Here’s what you need to know today

• Breville was the standout story from Reporting Season yesterday, reporting revenue up 3.5% to $1.53 billion and profit up 7.5% to $119 million. While those numbers don’t look amazing, what is notable is that 84% of Breville’s earnings are now generated internationally. A true Aussie success story taking on the world.
  
  

• Another notable Australian company taking on the world is WiseTech, which saw shares jump 18% after reporting its results. The logistics software platform saw revenue grow 28% and expects it to grow another 25-30% next year.
  
  

• Wall Street’s 8 day winning streak ended, as America’s S&P 500 fell 0.2%. Don’t despair, the US market is still up 1.35% since the start of the “global bloodbath” started a few weeks ago.
  
  

• Uber has announced it will shut down its car-sharing service. In 2022, Uber acquired Aussie startup Car Next Door for $105 million to accelerate its car-sharing ambitions. It now appears that platform may be shut down.
  
  

• Boeing may have a new CEO, but it continues to be plagued by old problems. The aerospace company has temporarily stopped test flights on its 777X aircraft and US safety regulators have ordered inspections into Boeing’s 787 Dreamliners.
  
  

• Kamala Harris has announced plans to raise America’s corporate tax rate to 28%. Before Trump, America’s corporate tax ranged from a 15% tier to a 39% tier depending on income. Trump changed it to a flat 21% in 2018.
  
  

• BMW has been forced to recall 720,000 cars in North America because of an electrical short that could cause a fire risk. This follows BMW’s 63,000 car recall in Australia a few weeks ago over an airbag safety issue. If you drive a BMW, you can reassure yourself by checking your car details on the BMW Recalls website.

What the…?

Australians lost $2.74 billion to scammers in 2023. Amazingly, that is actually down from $3.1 billion in 2022.

ASIC have recently celebrated taking down 7,300 phishing and investment scam websites in the past year. Which is a great start. But with 13.2 million Australians exposed to scams in 2022, we have to think that 7,300 is just the tip of a very, very large iceberg.

Investing is a lifelong journey

Here’s what you can learn today.

Question: What's a good split between safe ETFs (VDHG, DHHF etc.) and riskier stocks? 50/50? 80/20?

We put this question to Luke Laretive, financial adviser and CEO of Seneca Financial Solutions

It really depends on your situation, skill level and ability to generate returns in individual stocks.  Personally, I don’t have any money invested in ETFs, and for me (a professional), its ‘safer’ to invest in a portfolio of select individual shares.

That said, if you are asking this question, I’d argue for a 0% allocation to riskier stocks – with this level of experience and knowledge it is highly unlikely you will outperform a market cap weighted broad-based index fund.  

If you want to contextualise this, think of buying individual shares as buying a private business. Imagine I gave you the opportunity to invest in an existing hypothetical gym in your suburb with me.  Like buying individual companies, you don’t have to do it, there’s nobody forcing you. And if you did want to consider it, you’d probably want to know stuff like:

• Who was managing it and what their experience is?

• Have a look at the asking price?  How long until you receive a return on your investment?

• The competitors in the area, the foot-traffic of the location, development plans in the area, parking

• The gyms members, their demographic info, how long they’ve been members

• The equipment quality, the building fit out standard, the pricing, the costs to run the gym, the staff, the lease terms etc. etc. etc.

This is the sort of work you need to do when investing in a company on the stock market.  It’s not dissimilar. 

For the wider audience, a few general portfolio construction guidelines to help (by no means the only way to do it, just a few thoughts):

• No more than 15% of your capital in a single company, ever.

• Starting positions of 2% to 8% for most companies in your portfolio, smallest position should be at least 1%.  

• Starting positions for managed funds/ETFs/other ‘baskets’ of companies should be minimum 5%, probably minimum 10%. 

• Try not to be a jack of all trades. It’s unlikely as a single retail investor you will cover all sectors to the standard required to outperform in your spare time, with no professional training and Yahoo! Finance as a data source.  Find a sector (or even sub-sector) where you can specialise, ideally where you have some expertise already.  If you work in healthcare sales, maybe just stick to medical devices and technology.  If you work in civil engineering, maybe focus on the contractors.  You get the idea.  Find something you already understand well (and by well, I mean to a professional standard where someone else pays you to do it already) and “expand” your knowledge to include investing in that area.

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

Today’s sponsor is iShares by BlackRock

With iShares S&P ETFs like IOZ, IVV and IOO, you can get low-cost access to hundreds of the world’s largest companies in a single trade to help diversify your portfolio and help reduce the stress of selecting single stocks. Visit blackrock.com.au/ishares for information about their ETF range, or visit nabtrade.com.au to explore further insights, education and tips for getting started with ETFs.

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