14th November 2022

Smart money weekly; Crypto collapse, buying your first home, how to research investments and Origin Energy soars

Ben Nash

 

Hey team,

Happy Monday.

The crypto world is bleeding red this week as a massive exchange organisation, FTX, is on the brink of collapse. The CEO and founder of FTX, Sam Bankman-Fried has suffered the largest single loss in history as his net wealth diminished from an estimated $16billion to negative $200million. The broader downturn in financial markets has prompted investors to ditch riskier assets such as crypto. After witnessing rapid growth in 2020 and 2021, Bitcoin, the largest crypto by market cap, is down 59% year to date.

New Stamp duty legislation, known as the ‘First Home Buyer Choice’ passed parliament in NSW. The new laws mean from this weekend first home buyers can choose to pay up-front stamp duty or a smaller annual land tax of $400 plus 0.3 of the property’s land value. The scheme is only on offer for properties costing up to $1.5 million or vacant land up to $800,000. It is estimated that the scheme will cost the government almost $730million over the next four years.

Upcoming events:
Making avoidable mistakes with your money can have a massive impact on your financial well-being in the long term. Register for our upcoming session to learn the mistakes to avoid in 2023. Check out all our other upcoming events below as well.

Share market wrap
A lot happening this week. The Australian market seems to be on the mend with stocks performing well. Across the pond, America’s annual inflation rate slowed down to 7.7% which was lower than the expected 8%. Investors loved this news as it shows a possible end to increasing interest rates and may indicate inflation is finally under control. The Aussie dollar is sitting around 64 US cents. In the crypto world, we have seen a virtual collapse. So far, the cryptocurrency market has fallen about two-thirds from its peak, to $US1.07 trillion. I’m sure there are a lot of digital wallets that are feeling the pinch.

Key sharemarket numbers:  

  • The ASX ‘All Ords’ (top 500 shares in Australia) finished the week 3.6% higher than last Friday at 7,350.10 points.
  • The US ‘S&P 500’ (Top 500 shares in America) finished the week 5.0% higher than last week at 3,956.37 points.
  • The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week 5.3% higher than last week at 11,114.15 points.
  • The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week 2.83% higher than last week (Friday AEDT) at 7,375.34 points.
  • The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 1,986.78 for the month, down -12.51% for the month to date.

Investment story of the week: Origin Energy Ltd. (ASX:ORG)
Origin Energy’s share price jumped almost 35% on Thursday. The energy giant had a closing price Wednesday of $5.81 per share and then a closing price on Thursday of $7.83 per share. This increase was propelled by news from the company’s board that it would accept a proposed $9 per share bid put forward by Brookfield Asset Management and MidOcean Energy. They have been granted due diligence in hopes it will follow its proposal with a binding acquisition offer. Based on the Origin share price at market close on Wednesday, the $9 per share offer represents a massive 55% premium. It will be interesting to see if the deal actually comes to fruition as they will need approval from the Foreign Investment Board Review.

Smart Money upside #95
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 is from one of our clients to help you take your money game to the next level.

Numbers/Background
Individual, early 30’s; household income ~ $120k; total assets ~ $270k; savings ~ $10k annually.

Frustrations
No idea where to start and the information overwhelms me.

What they wanted from us / the advice process
Building a plan for the next 20 years, increasing her financial literacy and getting more assistance on investment opportunities and strategies.

What success looks like for them
Owning her home, having a strong investment portfolio that incorporates elements of passive income and a plan to help support family planning and education costs.

What money strategy they were following before we went through the planning process
No clear strategy for investing, just saving money in the bank.

What money strategy they chose to pursue from our planning work
Buying her first home, investing in shares, super contributions, a clear plan on arranging the deposit for the home, a solid banking structure and a plan to build a long-term diversified investment portfolio.

Key benefits of going through the process
A clear plan around arranging the property deposit using existing cash, an easy-to-follow banking structure that makes it simple to track and save, access to a diversified investment portfolio that will generate passive income in the future and a switch to a low-cost superfund with access to a range of quality investment options.

Value of advice after all advice fees year one: $27k
Year 20 upside after advice fees: $1.4m

If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.

Giving update of the week
At Pivot we know that health care helps prevent diseases and improve quality of life. Without access to healthcare, people are far more at risk and susceptible to illnesses and widespread viruses. So we’ve supported 100 villagers in Kenya to have access to healthcare for a year. This is all part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.

Money hack of the week: How to research what makes a good investment
For any large purchase, you tend to look under the hood and give it a good once over, right? Well, you should be doing the same for your investments. I chatted to Kevin McDonald from Future Focus Financial Planning on discovering all the nitty-gritty details of a fund when investing ethically. Check out our full chat here.

Money mistake of the week: Why more women need to share their thoughts.
No matter how much we achieve, we always find ourselves remaining curious about new ventures. Lynne Cazaly, after writing nine books, continues to strive to help women share their thoughts and express their ideas. In this chat, she noted how the quotes in history books are so often written by men, with not nearly enough by women. It’s time to change that. Check out our full chat here.

Jargon Buster of the Week: Introductory rate (via Mozo)
Introductory rates are discounted interest rates offered by lenders for an introductory period to make their home loan offers look more attractive to borrowers. Also known as a ‘honeymoon rate’, an introductory rate typically lasts for the first six to twelve months of the loan, before reverting to a higher ongoing rate.

Podcast from last week: #266 Money and investing hacks
This episode is a recording of a live event I did on Money and investing hacks. I talked about the most important things you need to get right to be successful with your money, how to invest, what to look out for when you invest and how to plan to get the most out of your current situation.

Also, I did a ton of Q&A with some interesting questions about the state of the markets and what is good buying today.

This episode is perfect for anyone who wants to know more about investing, understand the basics and how they can make it happen to them.

Helping people with this stuff is our jam, so if you want to chat about how to make your money success easier, you can book an intro call with us here.

Be awesome,

Ben

Disclaimer:

I know you’re smarter than someone that would need me to write the words that come next, but our compliance peeps are real hard asses so here we go… This information is not personal advice, poetry, or a map to where Jimmy Hoffa is buried. It may only be regarded as general advice and shouldn’t be considered something worthy of inclusion for Donna Hay’s next cookbook or the Archibald prize. This is actually just an email communication that has been sent to a bunch of people and doesn’t even have your name on it. Your personal objectives, needs or financial situation have not been considered when preparing this email, but I want you to know that I have spent a lot of time thinking about the Venn diagram intersection of poetry, landscaping, and essential oils – if you’re fascinated by this same phenomenon please reply so we can compare notes. You should consider the appropriateness of any general advice we have given you, regarding your objectives, financial situation and needs, and if necessary, seek advice before acting on it. You should also consider other people when getting on and off public transport, smiling more, eating healthy, and listening to your mum when she tells you that you’ve been working too hard. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Where the information relates to a hilarious joke I’ve made, you should consider belly laughing deeply. Worth noting also that past performance is not a reliable indicator of future performance when it comes to investments, and definitely not when it comes to the Wallabies. Financial services guide. All jokes aside and just to be clear, this information may only be regarded as general advice. Your personal objectives, needs or financial situations were not considered when preparing it.  You should consider the appropriateness of any general advice we have given you, regarding your objectives, financial situation and needs, and if necessary, seek advice before acting on it. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Past performance is not a reliable indicator of future performance.