This week on Equity Mates

Hey there Equity Mate,

Grab your ticket to ‘Equity Mates Live - Ask An Advisor’ - April 10th, Sydney.

We’ll be covering plenty of money and investing topics, including:

• Strategies for creating multiple income streams

• Tips on buying your first home or using an existing property to build an investment portfolio

• How to construct a portfolio for the next 30 years

• The best way to maximise superannuation

It’s going to be a fun, engaging night, giving you the the opportunity to ask some of Australia’s best advisors your burning questions.

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:

• Equity Mates Investing (Spotify | Apple | YouTube)

  • Monday - Top 5 ASX stocks of the past 10 years, TikTok, Temu & Shein make news & a crypto market update

  • Tuesday - Buy or Sell: Adam Keily with Andrew Page

  • Thursday - Speccy Magee returns

  • Friday - Expert: Kerry Craig - Portfolio construction and beating home country bias | JP Morgan Asset Management

• Get Started Investing (Spotify | Apple | YouTube)

  • Tuesday - 6 investing myths holding you back

With so much content each week, make sure you’re subscribed to both podcasts so you don’t miss an episode.

Your questions, answered

Sonny asked via email:

What’s the best approach to tackling HECS while also saving for other goals like a down payment?

We put Sonny’s question to advisor and Director of Bold Wealth, Dylan Pargiter-Green.

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

HECS Debt in Australia is a hot topic at the moment. Student Loans have often been seen as a relatively low interest rate linked with inflation and the upfront payment is made by our good friends in parliament house. This sounds great, however, in the most recent financial year, the inflation rate applied to HECS debt was a whopping 7.1%.

Compared to the previous few years, where it has sat at an average of 2.1%, this is a significant increase to most student loan balances and this isn’t sustainable. The Q4 2023 YoY inflation figure was 4.1%, and seems to be trending in the right direction (down!). It’s unlikely we see another inflation slug of 7% this year.

HECS should be treated a little differently to traditional personal debt:

• HECS repayments are income-contingent, meaning they are based on an individual's income and repayments increase as their income increases

• The repayments are charged as an additional tax % on top of your marginal tax rate. If you have a HECS debt, you generally don’t notice it coming out, because you’ve likely never earned money without paying it. Once it’s gone, you’ll suddenly get a little kick in your monthly pay after tax.

The main hindrance of maintaining a HECS debt and not making additional repayments is that it will be assessable as debt should you wish to borrow for other things, such as a house in future.

When it comes to the choice between additional payments on your HECS or saving for other goals, it all depends on what those goals are. In a lot of circumstances, I lean toward building other financial assets with the remaining cashflow after paying off HECS and Tax each month. I believe that on average, you should be beating inflation with your savings if you’re appropriately allocating these to growth assets in line with your goals and if you do this, you give yourself the choice at a later stage to repay the HECS if it’s getting in the way.

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

What we’ve been reading

Apple is adding to its arsenal of AI startups with a little-known Canadian firm

When you think of tech companies making moves in the artificial intelligence space, Microsoft and Alphabet are the two companies that come to mind. However, it turns out that Apple has actually been the top buyer of AI companies. The world’s largest company has been surprisingly quiet about it. We expect that means something big will emerge in due time.

Apple’s latest acquisition is DarwinAI, a Canadian startup working on AI that visually inspects components during manufacturing. The expectation is that Apple will utilise this technology across their supply chain.

This points to what will likely be a growing trend in the AI era. We’ve seen the amazing consumer applications like the chatbot ChatGPT and text-to-video application Sora. Despite being wonderful technology, they have been of limited practical use (so far).

What we should expect to see this year is a lot more practical use of AI. Companies, regardless of industry, will find ways to improve their efficiency, reduce costs or boost revenue. In this example, Apple may have found a use case to make their manufacturing processes more efficient. It may not be sexy, but speeding up some process or reducing defects in manufacturing could save them billions. It is these far less sexy applications where real value will start to be realised from AI.

This is just the tip of the iceberg for Apple. Estimates are that since 2017, Apple has been the biggest buyer of AI companies. And the scale of their buying is huge. It is estimated that Apple has bought almost double the AI companies as Microsoft and Meta.

Part of this is playing catch up. Apple appears to be behind Microsoft and Alphabet in their generative AI efforts. But Apple will likely have its own plans and run its own race, with CEO Tim Cook already publicly promising that the world’s largest company will “break new ground” in AI. We can’t wait to see it.

Welcome to the Valley of the Creepy AI Dolls

It was only a matter of time before artificial intelligence was combined with toys. And unsurprisingly, the result is creepy.

Meet Hyodol, the social robot marketed to older adults that is ChatGPT-enabled. This $1,800 doll can hold a conversation, remind users to take medication and allow caretakers to monitor patients from afar.

Designed as a cure for loneliness, it remains to be seen if these ChatGPT-enabled devices can act as a substitute for human connection. Over time, these devices may also become a valuable assistant to chronically overworked aged-care nurses.

That isn’t to say there hasn’t been pushback, as Wendy Moyle, Professor at the School of Nursing & Midwifery at Griffith University explained.

Whatever people’s feelings, the reality of our ageing population and the need to find ways to care for older people will necessitate robotic and AI assistance. We just hope they don’t have to look so creepy. Give us the robotic seal Paro over Hyodol any day.

Want to pick up a free copy of the hottest summer read?

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