Investopoly

  An understanding of basic economic principles will set you in good stead to understand financial commentary, political rhetoric and make your own assessment of economic risks and opportunities. That is not to suggest you need to become an economic expert but understanding some basic principles will go a long way.     The foundation of economics: the law of supply and demand  The law of supply an...

Many investors consider future trends when making investment decisions. Popular examples of investable trends include the growing demand for green energy, mainstream adoption of electric vehicles and cybersecurity.     The thesis is that if you can correctly spot/predict a trend in the early stages, then you can invest in the companies and sectors that are best positioned to benefit economically....

Some investors have been spooked by the RBA hiking interest rates by 0.75% over the past two months, particularly since it has spent the past two years telling us that rates would not rise until 2024. Higher interest rates at the same time as rising prices (inflation) are a two-fold blow for household budgets. Where are interest rates heading? The banks predict that the cash rate will rise by a fu...

Our goal is to inspire our people to adopt a holistic approach when making financial decisions. That's because financial decisions often include several interrelated considerations and consequences, including financial planning, cash flow, taxation, borrowing and so on. Also, taking a holistic approach ensures no opportunities or risks slip between the gaps. Often, the best way to make a poin...

Most people are familiar with the saying that “time in the market is more important than timing the market”. It is very true that holding a quality investment for many decades will mask imperfect timing. However, for some asset classes/investments, timing can be very important. Most markets move in cycles Most people understand that markets move in cycles . To generalise, an asset class can be ove...

I think we need to be prepared for the possibility that the next couple of years might be a bumpy ride in terms of the economy, financial markets, interest rates and so forth. The media thrives on higher levels of uncertainty, so be prepared for plenty of doomsday predictions and lots of negativity. The silver lining is that negative sentiment almost always creates attractive long term investment...

A lot has been written about the good fortune of baby-boomers in that, overall, they have enjoyed a long period of economic, share market and property market prosperity. Whilst they haven’t enjoyed the full benefit of compulsory super (which only began in 1992), other assets such as property has certainly compensated for that. This means an inheritance tsunami will hit the next generation over the...

I find it ironic that the two common financial mistakes that people make are (1) not investing i.e., procrastination or (2) doing too much i.e., turning over investments, changing their mind and so on. Of course, not doing anything is an obviously bad thing as nothing comes from nothing. I wrote about this in March . But, sometimes reacting, changing, tinkering, selling, buying and so on can be eq...

When it comes to building wealth, the truth is that unremarkable actions completed consistently for many years (decades) produce remarkable results. But because these actions appear unremarkable, people tend to overlook their importance. Also, sometimes, people are tempted to undertake intense and often risky “investments” as a shortcut to make up for past inaction. Unfortunately, this approach ra...

A common property investing rule-of-thumb is that you should “buy property and never sell”. That’s because prices always trend higher over time which means you benefit from compounding capital growth . Of course, the rule-of-thumb should be adjusted to include “buy quality property and never sell” to ensure you maximise investment returns. But the reality is, that sometimes the smartest thing to d...

A few weeks ago I wrote a blog about the one thing that stops most people from making the most of their financial opportunities including making regular investments. It was my thesis that a lack of context is the main cause. Having a long-term plan provides you with the context required to make mistake-free financial decisions. It is difficult to work out what investments to make (and when) if you...

This blog summarises the initiative contained in the 2022 Federal Budget announced on 29 March 2022. Budget initiatives that might affect you Extended the home loan guarantee scheme The First Home Loan Deposit Scheme (FHLDS) allows borrowers to borrow more than 80% of a property’s value whilst avoiding the cost of lenders mortgage insurance (LMI), because the government guarantees part of the loan...

It is very common for people to make an initial investment e.g., buy a parcel of shares or an investment property, but fail to make any further investments for many years or decades. Why does this happen? What is paralysing their ability to make investment decisions? Perhaps you don’t have enough time We use lack of time as an excuse for not doing many things. But if we are honest with ourselves,...

Even though its compulsory to invest money in superannuation, many people do not understand their options once they retire. This blog provides a summary. However, of course, everyone’s situation is different. Some super funds have different rules and there may be exceptions to some rules, so it’s important you receive personalised advice from an independent financial advisor. When can you access y...

Vocal market commentor and fund manager, Chris Joye wrote in the AFR in November last year that Australian house prices could fall by 15% to 25% after the RBA starts increasing interest rates (here’s a copy of that article ). Of course, there are many property doomsayers that perpetually (and often inaccurately) predict property market crashes. However, Chris is not one of these people. In fact, C...

The value of a property consists of two components being the land plus any improvements i.e., the dwelling. Generally, land appreciates in value whereas buildings depreciate over time due to wear and tear. It is possible to manufacture equity in a property by making improvements e.g. renovating/rebuilding the existing dwelling or constructing multiple dwellings. This occurs when the end value of t...

In my book, Investopoly, I outlined 8 investing rules that if followed, will help you build wealth and avoid making costly mistakes. These 8 rules are evidenced-based which I have refined over the past 20+ years. Rule number one is; play the long game . Arguably, it’s the most important rule because I’ve observed that this is the most common mistakes investors make i.e., they don’t play the long g...

There is one property investing golden rule that is more important than everything else. And if you nail this ‘one thing’, you are guaranteed to build wealth over the long run. This statement might sound sensationist, but I honestly cannot overstate this point. The golden rule is that the quality of the property you invest in will drive its long-term investment returns. If you invest in an average...

This is the second part of a two-part blog about investing in commercial property (you can read part one here ). Now that you have a broad understanding of commercial property attributes, the next topic to discuss is how you can successfully invest in commercial property. Why type of commercial property do I recommend? Personally, at the moment I invest in commercial offices, and recommend the sam...

I believe that most people would be well-served by investing in various asset classes, including shares and property. I do not believe that any one asset class is superior. They all have their pros and cons which you can balance out in a diversified investment portfolio, which could include commercial property. Commercial property does have some wonderfully attractive attributes but it’s important...

Last week, I shared what risks and opportunities investment markets could offer us during 2022. These market expectations helped my wife and I set our personal, relationship, business and financial goals for 2022. It is stating the obvious to so say that goal setting is important. I believe that if you aim at nothing, often that is exactly what you will achieve; nothing! Goal setting gives you mor...

It is stating the obvious to say that goal setting is important. The fact is, if you aim at nothing, often that is exactly what you will achieve; nothing! Each year my wife and I set personal, relationship, business and financial goals. We almost always achieve all the goals we set for ourselves each year. I want to share the process which we’ve just completed and share what I think 2022 might bri...

For my final podcast for 2021, I thought it would be interesting to look back to see how various investment asset-classes performed. This is important for two reasons. Firstly, it is wise to benchmark your investment returns so that you can assess relative performance. Secondly, it serves as a salient reminder about the cost of delay and procrastination. Short-term returns are unimportant In isola...

Paying Capital Gains Tax (CGT) isn’t necessarily a bad thing because it means that you have sold an asset and made a profit, which is better than a loss, of course. That said, I’m certain that most people would prefer to pay less tax, not more. Therefore, it’s important to understand the ins and outs of CGT. Capital Gain Tax basics The amount of tax you must pay on any capital gain is calculated u...

After almost 20 years of interacting with investors (and potential investors) on a daily basis, I’ve noticed some common themes that prevent investors from achieving their potential. If you can avoid all three, you are almost guaranteed to achieve financial security. Whilst some of these matters seem relatively simple, you should not let their simplicity fool you into thinking that they are anythi...