This week on Equity Mates

Hey there Equity Mate,

We’re sending this on a Friday because of ANZAC Day yesterday, and we want to start by paying our respects to all those who have served. Thank you as well to all of those who are currently serving. On today, and on all days, we are thankful for your service and your sacrifice.

While we may have a short week here in Australia, the news certainly hasn’t slowed down:

• Inflation came in higher than expected. Inflation for the past 12 months came in at 3.6%, down from 4.1% for the 12 months to December. That’s the good news. But it is falling slower than the RBA would like. All eyes now turn to their next meeting on 7 May.

• While not official yet, reports are that HECS-HELP debts will be indexed at 4.7% for the financial year

• Anthony Albanese has called Elon Musk an “arrogant billionaire” for refusing to take down videos of the Wakeley Church stabbing on X (Twitter)

• President Biden has signed into law the TikTok divestment bill, giving ByteDance 9 months to sell it to a non-Chinese company or face being banned in the United States

There’s also been plenty happening across Equity Mates as we celebrated our 1,000th podcast episode this week.

Here’s what we released this week:

Equity Mates Investing (Spotify | Apple | YouTube)

• Monday - We celebrate 1,000 episodes!

• Tuesday - Expert: Roger Montgomery - 5 stocks he is buying today

• Thursday - Industry Deep Dive: Sports Betting - 5 years after legalisation in the US, who is winning?

• Friday - Expert: Cameron Blanks - Secrets of Australasia's biggest private equity fund | Pacific Equity Partners

Get Started Investing (Spotify | Apple | YouTube)

• Monday - We celebrate 1,000 episodes!

Your questions, answered

A.J. asked via Instagram:
“I don't want to buy property. What risks are there with not buying property until you retire?”

We put A.J’s question to Dylan Pargiter-Green, from Bold Wealth.

Book a call with Dylan for professional investment advice.

No Property, No Problems!

The Australian Dream… A big block, verandah out the front, hills hoist in the back yard and watching the sun fall over the suburban streets. Australian’s have historically been a little bit obsessed with property. And for good reason, it has performed incredibly well over the past 50+years, as our baby boomer friends who purchased in the 60s, 70s and 80s will tell us. But it’s not the only option for building wealth.

As long as you have a solid understanding of where you will be with alternative assets in retirement, you can build wealth to be able to provide a comfortable retirement income. However, this income will need to be larger than the average to take into account rent you will have to pay ongoing.

A principal place of residence is exempt from the asset test for social security benefits, where investment assets are not. This can mean the difference between paying top dollar for a lot of costs that rise in retirement including medical appointments and pharmaceuticals, registration, utilities and rates amongst others. Hopefully, we’re all tracking to a point where we no longer rely on a government pension or benefits.

A property provides more than just an investment asset or store of long term value. It provides security over the long term that you’ll have shelter and a more settled lifestyle. This is very important to most people and the fact that property grows over the long term, whilst using leverage is a bonus. If you’ve got a deposit and can grow your wealth, whilst paying similar amounts in interest and repayments that you are in rent, you’ll end up ahead over the long term with a good property.

If you have a question you’d like answered, hit us up at [email protected] 

This email is thanks to PocketSmith

Ren’s had a general frustration for a while with spend trackers - most have predefined categories, annoying automation that miscategorise transactions and no distinction between spending and investing.

So when we were asked to give PocketSmith a go, we were skeptical.

But we’ve been pleasantly surprised - finally a budget tool that has the flexibility and detail to give you true insight into your spending habits.

PocketSmith is Australia’s leading personal finance management tool. You can find out anything you need about your money: track progress, identify trends, spot issues, run reports, and plan ahead. You can also connect with Sharesight and your superannuation provider to track your overall net wealth.

If you’d like to manage your money like a pro, PocketSmith has a special deal for the Equity Mates community. Get 50% off your first two months of PocketSmith’s Foundation plan.

What we’ve been reading

Why Chinese EVs will not take over the world

This year has been tough for all electric vehicle makers. While much of the focus has been on Tesla - down 35% year to date - almost all car makers have faced a decline in electric vehicle sales.

Beyond the crisis of the moment, much of the longer-term concern for Tesla is around the increasing competition in the electric vehicle space. The European automakers led by VW and BMW are going all-in on the transition. The US automakers like Ford and General Motors have announced big investments as they play catch up. And new Chinese electric vehicle makers are emerging, led by BYD.

This increase in competition is expected to put downward pressure on profit margins going forward. Right now, Tesla enjoys ~15% profit margin. This is well above the industry average: Toyota at 7%, BMW at 7%, General Motors at 6% and Ford at 3%. It is expected that over time, Tesla’s profit margins will move closer to the industry average.

But this article makes the case that the more dramatic fears about China’s EV giants coming to dominate the market are overblown. It argues that this fear echoes similar fears of Japanese automakers in the 1970s and 1980s. And how the market normalised after being disrupted by these Japanese companies is instructive for how the EV market may normalise in the coming years.

This post contains sponsored content

Uncovered: Hazer Group (ASX: HZR)

Uncovered is our exploration of the companies that don’t receive as much media attention or analyst coverage. We believe every company has an interesting story and we want to hear them.

For this edition of Uncovered, we took a look at Hazer Group (ASX: HZR). Hazer is working to commercialise a process that takes in methane and produces hydrogen and graphite.

Hydrogen will play a critical role in the world’s energy transition and Hazer estimate that their process offers a 50% emission reduction over the current most common hydrogen production method - Steam Methane Reforming.

Emerging out of research at the University of Western Australia, Hazer was created to scale and commercialise this technology. In this Uncovered article we dive into the company and where they are in that process.