Here’s what you need to know today

• Last week was a tough one for the ASX. As Australia’s banks (aside from Commonwealth) reported lower profit and the big miners cut their dividends, the ASX 200 index fell. The index was down 3% for last week, and the futures market suggests it may keep falling to start this week. (AFR)
  
  

• Australia’s second largest real estate listing platform, Domain, has received a $2.7 billion takeover bid from $50 billion US property listing giant CoStar. Domain’s share price was up 40% on the news and reports that CoStar had purchased 16% of the company’s shares. Nine Entertainment owns 60% of Domain, and saw shares rise 21% on the news. CoStar is being advised by former Australian Treasurer Joe Hockey. (AFR)
  
  

• Warren Buffett’s annual shareholder letter was released over the weekend. The most notable number: $334 billion. That is the amount of cash and short-term treasuries on Berkshire Hathaway's balance sheet. Basically, Buffett is hoarding cash. $334 billion would make his cash pile alone the 30th largest company in the S&P 500. (Berkshire Hathaway)
  
  

• The Australian Labor Party have announced a $8.5 billion Medicare overhaul, indicating it will be one of their signature policies in the 2025 Federal Election. The Prime Minister announced that if re-elected, the government would boost payments to GPs under Medicare who eliminate out-of-pocket costs. The policy would aim to lift the rate of bulk-billed visits from 78% in 2024 to 90% by 2030. (Capital Brief | AFR)
  
  

• Australian casino operator Star Entertainment may be struggling to avoid bankruptcy, but there are plenty of companies that are interested in helping it out. Last week, Star was offered a bailout package by US distressed debt giant Oaktree. Now, American casino operator Bally’s Corporation has sent representatives to meet with Star. Bally’s currently operates 19 casinos across 11 American states. (AFR)
  
  

• The Trump-Zelensky war-of-words continues. In an interview with Fox News, the US President called Ukraine’s President powerless, saying he has “no cards” in negotiations. Earlier, Mike Waltz, Trump’s national security advisor, said he expects Ukraine to sign a minerals agreement with America very soon. A leaked copy of the minerals agreement saw the US taking a larger share of Ukrainian GDP than the Allies took from Germany at the Treaty of Versailles. (NBC News | The Telegraph)
  
  

• Apple, long a staunch defender of privacy, will stop offering secure encryption to users of its cloud storage in Britain in response to new British laws. Apple has confirmed this will not affect its encrypted messaging services, such as iMessage. Still, it is notable from the company that was accused of siding with terrorists during the Obama Administration as it failed to unlock or decrypt terrorist’s phones. (Tech Radar)
  
  

• Wondering why it has taken so long to replace Daniel Craig as James Bond? While Amazon owns the distribution rights, the Broccoli family had owned key IP including the right to choose who the next Bond was. Amazon and the Broccoli’s didn’t get along and have been butting heads for years about the franchise. That dispute is over as Amazon now enjoy creative control over the Bond franchise, paying the way for plenty more Bond content on Amazon Prime. (Quartz)

What the…?

The latest bird flu outbreak has had devastating effects around the world. Towards the end of last year, millions of chickens were killed in Australia and supermarkets limited egg purchases.

Now the US is facing similar challenges with tens of millions of birds already euthanised and supermarkets limiting sales. In America’s latest inflation numbers, the price of eggs was up 53% year-on-year and 15% in January alone.

Now, some savvy entrepreneurs are capitalising on the shortages, with a rise in businesses renting out chickens to egg-hungry consumers. (CBS News)

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Investing is a lifelong journey

Here’s what you can learn today.

Meet the millionaire next door

This is an extract from our book, Don’t Stress Just Invest, available on Amazon or wherever you buy books.

There was a book published in the late 1990s, The Millionaire Next Door, that perhaps best demonstrated how the average person can build wealth through the stock market. It profiled a number of everyday people who built above-average wealth while working average-paying jobs. These are those stories you’ll sometimes hear

about the bus driver, the firefighter or the schoolteacher retiring with millions of dollars. 

The recipe is quite simple: spend less than you earn and be willing to take financial risks (i.e. invest rather than save) with what is left.

There is an element of survivorship bias here (we don’t hear about the bus driver, firefighter or schoolteacher who didn’t become a millionaire). But our key takeaway from stories like this is that it is possible to build above-average wealth on an average salary.

There is another side to this story as well: the stories of above-average earners going bankrupt. We see this most clearly in sport. An estimate from Sports Illustrated suggests that 80% of US National Football League (NFL) players go broke in their first three years out of the NFL. And an estimate from CNBC suggests that 60% of National Basketball Association (NBA) players go broke within five years of retiring. How is that the case when the minimum starting salary in the NFL is $660,000 and in the NBA it is $925,000?

We see a similar story with winners of the lottery. In the United States, according to the National Endowment for Financial Education, 70% of lottery winners end up broke.

Why is it that many average-earners are able to build wealth while many above-average earners lose it all?

When it comes to wealth, the difference between building wealth and losing wealth isn’t how much you earn. It’s about what you do with it once you’ve earned it. Wealth-builders start as good savers, and they then put their money to work.

• At a minimum, wealth-builders spend less than they earn. The Millionaire Next Door found that the most common car owned by average-earners-turned-millionaires was a Ford.

• Then they invest that money rather than saving it. The Millionaire Next Door found that the majority of people they interviewed invested about 15% of their post-tax income.

One thing that wealth-builders are not is superstar investors. They aren’t following secret investing strategies, they aren’t spending their days researching stocks and they aren’t paying hundreds or thousands of dollars for memberships of exclusive websites. 

When we think about building wealth we often think about investing success. What we see in those who have built wealth is a good savings rate and plenty of time.

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