Uncategorized Archives - Page 49 of 53 - Raiz Invest

By Clayton Daniel of Fund Your Ideal Lifestyle

I
remember over a decade ago when I didn’t know anything about investing. It’s a
really good frame of reference to have, and one that I hope I never lose.

Because
investing can seem ten million times more complex than it really is. Why? Well,
money is an emotional topic, and the first time you do anything it seems hard.

So
with that in mind, I wanted to explain all the financy pants terms that get
thrown around, and give some explanation as to where all the pieces of the
puzzle fit in. I think the more you understand about where you are investing,
and what you are investing in, the more control you will feel, and ultimately
the more comfort.

So
here we go.

Starting
right at the top we have the ever-ethereal word ‘market’. This word gets
thrown around a fair bit. It basically means the same as it always has. A place
where people gather to buy and sell. But instead of buying and selling fish or
bread, they are buying and selling assets like property or equities.

So
when something is traded on the market, it really means it is traded in a place
where there are buyers and sellers. If an asset has a market price, it simply
means the price is at a point between where buyers want to buy and sellers want
to sell.

Now
let’s talk about the most common type of asset traded on the market – an equity.
An equity is called as such as when you own it, you own equity in a company.
You own a part of the company. Equities have the remarkable distinction of
being able to interchange their name at any given moment. Have you ever heard
the terms ‘shares’ or ‘stocks’. Yeah, same thing.

At
this stage, now you know that equities are traded on the equity market (or
shares/stocks are traded on the share/stock market). This is where you can buy
and sell blue chip shares like the big four banks, or speculative mining
shares. There are thousands of different stocks to trade on the stock market.
The only limits are your limits to research and what equities you are
comfortable in buying.

Okay,
so that’s great right? You can go out right now and start investing. Fantastic.
What are you going to buy? If you are an investment professional, you will have
an investment philosophy that works for you. If you are not an investment
professional, you probably don’t have an investment philosophy.

Therefore
you can either spend a lot of time researching to become an investment
professional, you can hire an investment professional for you, or you can buy
what’s called an Exchange-Traded Fund (ETF). An ETF is simply
a computer algorithm that invests your money into equities. The benefit is, for
every change to the portfolio you aren’t charged a fee. Instead, you pay an
ongoing percentage fee to cover the management of your portfolio. This reduces
the conflict of ‘churning’ investments which is the natural result of a
business model where revenue is made through the amount of buy/sells that are
made.

As
you can see above, the amount of global money invested in ETF’s has grown
significantly since the start of the Global Financial Crisis (GFC) in 2007. So
why has the ETF market grown by 400% in less than a decade? Well for a few
reasons.

Firstly,
investors were burned so bad during the GFC that they got sick of paying for
stockbrokers, financial advisers, and fund managers to invest their money. The
argument that people were better at picking equities than computers were
largely proven wrong.

This
in turn created the rise in Modern Portfolio Theory. Put basically, you get 80%
of your gains and losses simply by being in the market. There are easily
refutable points to this theory, but put simply, it provided a framework to
build a portfolio without human involvement.

Which
brings me to technology. The technology to build these trading algorithms have
improved like all other tech has improved over the decades. These days there
are many different types of ETF’s, though most the money is still in the easy
to understand simple ones.

As
always, price is very important. Some ETF’s are so unbelievably cheap that it’s
hard to see where the revenue is being made by the product issuer. Some ETF’s
are so cost effective that on a million-dollar portfolio you can pay as little
as $300 a year.

And
with all these benefits it drew in many investors, which in turn created more
awareness, and more education. To the point where now ETF’s are essentially the
most popular way to invest. And considering the points above, it’s not hard to
see why.

Now
you know how to invest in the market, by purchasing equities through an ETF.
Brilliant. You’re nearly there. So how do you do all this? How do you pick
which broker to use, and which ETF’s to invest in. Well again, you can either
learn to do it yourself, hire someone to do it for you, or use technology.

This
brings me to the last piece of financy pants education today. The technology to
make all this happen – Raiz. Raiz is simply an app which takes the small amount
of round ups on purchases you make in everyday life, and invests them for you
into ETFs.

Raiz
themselves don’t have anything to do with the ups and downs of the market. They
simply make easy what has typically been hard to do – open an account and start
investing. They take the manual work out of starting a brokerage account, and
choosing which ETF’s to invest into.

They
take all the complexities out of investing, and make it as easy as buying your
daily coffee. And that to me is brilliant. As a personal finance expert, the
ease in which they make investing is unbelievable. Raiz are the packaging to
make investing easy for the every day person.

So
to recap: You invest in the market, by purchasing shares, with an ETF, through
the Raiz app. For more information on Raiz fees, click here.

Look
at you – all financy pants…..

By
Clayton Daniel of Fund Your Ideal Lifestyle

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

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By Leveraged 

With
the Dow Jones Industrial Average approaching 20,000 and the ASX All Ordinaries
Index reaching its 12-month high, many investors are wondering what they should
do from here. Some are wondering if they have missed the run, others are asking
if they should take profits at these levels.

The
short answer to these questions is that investors should do little different as
a result of this milestone level. This is a timely moment to remind investors
of a basic but often forgotten quality of investing. Investors should continue
to invest with a longer term outlook rather than trying to time the market.

Whether
investors enter the market here or if they should take profits here has nothing
to do with these milestone numbers. Instead investors should keep in mind
things such as the timeframe of their financial goals and their tolerance to
investment volatility.

Those
saving for a distant goal, such as saving for retirement or their children’s
education should look to start investing right away. For those who are aiming
to retire soon, they could consider decreasing exposure to growth assets if a
short term shock could be detrimental to their retirement goals. Investors
could also consider rebalancing portfolios from asset classes that have
appreciated into other asset classes to ensure the mix is still in line with
their risk profile.

Too
many investors are tempted to buy the market during bull markets but flee the
market during a correction. This results in buying high and selling low.
Instead, investors should keep in mind things such as their investment time
horizon and the tolerance to ride market ups and downs. It is better to have a
rule based investment approach than to make investment decisions based on
emotion.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post

By Clayton Daniel of Fund Your Ideal Lifestyle

As
one from the older end of the Millennial generation (1982 – 2000), I can say
without a doubt the world is changing rapidly.

It’s
crazy to think my first games console was the Atari 2600. Then Nintendo and Sega came along, which
were ultimately supplanted by Xbox and Playstation. VR it seems will likely
take both their scalps.

I
use video games as an illustration of progression. Sometimes I forget I’ve
actually aged thirty three years, but then seeing is believing.

But
this article isn’t about lamenting how my metabolism has slowed down, or how
young everyone looks in bars these days – it’s about what I would say to my 21
year old self about money.

At
21 I didn’t know anything. I could punch out a nasally punk rock lyric to a
room full of rowdy teenagers, but not much more than that. To say I didn’t know
anything about money was an understatement.

Then
at a pivotal time in my life I met an entrepreneur who was travelling around
the world having a grand old time. He bought me the book ‘rich dad poor dad’
and it set my on a path I now find myself over a decade later. That book taught
me my first lessons in personal finance, and I became obsessed.

Absolutely
obsessed. I realized by understanding the language of money, the rest of life’s
problems can get in line. Money is simply transportable power. The more you
control, the more control you have over your own world.

And
my thought process was this – ‘more money equals better, therefore more time
spent learning about money equals better’. Fast forward another twelve years
and I have a degree in accounting, worked as an accountant, then financial
adviser, and ultimately grew and sold a financial planning business.

And
even though I ‘get it’ now, I’ve dedicated my life to understanding it. Again,
I’m obsessed with it so I’m lucky. But what about the 99.99% of people who
don’t dedicate their lives to understanding personal finance? What about
everyone else who knows a little, but not enough? What about my 21 year old
self?

Well,
this is what I would tell my 21 year old self about money before I ever
dedicated my life to understanding it. ‘Get 80% of the results with 20% of the
effort’.

While
we all have heard of the Pareto Principle, have you ever considered using this
principle with money? Everyone thinks they need a PHD in personal finance to do
well – but you don’t. Everyone thinks they must think about their money a lot
in order to get the most out of it – but you don’t. So I’m talking to those
people who want to do better with their money, but can’t be bothered to do so.
And I know, there are a lot of you out there.

So
let’s get to it. How do you 80/20 your personal finance? Easy, use technology.
Outsource your self-discipline to automation. I promise you, money more so than
anything else in life, if you use an automatic system to perform a task rather
than rely on yourself to do it personally, your chances of success go from 10%
to 100%.

So
get your own outcome, and outsource to automation.

Tip
1 – Your salary account should not be your spending account. For
example, if you had two accounts, you get paid into account (a) and
AUTOMATICALLY transfer across to yourself an amount you’re happy to spend guilt
free each week into account (b). Account (b) has a bank card attached, account
(a) does not.

Social
psychologist Roy Baumeister showed unfulfilled desire causes
us decision fatigue. Reduce your desire to spend money in
your account by putting one level of separation between you and your
savings/salary. Less distractions, better outcomes.

Tip
2 – If you want to invest, do it automatically, don’t rely on being
interested enough each week to follow up. Raiz can AUTOMATICALLY receive
regular contributions from your account. How hard is that to set up? Five
minutes? Five minutes ‘work’ upfront equals long term investing with zero
ongoing effort.

Sure
you can get more fancy than that, but start simple. By doing these two things
you are taking care of your money today (cash-flow) and tomorrow (capital
assets). And if you have an automated investment system to think about your
tomorrow, your only focus is guilt-free spending today .

By Clayton Daniel of Fund Your Ideal Lifestyle

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post

By

Clayton Daniel

Have you ever woken up one day
and said to yourself ‘wow, I really have to get my act together…’. The next day
it’s all green smoothies, two hours at the gym, open the credit card
statements, and of course – calling your mother.

“While we forgot what it meant to build something
slowly and quietly in the background, believe it or not, I think we are starting
to remember again.”

It’s a knee jerk reaction. As
such, you and I both know it won’t last. We over-estimate what we want to
achieve in a week. But in a similar fashion, we can also under-estimate what we
can achieve in a year.

I recently wrote an article on
how a five year plan changed my life. It did quite well off the back of
Linkedin (I’ll never understand Linkedin), but I think I know why. While we
forgot what it meant to build something slowly and quietly in the background,
believe it or not, I think we are starting to remember again.

What was once a long way to the
top if you want to rock and roll was replaced with reality TV singing
competitions. Napster came along in the nineties, the whole music industry went
digital. And as Sanity and the Virgin mega-stores shut down, we called it a day
on hard copy music . But then this happened… ‘Vinyl albums just
outsold digital for the first time ever’

“Money it seems, is returning to its roots also.”

Instant gratification is rather
gratifying, but so is something else. Anticipation. The buildup. The ability to
appreciate what you’re holding in your hands. The process of buying an album
was a part of the journey. Music is more than just listening, it’s experiencing
the whole package.

Money it seems, is returning to
its roots also.

Credit cards are instant cash.
Savings take a little bit of time. But I can guarantee which one feels better
to spend. I can guarantee which one is guilt free spending and which one isn’t.
I can guarantee which one will keep you from reaching all your other goals, and
which one simply plays it’s roll in being a part of your financial life.

“Even if you are disciplined enough to put money
aside in an account – the fact that it is sitting there and you aren’t spending
it is a mental drain.”

So how do you build up a treasure
trove of cash?

Well with my work around
understanding decision fatigue in regards to money, savings make for a strange
situation. See, even if you are disciplined enough to put money aside in an
account – the fact that it is sitting there and you aren’t spending it is
a mental drain.

What a pain.

This comes from the research
performed by American social psychologist Roy Baumeister. Basically unfulfilled
satisfaction distracts you from your task and hand. This in turn reduces your
performance in all areas of life. Put simply – if you save money in an account
you have access to, it’s simple existence will demand you spend it. If you
don’t, your brain will be distracted until you do.

Again, what a pain.

So how do we achieve two things:

Build up a guilt free amount of
money to spend once a year on something big

Do so in a way in which we aren’t
reminded of every time we look at our bank accounts.

Luckily, you’ve come to the right
person – I do this for a living. You build up a savings accounts with regular
deposits in a side account that you can’t spend with a card.

“Build regular deposits in an account you don’t
have instant access to. By accumulating savings in account you don’t think
about everyday, you avoid the decision fatigue associated with the constant
desire to spend it.”

See my journey from sojourn
savant to lifestyle finance expert took over five years of small regular
improvements (plus another five years previously in accounting – but who’s
counting). When I woke up on a beach in Southern France five years ago and
decided I needed to get my act together, I didn’t make a large knee jerk
reaction. I built success with little steps over a period of time.

From my professional experience
of handling the cash flow of many young professionals over the years, I can say
this applies to the personal finance space more than anything else.

And so like everything else, how
do we reduce the barrier to entry? How do we make this easy on you? Simple –
build regular deposits in an account you don’t have instant access to. By
accumulating savings in account you don’t think about everyday, you avoid the
decision fatigue associated with the constant desire to spend it.

“If you were to set in motion today a $10 a week
regular deposit arrangement, next year for Christmas there will be around $500
waiting for you to spend.”

Great, so where can you find
these types of accounts? Well, what about opening a new bank account with a new
bank? That would work right? Why of course! I’m sure you’re a massive fan of
the banks and can’t wait to open another account with another institution….

To save that hassle you could
always open another bank account with your current provider. But then, we both
know a simple transfer is 0.2 seconds away from spending. That’s going to
defeat the whole purpose of cognitive minimalism. We want the money far enough
away from you so you don’t have to think about it, but close enough to spend
when the time is right. So what are you to do?

While Raiz is a financial
literacy tool to help you engage with your money, it has a lesser known
function called regular deposits. All this does is automatically move a set
amount across each month into your account. If you were to set in motion today
a $10 a week regular deposit arrangement, next year for Christmas there will be
around $500 waiting for you to spend.

And in the meantime you’ll see
the market go though it’s classic roller-coaster up and down. It will go up, it
will go down. And withstanding any kind of cataclysmic wild events – it will
only ever mean a couple of dollars up or down as investment amount is
comfortably low. The benefit however is your
investor intelligence will increase while simultaneously building a small
portfolio in the background that doesn’t create decision fatigue. For more information on Raiz fees, click here.

Big plans succeed with little
steps.

Clayton Daniel

In this example, $10 a week
put aside over 52 weeks would equal $520 if there were no movements in the
market. Obviously this is a theoretical case study with the end result being
above or below this amount. The case study mentioned above is not a suitable
long term investment strategy as anything less than five years in the market is
considered too short of a time frame to benefit from returns. Instead the case
study above is simply to provide education around the benefit of consistently
making small regular deposits into an investment account – the withdrawal after
52 weeks is not mandatory. Raiz cannot provide any certainty around how much
money an investor would be able to withdraw in the event they followed the
above case study as investment returns are unpredictable, and past performance
does not provide insight into future performance.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post

By RateCity

We
all know that travel can be expensive. By the time you add up your flights,
accommodation and insurance costs it almost feels like there’s no money left to
go out and enjoy the city to which you have travelled.

Finding
new ways to come up with the cash for your holiday, and to keep costs down
while you’re on vacation, is a must for every travel addict.

Here
are some of the best ways to pay for your holiday necessities and still have
enough money left over for those once in a lifetime travel experiences.

Saving
up before you go

Saving
enough to go away on a trip is often the first and most difficult hurdle for
cash-strapped travellers.

Incentive
based savings accounts are a great way of stashing some cash for your next
holiday as they tend to both require a minimum monthly deposit and discourage
you from making any withdrawals.  By sticking to the account’s basic terms
and conditions, you effectively sign yourself up to a relatively simple savings
plan.  By doing so you are rewarded with bonus interest which can go a
long way to making your trip even more memorable.

The RAMS Saver account is a great example of an
incentive based saving account.  It has some conditions in order for
customers to earn bonus interest (on top of the variable base interest rate the
account offers). Firstly, customers must deposit at least $200 each month.
This could be as easy as getting a portion of your salary paid into the
account each month.

Secondly,
in order to be eligible for the bonus interest rate, customers must not make
any withdrawals each month. This effectively makes customers think twice about
whether they really need to spend money now or instead build up the spending
money for their trip. Bonus interest is only payable on balances up to $500K.

Apart
from the traditional savings account, new apps can help you stay disciplined
and save extra cash before your big trip. An example of this is the Raiz app
that can be a useful tool for savers who find it hard to stick to a financial
plan.

The
app helps in identifying areas of your spending where you can cut back, and
setting reasonable short and long term targets for yourself. Raiz allows you to
automate how much you save by allowing you to save & invest any amount on a
daily, weekly, or monthly basis.

Another
key feature of Raiz that helps relieve the stress of saving is Round-Ups.
Round-Ups takes any transaction you make on your credit or debit card, rounds
it up to the nearest dollar and invests the change into your portfolio. By
linking saving to spending, it is a great way of showing that you can save
without affecting your lifestyle.

Saving
on insurance

Travel
insurance is a must for any holiday. While it will involve an initial cost, the
cost of not having insurance if something goes wrong could be infinitely
higher.

Online
travel insurance specialists, InsureandGo, suggest buying directly from a
specialist to help cut out middle man fees on travel insurance. Buying your
insurance direct from an online supplier can work out cheaper, but make sure
you shop around for cover that is appropriate for you – not just cheap.

It’s
also recommended to read the terms and conditions and take note of any
inclusions and exclusions on your policy so you know exactly for what you are
covered. This should help you avoid running into any surprise costs down the
track.

While
most policies will cover you for standard items – like medical/hospital and
emergency, trip cancellation, liability, baggage. Before you purchase your
insurance think about what other unique areas you will need cover for.

Will
you be doing any risky sports or activities that required extra cover? Perhaps
you taking an expensive camera or renting a car? These are just some of the
things that you should take into consideration when choosing your cover so you
are not left out of pocket if something goes wrong.

Another
tip is to look out for discounts and promotions. Just like your favourite
clothing store, travel insurers also offer coupon and discounts. If you’re a
regular traveller, it may be worth signing up to their newsletters or checking
out their social media pages is a great way to find out about these limited
time offers.

Saving
on accommodation

For
those looking to pay less for accommodation and more for experiences, house and
pet sitting is the ideal option. By providing free pet care when you travel,
you can enjoy the opportunity to spend time with a pet and live like a local in
the places you visit.

You
could reduce the cost of your trip by over a third and help pet owners find
peace of mind while they are away from home. Instead of checking into a hotel
you can stay for free in homes across Australia and all over the world.

This
style of accommodation is an experience in itself and gives you the chance to
make connections with local people, discover off-the-beaten-path destinations,
and take advantage of the companionship having a pet can provide. By organising
house and pet sitting stays through a community like TrustedHousesitters, for
less than the cost of one night in a 3-star hotel, you could save thousands of
dollars on your holiday accommodation.

TrustedHousesitters
is an online community of pet lovers who engage in a mutually beneficial
exchange to ensure all members can find the freedom to travel. Providing a
simple solution to a universal problem, they help home and pet owners connect
with caring, verified sitters who offer free pet care in exchange for a free
retreat, because they want to spend time with pets when they travel.

Saving
on the road

Apps
are not only for saving before your trip, they can also make life a lot easier
when you’re out on the road. One way that apps can make your travel experience
better (and cheaper) is by helping you avoid those “tourist trap” restaurants
that give you inauthentic food for double the price of a true local feed.

Using
the Townske app, you are able to easily uncover the places that locals go to
again and again. These are the places that are doing amazing things, providing
amazing experiences and are often at or below prices of more touristy places.
With Townske, you could improve you travel experience and have the opportunity
to enjoy the true richness of cities.

Another
hot tip that could see you saving thousands over your travels is getting access
to an International Student Identity Card (ISIC). Full time students, teachers
and anyone under the age of 31, qualify for one of 3 lifestyle and discount
cards.

First
established in 1953, all bona fide students over the age of 12, regardless of
their nationality, race, gender or religion can purchase an ISIC card at an
affordable price. Via one single card, ISIC students gain preferential and
discounted access to products, services and experiences relevant to all aspects
of student life, from software licenses, cinema access to bookstores, public
transport, cafés and eateries and much more.

Whether
you’re staying put in Australia or heading off on an overseas adventure, these
internationally recognised discount and lifestyle cards are the real deal when
it comes to savings.

ISIC
gives you a choice of up to 42,000 lifestyle and travel benefits in over 133
countries, including more than 5,000 in Australia and New Zealand. For example,
you could get 20 per cent off your meals at over 2,500 restaurants, cafes and
takeaway outlets across Australia and New Zealand.

There
are also exclusive discounts on flights and other travel products through STA
Travel and negotiated discounts on train, bus, tram & ferry tickets around
the world. There is an ISIC app that can be downloaded to help you check for
discounts while you’re on the go.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post

By Clayton Daniel

Creating
wealth is a long-term process, and in the same way that being a small degree
off-course can have a huge impact while navigating a long journey, small
effects add up to big outcomes over long-term investing.

As
such, tax efficient investing creates better returns for no extra investment
risk. For example if you built two identical portfolios in two separate
entities, with the only difference being the tax rate applied to the earnings,
the result will be better returns for the entity with the lower tax
environment.

With
that in mind there is a tax structure in Australia you can build assets in, so
tax efficient it makes seeking a tax dodging strategy like an offshore bank
account in the Isle of Man redundant.

Why
risk either being ripped off or going to jail by siphoning your money offshore
to avoid tax, when there is a perfectly legal way to reduce your tax right now?

Very
few people understand how attractive this tax vehicle is, as it has a very
boring and bureaucratic name. Considering the advantages of ending up with more
money in your pocket over the long term, it’s strange you never see this tax
structure up in lights.

However,
for those in the know, it has such unbelievable advantages that the government
built restrictions on how much you can put in. They did so to stop those who
bother to wade through the technical data from pouring as much money in as
possible.

Lucky
for you, I’m going to save you the hassle of peeling through hundreds of pages
of dry government fact sheets, and instead put all the tax benefits here for
you in plain English.

The
crazy thing is, you would already have heard of this tax structure before,
probably even own one, but found it to be as stimulating as a Top 40 dance
track from the 1990’s (Except The Prodigy, they were awesome, and I won’t hear
another word about it.) It’s called Superannuation.

The
misconception about Superannuation is that it’s an investment. It isn’t. It’s a
tax structure. Think of it as a car. Just as you can put almost any kind of
person in a car, you can build almost any kind of investment portfolio inside
of Superannuation (restrictions exist: here for summary, here for in-depth).

It
will save you money right now today, save money every year, and save money in
retirement. Put simply, with the choice to build an investment portfolio in
your own name, compared to building an identical portfolio in Superannuation,
you can ensure a better after-tax result by using a tax-efficient entity while
not taking on additional investment risk.

1)
SAVE MONEY TODAY

As
an ex-tax accountant, I can’t tell you how many people ask this question around
tax time: ‘What can I do to reduce my tax?’ Most people hate paying more tax
than they must, and will do anything to reduce it. Think Negative Gearing, the
purposeful loss in income to pay less tax.

What
if there was a way to reduce your income, but rather than losing your money
through Negative Gearing, you kept the money instead?

This
strategy is called salary sacrifice. It is redirecting a portion of your salary to Superannuation and is taxed at 15% (for incomes <$300k). For example, if
your salary is above $180k, you pay close to half your income in taxes and
levies. By redirecting a portion of your salary to long-term investments, you
immediately save over 30% in tax.

2)
SAVE MONEY EVERY YEAR

Investments
should earn the investor income every year. If you hold investments in your own
name, this income goes on top of your salary. For example, if you earn $80,000
per year from employment, and a further $20,000 per year in investment income,
the investment income is taxed at almost 40%.

If
instead, you earned the $20,000 investment income inside of a Superannuation
tax structure, you would have only paid 15% tax. Saving over 20% tax on your
investment returns every year of your wealth creation is going to have a
substantial positive effect on your long-term results. Also, as franked
dividends are taxed at 30%, and the tax environment for Superannuation is only
15%, you’re able to claw back the other 15% tax from the government. Imagine
that! The government paying you tax instead of the other way around!

3)
SAVE MONEY IN THE FUTURE

The
benefits of the Superannuation tax structure are impossible to beat once you
hit the age you are finally going to start using your asset base for the
purpose it was designed for: to pay you an income when you no longer work. It
is impossible to beat because these three points have a tax rate of 0%. And you
can’t beat 0% tax. It’s truly an offshore bank account within our own borders.

3a.
SELL ASSETS FOR 0% CAPITAL GAINS TAX (CGT)

When
a couple in their sixties is sitting in front of me and about to declare
retirement, they often tell me with pride the size of the investment portfolio
they have built up over the last forty years in their own names. Properties,
shares, managed funds etc.

The
pain in their eyes when I tell them the size of their tax bill because of their
success has stayed with me. It’s not fun learning you have to pay the
government hundreds of thousands of dollars just as you’re about to start
surviving on the spoils.

If
they had only known about the ability to transfer assets held inside of
Superannuation into tax-free environments before selling, they could have
avoided every cent of tax payable.

As
soon as you ‘flick the switch’ on the Superannuation tax structure from
‘accumulation’ to ‘pension’, every asset immediately becomes tax-free (assuming
your super account allows this).

3b.
TAX ON EARNINGS DROP TO 0%

For
the entire wealth creation journey inside of Superannuation, you only pay 15%
tax on all earnings by investments. And it gets even better from there. Once
you hit pension phase, the tax then becomes 0%.

From
the moment you start receiving income from your assets, your investment
portfolio will live in an entirely tax-free environment, never to pay tax on
investment earnings again.

3c.
INCOME FROM SUPERANNUATION IS TAXED AT 0%

And
finally the last benefit of reaching pension phase and having your assets
inside of a Superannuation tax structure, is the income you draw down to fund
your ideal lifestyle when you no longer work is taxed at 0% also (Only after
age 60. From age 55 – 60 the income is taxed Marginal Tax Rates less 15%. This
age 55 access is only available to those born before 1 July 1960. Sounds
complicated but it isn’t. If you are under age 50 now, you have to wait until
you’re 60.)

From
the benefits above, you can see the Superannuation tax structure is the best
entity for you to build an investment portfolio in the short term as you pay
less tax today, the medium term as you pay less tax every year, and the long
term when all assets and income become tax-free.

Now
consider the only ‘downside’ of using Superannuation to build an investment
portfolio: you can’t spend the funds until you reach retirement. But investing
is a long term endeavor, so I have no qualms in putting forward the merits of
Superannuation.

So
how do you get money into your superannuation? Firstly you can use Salary
Sacrifice to get pre-tax money in there. This can be helpful to save tax today,
but it has low thresholds (found here note this limit includes your mandatory
super contributions from your employment).

You
can also simply deposit money into super from your bank account as it is
after-tax money and the threshold is much higher (found here), however when was the last time you did
that?

Raiz
again have come to the rescue by bringing this valuable tax entity to the
fingertips of the money-smart. All you have to do to start being proactive in
using this tax effective vehicle to build your long term asset base is 1) click
Settings, 2) click Super Fund and follow the prompts. The simplest way I’ve
seen to start using the benefits already afforded to you under law.

Disclaimer:
While deep diving into topics and education is great, we have a responsibility
to ensure you don’t make any mistakes so please read this statement first:

Superannuation
is not an offshore bank account, and the term is used as an entertainment
analogy only. Thresholds and super laws are notorious for changing, and the
rules change frequently. As such, Clayton Daniel nor Raiz cannot be held responsible
for the validity of the information contained in this article, nor the outcome
you achieve with this information. This article gives an overview of the tax
benefits of superannuation, but it does not reference the returns of the
investments within any Superfund. It neither takes into consideration your
personal situation or your needs. Therefore the information is general in
nature. This article – and indeed any article – is not capable of being used as
personal financial advice nor is it intended to be. If this isn’t clear enough,
before taking any action with superannuation, get professional advice first.
More information can be found here.

Clayton
Daniel is a financial commentator best known for reducing decision fatigue
through financial automation. He is the author of upcoming book Fund Your Ideal Lifestyle.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

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Trump
has won, so what happens now. The sun will come up tomorrow. Mums and Dads
still go shopping. Children go to school. Workers still go to work and business
continue to trade. So economically, nothing has changed and
the economic fundamentals of the US economy are fine and improving.

Social policies will change, as the Republicans have not only won the
Presidency but also the House and the Senate. In fact, the Republicans tend to
introduce very favourable business policies. Some of the policies will seem
strange to Australians (like winding back Obama care) but It is unlikely
Republicans Senators and Congressmen, no matter how much they dislike Trump,
will block his proposed tax cuts or pro-business policies.

Stock markets don’t trade on social policy they worry about economic policies
and very few saw a clean sweep for the Republicans in this election which means
a very pro-business government in the USA.

America, however will become more protectionist and more withdrawn. This was
the outcome regardless of a Democratic or Republican win. This may mean that
their foreign policy will become withdrawn with less direct international
interference. This may cause Australia to be drawn closer to Asia as trade
blocks deals like the TPP (Trans-Pacific Partnership), which pivoted on US
involvement, looks now likely fail. This could end up being good for Australia
especially as the UK will also be looking for new trading partners.

Don’t panic. Stick with your investment strategy. We know this is easier said
than done and we know it is time & experience that helps with this. We hope
the Raiz App can assist you in learning this.

The markets will now focus on the next move from the Federal Reserve which we
expect to be a hike in the December. Especially as the FED will now worry about
the possible Republican inflationary policies. But more on this in the coming
weeks.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

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By Clayton Daniel

Do
you know what investing is? Confusing.

To
circumvent that issue, you can do what most people do – learn.

Ahh
yes. Learning about investing. Such a fantastic topic isn’t it. Perhaps, the
more you learn, the better returns you’ll get? Maybe outperform the market?
Maybe find the NBT (Next Big Thing)?

I
know. I started on this journey over a decade ago. Read a bunch of books. Went
to a few classes at uni. Even got a degree! Worked in tax, super, investments,
cash flow. Opened up my own shop. Clients came in. I researched portfolios. We
discussed those portfolios. These portfolios had ‘Foreign Exposure’ with
‘Counter-Cyclical Hedges’, ‘Active Managers’ that would use ‘Dynamic Asset
Allocation’ to ensure ‘Market Trends’ were taken advantage of.

Oh
God. It hurts even just to write it all down.

Here’s
the thing. The world of investing has taken something that is honestly quite
rudimentary and fluffed it up to be something it isn’t. Or to put simply, we
spend 80% of our time, effort and resources aiming for that last 20%.

What
do I mean?

I
mean, it’s not a surprise to anyone in the greater investment industry to spout
off this fact ‘the majority of active managers underperform the benchmark’. Now
what that financy-pants language means is that the majority of
professional investment teams do worse than if they had just
done nothing.

That’s
right.

For
all the posturing, all the research, all the education, all the fanfare, all
the talk, all the mumbo-jumbo………………. Most of the time it’s not only for naught,
but detrimental.

That’s
a pretty condemning statistic. Could you imagine if the medical industry had
these kind of results? Could you imagine if ‘go home and rest’ had a higher
chance of survival for cancer patients than having treatment? We would be up in
arms.

But
the investment community has a different opinion. And that is because everyone
is convinced they can pick that top 20%. And so that is what everyone is aiming
for. To ‘beat the market’ by being smart enough to get in the top 20%. It makes
sense. Everyone has an ego. And everyone has hubris – especially when it’s
other people’s money…

But
here’s the thing. What if you said ‘no more’. What would happen? What if you
stepped out of the hustle and bustle of trying to get that last 20% and were
happy with the 80%. What kind of world would that look like? What kind of
research, education, monitoring and ongoing effort would that require from you?

Or
put simply, how much of your attention would you have to give your investments
if you were happy with 80% of the possible returns?

I’m
sure you’re probably anticipating the answer to be 20% of the effort. I mean,
that’s how it normally goes doesn’t it. Well not quite. It’s less than that.

How
about one percent?

One
percent effort is all you need. And even that is pushing it. If you’re happy to
just go along with the ups and downs of the market, you don’t have to do
anything. At all. Once the purchase has been made, there is zero upkeep for
you.

Let
me explain how this works.

Like
everything else in finance, the solution comes in the form of an acronym.

ETF
– Exchange Traded Funds. Really simply, ETF’s are an algorithm that trades
stocks. Sounds complex, but it isn’t. Most ETF’s have a VERY simple trading
strategy. The algorithms aren’t looking for undervalued hidden gems, or for
promising speculative mining stocks. They aren’t looking what pays a good
dividend, or any other investment strategy.

All
they do is blindly buy what they are programmed to buy. And while these
algorithms are starting to get more complex, the majority of money invested in
ETFs are in the S&P 500 (http://etfdb.com/compare/market-cap/).

And
what is the S&P 500? It’s the top 500 publicly traded companies in the
States. That’s it. The algorithm simply buys the biggest 500 companies. If
company 500 drops down to 505 it’s sold. If company 550 goes up to 400, it’s
purchased. Simple. Indiscriminate investing. The Aussie version is called the
ASX200. So instead of the top 500, it’s the top 200.

Now,
this is why I like ETF investing.

It
takes 1% knowledge and effort to get in, and the algorithm ensures you’re only
ever invested in the top companies. Even in 20 years from now, say if 50% of
the companies that are currently in the S&P500 or the ASX200 were to go
bankrupt and fall off the face of the world – you don’t have to know about any
of it, and you don’t have to take any action.

The
ETF trading formula does it all for you.

In
addition, as this is the simplest, easiest to monitor trading strategy that
takes so little money to run, it is by far the cheapest way to invest.

So
the easiest way to invest, is also the cheapest way to invest. Winning.

But
not only that, this whole easy/cheap way of investing is backed up with a Nobel
prize. If you want to look into it more, it’s called Modern Portfolio Theory (https://en.wikipedia.org/wiki/Modern_portfolio_theory)

Like
all theories, it absolutely has it’s detractors, and the detractors have a
point. But I’m not suggesting this passive ETF investment strategy because I
think you’ll get the best returns. Absolutely not. This article is all about
80/20, and while you’ll never get in the top 20% of investment returns with
this long term investment strategy, do you really want to
spend 80% of your time, money, resources etc. going after that last 20%.

Nope.
Not me.

I
have exited my ego stage left when it comes to investing. I used to think I
could out-perform the market, and at times I absolutely have, but to do it
consistently is nigh on impossible.

And
here is why you shouldn’t be looking for that last 20% either – because it’s
just not a good use of your time or your headspace. I’ve written extensively on
decision fatigue (http://www.fundyourideallifestyle.com.au/decision-fatigue/),
and I’m a big proponent on the less you try to think about money, the better
you do in every other area of your professional and personal life.

So
how do you get your hands on these ETF’s? Well you can go out and open a
brokerage account, go online and find a risk profiling tool to see what mix of
ETFs you should have. Then decide which ETF you should buy, save up at least
$500 for each ETF, go back to your broker, pay the brokerage fee, and have a
portfolio you can log on to once every six months to look at.

Or
you can download the Raiz app, go about your day, spend your money, and have
the roundups get invested for you. For more information on Raiz fees, click here.

You
decide.

By
Clayton Daniel

Financial
commentator and author of upcoming book Fund Your Ideal Lifestyle.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post

By Ash McAuliffe

Q:
How do you eat an elephant? A: One bite at a time

It’s
a dad joke but a good one none the less, and it stems from a quote attributed
to Creighton Abrams: “When eating an elephant, take one bit at a time”.
Not only is this one of my favourite quotes, but it is one of the
underlying philosophies of the financial advice that I give my clients.

“In
my time in helping people hit their financial goals, one trend that stands out
is what I call the ‘Back-Burner effect’.”

The
conversation that I had this week with a new client was typical of so many
conversations that I have had with my clients over the years. He had a
financial goal and we were discussing the best way to get there and how this
goal should be prioritised against his other goals.  This was his biggest
goal, and thankfully had the longest time frame attached but as my experience
tells me, this meant that this was the goal that he was least likely to
achieve.

“Letting
a big important goal sneak up on you is a Financial FAIL.”

In
my time in helping people hit their financial goals, one trend that stands out
is what I call the ‘Back-Burner effect’.  This is where the less immediate
goals lose significance because they’re off in the distance, and regardless of
their importance, they don’t get the attention that the immediate
‘in-your-face’ goals do so the result is that these big, important, long-term
goals are neglected…. Which allows them to sneak up on you.

Letting
a big important goal sneak up on you is a Financial FAIL.

Back
to my conversation with my client… his exact words were “this is 15 years away
so I think I’ll sort these other things, get them out of the way, then in about
5-10 years, I’ll really smash this one”.  It’s safe to say that he wasn’t
really ready for my reaction (truth be told, neither was I) I stood up and at
the same time I slammed my hand on the table and said “NO WAY!…  This is
an elephant, you need to take your first bite now”

“what
is underestimated is the power of developing a habit of chipping away at your
goals”

He
had absolutely no idea what I was talking about… but who could blame him?

The
$100 per month that this guy can put towards his big, long-term goal (aka: the
elephant) today, is so much more powerful than the $500 per month that he will
maybe put towards it in 10 years.  This is because of the magic of
compound returns, but what is underestimated is the power of developing a habit
of chipping away at your goals.  Taking one bite at a time.

What
I tell my clients… repeatedly… is that whatever their goal, they
need to start now, even if it means starting small.

There
are so many cliché quotes/examples that I can give… “a journey of 1,000 mile
starts with a single step”.. ‘be the tortoise, not the hare’… give your goals a
‘death by a million cuts’, but the lesson remains….start.

Start
now, start small if you have to, but take one small step towards your goal
every single day.  You will get there sooner, I promise.

Ash McAuliffe CFP

The Asset Lab

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

 

Important Information

The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.

A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.

Read Post