Here’s what you need to know today

• Australian Prime Minister Anthony Albanese has announced plans to cut the student debt of every student by 20% in the new financial year. This includes government income-contigent loan programs like HECS/HELP, Vet Student Loan, and Australian Apprenticeship Support Loan and is expected to wipe out $16 billion of debt. The average university student graduates with $27,600 in HELP debt, meaning $5,520 would be wiped under this policy. (AFR)
  
  

• The government announced a second policy on education costs over the weekend - 100,000 fee-free TAFE places each year. The government are clearly getting into campaign mode with the next federal election expected to be held in the first half of 2025. (ABC)
  
  

• The struggles of private hospitals continue to be a note-worthy story in Australia. After months of negotiating with private health insurers to pay more to cover the rising cost of healthcare, the industry also asked the government for a bailout (which Health Minister Mark Butler rejected). A government review found margins have almost halved in the past 5 years and the industry warned more private hopsital closures were coming if they couldn’t address their funding shortfalls. (AFR)
  
  

• OpenAI have launched a new feature for ChatGPT that will allow it to search the internet, a feature seen as a big threat to Google’s dominance in online search. ChatGPT will now be able to provide links to relevant web sources, which the company thinks is better than traditional search because it allows users to ask questions in a more conversational way. (Forbes)
  
  

• Earnings season continues in the US. Last week we saw Berkshire Hathaway report cash on hand at $325 billion as it sold more Apple shares. (Reuters) Meta reported revenue up 19% and profit up 35% while increasing estimates for what it will spend on AI. (Quartz) Microsoft reported revenue up 16% and profit up 11% and made clear they couldn’t build data centres fast enough to keep up with AI demand. (Quartz) Meanwhile oil giants ExxonMobil and Chevron reported profit falls of 5% and 21% respectively, as they manage falling oil prices. (Reuters)
  
  

• Super Micro Computer is managing the fallout of its auditor EY quitting, citing integrity and governance concerns. Super Micro has now been given until 16 November to submit a compliance plan to Nasdaq, otherwise it may get removed from the Nasdaq stock exchange. (Quartz)
  
  

• The UK Conservative Party announced their new leader over the weekend, 44 year old Kemi Badenoch. Badenoch is the 6th Tory leader in less than 9 years and will be the first black woman to lead a major political party in the UK. (BBC)

What the…?

Divorce in the digital age: The Wall Street Journal has written about the latest challenge vexing family lawyers - who gets the social media accounts? The rise of influencer couples and families has been lucrative, particularly on TikTok. But when the relationship breaks down, and the most valuable asset is the social accounts, how are you meant to split it? (WSJ)

Investing is a lifelong journey

Here’s what you can learn today.

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, Managing Director and Financial Adviser at Advise Wise

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. 

As your portfolio accumulates, you may consider complimenting your “core” investment with other “core” or “satellite” investments that are focused on one or some of the differentiating factors we talked about earlier.

Fundamentally when investing for the long-term it is important to:

1. Keep it simple – take your “free lunch”

2. Be consistent – both with your contributions and your investment approach

3. Be disciplined – investing has risks, you’ll need to take the sour with the sweet

4. Time not timing – remember it’s time in the market, not timing the market.

Want to speak to one of our hand-picked financial advisers? Fill out the form on our website and we’ll put you in touch.

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