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Equity Mates live event - Ask An Advisor!
Equity Mates
March 10, 2024
This week on Equity Mates
Hey there Equity Mate,
Equity Mates Live - Ask An Advisor- April 10th, Sydney
Join us at Chauvel Cinema (Sydney) for an exciting in-person live podcast where you can ask all your burning money and investing questions to experienced financial advisors.
You don’t often get the opportunity to ask financial advisors directly, so this is your chance. Be it related to investing, property, budgeting, superannuation, cost of living, whatever, you can ask it!
Don't miss out on this unique opportunity to learn from the best in the industry. Click here for more information and tickets.
Here’s what we’re releasing this week:
Monday - Pimp my portfolio returns, 2024's hottest commodity & we review Same as Always by Morgan Housel
Tuesday - Expert: Aswath Damodaran - Valuation 101: Every number tells a story
Thursday - Market news, we answer a community question and our first ‘Not financial advice’ segment
Tuesday - How many ETFs is too many ETFs?
Your questions, answered
Kate asked via email:
I’m 21 and have absolutely no knowledge regarding insurance, where do I start?
We put Kate’s question to insurance advisor Phil Thompson, from Skye
Book a call with Phil and the team here.
Starting with insurance at 21 is a smart move! You can start by understanding the basics of the 4 main types of insurance:
1. Death cover
Death cover provides financial support to your family or dependents in the event of death or diagnosis of a terminal illness. The payment helps your family repay debts, cover funeral expenses and replace lost income.
2. Total & Permanent Disability (TPD) Cover
If you become totally and permanently disabled and can’t work, TPD cover helps you pay off debts and medical expenses, make modifications to your home, and replace lost income.
3. Trauma or Critical Illness cover
Trauma insurance is paid if you get a diagnosis of a serious illness like cancer, heart attack or stroke. Put the focus on recovery and getting well – an immediate payment helps meet your financial commitments and medical costs.
4. Income Protection (or salary continuance)
This insurance protects one of your biggest assets – your income. If you’re unable to work due to illness or injury, you’ll still receive a regular income to meet your financial commitments and living expenses.
All four of these insurances fall under the "life insurance" category because they protect you financially in the event of your death.
In your early 20s, it's a good idea to think about getting some type of personal insurance, like income protection. While you may not have any dependents yet, you do have financial responsibilities like rent and bills, however, your may not have any need for life insurance specifically if you do not have any debt or anyone depending on your financially.
Also keep in mind, give your age 25, your super fund will not automatically set any of this cover up on your behalf until you are age 25 years old, so it's worth considering when reviewing your finances.
If you're feeling a bit lost, reaching out to a financial adviser can provide personalised guidance tailored to your needs and goals. Remember, it's never too early to start securing your financial future!
If you have a question you’d like answered, hit us up at [email protected]
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For starters, we have the free Get Started Investing course. It covers all the basic of what is the stock market, how do I start investing and how do I build a portfolio.
For the more advanced investor, we have the highly-rated Value Investor Program. Normally priced a $499, we are excited to offer $100 off if you use the promo code: MATES.
What we’ve been reading
Berkshire Hathaway's 2023 Results — Overview
There has been a lot of talk about Warren Buffett’s Berkshire Hathaway since history’s greatest investor released the company’s results and his accompanying 2023 shareholder letter. This article takes a look at the numbers behind the business of Berkshire and where the company is going.
While the majority of analysis has focused on Berkshire’s $168 billion pile of cash and short-term treasuries and Buffett’s comments that it is getting harder-and-harder to find things to buy as Berkshire gets bigger-and-bigger, the future of Berkshire will be driven by the operating businesses. The insurance business, which for decades has been the driver of Berkshire’s investment strategy, and the wholly-owned businesses, which saw profit growth of 21% in 2023. Investors that are buying Berkshire stock today are buying it more for the quality of these businesses and less for the brilliance of the 93-year-old Buffett.
These operating businesses span a number of ‘unsexy’ fields - including insurance, energy, railroads, manufacturing - but together they form one of the largest industrial conglomerates the world has ever known. Understanding these collection of businesses will help us answer the question all Berkshire shareholders are wondering: what is the future of Berkshire beyond Buffett?
Michael Mauboussin on increasing returns to scale
This year has started where last year ended, hype around artificial intelligence. This has led to a number of professional investors, especially those with a value-bent, calling that we’re seeing echoes of 2001 and that we’re seeing a bubble form in tech stocks.
In this article, the Financial Times make the counterpoint - despite the incredible growth over the past 18 months, Nvidia’s valuation doesn’t look insane.
Nvidia’s forward P/E ratio, at 33, is well above the market’s, at 21. Bubble talk is everywhere. But so is the counterpoint that in terms of valuation multiples, Nvidia doesn’t look all that insane.
To get our head around this mega-cap tech stocks and how they can keep growing, Michael Mauboussin recently published a paper on the phenomenon of ‘increasing returns to scale’. Essentially, it is where companies get more competitive as they get larger. Mauboussin identifies 5 reasons for this, outlined in the table below.
This article is a transcribed Financial Times interview with Mauboussin as he outlines his ideas and explains why the mega-cap tech stocks have been able to maintain high growth rates despite their ever-increasing size.
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