Smart money moves of the week

Ben Nash

The Aussie share market finished the week up at 50.04% higher than what we saw at the height (low) of the COVID pandemic.

Share market wrap

The ASX was up 0.5% this week, with gains balanced against the ongoing trade war with China, and better than expected Australian economic growth numbers having a positive impact on markets.

The main negative for markets was worse than expected employment data out of the US, and the ongoing trade war with China.
Key market stats:

  • The ASX ‘All Ords’ (top 500 shares in Australia) finished the week 0.8% higher than last Friday, on 6,871 points.
  • The US ‘S&P500’ (Top 500 shares in America) finished the week 1.79% higher than last Friday, on 3,699 points.
  • The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week 1.79% higher than last Friday, on 12,464.23 points.
  • The Global ‘All World’ index (measured with the iShares MSCI world index (all share markets around the world combined) finished the week 1.87% higher than last Friday, at 111.42

Share story of the week: Telix Pharmaceuticals (ASX:TLX)
Telix is a clinical-stage pharma company that’s starting to kick some serious goals. They just acquired TheraPharm, a Swiss company and surged over 21% this week as a result.

Money hacks of the week

Keep your assets in line with your goals: A common question I’m asked and one of the areas people go wrong when they invest is looking at investments in isolation. I did a short video chatting about how to choose good investments here.

Podcast from last week: Is the sharemarket about to crash?

Money mistake of the week: Risk aversion
It’s really common (and really smart) to make sure you cover your risks when you invest. But sometimes, fear around risk management can become consuming, and it’s easy to fall into the trap of being more conservative than you really need to be.

This client mistake was from one of our most entertaining clients, who has the goal of being debt free on their home. The mistake though was driven by the fact they have a mortgage of around $500k which is now fully offset. Sounds great, although when we got into their situation and goals, it became clear pretty quickly that holding $500k in cash, even in an offset account, was way more than they should have been holding – we found that at least part of this money could have been put to better use through investing.

Through our conversations over the last few weeks we’ve decided it would be better to do a debt recycling strategy to make that debt tax deductible, and then look to invest the surplus savings beyond what was needed to make them feel comfortable with a solid emergency fund.

Weekly jargon buster: Gearing
This one confuses a bunch of people but is simpler than you’d expect.

Definition: Gearing is borrowing money to invest. The positive/negative/neutral element refers to the ‘cashflow’ impact, i.e. when you buy property if the total (rental) income is more than your expenses (mortgage repayments and other costs) then your property has a positive cashflow and is ‘positively geared’. If the cashflow is negative, then your investment is ‘negatively geared’, and if the cashflow impact is neutral your property would be ‘neutrally geared’.

Advice upside
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story from one of our clients to help you take your money game to the next level.

Couple working in software and marketing, mid 30’s, household income $200k, saving $15k annually before ($35k after), $15k shares + $145k cash.

Frustrations when first coming to see us
Decent savings and wanting to ultimately get into a family home for their growing family but this seeming unattainable, not sure the right strategy, not sure how to tackle investing.

What they wanted from us / the advice process
Clear plan to family home, put cash savings to work

What an awesome result looked like for them
Be able to grow their family, and make some smart money moves to get their money working for them, mapping a clear plan to family home within 5 years and building investment income.

What money strategy they were following when we started working together
Saving money in cash, very small amount of share investing but unclear on the strategy.

What money strategy they chose to pursue from our planning work
Buy an investment property around $1.2m, upgrade rental property.

Key benefits of going through the process
Growing investments, gearing with property, confidence to execute, and building knowledge around investing.

Total quantifiable value received in year one from plan after all advice fees (i.e. tax savings, increased savings rate, growth on investments): $33,061, reflecting a 246% return on their investment.





This information is of a general nature and has been prepared without taking account of your personal objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. We expressly recommend that you seek advice from a financial advisor.