This week on Equity Mates

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Here’s what we’re released this week:

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - Interest rate expectations, supermarket enquiries & ASX 200 rebalance - who's in, who's out?

• Tuesday - Ask an Advisor: Glen Hare - The most common questions Aussies are asking advisors

• Thursday - Super-for-Housing 🤮, Pimp my Portfolio 💰 & investing in India 🇮🇳

• Friday - Expert: Ben McVicar & Jowell Amores - Infrastructure: Invest in where the world is going

Get Started Investing (Spotify | Apple | YouTube)

• Tuesday - How our expert advisors are investing in 2024

Your questions, answered

Alfie asked via email:

Saving for retirement seems so far away. How much should I be contributing now, and where should I invest it?

We put Alfie’s question to Dylan Pargiter-Green, from Bold Wealth. Dylan is one of the trusted advisors in the Equity Mates network.

To book a call with Dylan and the team, click here.

Depending on your age, retirement might seem far away, but it doesn’t have to be the same for everyone. At Bold, we’re often challenging clients to think more about their needs and wants for their ‘retirement’ before putting a date on it. This way, we can work backwards from an asset position that provides this.

Let’s say for example you want to live a comfortable lifestyle as per the ASFA (Association of Superannuation Funds of Australia) as a couple, which was recently increased to after tax $71,723.56 per annum. If you’re tracking toward achieving this at the ripe old age of 65 with your employer superannuation contributions alone; Happy Days! You can then spend the rest of your surplus cash on whatever you please until that point.

However, a better way perhaps of thinking about this is asking a different question, such as:

• Could I retire on $71,723.56 at age 60? Or 55?

• Do I want to go on a European Holiday for $25,000 each year once I retire?

• Do I want to buy a new sports car every 5 years in retirement?

These sorts of questions give us a tangible goal to work toward, which provides context to the question being asked – “How much do I need to put away to make sure I can do the things I want to do when I retire?”

Where you should put it is another question all together. And the answer is “it depends.”

If you want to retire at 55, superannuation probably won’t be the only option for additional savings as you will be restricted in accessing it for at least another 5 years. So other tax effective options might be beneficial like investment bonds or simply high capital growth investments held in a favourable tax structure.

These are the bread-and-butter questions any advisor loves working with clients on. Planning for the long term can seem so far away it’s not worth thinking about. But sometimes the little things we can do early, make the biggest difference later on. Definitely go and see an advisor for this one, get some simple strategies in place, stick to them and laugh all the way to the nursing home.

If you have a question you’d like answered, hit us up at [email protected] or if you’d like to chat with Phil and the team, click here

This email is thanks to JP Morgan Asset Management

What we’ve been reading

Cocoa prices are soaring and creating Easter chaos for candy companies

Cocoa is the hottest commodity for 2024. That was the call we made at the start of the month on Equity Mates Investing Podcast. Since then, the price of the commodity critical to chocolate has just kept of running. Now with Easter here, that has caused chaos for chocolate maker.

First of all, the price. Heres what all the fuss is about:

As spot cocoa prices reach $10,000 per tonne, this article has looked at how chocolate makers are managing the rising cost of their key input.

Many of the larger chocolate makers have hedged their exposure to cocoa markets and locked in prices ahead of time. Hershey’s and Lindt each confirmed as much on recent earnings calls. Yet that hasn’t shielded these companies from price increases all together. The U.S. Bureau of Labor Statistics reported that producer prices have grown 10% in the past year.

Unsurprisingly, this has seen prices rise for chocolate items across America.

No prizes for guessing where this all ends up. These chocolate makers will end up passing these cost increases on to consumers. The CFO of Mondelez (owner of Oreo and Toblerone) confirmed as much on their recent earnings call.

So we hope you’re ready for it this Easter. Chocolate is likely going to be a little more expensive.

 Tesla: The Market is Wrong

Reading this article, we’re not sure we agree with it at all. But that is what we love about investing. It is a contest of ideas. People do the work, form a view and passionately advocate for that view. We, as investors, can form our own view and ultimately, over the long term, the market decides who was right.

Tesla has had a shocking year. Starting with the share price, down 28%, it is the worst performer of the S&P 500. Even worse that Boeing, down 25% year-to-date.

Beyond the share price, Tesla has struggled to maintain margins in the face of cheaper Chinese and European electric vehicles, it has warned of a production slow down and across the whole industry, the electric vehicle market appears to be softening.

As a result, the market has stopped seeing Tesla as a fast growing tech company and more like a traditional auto manufacturer.

Despite all of these challenges, this article makes the case that the market is wrong on Tesla and it can have a huge turnaround from here. It points to:

• Tesla’s $29 billion cash and no debt on the balance sheet

• Growing free cash flow per share

• Upcoming releases of their self-driving software

• Growth in the energy business

As signs that Tesla’s best days may still be ahead of it.

At this stage, who knows who is right. Maybe it is this author, maybe it is the market. Only time will tell.