Latest News from Newealth

16 Apr 2021

Financial Fraud

As my late father would always taught me…‘what goes around comes around.’

And it has come around in a big way for Mr Bernie Maddoff.

Click to read.

It also proves that no amount of regulation or compliance will ever stop an individual who has decided to commit a crime when you consider that he committed this financial fraud over decades.

Will his death appease the investors who have lost their money? Doubt it.

Fortunately, Newealth is in the business of helping clients make money and not lying, cheating and stealing.

 

15 Apr 2021

Philanthropy: Shaq Gives Back

This is just a wonderful message.

It reminds me of what Winston Churchill said…“We make a living by what we get. We make a life by what we give.”

Click for video.

 

8 Apr 2021

Market Metrics: US IPO

We have seen many financial market crashes first hand during the past three decades with the two biggest being the 2000 Tech Wreck (Dot-com Bubble) and the 2008 Global Financial Crisis (GFC).

Both destroyed billions of dollars of investor capital and for both the IPO (Initial Public Offering) dollars which refers to the process of offering shares of a private company to the public to raise capital using a public exchange peaked in the year prior.

The amount raised in US IPO market peaked in 1999, it peaked in 2007 and in 2020 it went berserk at US$154 (AU$202) billion dollars raised.

Click for chart 1.

What has been the driver (the fuel)? Low interest rates.

The lack of return from cash, term deposits, notes, bills and bonds has fuel investment in tech companies especially which are now as sector valued at even higher multiples than in 2000 Tech Wreck (Dot-com Bubble).

Click for chart 2.

Yes, we keep getting reports and research that 2021 is going to be a good year but there is no doubt that tech sector valuation are beyond stretched.

Something will go wrong which is why it is most important to remain invested according to your appetite for volatility and when fear and panic take hold during the next financial catastrophe, only then react by buying more quality assets at discounted prices.

 

6 Apr 2021

Retirement: The Super Gap

We regularly get asked how much money should I have already saved in superannuation.

If you look at the statistics, the average Australian superannuation balance comes up short.

There is a gap between male and female average superannuation balances and there is also a gap between the current and recommended average superannuation balance.

Why do women have a smaller average superannuation balance because children get in the way?

Women’s income is heavily impacted by the fact that they are the only sex that can give birth and woman often continue on to become the primary care giver which usually leaves them with less time for full-time work.

Significantly reduced hours of full-time work over years and in some cases decades causes this gap because part-time and casual work pays less income and has less opportunity for increasing income.

On the question of why are the current average superannuation balances below the recommended for both men and women?

Again, because life gets in the way.

Rather than increasing our saving towards retirement we allocate money towards entertainment, hobbies, vehicles, holidays, wedding, property, children, debt repayment and more.

It is always easy to find a reason to spend money.

Spending money is a normal behaviour and also necessary and that is why increasing the superannuation guarantee contribution from the current 9.50% to an eventual 12.0% per annum on the 1st July 2025 is good.

It will force increase the average superannuation balance.

Click for chart.

 

1 Apr 2021

Market Cycles: Bull Markets

History doesn’t repeat itself, but it does rhyme’ is a famous quote by Mark Twain.

The COVID-19 Pandemic caused a 37% collapse in asset prices last March and as a consequence marked the start of a new Bull Market.

Have a question, how long do Bull Markets last and how high do they get?

Attached is research on the duration of Bull Markets post-crash and their total return for the past 75 years.

For Australia, a Bull Market has lasted on average 46 months (or 3 years and 10 months) and the All Ordinaries has risen an average 116%.

For the United States a Bull Market has lasted on average 64 months (or 5 years and 4 months) and the S&P 500 has risen an average 172%.

Click for tables.

We are currently only 12th months into this new Bull Market and based on averages, there is a long way left to run but the problem with averages is that they cannot always be trusted.

What we can trust in is Benjamin Graham value investing principles which is not to speculate.

Instead 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.

 

27 Mar 2021

The Wealth Report 2020: Insight 6 of 6

Prime Property is defined as the top 5% of the most desirable and most expensive property in a given location.

According to The Wealth Report, London globally has the highest number of prime properties at 68,189 followed by Dubai at 42,356 and Sydney in third place with 27,436 residential prime properties.

The Prime Property threshold for London is £2m (AU$3.6m) plus while it is Dh3.6m (AU$1.29m) plus for Dubai and AU$3m plus for Sydney.

Interestingly however, London comes in third when you consider the number of square metres of Prime Property that you get for US$1m (AU$1.31m).

Sydney comes in 9th with US$1m (AU$1.31m) only buying you 45 square metres of Prime Property while Melbourne offers much better value at almost double the square metres for the same price.

Click for chart.

 

26 Mar 2021

The Wealth Report 2020: Insight 5 of 6

The PIRI 100 (Prime International Residential Index) is used in The Wealth Report to track movements in luxury property prices across the World’s top residential markets.

It includes residential property in major financial centers, gateway cities, second home hotspots (both coastal and rural) and leading luxury ski resorts.

So which City topped the PIRI 100 with the biggest annual increase in 2020?

Auckland New Zealand beat all with a 17.5% increase while Sydney Australia was well down the PIRI 100 in 56th place at only 1.1% and was beaten by Perth, Gold Coast and Brisbane.

This is a surprise given the booming auction prices being reported for Sydney residential property.

Click for chart.

 

25 Mar 2021

The Wealth Report 2020: Insight 4 of 6

According to The Wealth Report, Russia & CIS (Commonwealth of Independent States) which unites Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Ukraine is forecast to see the biggest rise of the mass affluent at 144% by 2025.

The mass affluent are defined as households earning an income of US$100,000 (AU$131,000) per annum or more.

This is closely followed by Africa at 139% and no doubt these numbers are coming of a relative low base.

Asia however is still forecast to see the biggest rise in the number of HNWI and UHNWI at 46% and 39% respectively by 2025.

Interestingly, Indonesia is expected to outpace India by 2025 in terms of the percentage increase in the number of UHNWI, defined as individuals who have over US$30m (AU$39m) in assets including their primary residence.

It is difficult to see a scenario for this not being the Asian Century.

Click for chart.

 

24 Mar 2021

The Wealth Report 2020: Insight 3 of 6

You may recall that according to The Wealth Report you meet the definition of an Ultra-High Net Worth Individual (UHNWI) once you have over US$30m (AU$39m) in assets including your primary residence.

Interestingly, 80% of UHNWI cite the ongoing disruption by the COVID-19 pandemic as their biggest worry when it comes to wealth creation while 87% of UHNWI see new investment opportunities in the post-pandemic world.

This is classic, is the glass half empty or half full and should come as no surprise because every crisis creates opportunities for those individuals that do not panic or freeze.

Click for charts.

 

23 Mar 2021

The Wealth Report 2020: Insight 2 of 6

According to The Wealth Report, you only need US$2.8m (AU$3.61m) in assets including your primary residence to meet the definition of being part of the top 1% of most wealthy individuals in Australia.

Surprisingly however, you only need US$4.4m (AU$5.67m) in assets including your primary residence to meet the definition of being part of the top 1% of most wealthy individuals in the United States.

Did think that number would be higher for both Australia and the United States.

Click for table.

 

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