Here’s what you need to know today

• Bitcoin has crossed $100,000 USD for the first time ever. The milestone was reached after President-elect Trump announced Paul Atkins would be replacing Gary Gensler as SEC chair. Atkins is seen as far more pro-crypto than Gensler, who has allowed crypto ETFs but has also pushed enforcement actions against crypto companies. (CNN | NY Times)
  
  

• McKinsey has called Australia’s economy a “problem child” and our declining living standards a “national emergency”. That sober assessment came as the consulting firm found Australia’s productivity growth has fallen to 30th out of 35 rich countries and that Australia has seen zero labour productivity growth since 2016. Real household disposable income has flat lined over the past 8 years, compared to 15% growth in the US. (AFR)
  
  

• The fallout from South Korea’s 6 hours of martial law continues. Lawmakers are rallying support for an impeachment proceeding of President Yook Suk Yeol over his declaration of martial law and sending troops to the National Assembly. An impeachment vote would require two-thirds of the legislature and six Constitutional Court justices. If impeached, Yoon’s powers would transfer to Prime Minister Han Duck-soo. (ABC News)

  
  

• The CEO of UnitedHealthcare, Brian Thompson, was fatally shot outside his New York hotel on the morning of the American health insurer’s annual investor conference. Police believe Thompson was deliberately targeted and had been receiving death threats. (NY Times)
  
  

• Salesforce showed there is real revenue being generated by AI. The software giant reported 8.3% revenue growth in the third-quarter, largely driven by its AI platform Agentforce which reportedly secured 200 deals during the quarter. Salesforce shares rose 11%, hitting a record high. (Bloomberg | Reuters)
  
  

• French Prime Minister Michel Barnier lost a vote of no-confidence and is expected to resign. Left-wing and right-wing parties joined forces to pass the no-confidence motion after Barnier attempted to force through a budget without parliamentary approval. (Sydney Morning Herald)

What the…?

There’s a new investable asset class taking the wealthy by storm - dinosaur fossils - and it is starting to impact the work of scientists. The latest report from the Wall Street Journal found that private collectors of dinosaur bones have palaeontologists struggling to get the fossils necessary to do their work. And with dinosaur bones fetching record prices, this trend may still have further to run. (WSJ)

Investing is a lifelong journey

Here’s what you can learn today.

Community Question: What's the best way to structure a home loan to minimise the interest repayments?

We put this question to Jacob McCudden, financial adviser at Back-to-Back Financial Planners. He told us:

Easy. Borrow the least amount you can and repay it as fast as you can. That’s it. 

In practice there are many ways this can be achieved:

• Don’t overspend why buying a home – that is, don’t just borrow what the bank will lend, remember, it’s in their interest to lend you as much as they can, only the gov’t is the one holding them back to “lend responsibility”. They are not your friend, they are not helping you out, they are selling you a financial product (i.e. a mortgage) and will be paid handsomely for it in the form of interest at your expense (literally).  As an anecdote, they say when you buy a house you pay for it twice, once for the purchase price, and again on the interest you will pay to the bank over the life of the mortgage (don’t believe me? Average mortgage debt of about $600k, interest rate of 5%, loan term of 30 years… total repayments to the bank = $1,159,535 ($600k in principal, $559,535 in interest).
  

• Start by understanding how much of your household budget can be allocated to “housing”, ideally under 30%, but no more than 40%. Then you can easily work out what repayments you can afford and thus how much you can borrow, but also when you want to be “debt free”, ideally before retirement but potentially even earlier (so whilst it may be a 30-year mortgage, that doesn’t necessarily mean you should be taking 30 years to pay it off)
  

• Don’t fall into the pressure of the bank/broker/real estate agent who all profit from the more you borrow and spend (easier said than done, I know, but this is most likely the biggest expense of your life, so it pays to take it extremely seriously and to do your homework)
  

• Then, once we’ve actually got the house and loan, need to think about things like perhaps using offset accounts (if and when they make sense and they may not for everyone as loans with offsets generally come with a higher effective interest cost)
  

• So more technical strategies could include debt recycling, which is where you leverage investment assets as a tool to slowing replace your “bad debt” (aka non-deductible debt like your mortgage) with “good debt” (aka deductible or investment debt), but these should be “advisable” before you embark on one.
  

• Seek advice! As really the only way to put together a strategy for your individual situation and help you decide what’s right for you is to speak with a financial planner who can develop a plan to help you achieve your financial goals (e.g. pay less interest over life of loan, pay of loan faster, be debt free, retire early, etc.)

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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