Ask An Advisor

Hello and welcome back to Ask An Advisor.

It’s our final newsletter for 2023.

This week on the show we announced the Equity Mates Awards for 2023.

We’ll be back with the Summer Series - 12 episodes, 12 experts, 12 stocks - on the 8th January 2024.

Thanks for the support as always, and have a great festive period.

- Bryce and Alec

Key lessons from Ask An Advisor 2023

Ben Wauchope - Know your numbers, pay attention to your finances

Ben was asked by a community member what the key pillars to financial wellbeing were. The first was ‘knowing your why’. The second was having a ‘strong financial mindset’ (ie being proactive and not sticking your head in the sand) and the third was ‘know your numbers’.

Knowing what your income is, what your expenses are, what your interest rate is on your mortgage and savings account is important is helping you have a clear picture of your financial situation.

If you don’t know your numbers and your head is in the sand, it’s difficult to create a financial plan that helps you to achieve your ‘why’.

Luke Laretive - How to compare fund managers

We’ve spoken with some great fund managers this year who can give us access to markets that are harder to invest in, or where passive index investing isn’t the right strategy.

But a question from the community was how do you then choose between so many active fund managers.

Luke’s main piece of advice was to make sure you are comparing apples with apples. Make sure that you’re comparing the same asset classes, the same strategies, the same concentration and the same benchmark against each other. Otherwise it’s not a fair playing field.

You also need to have a clear idea of what you’re looking for - what role do you want the manager to play in your portfolio? Is it access to emerging markets? Is it highly concentrated small caps?

There are many ways to skin the cat, and for more, you can read Luke’s framework here.

Jacob McCudden - Should I pay off HECs faster?

A final lesson to end 2023, and one that caused some debate in the community, and that was around paying off HECs faster.

I short his view was no, you shouldn’t pay it down faster. Firstly, while it is indexed to annual inflation, it is still an interest free government loan (and you can’t do much better than that) and secondly because it’s tied to your income, and there’s no mandatory repayment. That is, if you lose your job, or are in financial stress and your income reduces, then so do your HECs repayments.

Focussing on other debt first is Jacob’s priority. We suggest revisiting this episode if you’re still thinking about what to do.

Want to ask a question?

We have a star-studded list of advisors waiting to answer your question, so what are you waiting for?

Email [email protected] with your question 

Tips to build wealth, your way 
thanks to Betashares Direct

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Diversification: More than a buzzword

Here’s a stat that surprised us: A well-known study from the Financial Analysts Journal¹ found that 94% of the variation in a portfolio’s return comes from asset allocation.

Meanwhile, stock-picking and market-timing together accounted for just 6%.

What does that mean? As investors, there may be a tendency to put too much weight on the role that active management plays in the variation of returns. We think that what stocks you buy and when you buy them has the biggest say in how our overall returns compare to the average. But the research seems to indicate the biggest variations have come from the asset classes we choose to invest in: stock market, bonds, property, infrastructure etc.

The great news is that almost all asset classes are accessible to us as investors through ETFs traded on the ASX.

So, however we want to construct our portfolio, we can do it with a collection of ETFs.

1. “Determinants of Portfolio Performance”. Brinson, Hood and Beebower, Financial Analysts Journal, 1995.

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With Betashares Direct you can invest in any ETFs trading on Australian exchanges - whether from Betashares or any other ETF issuer - all with $0 brokerage and no account fees

Find out more

*Refer to the Product Disclosure Statement for information on interest retained by Betashares on cash balances and portfolio fees associated with AutoPilot portfolios.

Betashares Capital Limited (ABN 78 139 566 868, AFSL 341181) is the issuer of Betashares Invest, which is available through Betashares Direct. Read the Product Disclosure Statement and the Target Market Determination for Betashares Invest, available by emailing Customer Support at [email protected] or at www.betashares.com.au/direct, to consider whether the product is right for you. This information is general in nature and doesn’t take into account your financial objectives, situation or needs. You should consider its appropriateness taking into account such factors and seek professional financial advice. Investing involves risk.

Keep learning

Podcasts

This week on Equity Mates Investing we reveal the Equity Mates Award winner for 2023.

Online courses

The Rask Value Investor Program with Equity Mates, is Rask’s full online investor training complete with stock market valuation templates, Excel downloads, investing checklists, case studies and hours of HD video.