Happy Monday.
What piqued my interest the most this week was the share market performance. A global tech rout wreaked havoc on Australian shares on Thursday, triggering the worst sell-off on the local share market in 16 months, amid fears the US Federal Reserve could begin to raise interest rates more aggressively than previously anticipated.
The S&P/ASX 200 Index tumbled 207.6 points, or 2.7 per cent, to 7358.3, declining for a second straight session, and wiping more than two weeks of gains. I talk a lot about diversification and how a balanced portfolio is a key to long term success. Zoom and Peloton are two good examples of shares that in the last 12 months have continued to underperform. 2022 is shaping up to be an interesting year already.
Before I get into the content for this week, I wanted to share an upcoming event series we’ve put together coming up in February. The series is all around Employer Share Plans and how to make more money out of them, and the series has been put together in response to demand from our mainly tech company workers who want to be smarter with what they have.
I know that for many of you following along, being in the tech industry 2021 was a bit of a wild ride – some good, some bad. So what do you do with your employer shares? Join me to find out. Check out the full list of events that are coming up and click through to register:
Event schedule and links to book here:
- Employer share plans 101: Tuesday, Feb 1, 2022, 11am
- How employer share plans work (deep dive): Monday, Feb 7, 2022, 2pm
- Employer share plan tax hacks and mistakes to avoid: Thursday 10th Feb 12pm
- How to make more PROFIT from your employer share plan: Tuesday, Feb 15, 2022, 11am
- Why you need a financial adviser if you make more than $250k p.a: Thursday 13th January 12pm
- How to use property equity to invest when your LVR is below 50%: Tuesday 25th January 12pm
- How to invest if you’re saving more than $5k monthly: Thursday 24th Feb 12pm
Smart Money upside #50
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 20’s, income ~$603K, total assets ~740k, savings $20k annually with Shares and diversified investments
Frustrations
Has a number of investments but no real structure around holdings.
What they wanted from us / the advice process
Career trajectory and earning potential was up in the air. Keen to ensure that they are able to plan and have a strategy that can be flexible with this.
What success looks like for them
Have a clear plan for their money, be on a good budget and be across monthly spending.
What money strategy they were following before we went through the planning process
Purchasing some shares on an ad-hoc basis and a couple of investments with family. Never sought advice around the bigger picture.
What money strategy they choose to pursue from our planning work
Deprioritise purchasing a family home, clean up and consolidate current investments. Purchase a new investment property, continue to rent and invest in a diversified investment portfolio along the way.
Key benefits of going through the process
Organisation and structure.
Value of advice after all advice fees year one: $60,617
Year 20 upside after advice fees: $2,062,609
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
This week we’ve had the privilege of starting work with a bunch of new clients, and we’ve celebrated by providing 100 underprivileged people in Africa with 365 days of access to clean, life-saving water. 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.
I sat down with The Australian to share my thoughts on the top tips for the stock market in 2022. Click here to read more
Money Hack of the week: How does Blockchain, Bitcoin & Ethereum really work?
Blockchain technology is damn confusing, right? Luckily, I sat down with Joni Pirovich from Blockchain & Digital Assets to shed some light on how blockchain and cryptocurrencies work. From Bitcoin to Ethereum and Litecoin, all of these have a unique purpose in the crypto market. Check out our full chat here.
Share market wrap
The Australian sharemarket endured a wild ride in the first four sessions of trading in the new year, hitting a four-month high mid-week before suffering its worst session in 16-months just two days later. The S&P/ASX 200 Index closed the week 8.7 points, or 0.1 per cent, higher at 7453.3, rising 95 points, or 1.3 per cent, on Friday. Over in the US, policymakers also signalled their interest in reducing the Fed’s $US8.5 trillion balance sheet sooner than expected. Interest rate hikes are generally bad news for the stock market.
Key sharemarket numbers:
- The ASX ‘All Ords’ (top 500 shares in Australia) finished the week -0.97% lower than last Friday, on 7,774.40 points.
- The US ‘S&P 500’ (Top 500 shares in America) finished the week -1.66% lower than last week, at 4,696.05 points.
- The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week -4.08% lower than last week, at 15,080.86 points.
- The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week 0.29% higher than last week (Friday AEDT), at 7,450.37
- The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 4,866.41 for the month, down -5.87% for the month to date
Investment story of the week: MGC Pharmaceuticals Ltd (ASX:MXC)
MGC Pharmaceuticals is a medical and cosmetic cannabis company with global operations to supply the legalized markets with cannabis products. The current activities of the company include development of non-psychoactive cannabidiol (CBD) cosmetic products. The share price smoked the market today. This comes after the company provided investors with a positive update regarding its clinically tested nutritional supplement, ArtemiC Rescue. At the closing bell, the cannabis company’s shares finished up 19.51% at 4.9 cents apiece. Investors are pushing up the MGC Pharmaceuticals share price following the news the company has expanded its sales base. In the release, MGC Pharma advised it has secured an import approval permit for ArtemiC Rescue by Indian regulators, which enables the importation, distribution, marketing, and sales of ArtemiC Rescue in India, generating the company a new revenue stream.
Money mistake of the week: Not having a mutual understanding with your advisor.
What’s one of the most important aspects of any relationship? Mutual understanding. Maddie came to Pivot Wealth after hiring another financial planner who just didn’t understand her values. If your financial planner doesn’t understand you and vice versa, you could be sacrificing your potential. Take a listen to my chat with Maddie to hear what surprised her most about her experience with Pivot. Check out our full chat here.
Jargon Buster of the Week: Guarantee (Via Macquarie)
A guarantee is a non-cancellable indemnity bond, backed by an insurer. It offers investors security that an investment will be repaid. A limited guarantee is when the amount the guarantor is responsible for is limited to a set sum or time frame. A non-limited guarantee is when the guarantor is obligated to repay all amounts due.
Podcast from last week: #150 – Finding the Right Investment for You [Live event collab w. General Assembly]
If you don’t have a clear plan for your money, not only are you shooting from the hip, but you’re probably leaving a heap of money on the table. And the more you earn, the more problematic it becomes because there are more things you can be doing to get more out of what you have. In this session, we’ll cover the different types of investments available to you, the pros and cons of each, and the process you can use to set up a rock-solid investment plan, the steps to follow, what to look out for, and how to get started. It will give you the confidence to make the right investment moves and take your money game to the next level.
Be awesome,
Ben
PS: If you want a hand to get on the front foot with your money in 2021, check out our 45-minute one-on-one sessions here. We’re donating 100% of the money raised to charity, so you can up your money game and do something good on the planet at the same time.
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 definitely 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, having regard to your own 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. That is, 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, having regard to your own 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.