Here’s what you need to know today

• Australia’s Reserve Bank has held interest rates steady at 3.85%. This came as a surprise as markets were implying a 96% chance of a 25 basis point cut. In its commentary, Australia’s Central Bank said it was waiting on “a little more information” to confirm Australia’s inflation is sustainably lower. (Capital Brief)
  
  

• In response to the RBA’s surprise decision, the Australian Dollar shot up 0.6% against the US Dollar. Meanwhile the ASX 200 immediately fell 0.2% following the RBA’s announcement at 2:30pm, but recovered to finish the day flat. (ABC News)
  
  

• As the 90-day pause expires, US President Donald Trump starting notifying countries of their upcoming tariff rates if they do not strike a trade deal by 1 August. 14 countries received notification, including South Korea and Japan, with all countries threatened with tariffs of at least 25%. (CNN)
  
  

• Australia may be a surprising winner from Trump’s trade war. The latest analysis from the Productivity Commission found that global capital flows may be redirected from the US towards Australia. It’s latest modelling found that Australia’s GDP may rise 0.37% as a result of America’s trade protection policies. (ABC News)
  
  

• After Qantas’ data breach last week that compromised the records of 6 million customers, Australia’s major airline has reportedly been contacted by a potential cybercriminal. The airline said it was working with the Australian Federal Police to verify the contact and did not disclose whether a ransom was sought. (ABC News)
  
  

• DroneShield announced an $11.7 million research and development contract with an unspecified Five Eyes country (Five Eyes is the intelligence sharing arrangement between Australia, USA, UK, Canada and New Zealand). Last month, DroneShield reported a sales pipeline of $2.41 billion across 268 projects. (Capital Brief)

  
  

• BHP has lost a landmark case testing the government’s ‘same job, same pay’ laws. A Federal Court ruled the mining giant must pay 2,200 labour hire workers an average of $30,000 more to bring their pay in line with their directly employed peers. Estimates are that if those rules are applied to all of BHP’s labour hire workers across all of its mines, it would cost $1.3 billion a year. (ABC News)
  
  

• Google’s self-driving robotaxi company Waymo has started work on its biggest challenge yet: New York City. Currently, Waymo operates a driverless robotaxi service in 7 cities, but it is reportedly now taking the first steps to launch in NYC and Philadelphia. (Quartz)
  
  

• Apple launched an appeal to a €500 million penalty for breaking competition rules in the European Union. The European Commission accused Apple of preventing developers from directing users to cheaper deals outside its App Store in an attempt to avoid Apple’s 30% fee. (Reuters)

What the…?

Jane Street Capital is one of the world’s largest quantitative trading firms with almost $400 billion under management. Jane Street’s CEO, Robert Granieri, has admitted to one of the most out-there scams in history: he was duped into spending $7 million to buy AK-47s and grenades for a coup in South Sudan.

Granieri claims he was duped by two men claiming to be human rights activists. Federal Prosecutors in the US claim these two men were actually raising money for weapons to support rebels in South Sudan. (Bloomberg)

Investing is a lifelong journey

Here’s what you can learn today.

How one adviser would invest $500 a month

Community Question: If I have $500 to invest every month, how should I think about allocating it to build a portfolio for the long-term?

We put this question to Matthew Fenning, financial adviser at AdviseWise

A fantastic first question from any future investor looking to take the plunge into personal finance.

The best place to start is with the why – what are your goals, or what are you looking to achieve from your investments?

If you don’t have a goal yet, it is important to stop and develop one that you want to achieve from investing – goals will provide direction, motivation, and purpose, and as a result will help you become a disciplined investor.

Let's say your goal is to build a $100k portfolio over the next decade – what might that look like?

Well, if you were to invest $500 per month every month, assuming that on average over a 10-year period, your return was 10% per annum, your investment would have compounded to around $100,000 over that time.

Sounds great right?

So, what are some proven ways to allocate your investments to get there?

Starting with a “core” investment or investments that are well diversified will set you on a path to achieving your long-term goal.

An example would be starting with a global index-based equity ETF (exchange traded funds) and an Australian index-based equity ETF. Starting here you can accumulate investments indirectly in a broad-based portfolio but manage trading and investment costs by having a single holding in the overarching ETFs.

Nobel Prize laureate, economist Harry Markowitz is reported to have said “diversification is the only free lunch in investing”?

Why is that?

Practically speaking, diversification helps us select investments that maximise returns within an acceptable level of risk, in other words, why take more risk than you need to in order to get the same result.

What does diversification look like?

In equity markets this can mean spreading out investments across many different differentiating factors for example industries, countries, company size, geographical location to minimise your exposure to shocks in the market and consistently perform over the long term.

There are very few stock pickers who consistently outperform the market in the long term, and they do it all day every day, and by concentrating their investment in a smaller number of stocks, their returns may well be higher, but they carry with that a much higher risk on the downside as well.

With the explosion of ETF’s and micro investing funds this has also never been more achievable enabling you to invest that money no matter how large or small the amount.

Interested in speaking to a financial adviser? Fill out the form on our website and we’ll match you with a suitable adviser.

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