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3 July 2024

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Yields

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Where to find value in a multi-asset portfolio

Bonds have had a dreadful few years and their positive correlation to equities of late means they may not be the diversifier in portfolios that they once were. What are the alternatives to bonds, and where might there be value?

Stocks don't always beat bonds

Stocks always outperform bonds in the long-term, right? New research challenges that assumption, raising questions about historical financial data, and forecasts for future performance from the two largest asset classes.

Rising rates are transferring wealth to older people

Young people hold the majority of home loans while older people have the vast majority of deposits. It's not hard to see why rising interest rates are hurting the young and resulting in increased intergenerational tension.

Should retirees forget about the 4% withdrawal rule?

When evaluating investment yields or retiree-withdrawal rates, consider not only the numerator’s percentage, but also the denominator’s effect. Doing so will lead to the only path that truly matters: the dollar trail.

The growth outperformance myth

There's a common belief that the outperformance of 'growth investing' over 'value investing' since the GFC is simply due to the fall in longer-term interest rates, but is this really the case? The answer may surprise you.

Which asset class in Australia offers the best value now?

After price falls in most asset classes in Australia last year, where are the best opportunities in 2023? We compare cash, bonds, residential and commercial property, as well as stocks, and reveal what’s cheap and what’s not.

Are major bank hybrids really yielding 7%?

It's like magic. Compound at 7% for 10 years and an investor will double their money. So when a major bank security hits that level, it's worth understanding exactly what it means, then considering where it fits.

On interest rates and credit, do you feel the need for speed?

Central bank support for credit and equity markets is reversing, which has led to wider spreads and higher rates. But what does that mean and is it time to jump at higher rates or do they have some way to go?

Cash is the nightingale, the bird in the hand

The bird in the hand is worth two in the bush, and it's an apt metaphor for investment choices. In 2021, as investors hunted in the bush for decent returns, demand overwhelmed supply. Cash is the bird in the hand.

Don't invest just for yield: the smarter way to generate income

Investors often overlook the capital risk in high-yielding stocks. It's better to ensure capital grows and investors can sell a portion each year to make up for the shortfall in income from dividends.

How to find diversification and flexibility in bond markets

The role of a portfolio manager changes when normal opportunities become constrained. Flexibility and diversification in seeking alternatives in new markets is vital to adapting. 

Retail yield enhancement via wholesale funds

The wholesale market, accessible for retail investors via managed funds (including ETFs and LICs) offers better cash yields than bank term deposits but at a higher risk. This risk can be managed via a diversified portfolio .

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How much do you need to retire comfortably?

Two commonly asked questions are: 'How much do I need to retire' and 'How much can I afford to spend in retirement'? This is a guide to help you come up with your own numbers to suit your goals and needs.

Meg on SMSFs: Clearing up confusion on the $3 million super tax

There seems to be more confusion than clarity about the mechanics of how the new $3 million super tax is supposed to work. Here is an attempt to answer some of the questions from my previous work on the issue. 

The secrets of Australia’s Berkshire Hathaway

Washington H. Soul Pattinson is an ASX top 50 stock with one of the best investment track records this country has seen. Yet, most Australians haven’t heard of it, and the company seems to prefer it that way.

How long will you live?

We are often quoted life expectancy at birth but what matters most is how long we should live as we grow older. It is surprising how short this can be for people born last century, so make the most of it.

Australian housing is twice as expensive as the US

A new report suggests Australian housing is twice as expensive as that of the US and UK on a price-to-income basis. It also reveals that it’s cheaper to live in New York than most of our capital cities.

Welcome to Firstlinks Edition 566 with weekend update

Here are 10 rules for staying happy and sharp as we age, including socialise a lot, never retire, learn a demanding skill, practice gratitude, play video games (specific ones), and be sure to reminisce.

  • 27 June 2024

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