Latest News from Newealth

22 Jul 2021

Demographics: Millennials (Gen Y)

Bernard Salt is one of Australia’s leading demographers and has an interesting take on the reason for the current accelerating residential house prices.

Millennials (Gen Y), typically defined as being born between 1981 and 1996 are moving out of units/apartments/parents due to family formation and need more room to raise children.

The attached chart shows over 600,000 more individuals landing in the 30 and 40 year old demographic over the next 5 years which he argues is accelerating demand for residential houses.

Click for chart.

That implies that the current high residential house prices are here to stay and will only go higher subject to a substantial increase in interest rates and or China dramatically reducing the consumption of our hard commodities.

Both these negative factors are unlikely in the next 3 to 5 years.

However, the future is always full of unknown detail and so as Benjamin Graham taught, remain invested according to your appetite for volatility and when fear and panic take hold, then react by buying more quality assets at discounted prices.

 

16 Jul 2021

Friday Tidbit

China is going green and that means that the coal export market for Australia is going to go the way of the dinosaur in the coming decades.

Click for chart.

 

15 Jul 2021

Australian Household Wealth: AU$14 trillion

Very much doubt that it will come as any surprise that the vast majority of Australian household wealth is built on residential property.

Australian households have amassed AU$14 trillion in wealth and almost AU$7 trillion (half) of that wealth is made up of residential property followed by superannuation in a distant second with AU$2.8 trillion in assets.

The primary residence has been the bedrock of wealth during the whole of my three decades to date and is likely to continue while the taxation benefits make it so advantageous.

However, even though we do professionally love the primary residence it is important to remember that you cannot eat bricks or sell a bathroom when you need cash.

Click to read.

 

13 Jul 2021

Executive Salary, Incentives & Tenure

We are pro-business but don’t understand how any business can pay an employee AU$43m for one year of work.

Yes, the Chief Executive Officer (CEO) must be paid and paid well but AU$43m for one year of work!

Is it theft or value for shareholders to pay a CEO AU$43m for one year of work?

Is it the business or the CEO that earns the return for shareholders?

The Board of Directors is responsible for this outcome.

The Board of Directors represent the shareholders that own the business (that’s us) and it is they that approve the remuneration policy of the CEO.

Click for table.

 

9 Jul 2021

Friday Tidbit

The numbers are in and they are spectacular for passive investing.

For example, if you bought all the good and all the bad listed companies in the ASX200 and in proportion to their market capitalisation you would have made a 24.0% index return for the 12 months to 30 June 2021.

This is an outsized performance number.

The real eye popper however is iron ore which has jumped up 206.0% in price and is a big reason for why the Australian economy is doing so relatively well during this COVID-19 Pandemic.

Remember, past performance is no guarantee of future performance.

Click for table.

 

7 Jul 2021

Interest payments on Government debt

There are many insights in this 5th Intergenerational Report which aims to forecasts an outlook for the Australian economy and the Federal Government’s budget over the next 40 years.

One piece of good news is that the cost of interest payments on Federal Government debt is likely to be contained for the rest of this decade, however it is then forecast to double into the 2040’s and 2050’s.

Click for Chart 6.11

The solution, reduce the amount of debt and you are most likely to reduce the cost of interest payments but there is a significant issue with this plan, Governments do not earn an income.

Government revenue is derived by taking from one segment to give to another which means that to repay debt and or the increasing interest cost they must take from you.

For a full copy of the 2021 Intergenerational Report please click the following link.

Click to read.

Please contact us if you want advice on how to minimise and reduce your tax liability in the coming decades.

 

2 Jul 2021

Superannuation Changes

We have attached a short two page technical paper on the key changes that the Federal Government has made to superannuation which came into effect from yesterday, the 1st July 2021.

Enjoy and remember, disciplined saving is always good. For everyone.

Click to read.

 

1 Jul 2021

Newealth FSG (July 2021)

We have updated our Financial Services Guide.

For more details, click ‘Newealth FSG’ or alternatively go to the FINANCIAL SERVICES GUIDE link at bottom of the page.

 

Share this archive
Top