900,000, and live in it as a rental while building equity towards an eventual purchase.
Approved participants pay a 3% ‘kickstarter’ deposit, which goes towards the home deposit, compared to 10% to 20% required by banks. You’ll pay your weekly rental plus 50% extra as a weekly contribution. The aim is to build 2.5% to 3% equity in your property each year.
After living in the property for four years, you can opt to buy it using the lender of your choice. You can rent the home for up to seven years before buying it or allowing it to be sold on the open market. The final purchase price will be determined by the value set by an independent valuer or the initial home value plus 5% annual capital appreciation, whichever is higher. A calculator on the
PublicSquare website enables you to estimate your purchase price and deposit saved each year from four to seven years.
Assemble Communities, a Victorian developer with backing from AustralianSuper, uses a different model. It builds apartments aimed at low-tomoderate income households and leases them to tenants with an option to buy. When a tenant signs a lease on an Assemble apartment, the rental price is set for five years, rising at 3% a year, so they know what to expect. Each tenant is given the option to purchase their apartment at a fixed price, agreed upon at the commencement of their five-year lease. The purchase price of the home is fixed for 12 months from when it is completed and increases at a fixed rate of 3% a year after that. At the end of those five years, or sooner if they prefer, the tenant can choose whether to exercise that option and become the owner of their apartment or walk away with no financial penalty.
With Assemble’s purchase pathway, you have the option, but not the obligation, to purchase your home, and your rent does not go towards your deposit. You can also leave the apartment with no financial penalty if you decide not to purchase. A pricing guide on the Assemble website shows you the value of your apartment (purchase price) over time and how much rental you will pay. It also shows the recommended minimum household income needed to purchase each specific property.
Assemble offers its tenants a free financial coaching program.
3
Fractional property investing
This enables you to invest much smaller amounts by way of platforms that let you purchase shares in their rental properties. You can benefit from capital growth as prices rise and get a share of rental income, but you will have to pay a fee to the platform. The two main fractional investment platforms in Australia are BrickX and DomaCom. Buying property one brick at a time is the concept behind BrickX. It buys properties
You can benefit from capital growth as prices rise and get a share of rental income.
(mainly residential) with positive rental returns and capital growth potential and divides the cost into 10,000 shares, or ‘bricks’. Investors can buy and sell Bricks on the platform and receive monthly rent payments proportional to the size of their investment. To participate you need to deposit a minimum of $250.
BrickX charges a purchase fee that is 0.5% of the cost of the bricks you buy. The company charges another 0.5% fee when you sell, (based on the price at time of sale).
Details of each property are listed on the BrickX website to help you choose, or you can opt for the Smart Invest option where bricks are automatically purchased for you according to selection criteria. This option requires a minimum deposit of $50 a month. An example of a property you can invest in is a threebedroom house in Somerville on Melbourne’s Mornington Peninsula, with a current value of $872,000. It has an estimated net rental yield of 4.78% and the 20-year capital growth for the area is 6.74% a year. The current cost of a brick is $86.
DomaCom works by crowdfunding investment properties. You’ll need at least $1000 to get started, and from there you can invest in available properties. Alternatively, you can use the Family and Friends option to team up with mates, relatives, co-workers and even social media contacts, to set up a new sub-fund that invests in the property of your choice. This option has a minimum investment of $2500. n
One of super’s most overlooked products is its default life insurance. It provides you and your dependants with financial protection in the event of death or disability. Yet many people neglect to get to grips with it.
While super fund performance is constantly in the spotlight, life cover rarely rates a mention. Many fund members remain ignorant of how it works and what’s involved in the event of a claim. Worse still, some members don’t even know they have it.
When you join a super fund, you are automatically given default life cover. It comes without health checks and is provided at cheaper rates than you would
Get into life
Tucked inside super are products that can protect you from life’s inevitable uncertainties.
otherwise get. This is because super funds negotiate group insurance at wholesale rates on your behalf.
Premiums are usually based on your age and the insured amount. These are deducted from your super and can be a tax-effective way to pay for it. Life cover is generally bundled up with Total and Permanent Disability (TPD) insurance.
You can opt out of your cover at any time. Members younger than 25 have to opt in for it, as typically, young people that age are less likely to have dependants and mortgages.
Because much of this happens by default, disengaged fund members fail to read the fine print and many be unaware they have it.
Check your policy
Xavier O’ Halloran, director of Super Consumers Australia, says more than eight million Australians hold group life insurance in their super costing about $6.5 billion a year.
He urges people to read their policy carefully to see if it’s suitable and check what tests or conditions you might need to meet to make a successful claim.
“For example, TPD insurance policies apply different tests to determine whether someone is disabled. Some are so hard to meet that most people fail when trying to claim.
“The tests usually consider whether you can work again based on your expertise, training and experience. But in some cases,
insurers will apply a much harsher ‘activities of daily living’ test, which means that even if you can’t work, they’ll only pay your claim if you’re unable to do some basic things like feed and dress yourself.”
Some funds require you to work a minimum number of hours per week before you can make a claim. “If you’re working casual a couple of days a week, you might not qualify to claim on your TPD insurance. Or if you can claim, you might have to meet that much stricter test,” says O’Halloran. Some insurers may not cover you if you’re working in high-risk jobs.
Do the sums
To ensure you have enough cover, use Moneysmart’s life insurance calculator, which can be found on their website at moneysmart.gov.au. “You can use it to do the sums on how much you might need if you can’t work, or how much you should leave the people who rely on you financially if you pass away,” says O’Halloran. And don’t forget to nominate your beneficiaries so the people who rely on you financially can access the money from your super and life insurance if you die.
“It’s important to do this, because if you don’t nominate them, your loved ones might have to go through a complex process to get that money at a difficult time in their lives,” adds O’Halloran.
He points out that there are rules about who you can nominate, and some nominations expire after a certain period.
“It’s important to ask your fund what rules apply to your situation. Super Consumers has done an explainer on the nomination process.”
You need to be extra careful when switching super funds. It’s important to hold on to your existing cover until you’ve received confirmation from the new fund that you are covered.
“You might be offered the new cover with exclusions or carve outs, or you may have to undergo medical tests or have a waiting period before you can be covered. It’s good to be aware of this, as you could find yourself uninsured,” warns O’Halloran. And always make sure there’s enough money in your super account to cover the cost of your insurance premiums.
Life insurance fee waiver
CareSuper has introduced a fee waiver on its life insurance for members on parental leave. It means the insurance cover can continue at no cost to the member. It will allow members to focus on their family without having to worry that insurance costs are depleting their super balance – especially younger families with lower balances. “By offering insurance cover at no cost during parental leave we’re reinforcing our commitment to supporting families during critical life transitions,” says chief executive Michael Dundon.
Who is eligible?
• Members who are on employerapproved parental leave and not receiving Superannuation Guarantee contributions can request a waiver of insurance fees.
• The waiver applies to death, TPD and income protection insurances.
• The waiver remains in effect for up to 24 months, starting from the first day of the month after the member begins parental leave.
• There is no limit on the amount of cover to which this waiver applies.
• Gender-neutral: Both men and women can apply for the waiver.
Complaints skyrocketing
Analysis conducted by advocacy group Super Consumers found that even the Australian Securities and Investments Commission (ASIC) – the consumer protection regulator for insurers and super funds – found it ‘difficult’ and ‘confusing’ to understand policy disclosures. It found that policy documents are long, complicated, full of technical jargon and not an easy read.
“It is only when people make an insurance claim that they find out the value of what they’ve been paying for. And it’s usually at a time when they’re facing serious illness, disability or the death of a loved one,” says O’Halloran, adding that the Super Consumers’ research found that one in five people with super doesn’t know if they have insurance included, and of the people who do know roughly only half know what they’re covered for and how much it costs them.
To overcome some of these issues, O’Halloran recommends calling your fund and checking what types of things you can claim for, if they meet your needs, and how much financial support a policy will give you if you need to claim.
“We looked at data and found that one in five TPD claims in super takes more than six months, which exceeds the insurance industry’s own commitment under their Code of Practice.
“Living with that uncertainty, and without a source of income, for more than six months is really tough, and financially devastating for many people. The impact of this bad claims-handling experience can be seen in the Australian Financial Complaints Authority data that shows complaints about delays in claims handling skyrocketed 136% in 2022-23 compared to the previous year,” he says.
Call for mandatory standards
Super funds don’t have industry-wide service standards and timelines for insurance claims. “Insurers have set some standards for themselves, but they consistently breach these by taking far too long to resolve claims,” says O’Halloran.
“It means people are having awful experiences at very vulnerable times. The big rise in complaints reflects this lack of consumer protections. Super Consumers Australia has been calling for enforceable standards on super funds to make sure they’re delivering good customer service and dealing with claims fairly and in a timely way.”
He says insurance in super is complicated and high stakes.
“The data shows too many people are getting a bad deal. We want to see an independent review into insurance in super to test whether it’s living up to people’s expectations.
“Unfortunately, it’s often only when someone makes a claim that they find out that their insurance is not what they expected.
“We want to make sure people are financially protected if the worst happens.” n
Read more of Vita’s columns at moneymag. com.au/author/vita-palestrant.
IPowering the AI boom
Beyond the software and chipmakers, where will the energy come from?
t appears global investors are waking up and suddenly realising – who is going to power the artificial intelligence (AI) demand boom? We know the software and chipmaker companies who will benefit from the AI boom, as reflected in their share prices. However, attention has, rightly, also turned to how we are going to provide the electricity to power this structural growth story given how energy-intensive AI is. The utilities sector is now catching investors’ attention and we believe it will be an important theme over the medium term.
Utilities find a new life
The usually uneventful and boring utilities sector is getting some attention of late because of these types of questions. So much so that even rising long-term bond yields in the US have not disrupted the recent rally in utilities companies. Historically, there is a negative correlation between the two – that is, when bond yields rise, the share price of utilities falls. At the time of writing, the US Utilities Select Sector SPDR ETF was up 21.3% from its low in February this year, despite the US 10-year
Treasury rate also rising over the same period. The Australian utilities companies have also caught the bug, with the share price of ASX-listed merchant retailers AGL Energy (ASX: AGL) and Origin Energy (ORG) up 22.6% and 21.8%, respectively, over the same period.
AI-boom thematic broadening
First, it is worth pointing out that the recent performance of utilities is not just about the AI theme broadening to the utilities sector. It also has to do with the recent quarterly earnings update
All the data centres, EVs, and green transitions will increase power demand.
provided by the utilities companies listed on the S&P 500 Index – it was a standout performance with respect to earnings. However, the AI boom has also made its way to utilities, and this is where the future earnings growth potential for merchant utilities could see a material change.
At the end of the day, all the data centres, EVs, and green transitions will significantly increase power demand and, in fact, could materially accelerate it. Let’s take the power required for data centres. AI is driving growth in
global demand for data centre capacity. According to a recent presentation by Nextdc (NXT) – an Australian data centre operator –historically the global data centre market has grown at a +15% CAGR (compound annual growth rate) between FY17 to FY23, supported by digitisation and cloud migration megatrends. However, with the emergence of AI megatrend and the pace of adoption, the market growth rate is expected to accelerate to a +19% CAGR over 2024-27.
Ageing power grids
In a recent earnings call with the chief executive of US-listed Generac Holdings Inc (GNRC) – a manufacturer of automatic, stationary standby and portable generators – the chief executive noted: “The amount of power that will be drawn from those data centres will triple from the current levels that we’re at today. It’s almost the equivalent to adding 40 million households to the grid ... the ageing power grid in the US is clearly not prepared for the future trajectory of power consumption needed to satisfy these converging trends.”
Paying a premium
Recently we have seen global companies, such as Amazon, move to secure energy supply. Amazon recently agreed to purchase a data centre campus attached to the sixth largest nuclear power facility in the US and will reportedly take up 40% of the output of the nuclear facility.
Interestingly, this then reduces the amount of power that would otherwise be going into the grid for other consumers, which means that power will need to be sourced from other energy sources – that is, solar panels, wind turbines and so on. We see the potential for a capital expenditure boom in the utilities sector. n
Munro Climate Change Leaders Fund
The fund is focused on creating a portfolio of climate winners that help enable the decarbonisation of the planet – those companies that are best positioned to champion and win from this structural change. The investment return objective of the fund is to maximise long-term capital appreciation, by investing primarily in a concentrated long-only portfolio of companies focused on decarbonisation and climate change located anywhere in the world.
T Rowe Price Global Equity Fund
The strategy aims to deliver long-term capital growth by investing primarily in a portfolio of companies that are traded, listed or due to be listed on recognised exchanges and/or markets globally. We believe the fund’s approach to global equities (core, quality growth) is likely to yield solid absolute and relative performance over the investment horizon.
Utilities Select Sector SPDR Fund
The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Utilities Select Sector Index. The index aims to provide an effective representation of the utilities sector of the S&P 500 Index. It also seeks to provide precise exposure to companies from the electric utility, gas utility, multi-utility, and independent power and renewable electricity producers industries.
Zach Riaz is an investment manager and director at Banyantree Investment Group, with responsibilities across equity and multi-asset strategies. See banyantreeinvestmentgroup.com.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
We all have a lot of trouble buying stocks that have gone up a lot and selling those that have gone down a lot. If that’s you, then I regret to inform you that you are being affected by a well-established financial concept that only affects soft-brained investors. It is called ‘anchoring’. Anchoring, also known as a ‘focusing bias’, is the use of a reference point against which to judge value.
The issue arises every day in a broking office. It’s when someone says, “I can’t buy that because the share price is up XYZ%” or “You can’t sell that because the price is down XYZ%”. An even more soft-brained variation on the theme is when you find yourself saying, “It’s down XYZ% so it’s cheap” or “It’s up XYZ% so it’s expensive”.
But making money in shares is all about where the share price is going. In that equation, where the
share price has been is pretty much irrelevant and the fact that we don’t buy or sell a stock because it is up X% or down X% because of where the share price used to be is unscientific.
What you paid for a stock, what price it was in the past – in fact, any reference to the share price history – ignores the only relevant consideration, which is what the share price is going to do tomorrow. BHP five years ago was priced on a different set of facts from BHP now, so what relevance is that old high or old low? It’s irrelevant.
Despite that, it is common practice to reference how much a stock has moved from the lowest low or highest high and it is commonplace to take those past prices (laughably, the extreme highs or lows) as an anchor point from which to judge the current price as being expensive or cheap based on how far it is up or down since then.
But past prices are simply a statement of where a price was. The more important consideration is what the company is worth now coupled with an understanding that the market’s appreciation of what the company was worth at some point in the past has almost certainly changed. As soon as the value of a company changes, which arguably it does every day, you have to move your thinking along.
An amateurish approach
If your decision-making starts with a reference point from the past (“It’s up XYZ% from the low”) you have proven yourself a bit amateur. To make a stock judgment, past prices are the most unscientific of starting points.
Another amateur manifestation of anchoring is buying stocks because they have fallen a lot. This is technically wrong (you should sell stocks going
As soon as the value of a company changes, as arguably it does every day, you have to move your thinking along.
down, not buy them). Buying bombed-out stocks (catching the knife) because they have fallen a lot ignores the fact that the market’s assessment of the company’s value has changed, a lot, for the worse, so the ‘attraction’ of a big fall is irrelevant.
The other very widespread use of anchoring is when traders use their purchase price as a reference point. “I’ll sell if it goes up 10%” or “I’ll sell if it goes below my purchase price.” All very nice but not rational, although, in its defence, anything, even unscientific anchoring, is better than nothing when it comes to having some trading discipline.
An extension of anchoring is ‘lazy jargon’, saying that a stock is cheap or undervalued because it has fallen a lot. Or expensive or overvalued if it has gone up a lot. A stock can only be valued with reference to what it is worth, not with reference to what the share price used to be.
The best way to avoid anchoring is to forget the past price as a reference point and simply assess cheap or expensive on some other criteria. Price earnings history, perhaps, or price relative to an intrinsic value calculation would be more useful.
Meanwhile, you can amuse yourself by listening out for anyone, you perhaps, making comments or decisions on the basis that a stock is up X% or down X%, because your sole focus should be whether a stock is going up or not. The fact that it has gone up or not is irrelevant.
Anchoring is another reason humans aren’t wired to trade successfully. n
Marcus Padley is the author of the daily stockmarket newsletter Marcus Today. For a free trial of the Marcus Today newsletter, please go to marcustoday.com.au.
An outrageous, beautiful monopoly
Telstra’s
mobile business is a cash machine with few competitors, giving it the highest returns in the world.
To Telstra, it was cost cuts; for the press, it was job cuts; and for brokers, it was panic about guidance. The reaction to the telco’s news that it would cut 2800 jobs from its enterprise division was varied and swift. The share price fell almost 10% after the announcement before recovering slightly.
The herd may have missed the bigger picture.
Telstra’s mobile business grew operating profits by 13% to more than $2.5 billion for the half year. For a business that commands more than 40% of the national market, that is astonishing growth, brought about by the enviable combination of higher prices and more users.
Mobile subscribers increased by almost 5% over the period, with average revenue per user (ARPU) rising by 3.4%. Once again, Telstra has managed to draw more users to its network while charging each one more money.
Media and politicians are too busy getting stuck into supermarkets to see that the cosiest monopoly sits pretty in front of their very eyes.
Woolies and Coles generate EBITDA (earnings before interest, tax, depreciation and amortisation) margins of 5-6%. This is slightly better than supermarkets globally but hardly grand larceny.
Telstra’s mobile business now generates EBITDA margins of 47% – the highest mobile margins in the world. There are two reasons for this outrageous figure: Telstra is now indexing prices to inflation, so mobile prices are rising annually, but the more important reason is the feeble competition.
Vodafone remains a subscale network. It is crippled by debt, and there aren’t enough users to generate the cash surplus needed to compete effectively with Telstra.
We doubt Vodafone can ever be competitive unless it dramatically increases user density on its
network. To be blunt, we worry about the long-term viability of its Australian business.
Optus is a little better. It has scale but continues to bleed market share. Optus management refuses to compete on price and can’t compete on service. With competitors like these, Telstra is milking the mobile market.
Returns are reinvested
The company invests those returns enthusiastically into network expansion. About 16% of Telstra group revenues are reinvested into mobile infrastructure and spectrum, preserving its dominance.
Despite this heavy outlay, the mobile business is a fantastic, dominant business with few competitive threats and overwhelming advantages. It’s a business that generates oodles of free cash and ought to attract decent multiples – except the rest of Telstra dilutes it.
Telstra’s non-mobile adventures can be divided into four groups: fixed, enterprise, infrastructure
STORY GAURAV SODHI
and international. Only the infrastructure business, its remaining stake in towers and infrastructure leased to NBN, generates decent returns.
The international business is reasonable. Backed by the acquisition of Digicel Pacific, it generated $344 million of EBITDA over the period. However, the small scale and limited growth (earnings went backwards) make us wonder why the mobile giant would bother with it.
The fixed and enterprise businesses are similarly small and slow growing. Combined, broadband and enterprise contribute just 5.5% of EBITDA but are no good when it comes to resources and management time. There is a case to stick with broadband, as bundling it with mobile reduces churn rates, but we question the utility of the enterprise business.
The high-quality infrastructure businesses generate more than $1 billion in EBITDA, about 25% of the total. Management did well selling infrastructure assets at silly multiples during the
The mobile business remains the jewel, one of the best in the world.
bull market. There remains some optionality about realising further gains in the future.
The enterprise segment is a key example of what Telstra needs to fix. Built to catch successive technology fads, it comprises managed services, cloud and traditional telephony services for big businesses.
Enterprises have many more options for traditional voice and data services and enterprise has become a competitive battleground. With high fixed costs and declining revenue, today’s miserly returns could easily turn into a cash drain if left unchecked.
Dramatic cost-cutting is a sensible response and probably should have happened earlier. It will cost between $200 million and $250 million to cut almost 9% of Telstra’s total workforce, but annual savings should top $250 million. This is a clear message that focus is returning to Telstra. Enterprise comprised less than 3% of its valuation while consuming resources and management time. The drivers of value are mobile and infrastructure, and here the business is as dominant as ever.
Dividends set to rise
The mobile business remains the jewel, one of the best in the world. This year, operating margins ought to approach 50% – the highest in the world – as Telstra adds customers and raises prices. Telstra is overwhelmingly dominant in the segment.
Vodafone is subscale and we aren’t sure it will remain in Australia over the long term. Optus refuses to compete on price and can’t compete on network.
Shareholders should be thankful that David Teoh (the founder of TPG) has left Australia to wreak havoc in Singapore’s mobile market. Soft competitors have been a blessing for Telstra.
Over the next two years, we think cashflows and dividends will continue to rise modestly. By 2026, we expect dividends to rise to 20 cents per share.
At today’s lower share price, a fully franked 6% yield is on offer, and there are options to grow this further with more simplification or attention to the infrastructure business.
Telstra should deliver high single-digit returns from here, making it attractive for conservative portfolios. BUY. n
Gaurav Sodhi is research director at Intelligent Investor. Disclosure: The Intelligent Investor Australian Equity Income Fund (ASX: INIF) and Intelligent Investor Ethical Share Fund (ASX: INES) owns shares in Telstra Group.
SECTOR HEALTHCARE
In rude health
Healthcare companies are sometimes regarded as long-term compounding machines. Here’s why…
In what has been something of an uncertain year for investors so far, sooner or later attention tends to turn to so-called ‘safe haven’ investments. For some, that means going to cash, gold or something that’s not exposed to the vicissitudes of a moody stockmarket. And fair enough, but the return on cash, particularly after inflation, isn’t flash, and commodity price movements are anything but predictable.
For those who want to remain invested in the stockmarket, then, healthcare companies come into focus as potentially less volatile stocks that generally are less exposed to economic conditions. After all, while health outcomes can be slightly related to economic circumstances for individuals – they tend to be worse when the economy drops, suggesting a small amount of potential counter-cyclicality – most healthcare needs are completely acyclical.
Not only that, but some of the companies in this sector have proven themselves to be wonderful longterm compounding machines, and it’s a category in which Australia punches above its weight. Consider CSL, Cochlear and ResMed: each a global leader in its field, and each with a high likelihood of long-term growth ahead, given global reach, improved diagnostics and a rapidly growing global middle class.
Ramsay Healthcare is an enormous hospital business, and there is a broad cross-section of other healthcare operations spanning biotechnology research, medical devices, medical technology, personal protective equipment and more. As I’ve written before, though, I don’t believe aged-care businesses really belong in this sector. Their services are health-related, but their business structures more closely resemble real estate businesses. Oils ain’t oils, as the old Castrol ad said, and healthcare ain’t healthcare. That applies across the rest of the sector, too.
Foolish takeaway
In this series, we’re looking for the Best in Breed: the company that beats the others on quality. The hospitals are dominant, but they’re very capital intensive and tend to have limited growth potential. The diagnostic companies will likely continue to grow as medical science improves and there are more tests for more conditions; but the market is pretty saturated and none has particularly impressive international growth potential. And that takes us back to the big three: CSL, Cochlear and ResMed. The former has a storied history; the latter a growing market as rising affluence leads to increasing rates of obesity and sleep apnoea. But hearing-implant maker Cochlear offers a wonderful brand, strong reputation, market-leading research and development, a growing market and a lifetime of customer loyalty. Add the benefit of an increase in hearing loss diagnoses around the world, and Cochlear is our Best in Breed.
And we have a brace of diagnostics and treatment companies, too. Sonic Healthcare is a $11.5 billion behemoth. Healius, its much smaller younger brother, still clocks in with a market capitalisation of $1 billion.
Compare sleep apnoea device maker ResMed and a tiny biotechnology research business. They might both aim to improve health outcomes for their end-users, but the investment cases are different. ResMed has a product, brand and history. It has sales, profits and a healthy balance sheet. The company looking for the next big thing will probably have a tiny staff and no products, and be burning through cash at a scary rate. It very likely has a capital raising – or four – in its future. Of course, the range of outcomes is far larger for the latter… but in both directions.
If you were looking for raw upside – a lottery ticket of sorts – you might be tempted to roll the dice. But, as with the lottery, your odds of winning aren’t good. n
Scott Phillips is The Motley Fool’s chief investment officer. You can reach him on Twitter @TMFScottP, Facebook scottphillipsmoney, and via email ScottTheFool@gmail.com. This article contains general investment advice only (under AFSL 400691).
Best in Breed’s 2024 tips so far*
SECTOR STOCK ASX CODE
Discretionary retail Premier Investments PMV
Consumer staples Woolworths WOW
Resources South32 S32
Technology Xero XRO
Financials Macquarie Group MQG
Healthcare Cochlear COH
*The table is compiled throughout the year, with each month’s new tip appearing on the list for the rest of the year. The focus is on the fundamental long-term qualities of the businesses.
“The lows have been highs because they’ve taught me how to be a better artist and human...”
Anna Broinowski
Author, filmmaker and academic, Anna Broinowski’s new book, Datsun Angel, is a rollicking memoir based on her travels as a hitchhiker through outback Australia in the 1980s. Here, she talks about her life, loves, and learning.
Tell us about your early years. My childhood was peripatetic. I was born in Tokyo and went to nine schools in Burma [now Myanmar], Iran, the Philippines, Canberra and Japan. I liked humanities subjects and loved theatre – I still remember being Rat 4 in a play about a pumpkin on the icy roof of my British kindergarten in Tehran, playing Eliza Doolittle in My Fair Lady in middle school in Manila, narrating Joseph’s Amazing Technicolour Dreamcoat in my rough-as-guts public high school in Canberra, and playing a mosquito in an ancient Kyogen play in the American School in Japan, where I graduated. But I didn’t want to be an actor. I wanted to be the Australian prime minister. I had a big ego as a kid. I thought I was invincible.
You’re a filmmaker, author and academic. Tell us about your career trajectory. It’s been entirely accidental. When I started at Sydney University, I was on the correct trajectory for Australia’s top
political job: Arts/Law, distinction average, mediocre but committed debater, success-oriented mindset, and diligent tennis player. Then one day, curious to find out what non-college students were up to, I dropped in on a casting session in the Holme building’s mouldy cellar, where the post-modern renegades of SUDS (the uni’s dramatic society) wagged lectures, staged working-class plays and smoked. I stopped attending tutorials and threw myself into SUDS full-time. You could do that in the mid 1980s –tertiary education was still free.
In third year, now happily failing law, I auditioned for NIDA and was rejected because I had no life experience. That’s when I decided to hitchhike to Darwin. I was kidnapped by two truckies and survived. That trip changed my life. The second time, NIDA let me in. I discovered I was way too wooden to be a film star but loved writing and producing my own work. Five years into my fairly unremarkable stage career, playing corseted ingenues around Sydney, I wrote a napkin pitch with my brother for a whacky documentary called Hell Bento!! about Japan’s otaku, rockabilly,
biker, queer and yakuza subcultures. It was full of nudity, drugs, morphing sushi and apocalyptic imagery, the kind of thing no broadcaster would touch in a pink fit. But luckily, just after I had faxed the pitch, SBS’s head of non-fiction received a call from the Australian Film Commission about a new fund for unusually innovative projects. [He] gave us $250,000, made me producer, and my filmmaking career was born. I’ve spent three exhilarating decades documenting real life. I’m passionate about it. The academic thing is more recent; I completed my PhD partly out of guilt over the extraordinary learning opportunities I avoided at uni.
The highs of your career?
Watching 2000 people laugh and engage with Hell Bento!! in Sydney’s State Theatre in 1995 was the first high, because I realised that I could reach more people, and change how they feel and think about the world, through film. I’ve made eight documentaries since. Interviewing the original superman, Christopher Reeve, hoax author Norma Khouri, the brilliant Noam Chomsky, my aunt Dr Helen Caldicott, powerhouse Marcia Langton, Tetsuo: The Iron Man director Shinya Tsukamoto, non-binary pioneer Norrie MayWelby and the late Senator Ted Kennedy have all been highs, as have filming North Korea’s top directors, composers and actors in Pyongyang, far-right Senator Pauline Hanson, and former PM John Howard – each of whom inhabit the fractious cultural and political terrain I like to explore.
As for gongs, there’s a row gathering dust in my study –AACTAs, a Walkley, a Writers Guild of America thing – but my favourite is the carved wooden elephant I was given by a Moscow film critic, who drily informed me the hole inside is ‘for burning bad reviews’. Adulation and acclaim are delicious, like a gourmet feast – excess makes you sick. After two years’ flying, even first-class sometimes, to glamorous festivals in the Middle East, Europe and the US for my most commercially successful film Forbidden Lie$, I grew fat and lazy. I’d forgotten how to be a filmmaker, which is the most enduring high.
And the lows?
In hindsight, the lows have been highs because they’ve taught me how to be a better artist and human, though they never feel like it at the time. Every documentary puts you through an intense low at some point, because you’re playing god with someone’s life and they’ve trusted you to share it with the world. Film-making is inherently deceptive – from how you frame something to the words you omit, you’re manipulating reality.
Datsun Angel is making big waves. What made you turn your teenage travel diary into a book?
After I survived my kidnapping by the truckies and made it to Darwin and back unscathed (or so I thought), I packed away my diary and got on with life. Two things made me revisit it again. I was going through some old boxes looking for a new project after making a science documentary for the ABC and stumbled across the diary. I couldn’t believe the insane, death-defying things young me got up to, and the
eccentric misfits we hung out with. And with an adventurous daughter the same age I was when I made my life-changing journey, I wanted to know if the misogyny, madness and danger I encountered in the ’80s would be the same for her now.
The second reason was the #MeToo movement, which popped up on my Facebook feed in 2017. Without thinking much about it, I posted about the truckies. I became obsessed with other women’s posts, thousands of which were more horrific than mine. I embraced the new sisterhood MeToo created that the individualist, anti-civil rights mindset of the ’80s had destroyed. At a dinner with some old SUDS mates, I recounted the kidnapping story and finally cried. I’d had PTSD for three decades. I refused, and still refuse, to identify as a victim. But writing the book was a way of supporting the critical focus shift MeToo has catalysed: from the abused to the abuser.
When you look back at this time, what do you wish you had known?
Nothing to be honest. When I hitchhiked at 19, I was intellectually precocious with the EQ of a toddler. I was ignorant and arrogant, an atrocious combination. My certainty that nothing could get in my way, that no-one could impede the glorious path I’d set myself, helped me survive the kidnapping. But I had a universe of things to learn. About kindness, about authenticity, about my privilege and others’ lack of it. The trip stripped away everything I knew of the world. It showed me the things I was chasing were meaningless. There’s a yin-yang rule on the great open road – for every decent
stranger who gives you a lift, the other’s always a f***wit. My companion Andrew Peisley and I survived by busking Slim Dusty songs in pubs for counter-meals and cashing his dole cheque in towns along the way. We met extraordinary characters, both generous and hostile. One of our most unforgettable rides was with two petty criminals in a stolen Commodore from Perth, who set up camp with us on Queensland’s Airlie Beach for three days. By the end of it, I truly believed the bestthings-in-life-are-free trope, that all I needed was honest friends, the wind in my hair, and a glowing campfire around which to share stories and sing. Having to survive in Sydney eradicated all that. But I’m glad I got to experience it.
What early money lessons did you pick up from your parents?
Sensible things. Never use credit. Spend less than you earn.
What affect did that have?
I take risks creatively but never financially. I never self-fund my films. Instead, I secure investors and producing partners up front, and make sure the budget includes a liveable wage. I feel strangely conflicted about being extravagant.
A financial turning point?
Saving enough as a freelancer to buy my first flat at 29, a tiny, converted boiler room at the bottom of a 1920s Coogee block. It cost $98,000. I’ve relied on bricks and mortar, not stocks, ever since. I’m appalled my daughter’s generation could work and save as hard as I did, but never get this opportunity.
Best investment you’ve made?
My current house, which was an investment in my daughter’s childhood. We wanted an oldschool neighbourhood where kids could walk to each other’s homes and the corner shop, and cycle to the park. It meant leaving the coast, but I don’t regret it.
Worst investment decision you’ve made?
Signing away the back-end revenue on my films to other people. There is a saying in the movie business that if your film makes money, there’s something wrong with your distributor.
How would you spend your last $50?
That’s a tough one. If I knew anything about plants, I’d by enough seeds to nurture a village. I’d probably shout my beloveds to an old-school feed of salty hand-cut fries and Aussie burgers with the lot (beetroot and grilled pineapple) on an empty, windless beach.
Your next challenge?
Maybe it’s impossible but... a sci-fi using deepfakes.
Finish this sentence: Money is good for…
Producing work that helps us be better humans in an increasingly tech-obsessed world. n VANESSA WALKER
DATABANK YOUR GUIDE TO SUPER DATA
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Managed funds displayed in these tables are multi-sector or asset class specific. Multi-sector managed funds invest across a diversified mix of asset types spanning equities, property, bonds, cash, infrastructure, private equity and alternatives.
Managed funds are normally set up as unit trusts. You may be able to invest in them directly or through a platform.
Top 5 sector benchmarks
Source: Rainmaker Information. Data sourced April 30, 2024. *Numbers stated here depict averages, other than the Rank column, which is the total number of funds in the category. For any queries on these tables, please contact info@rainmaker.com.au.
Top 5 Australian funds by size
Top 5 funds by 1-year return
Top 5 diversified funds by 1-year return
These products may be recommended to you by a financial adviser. The performance results displayed are the annualised investment returns each managed fund has delivered after
taking into account taxes paid by the unit trust and investment fees. Research was prepared by Rainmaker Information. For more information see rainmaker.com.au
Top 5 Australian equities funds by 1-year return
Top 5 international equities funds by 1-year return
DATA SOURCED APRIL 30, 2024
DATABANK
Top 5 income-focused equities funds by 1-year return
Top 5 ESG funds by 1-year return
WHAT THEY MEAN Performance after investment fees. Investment returns after investment fees annualised to describe each fund’s returns per annum. But if your managed fund achieves a high return and charges you an extra “performance fee”, Rainmaker has not taken this into account. Past performance is not an indicator of future performance. Rank. Funds are ranked against all managed funds in each segment, not just those included in each table. Indices and averages. Arithmetic average investment returns or average fees for all fund investment options within each category, that is, not fund size weighted.
YOUR GUIDE TO SUPER DATA
The table helps you compare super products. It showcases publicly available MySuper investment options offered by some of Australia’s biggest funds.
Rainmaker Information categorises them into risk options based on percentage of growth assets in their portfolio. The high-
growth risk option has more than 85% in growth assets (growth has between 75% and 85%), balanced has between 55% and 75%, and capital stable products have less than 55% growth assets.
The performance results are the annualised investment returns each option has delivered after taking account of all taxes and fees. Past performance is no indicator of future performance.
Best Super Funds: Top 20 MySuper – April
The table only lists products designated AAA, Rainmaker’s Super fund quality rating. Rainmaker Information prepared this research. moneymag.com.au/super/products/compare.
30, 2024
Rainmaker Information Benchmark Indices – Workplace Super
DATABANK
WHAT THEY MEAN
Performance after fees: When calculating fees, Rainmaker assumes a member has $50,000 in their account. Strategy: Some MySuper products invest your superannuation based on age and are known as lifecycle funds (marked LC). The table includes the LC option for 40-year-old members. Non-lifecycle funds are known as single strategy (S). Rank: Funds are ranked against all MySuper investment options available in Australia. Indices and averages: To produce these indices, Rainmaker analyses the results of more than 3300 investment options.
WHERE TO GO FOR HELP
Useful numbers and websites
Association of Superannuation Funds of Australia (ASFA) 1800 812 798 (outside Sydney) 9264 9300 (Sydney) superannuation.asn.au
Australian Communications and Media Authority 1300 850 115 acma.gov.au
Australian Competition and Consumer Commission 1300 302 502 accc.gov.au
Australian Energy Regulator aer.gov.au/consumers/ making-a-complaint
Australian Financial Complaints Authority 1800 931 678 afca.org.au
Australian Securities and Investments Commission (ASIC) 1300 300 630 asic.gov.au
Australian Securities Exchange (ASX) 131 279 asx.com.au
To reduce telemarketing calls 1300 792 958 donotcall.gov.au/ contact-us/contact-details
Fair Trading/ Consumer Affairs
ACT: 132 281
NSW: 133 220
NT: 1800 019 319
QLD: 137 468
SA: 131 882
TAS: 1300 654 499
VIC: 1300 558 181 WA: 1300 304 054
Financial Counselling Australia
National Debt Helpline: 1800 007 007
financialcounsellingaustralia.org.au/ contact
Financial Advice Association
Australia (FAAA) 1300 337 301 faaa.au
Human Services (formerly Centrelink) Families: 136 150
Older Australians: 132 300 humanservices.gov.au
illion
For a copy of your credit report 132 333 illion.com.au
Legal Aid advice (free)
ACT: 1300 654 314
NT: 1800 019 343
NSW: 1300 888 529
QLD: 1300 651 188
SA: 1300 366 424
TAS: 1300 366 611
VIC: 1300 792 387
WA: 1300 650 579
myGov
Track down lost super 1300 169 468 my.gov.au
Scamwatch scamwatch.gov.au
Seniors Card
ACT: (02) 6282 3777
NT: 1800 441 489
NSW: 137 788
QLD: 137 468
SA: 1800 819 961
TAS: 1300 135 513
VIC: 1300 797 210 WA: 1800 671 233
Telecommunications Industry Ombudsman 1800 062 058 tio.com.au/complaints
For anyone experiencing or at risk of family violence or abuse:
1800RESPECT
A 24-hour national sexual assault, family and domestic violence counselling line for anyone who has experienced, or is at risk of, family and domestic violence and/or sexual assault. 1800 737 732, 1800respect.org.au
13Yarn
The first national crisis support line for mob who are feeling overwhelmed or having difficulty coping. It offers a confidential one-on-one talking opportunity with a Lifeline-trained Aboriginal and Torres Strait Islander crisis supporter.
139 276, 13yarn.org.au
Elder Abuse Helpline
Free information and support for people who experience or witness the abuse of an older person. Operating hours vary. 1800 353 374
Men’s Referral Service
This service from No to Violence offers assistance, information and counselling to help men change their abusive behaviour. 1300 766 49, ntv.org.au/get-help
Lifeline
Anyone experiencing a personal crisis or thinking about suicide can call 131 114 or text 0477 131 114 at night (6pm-midnight AEDT). Someone will help put you in contact with a crisis service. 131 114, lifeline.org.au
Financial Independence Hub
Good Shepherd’s free and confidential support for victims/survivors of financial abuse. 1300 050 150, fih@goodshep.org.au
