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Eureka Report articles - 2013 archive 14/10/2013 - The art and science of value investing - The term value investing has been around since the 1930s, and generally involves buying securities that appear under-priced. But there are active and passive approaches to value investing, with one being more of an art and the other a science.
07/10/2013 - The top five investor mistakes - There’s no formal rulebook for investing, and a large number of investors taking to the investment field are often playing blind. They may score some goals along the way, but without a disciplined approach it’s more often luck than skill. Here’s a list of the five most common investor mistakes, and what to do to avoid making them.
30/09/2013 - First home saver accounts take off - First home saver accounts haven’t been heavily marketed, but they are gaining some traction among people saving towards their first home. They enable savers to deposit funds into an account and receive a government contribution, and only pay tax on the savings at 15%. But there are some catches that savers should be aware of.
30/09/2013 - The million dollar savings plan - Compound interest is a powerful investment strategy, but few use it to its maximum potential. An average income earner can build up $1 million in savings, investing 10% of their after-tax income, and increasing annual contributions in line with inflation, after 38 years.
16/09/2013 - Buffett's rules for your DIY fund - Investment guru Warren Buffett has made tens of billions of dollars by following a disciplined approach to investing. Nearly 40 years ago he wrote a letter to the Washington Post detailing his key strategies for managing pension assets, and they’re still just as relevant today as they were back then.
21/08/2013 - Coalition franking cuts to bite - The Coalition’s parental leave plan will involve a 1.5% levy on the highest-earning Australian companies, and this will not be franked. What that means is that shareholders in affected companies will lose the same proportion of their dividend franking credits.
19/08/2013 - Five risks of a low rates era - Investors seeking to offset their low returns from cash can be seduced by the high-yield returns on offer from shares and other assets, including property. The problem is, high-yield generally equates to higher risk. It’s therefore important to look very closely before you leap out of the cash safety zone.
05/08/2013 - An after-tax bonus from shares - Australian shares outperformed returns from residential property and other asset classes over the past 20 years and the last decade, both on a pre-tax and after-tax basis. After-tax, Australian shares averaged 7.9% per annum, compared with 6.8% for residential property. Cash paid the lowest average annual return, at 2%.
29/07/2013 - A pension trip worth taking - Transition to Retirement Pension streams (or TRIPs) enable an individual to keep working and simultaneously draw down income from their superannuation fund. By salary sacrificing income into their super fund, individuals can achieve substantial tax savings – especially once they have reached the age of 60.
22/07/2013 - Creating momentum for investors - Evidence suggests momentum or trend trading can offer potential returns. But investors should be aware that trying to replicate a trading strategy to capture ‘momentum’ through short term buying and selling would generate significant tax and transaction costs.
15/07/2013 - Investing on either side of a crisis - Modelling of superannuation outcomes demonstrate the extent of the hit taken by retirees hit by economic crises soon after finishing work in the early 1970s, compared to those who retired after the energy crisis. The worst, most share –exposed outcomes saw retirees run out of money well before expectations, while the best gave the retiree 17.45% returns
24/06/2013 - Anti-detriment payments a super opportunity - Anti-detriment payments are tax deduction benefits paid out from a super fund when a member dies. They are payable when a death benefit is paid as a lump sum, not as a pension, and can amount of thousands of dollars.
17/06/2013 - Going for growth: A 30-year retirement plan - Based on a retirement fund balance of $243,000 in 1983, and assuming a set annual drawdown rate, increased for inflation, a person who retired 30 years ago should have been able to lead a reasonably comfortable retirement and still have plenty of funds now. But, depending on where the funds were invested, some retirees would be sitting on a considerably higher balance than others.
03/06/2013 - Picking a winner - bank shares or cash - In the hunt for yield and solid returns, are banks shares a safer bet than bank deposits? Under current economic conditions, the answer is fairly easy. Bank shares have run hard, while the cash rate has fallen away. But would the story change over five years?
20/05/2013 - Housing plan opens seniors door - The latest federal budget unveiled a new government initiative to allow seniors to downsize their home and have $200,000 of the proceeds quarantined from the age pension assets test for 10 years. But those considering the option should weigh up the pros and cons before jumping through the door.
15/05/2013 - Budget 2013: Wealth, health and taxing options - Pensioners choosing to downsize their home can now quarantine part of the proceeds from the assets means test, while some of the government’s previously announced super rule changes will come into effect from July 1 if passed. Increases in the Medicare levy make private health cover attractive when the 1.5% surcharge is taken into account. While tax changes for smokers could be beneficial for all taxpayers if the same model was adopted for bracket creep.
29/04/2013 - Advancing your home loan - Paying more than the minimum on your mortgage from the first year saves interest for the life of the loan – much like starting a regular saving or investing program.
22/04/2013 - Spending in retirement: How much is enough? - How much should you withdraw in retirement? You can spend what you earn, or apply a more research-based approach. 15/04/2013 - Why bank deeming accounts don't add up - Centrelink’s age-pension deeming rates set entitlements based on specific financial asset levels. But what is commonly misunderstood is that recipients aren’t penalised for earning more than the set deeming rates. Investors can look beyond bank deeming accounts to earn higher returns. 08/04/2013 - How to stay under the new super limit - The Federal Government announced a series of planned changes to superannuation rules on Friday, including a new tax-free threshold of $100,000 for individuals in retirement. Earning more will attract a 15% tax, but there are several strategies to keep under the earnings cap. 25/03/2013 - A pension strategy where everyone can win - Many individuals or couples at pension age are uncertain about how much they can have in personal assets, and how much they can receive in income, before their age pension is impacted. This article runs through the numbers, and shows it’s possible to draw down a reasonable tax-free income and still receive a pension. 20/03/2013 - Pension plan adds up to better returns - A part-age pension can add a defensive quality to an individual’s financial circumstances and provide a comfortable tax-free retirement income stream when mixed with other investments. 11/03/2013 - Call for margin loans cools off - Demand for margin loans reached its peak during the Global Financial Crisis. A geared share portfolio can become self-funding over time if dividend income exceeds the loan interest costs. But there are no guarantees, and borrowing to invests means you are forgoing defensive assets in your portfolio. 20/02/2013 - Gearing up: It's all in the timing - A geared share portfolio can become self-funding over time if dividend income exceeds the loan interest costs. But there are no guarantees, and borrowing to invests means you are forgoing defensive assets in your portfolio. 30/01/2013 - A case for solid growth - While there is a view that the sharemarket will settle back after its current short-term surge, there is also a strong case that the market will continue to rise and deliver solid earnings growth for shareholders through earnings per share and dividends. 21/01/2013 - A steady dividends flow - Investors in many of the largest listed companies have watched their share values deteriorate since the GFC, but they are ahead on dividend payouts, particularly when tax franking credits are added back into yield equation. |