Investment strategies and opportunities: Shani's top article from July
Morningstar’s Senior Investment Specialist discusses various perspectives on how to get to your financial goals.
Happy New Year. July signalled the start of the new financial year. For many of us, our financial situation comes into focus. We start receiving statements from investments and superfunds, employers and banks. Some of us will log onto the ATO, look at our income and wonder where on earth it has all gone in the last 12 months. Others will review their investment portfolios and be pretty chuffed about how markets have performed in the last 12 months. Regardless, the new financial year is the best time to open all the books and ensure you’re on track – from every regard.
This month, my articles have explored getting to your financial goals (whatever they may be), investment opportunities and estate planning.
Getting to your financial goals
My disinterest in investments as an investment specialist: I laid out my investment strategy, and why I choose to focus on asset allocation and factors within my control, rather than choosing between two stocks.
Transitioning to a ‘grown-up’ portfolio:Inspired by a question from a friend and past experience, I wrote about transitioning to a ‘grown up’ portfolio. We’re encouraged to get into the market as soon as possible. Investing builds wealth and ensures our savings are protected from inflation. However, rushing into the market as many investors did in 2020 leaves them with a portfolio of investments that may be misaligned with their financial goals. What is the best process for transitioning from that misaligned portfolio to one that truly reflects what you’re trying to achieve? Read my thoughts here.
DCA vs Lump Sum: One of the most common questions that we get from investors is whether they should Dollar Cost Average (DCA) or Lump Sum invest. I look at the theory behind both, and what the data says we should be doing with our investments. I found that sometimes, it is not data that will dictate our strategy, but circumstance.
When should you pay off your HECS/HELP debt: Part of the new financial year for those of us who have taken out student loans to afford tertiary education is paying HECS/HELP debt. This can often be a frustrating process when the indexation rates applied exceed the payments made. Nevertheless, we are told that HECS/HELP debt is one of the best debts you can have. It is often advised by financial advisers and professionals to focus on other goals before tackling HECS/HELP. I firmly believe that personal finance is just that – personal. I look at the circumstances in which you should consider paying off a debt, and speak to a financial adviser and mortgage broker about how they advise their clients.
A rundown of the First Home Super Savers Scheme:Many first home buyers are struggling to save for a deposit for their first home. There are many state based initiatives to make the process easier for them. One federal scheme, however, involves utilising the efficient tax rates of superannuation to save for a deposit faster. I take a closer look at the First Home Super Saver Scheme (FHSSS) and whether first home buyers should utilise it as part of their strategy to save for a deposit.
Build a portfolio with 3 ETFs: Investing is not a sport to be enjoyed (for most). Sometimes, we just need a simple framework to save for our goals. I use Morningstar research and data to put together a diversified portfolio of 3 ETFs.
Travel more with a better alternative than saving for holidays: Travel is an extremely common goal. In fact, in recent surveys by nabtrade and moomoo, it is the most common goal for people. I explore the ways that you can harness investing and passive income to create a travel fund.
Investment opportunities
The top holdings of the best performing superfunds on the market: Superfunds have some of the largest pools of resources behind them. Each investment decision has countless investment professionals involved in the process. I take a look at the top holdings of the best performing superfunds in the market, and what our equity analysts think of the holding.
3 cheap fully franked stocks: With the new financial year, we have seen new marginal tax rates come into effect. The median salary now sits in a 30% marginal tax rate. Franking credits sit at 30%. This means an effective tax rate of 0% on income if the share is fully franked. I take a look at 3 cheap fully franked stocks.
What did Morningstar subscribers buy and sell in June:June was a peculiar month. We have been putting together articles on Morningstar’s top monthly trades for a while now. This is the first month where the top 4 trades have been ETFs. 9 out of our 20 top trades were for ETFs, all heavily weighted to the buy side. I look at what our manager research analysts think about the top ETF trades in the previous month.
Estate planning
Your inheritance will likely be a home – what should you do with it? And What to do when you inherit shares: The intergenerational wealth transfer will see many assets bequeathed. Most of these assets won’t be cash. I have written two articles this week that cover assets that you are likely to receive as part of your inheritance - property and shares. The articles go through the implications of inheriting and bequeathing these assets, and potential ways to reduce headaches at what will be a difficult time with the loss of a loved one.
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Articles mentioned:
- My disinterest in investments as an investment specialist
- Transitioning to a ‘grown-up’ portfolio
- DCA vs Lump Sum
- When should you pay off your HECS/HELP debt
- A rundown of the First Home Super Savers Scheme
- Build a portfolio with 3 ETFs
- The top holdings of the best performing superfunds on the market
- 3 cheap fully franked stocks
- What did Morningstar subscribers buy and sell in June
- Your inheritance will likely be a home – what should you do with it?
- What to do when you inherit shares
- Travel more with a better alternative than saving for holidays