Wealth

Insights on wealth management, investments, and personal finance.

Wealth
Aussies see evergreen funds as private market hot-spot
After 23 straight years of outperforming public markets, it’s time for investors to recalibrate their exposure to private credit based on short-term pockets of risk and the long-term runway for growth. At least that is the conclusion of Mario Giannini, executive co-chairman of US-based alternative investment manager, Hamilton Lane. While private equity buyouts and real estate saw the run end last year, Giannini argues that investors who view this as a window into future performance are ignoring the previous 30 years. Protection against downside risk Giannini points to the numbers, which reveal that over no five-year period did investors ever lose money in buyouts, private credit or private infrastructure. “This is one of the most unappreciated benefits of private market exposure in a portfolio: protection against downside risk,” said Giannini. “A reasonably diversified buyout or private credit or private infrastructure portfolio would be hard pressed to lose money… the risk in these markets does not typically stem from losing money.” With that in mind, Giannini believes the credit, infrastructure and secondary sectors are "primed for future success." AI applications While Giannini recommends investors have exp
Wealth
One in five Australians are lying about their finances
New research from Compare the Market found that around one in five Australians are financially unfaithful to their loved ones. Of the 21% who admitted to lying to their partner or family about their finances, 33% reported being dishonest about what they spend money on. Compare the Market spokesperson, Sarah Orr said that money has become a sensitive topic with couples due to fear and stress exacerbated by the cost of living. “The cost of everything from insurance to energy bills, petrol and groceries has gone up and that’s added pressure on relationships where finances may be a concern,” Orr said. “There can be a lot of shame and guilt opening up about these issues but we know that being dishonest can cause more harm in the long-term, especially where debts are allowed to snowball. “If you share a bank account, mortgage, split bills or pay rent with a loved one, you shouldn’t be keeping them in the dark.” People surveyed reported being most dishonest about how much debt they're in (25%) and how much they spent on coffee or takeaway (24%). Respondents were also dishonest about gambling, alcohol and clothing spending as well as how much they earn. Orr encouraged people to open up conversations surrounding mon
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Unpopular financial planning document to be replaced
A deeply unpopular document that financial planners are required to give to clients will be thrown into the paper bin of superannuation history under draft legislation released forconsultation by the Australian Government. If the legislation is passed and enacted, the statement of advice (SOA) would be replaced by a more ‘fit-for-purpose’ client advice record under financial advice reforms which have been welcomed by super funds and their peak bodies. Assistant Treasurer and Minister for Financial Services Stephen Jones said in a media release the Labor Government invited feedback on the reforms by 2 May, 15 days before the next election must be held at the latest. Given that the Liberal/National Party Opposition have called for the Government to legislate the recommendations of the Quality of Advice Review which the reforms reflect, the changes seem likely to proceed irrespective of the outcome of the poll. Jones said the first components of the legislation also provided rules on what advice could be collectively charged to all members of the fund andallowed superannuation funds to provide ‘prompts’ to members to engage with them. He said the remaining pieces, including modernising the best interests duty and creating a ne
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Risky business: Bridging the insurance gap
Australians facing steep insurance premium rises in a world of disasters are sharing a global problem. The solutions are out there, but they are complex. Australia faces a massive insurance gap that leaves home and business owners increasingly vulnerable to either dealing with disasters without being fully insured or paying more for premiums even if they live thousands of kilometres from a disaster zone. That potential lack of insurance cover also has sobering ramifications for those seeking a mortgage and home ownership, especially in a world where climate-linked disasters are increasing. The potential solutions are complex and will require government action. It’s a global problem that Australia knows too well. In 2022, when disastrous floods hit Queensland and NSW, the insured losses alone were more than $6 billion and about 48 percent of Australian losses were not covered by insurance. Everyday Australians are facing steep insurance premium rises and the number now seen as being under insurance stress has increased from 10 percent in 2022 to 15 percent last year. That leaves many people in vulnerable areas underinsured or uninsured and even those who can get insurance are paying much more. The disaster impact Globally
Wealth
Avoid traps: Azzet’s guide to capital gains tax on shares
While refusing to lock-in profits or never cull the deadwood from your share portfolio is one sure-fire way to avoid capital gains tax (CGT), it's as nonsensical as choosing an investment for tax considerations over the underlying merits of the investment itself. With the new tax year just around the corner, there's no better time to take stock of the most common tax traps share investors can easily fall into and the best ways to side-step them. Capital gains tax is paid on profit Legitimately minimising the tax you pay on shares is something every investor should strive for, and where necessary you should seek expert help to get it right. Like it or not, paying tax is a present reality resulting from profits made by selling shares. So rather than agonising over it, pay the tax owing and get on with your next investment. Instead of being fixated on how much tax you’ll pay to receive the capital gain, you're better off focusing on what you’re left with after tax. Refusing to sell down a stock and lock-in a gain when you should – for example when it’s trading close to or above its intrinsic value – means you run the risk of retaining overpriced companies in your share portfolio. Remember, share prices eventually c

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Harvard expands its financial aid initiative
Harvard University has announced upgrades to its financial aid that will allow middle-low-income families to receive more support. The expansion will allow families who earn US$200,000 or under to attend the university tuition-free starting in the 2025-26 academic year. “We know the most talented students come from different socioeconomic backgrounds and experiences, from every state and around the globe,” William R. Fitzsimmons, Harvard College’s dean of admissions and financial aid said. “Our financial aid is critical to ensuring that these students know Harvard College is a place where they can be part of a vibrant learning community strengthened by their presence and participation.” According to the Harvard website, the annual tuition for an undergraduate is $56,550 and grows to $82,866 when additional costs like food, housing and health services are included. Students whose family income is lower than $100,000 will receive free tuition with all billed expenses like food, housing, health insurance and travel costs included. They will also receive a $2,000 start-up grant in their first year and an additional $2,000 launch grant in their junior year. For those whose families earn less than $200,000, they will r
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ESG crackdown continues with super fund fined $10.5m
Active Super has been fined A$10.5 million (US$6.6 million) by the Federal Court for greenwashing after making misleading claims about its investments. The Australian Securities and Investments Commission (ASIC) said the fund broke the law when it invested in securities it had claimed were eliminated or restricted by its environmental, social and governance (ESG) investment screens. Active Super claimed in its marketing that it eliminated investments that posed too great a risk to the environment and the community, including gambling, coal mining and oil tar sands companies, and after the invasion of Ukraine, Russian investments. But it held direct and indirect investments in companies such as SkyCity Entertainment Group Ltd (gambling), Gazprom PJSC (Russia), Shell Plc (oil tar sands) and Whitehaven Coal (coal). ASIC Deputy Chair Sarah Court said this was a significant penalty that sent a strong message to companies that their sustainable investment claims needed to reflect the true position. “This case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services,” Court said in a media release. “It is our third greenwashing court outcome, a
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APRA rejects growing financial deregulation call
The Australian Prudential Regulation Authority (APRA) has rejected the growing calls for financial deregulation which have gathered pace since Donald Trump was elected President of the United States. Chair John Lonsdale said calls to rethink the impact of regulation on competition and efficiency had been boosted by a new U.S. administration with an agenda of cutting red tape, increasing trade barriers and reviewing multi-national frameworks. Lonsdale said he did not detect a significant appetite among his overseas peers for a wholesale rollback of the regulatory settings that had helped protect global financial stability since the global financial crisis (GFC). He said APRA strongly supported the work done internationally since 2008 to strengthen the resilience of the banking system and curb the high-risk behaviours that led to the GFC. APRA was reluctant to lower the regulatory standards that kept Australia’s financial system resilient and economy strong, particularly when geopolitical risks were increasing. “But that doesn’t mean we’re closed off to making our prudential framework simpler, less burdensome or more proportionate,” Lonsdale said in a speech to the Australian Financial Review banking summit. “Unlik
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How to dial down media hype during a volatile market
Investors need to look behind half-truths and media misinformation to ensure they make the right decision. Ever since President Donald Trump entered the United States political landscape over eight years ago, the world has been less likely to take news reports at face value than ever before. That’s great, but when the media collectively sells hyperbole for headlines, half-truths gather global momentum. Once it hits a social media website, the news can stick. For example, investors piled into cryptocurrencies after Donald Trump’s second ascension to the white house with vigour previously reserved for blue-chip stocks. More deliberate examples of media hyperbole include Business Week’s infamous The Death of Equities issue of 13 August, 1979. While the cover story argued that inflation was destroying equities, only a few years later the share market embarked on one of the biggest rallies in history. Anxiety and greed have always been investors’ worst enemies, and this often results in them buying when they should be selling and vice versa. Much of this is due to knee-jerk reactions driven by FOMO (fear of missing out) or FONGO (fear of not getting out), both enemies of the successful investor. Investor para