Here’s what you need to know today

• The stock market judged a clear winner in this week’s US Presidential debate. Shares in Trump Media & Technology Group fell more than 10%, while green energy stocks surged, such as the Invesco Solar ETF gained 3%, on speculation that a Kamala Harris win would boost renewable energy funding.
  
  

• Speaking of solar, Australian renewable energy hit a record this week as renewable’s share of total electricity generated reached 72.2% in the half-hour before 12pm on Monday.
  
  

• It’s not just Australian renewables hitting records. Globally, renewables share of electricity generation broke 40% for the first time ever last month.

  
  

• CEO of Nine Entertainment, Mike Sneesby, has stepped down as CEO of the media giant. He became CEO in April 2021 and in that time has seen the share price fall 55%. Tough to blame it all on him though, many of his media properties - print newspapers, TV networks - are in structural decline.
  
  
  

• Australia’s second-largest private hospital operator Healthscope has forced 3 of Australia’s largest private health insurers - Medibank Private, NIB and HCF - to stump of millions of dollars in out-of-cycle payments as the fight between Australia’s private hospital operators and private health insurers intensifies.
  
  

• The latest data showed US inflation increased 2.5% year-on-year, the smallest annual increase since early 2021. You can almost certainly lock in an interest rate cut when the Federal Reserve meets next week (18 September).
  
  

• The Australian government continues to go hard at social media. In the same week it floated the idea of banning children under 14 years old from social media, it has now introduced bills targeting online misinformation as well as new online privacy reforms.
  
  

• Novo Nordisk’s first trial of a tablet version of its ground-breaking weight loss injection, Ozempic, has shown amazing results. Albeit early results from a small trial, weight loss was actually greater than their once-weekly injections.

What the…?

The world has set a record for the most amount of people in Earth’s orbit at any one time. 19 people are currently orbiting the earth: 9 on the International Space Station (ISS), 3 on a mission towards the ISS, 3 on China’s Tiangong Space Station, and 4 on SpaceX’s Polaris Dawn mission that will attempt the world’s first private space walk.

Investing is a lifelong journey

Here’s what you can learn today.

Question: Should young people delay paying off HECS debt, until they have a solid investment portfolio, and/or own some form of property?

We put this question to Glen Hare, financial adviser and co-founder of Fox & Hare

Usually, we would advise our members that paying off debt quickly is a smart move, especially high-interest, consumer debts like credit cards. But HECS is different. Because HECS is indexed to inflation, your repayments will grow or shrink in line with the lower of the Consumer Price Index (also known as CPI) or the Wage Price Index (WPI), which opens the door of opportunity for those who are comfortable with investing.  

If you can find investments that reliably earn more than the HECS interest rate, it could be better to invest instead of prioritising the debt.  

Think of it this way: Your HECS debt is like a loan at, say, 4% interest. If you can invest that money and earn 6%, you're making a 2% profit. But, as always, investing comes with risk. Markets can go down, there's no guarantee your investments will beat the HECS rate and, as we’ve seen in the post COVID era, the CPI is prone to bouts of rapid growth – pushing HECS repayment rates higher.  

So, it’s safe to say this strategy is reserved for those who understand investing and are okay with some risk. For those not comfortable with their knowledge levels or who dislike risk and uncertainty, paying down the loan could be a better bet. It’s also worth noting, if you're thinking of buying a house soon, HECS affects how much you can borrow – although prioritising HECS over saving may lead to a longer lead time on your deposit, further complicating the matter.  

Overall, while getting rid of debt is usually good, ‘low’ inflation (less than the returns on your investments at least) lets you think differently about HECS. If you're investment-savvy, delaying repayments to invest could help you build wealth faster. Just be sure to weigh the risks and consider your financial goals before making any big decisions. And, as always, getting advice from a financial pro would be a smart move. 

Want to speak to Glen and the team at Fox & Hare? Fill out the form on our website and we’ll put you in touch.

Today’s sponsor is iShares by BlackRock

With iShares S&P ETFs like IOZ, IVV and IOO, you can get low-cost access to hundreds of the world’s largest companies in a single trade to help diversify your portfolio and help reduce the stress of selecting single stocks. Visit blackrock.com.au/ishares for information about their ETF range, or visit nabtrade.com.au to explore further insights, education and tips for getting started with ETFs.

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