Here’s what you need to know today

• Australian inflation is back within the Reserve Bank’s target of 2-3%. The latest ABS data shows inflation at 2.8% in the 12 months to September, down from 3.8% in the 3 months to June. (AFR)
  
  

• While inflation is down, don’t expect interest rate cuts to automatically follow. With some temporary government cost-of-living measures keeping costs down and Christmas spending just around the corner, the Reserve Bank wants to see how sustainable this inflation reading is before rate cuts follow. Expectations are for early-2025 if inflation remains within target until then. (ABC)
  
  

• Australian supermarket giant Woolworths saw shares fall 6% after it downgraded its profit forecast for the year. New CEO Amanda Bardwell also shared that things could be tough for a while, “Looking ahead, we expect customers to remain extremely value-conscious with cost-of-living pressures to continue for the remainder of F25.” (Capital Brief)

  
  

• Pfizer is looking to get into the Ozempic-mania with its own GLP-1 drug. The pharmaceutical giant is working on a pill-version of the drug that it believes will be a preferred option for many current users of Novo Nordisk and Eli Lily’s injectables. Meanwhile, Morgan Stanley predict the market for GLP-1 drugs globally will reach $105 billion by 2030. (Quartz)
  
  

• Bitcoin is nearing an all time high, crossing $73,000 US dollars. The cryptocurrency reached an all-time high of $73,750 in March 2024, but since then fell more than 25%. However, it is up 35% since early September and is getting close to all-time highs once again. (Forbes)
  
  

• One of the greatest Australian business stories of the past decade is coming to a close as Anthony Eisen, cofounder of Afterpay, calls it a day. The Australian Buy Now, Pay Later success story nailed the timing of their exit, selling to US fintech Block for a record $39 billion in the peak of the COVID-era stock market bubble. (AFR)

What the…?

America’s car loan culture is out of control, with the latest data showing more Americans are in negative equity than ever before. 24% of cars being traded in have more debt owing than the vehicle is actually worth. More troubling, 1-in-5 of those with negative equity owe $10,000 or more. (Edmunds)

A good place to remind everyone: don’t borrow money to buy a depreciating asset. If at all possible, buy a cheap, second-hand car with cash and if you do have to borrow try and keep the loan as small as possible.

Investing is a lifelong journey

Here’s what you can learn today.

Question from Equity Mates Community: How should I speak to my kids about investing, and what are their options? What are my options? They both have about $10k, and are under 10.

We put this question to High Lovibond, Senior Financial Adviser at Millennium Wealth

It’s an amazing idea to get your kids involved in investing at an early age. This will provide them with a wealth of knowledge and experience to use throughout their adult life.

The first consideration when it comes to investing is what structure do we want to use to purchase any investments in. Kids can only generate $416 pa in income before they pay at least the highest marginal tax rate. So having investments in their personal name may not be ideal.

It would be worthwhile considering the following alternatives:

• Investing in you or your partners names on behalf of your children

• Education/investment bonds

• Family Trust structures 

I would recommend talking to an accountant/financial adviser before making this choice.

Once you have decided on a preferred investment structure, then I would recommend teaching them the basics around investing so they can start to get involved. This may include talking about why you are investing in the first place & possibly even setting some goals for the money. Such as wanting to build 50k in investment by the time they turn 21 to help fund their university costs.  

I would give them a basic idea around compounding returns work & how they will give them a much larger amount of money to use in the future. I would then talk to them about their time frame’s and encourage them not to touch the money until at least a designated point of time. For example when they turn 21.

When it comes to the investments themselves, I would try and keep them as simple and low maintenance as possible while keeping the investments focused on shares/property exposure. 

Some potential options would include:

• Listed index ETF’s. These are simple and cheap ways to get exposure to various markets across the world. A good example would be VGS which is The Vanguard MSCI Index International Shares ETF. You will need a simple broking account which can takes minutes to set up online.

• Unlisted managed funds. These are funds that are not listed on a stock exchange & you provide your money to an external company to manage.  Sometimes these funds will require a larger minimum starting balance than ETFs, however they can also easily be bought and sold on trading platforms such as Vanguard Personal Investor.

• If you went down the education/investment bond route. Providers like Generation Life provide you with a large variety of unlisted managed fund investment options to select between.

Want to speak to one of our hand-picked financial advisers? Fill out the form on our website and we’ll put you in touch.

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