Here’s what you need to know today

• President Trump has delayed tariffs on both Mexico and Canada for 30 days. The Mexican delay came after Mexico agreed to deploy 10,000 troops to the border to curb drug trafficking and illegal immigration. Later, Canada reached a deal after agreeing to station 10,000 “frontline personnel” on the US-Canada border and redouble efforts to tackle the opioid crisis by establishing a fentanyl czar. (NY Times)
  
  

• Meanwhile, China are reportedly preparing a trade proposal for the Trump administration to prevent further tariffs. The Wall Street Journal report that China is trying to revive a 2020 trade deal they made with the former President that would require China to buy US$200 billion worth of US goods. Reports are that as part of this proposal, China would agree to treat TikTok as a commercial matter and allow ByteDance to negotiate with US investors. (Wall Street Journal)
  
  

• While negotiations continue, China has announced its first set of retaliatory tariffs. Headlining the response is a 15% tariff on coal and LNG products and a 10% tariff on crude oil, farm equipment and some cars. (AFR)
  
  

• After a tough Monday (the ASX 200 was down 2% and Aussie dollar hit a 5-year low), Tuesday saw the Australian market flat as the relief over delays to tariffs on Canada and Mexico was balanced with concern over the impact of the Chinese tariffs on Australian businesses. (ABC News)
  
  

• NSW Transport Minister Jo Haylen has resigned as Minister as a scandal escalates over her use of taxpayer-funded drivers for private trips. The resignation comes after it was revealed Minister Haylen took a second trip from Sydney to the Hunter Valley in a taxpayer-funded car. (AFR)
  
  

• Australian supermarkets are facing a tough market. Shoppers are concerned about rising cost of living, shareholders are concerned about lower returns and the government is accusing them of price gouging. In response, Coles has announced it will be removing 2,500 products from its shelves in an effort to rationalise range, reduce costs and grow profits. (7 News) Woolworths have announced an executive reshuffle. (AFR)
  
  

• President Trump also signed an executive order to create a US Sovereign Wealth Fund. In the past 20 years, national sovereign wealth funds like Australia’s Future Fund (A$280 billion) and Norway’s Government Pension Fund (US$1.7 trillion) have become major forces in global markets. (Reuters)

What the…?

If you’re planning to run the Beijing half-marathon in April, watch out for a new competitor. 20 Chinese robotics companies have entered humanoid robots and will compete with human runners for the first time in the full 21.1km race. (Running Magazine)

Robots must have just two legs, no wheels, be between 0.5 and 2 metres tall and can be remote-controlled or autonomous. The race organisers have confirmed that podium finishers - human or not - will be awarded the prize money.

The suggestions are rolling in for 2025!

“Make episodes longer!”

“More content with Luke Laretive”

“Kick the obsession with ETFs”

“dedicated AFL podcast ;)”

These are just some of the suggestions that have come through so far on the Equity Mates 2025 Community Survey. Do you have an idea (or disagree with one of those listed above) then this is the last week to make your voice heard!

Fill out the survey and help us make Equity Mates even better in 2025! (Survey Link).

Investing is a lifelong journey

Here’s what you can learn today.

Dividend investing for young investors

This question came in from Derek, via the Equity Mates contact form.

Question: Is Dividend investing worth it if you’re younger (mid-20s) in ‘accumulation’ phase?

We put Derek’s question to Samuel Fenning, Founding Partner & Senior Financial Adviser at Esencia Wealth

When evaluating any investment strategy, irrespective of one’s life stage, it is vital to consider the financial objectives, the risk tolerance (the extent and comfort with risk exposure), the risk capacity (the ability to withstand potential losses) and the associated timeframes.

Dividend investing involves buying and holding shares with the primary purpose of generating income from dividends paid by those shares.

Dividend investing in Australia has a unique aspect in the fact that dividends often include franking credits, which can lower income tax.

This approach has its own set of advantages and disadvantages, including:

Pros:

• Regular Income: Dividend paying shares can provide a consistent stream of income, which can be useful for covering living expenses or reinvesting in additional investments.

• Tax Advantages: Dividends often attract franking credits which can reduce the overall tax paid by the investor.

• Compound Growth: Reinvesting dividends can lead to the compounding effect, where the initial investment grows exponentially over time.

• Diversification: Dividend shares can offer diversification in a portfolio depending on the companies used (i.e., from different industries or sectors) and the existing strategies in a portfolio.

• Long-Term Focus: Dividend investing encourages a long-term perspective, which can be favourable for younger investors who have time on their side.

Cons:

• Lower Growth Potential: Dividend shares may not provide the same level of capital appreciation as growth shares, which can limit the overall capital growth in a portfolio.

• Income Tax: While dividends can provide income, they are also subject to income tax. This can reduce the overall return on the investments (often called Total Return).

• Limited Diversification: While aspects of this strategy have diversification benefits, this strategy can also limit diversification by solely relying on dividend paying shares, as this may increase the exposure and reliance on certain industries and sectors.

• Market Risk: Even dividend paying shares can be affected by economic downturns and market fluctuations.

• Opportunity Cost: By focusing on dividend shares only, there are potential returns that could be sacrificed at the cost of not investing in other types of shares as well as other asset classes.

• Company Risk: Not all companies with high dividends yields are financially stable. Investing in poorly managed or financially troubled companies can lead to dividend cuts or even bankruptcy.

In conclusion, dividend investing can be a prudent strategy for young investors who seek income, stability, and a long-term approach. However, it’s important to balance your portfolio and consider other investments to achieve diversification and consider the trade-offs between income and growth.

The individual goals, risk tolerance, risk capacity and timeframes will ultimately help determine whether this strategy is suitable.

Seeking advice from a financial adviser can ensure you make informed decisions tailored to your specific circumstances.

Interested in speaking to a financial adviser? Fill out the form on our website and we’ll match you with one of our hand-picked financial advisers.

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