The crypto sector has been getting smashed by many of the same factors that are driving stocks lower and yields higher. As it happens monetary policy and higher rates affect crypto and its enthusiasts as well. A tough lesson to learn for the novel asset class.
Bitcoin is at its lowest levels in a year and more than 50% off its highs. Coinbase is down over 80% from its IPO and fell 25% intraday. Even lower is Luna (RIP), down 96% on the DAY, after a debacle with stablecoin Terra (which is also trading way off its target of parity with the dollar at around 30 cents). It’s interesting to see how this has played out for an asset class that people touted as an inflation hedge.
Bitcoin was supposed to be the cure to what fiat money gets wrong. In reality, it affects investors’ portfolios just like any risk on equities these days. When investing in anything you should always be prepared for possible losses. One unfortunate part of this truth is that retail investors may not be financially savvy enough to realize just how bad it could get.
It is the most the end of the financial year and no better time than to get on top of the tax hacks we have coming up on our June 8 event.. Check out the rest of our events right through winter, covering money fundamentals, including – money mistakes, money mindset and investing. Click through to register and join the session:
Event schedule and links to book here:
- How to build a second income investing – May 26, 12.30pm – 1.30pm
- GA Event: How to Cut Your Tax Bill Before EOFY – June 8, 12:30pm – 1:30pm
- How to buy your dream home without a crippling mortgage – June 16, 12.30pm – 1.30pm
- Cryptocurrency investing 101 – July 7, 12.30pm – 1.30pm
- How to save more money faster – July 28, 12.30pm – 1.30pm
- Buy property the smart way in 2022 – August 18, 12.30pm – 1.30pm
Share market wrap
The Australian share market is ending the week on a high despite global markets still struggling with looming rate hikes, war and inflation. As of Friday morning, the Dow Jones closed 0.3 per cent down, while the S&P 500 was 0.1 per cent lower. The Nasdaq was marginally up by 0.1 per cent. That’s after the tech sector has been suffering heavy losses off the back of higher than expected inflation data out of the US. Crypto is still struggling, however, Bitcoin has recovered a slice of what it lost on Thursday.
Key sharemarket numbers:
- The ASX ‘All Ords’ (top 500 shares in Australia) finished the week -2.3% lower than last Friday, on 7,292.90 points.
- The US ‘S&P 500’ (Top 500 shares in America) finished the week -4.78% lower than last week, at 3,930.08 points.
- The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week -7.15 % lower than last week, at 11,370.96 points.
- The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week -3.50% lower than last week (Friday AEDT), at 7,233.34
- The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 3,063.34 for the month, down -27.08% for the month to date
Investment story of the week: Brisbane Broncos Limited (ASX: BBL)
Brisbane Broncos is a sports entertainment business that is best known for its ownership of the National Rugby League (NRL) football team of the same name. The Brisbane Broncos franchise generates revenue from sponsorships and from sales of its merchandise and memberships. The share has been consistently growing since its inception, with a very strong 1-year return of approximately 82%. The rugby team has had increasingly good results this season, with their win last week propelling them into the top 8 of the NRL (a place the team hasn’t been in quite some time). Off the back of the result, the market has responded kindly with a 35% rise as of Thursday’s close of business. The positive momentum may continue to push the share higher, and it’s definitely an interesting consideration to see if there is a correlation between team performance and performance in the share market.
Smart Money upside #68
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.
Couple; late 30’s, income ~$300k, total assets ~$2.3m, saving~ $5k annually
They weren’t great at managing money or being able to make longer-term plans, and there are too many options, it was overwhelming.
What they wanted from us / the advice process
Understand property investing and how it can help us, learn how they can create a tax minimisation strategy, and have a clear savings plan to maintain a nice lifestyle as well as a clear plan of what to do next.
What success looks like for them
Building a solid property investment portfolio, having solid business growth knowing that they’re being as strategic as possible with their structure, clarity around when exactly they’ll create a passive income of $100k annually, finances are essentially managed well and they don’t need as much energy put into it.
What money strategy they were following before we went through the planning process
What money strategy they choose to pursue from our planning work
Upgrading their family home, debt strategy for current and future mortgages, acquiring a new investment property, treatment of business income, cash management, revised banking structure, investment into equities, trust strategies, superannuation rollover, superannuation contributions, group insurance rollover and estate planning.
Key benefits of going through the process
Education, a clear plan to follow and more confidence in achieving the goals they want to achieve, and securing a nice lifestyle they want to have in the future.
Value of advice after all advice fees year one: $64k
Year 20 upside after advice fees: $6m
If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.
Giving update of the week
This week we’ve had the privilege of starting work with a bunch of new clients, and we’ve celebrated by providing 100 underprivileged people in Africa with 365 days of access to clean, llife-saving water. This is all part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.
Money Hack of the week: How to avoid feeling overwhelmed about money.
Do you get easily overwhelmed when talking about money? Truth bomb: Just because you have money doesn’t mean you automatically know how to manage it. I chatted with Dr Amy Silver about the catalyst for her to get financial advice and the common money myths that can do more harm than good to your finances. Check out our full chat here.
Money mistake of the week: Why it’s so easy to lose track of your investments.
Have you ever looked at your portfolio and thought, “What the F$%k is going on here?”. Well, that’s exactly what happened when Hannah came on board at Pivot Wealth. By making investments here and there, she ended up with a portfolio scattered all over the place. And she knew it was time to organise it. Check out our full chat here.
Jargon Buster of the Week: Unencumbered security (via Macquarie)
An asset or property that is not encumbered by creditor claims or liens. A house without a mortgage is unencumbered security. An encumbered asset is one with a registered interest against it, for example, a property for which you have a mortgage.
Podcast from last week: #168 Money Chat w. Mike and Lena – How couples can get on the same financial page
In this episode, I chat with two of our lovely clients, Mike and Lena who have recently gone through the planning process of their journey. How they got aligned having come from different sorts of financial mindsets and experienced level backgrounds. Some of the challenges they encountered, how they navigated them, and how they set up a plan to get them into their dream home and start a family. Also, some of the things that surprise them about how financial advice really works.
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.
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.