Provision Newsletter

Are you feeling wealthier, less wealthy or somewhere in between? You may be experiencing what is sometimes called “the housing wealth effect”.

Movements in house prices, up and down, can affect how we feel about the state of our wealth and our willingness to spend, suggests a Reserve Bank paper* published several years ago.

Under this theory, if house prices are up, we may tend to feel wealthier and willing to spend more on consumer goods including new cars. And when house prices are weakening, we may tend to feel less wealthy and less willing to spend as freely.

As housing prices have continued to weaken in most Australian states, led by Sydney and Melbourne, you may decide to reduce your consumer spending due to the housing wealth effect. And you may be more inclined to save more in such ways as accelerating your mortgage repayments.

While overall new car sales have eased over the year to August, sales of luxury cars are at their lowest for more than two years, according to an update of the CommSec Luxury Vehicle Index. This index is based on the Australian sales of 17 upmarket models.

Historically-low interest had been, of course, a major driver of the last rapid rise in housing prices. (The Reserve Bank this month held the official cash rate at the record low of 1.5 per cent – a level held for almost two years.)

Yet continuing low rates provide an opportunity for many homebuyers, depending upon their circumstances, to build a mortgage buffer or cushion using mortgage offset accounts and redraw facilities.

By putting aside more than the required mortgage payment, homebuyers create protection to help deal with financial setbacks, such as illness or job loss, and future rate rises.

When interest rates fell over the past decade, many homebuyers chose to keep their monthly repayments at the same dollar amount while many developed a habit of making higher repayments whenever possible.

The Reserve Bank reports that homebuyers early this year held a total in mortgage offset accounts and redraw facilities equal to two and a half years of scheduled repayments.

Particularly given Australia’s record household debt, it makes much sense for homebuyers to try to use the “housing wealth effect” to their advantage by building a bigger mortgage buffer – a task made more achievable by low interest rates.

In a speech this month, the Reserve Bank continued to highlight the rise in household debt – up from 70 per cent of household income in the early 1990s to 190 per cent today. Australia’s total household debt-to-income ratio has been rising in recent years more sharply than in other advanced economies.

The rise in household debt is “largely due” to a rise in mortgage debt, the Reserve Bank notes. Low interest rates have enabled homebuyers to borrow more – a key influence in a country of enthusiastic homeowners.

* Housing wealth effects: Evidence from new vehicle registrations, Reserve Bank Bulletin, September 2015.

Written by Robin Bowerman, Head of Corporate Affairs at Vanguard.

Please contact us on |PHONE| if you seek further assistance on this topic.

Source : Vanguard September 2018

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2018 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

By Flying Solo contributor Lucinda Lions

Have you ever said to yourself, “That’s a great idea, I don’t need to write it down,” only to regret your decision within 17.7 seconds? Here’s a quick, easy way to remember names, numbers and everyday information.

Is this you?

Have you ever been driving along and tried to memorise a website or business name, to no, frustrating, avail?

Have you ever spell-checked a word online so many times that Google voluntarily and independently shows you memory loss ads, abandoning its algorithm in order to salvage yours?

Have you ever been introduced to someone, instantly forgetting their name while secretly grasping for your own?

If you answered ‘yes’ to any of these questions, you may find this article memorable, for all the right reasons.

To be clear, I’m no expert in memory. Heck, if I remember my age, it’s a good day. But an event happened recently that prompted me to take a hard look at why I should attempt to improve my memory skills.

“These numbers became seared into my memory within minutes, and now I literally can’t forget them. Yet, I had been struggling to memorise them for months.”

I should have remembered this

I had been struggling to remember the last three digits of my son’s mobile phone number for ages, which became an issue one day when my phone battery died and I had to call him using someone else’s phone.

But I couldn’t remember his full number, only the first seven digits.  I couldn’t call him. Yikes!

Thankfully everything worked out, but it so easily may not have. The incident pushed me to learn more about my memory, or lack thereof, as well as the best techniques to help me remember stuff.

This is what I found out.

Baker versus baker

I watched an excellent Ted Talk by Joshua Foer on memory.  In it, Foer explains that all memory techniques come down to ‘elaborate encoding’, which involves trying to remember abstract information (such as the numbers 417) by making them relatable and meaningful, therefore memorable. Elaborate encoding is illustrated perfectly by the Baker/baker Paradox.

The paradox goes like this.

If I said to you, “Remember that there’s a guy who is a baker”, and I said to your friend, “Remember that there’s a guy by the name of Baker”, YOU are more likely to remember the word ‘baker’ than your friend.

The reason? The name Baker probably doesn’t actually mean anything to your friend. As Foer explains, the word Baker is ‘untethered to all the other memories floating around’ in his skull. But a baker, on the other hand, triggers visual images of people in white hats with floury hands. So when you hear about a baker, your brain starts sinking ‘associational hooks’ into the word, making it easier to fish out later.

When it comes down to it, Foer says that the art of trying to remember information well, is about figuring out how to change capital case Bakers into lower case bakers. In other words, turning all abstract information into interesting, relatable, memorable information.

Foer also describes our minds as being a palace: “As bad as we are at remembering names and numbers and word-for-word instructions from our colleagues, we have really exceptional visual and spatial memories… The idea behind the memory palace is to create this imagined edifice in your mind’s eye and populate it with images that you want to remember. The crazier, weirder, more bizarre, funnier, raunchier, stinkier the image is, the more unforgettable it’s likely to be.”

I put it into practice

This article by Lucinda Lions is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others. 

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

How do you behave in the face of fear? Do you run towards danger, or turn and flee? Knowing how you and others react to extreme situations might seem remote from the world of investment, but could have a lot to do with what separates the great investors from the rest of us.

Humans have a tendency to be more scared of the things they cannot control. For example, you are statistically much more likely to die in a road accident in Australia than you are in a plane crash anywhere in the world. But it is most unlikely that you feel the same apprehension pulling away from the kerb as you do when your flight gathers pace on the runway.

In the same way, we fear losing our money in an uncontrolled market crash even though this is actually rather less likely than losing it through poor decisions or even simply inertia.
Before anyone makes an investment, they should consider what type of investor they are, how they cope with their emotions and what kind of appetite they have for risk. The conventional approach to doing this is often a box-ticking exercise which asks anodyne questions like; “are you prepared to take a little more risk for the possibility of a little more return?”

What a basic box-ticking exercise fails to take account of is the messy humanity of investors. We are all prone to changing our minds, inconsistency and a general propensity to react more to emotions than rational analysis when making investment decisions.

Novice investors need to understand that there are different types of risk and that not all of them are bad. In many people’s minds, risk is now associated with the reckless behaviour caricatured in movies like the ‘Margin Call or ‘The Wolf of Wall street’. We tend to assume that vivid disasters, like the financial crisis, are more likely than mundane slow-motion catastrophes like the value of our investments being eroded over time by inflation. They are not.

An inexperienced or apprehensive investor should overcome this aversion to risk and be prepared to embrace the risks they can control. They should understand that being too cautious with their investments is a risk in itself and could mean they fail to achieve their financial goals. Investing money in what are perceived to be riskier assets might actually be safer than putting it in the bank.

To make matters worse, humans are inconsistent in their inconsistency. This can make it near impossible to pigeon-hole investors into neat high, medium and low-risk categories. Most people would immediately recognise themselves as a glass-half-empty, or glass-half-full type of person. But consider this study. One group of people is shown an empty glass which is then half filled. The majority describe the glass as half full. Another random group of people is shown a full glass from which half the contents are subsequently poured. The majority of these people describe the glass as half empty.

The way a question is phrased and the context in which it is asked clearly influences our perception of it and therefore our response. On tackling your first profiling questionnaire, you might feel apprehensive and therefore more cautious, or perhaps more bold than usual. This could influence your responses to the risk-profiling questions you are asked.

The same instinct that made early man run from a sabre-toothed tiger thousands of years ago, gives professional investors sweaty palms today. What else explains the instant market reaction whenever a company reports disappointing results, or when a negative rumour circulates? How can these well-trained, highly-professional investors suddenly panic and sell a carefully-researched investment that moments before they believed in implicitly?

It is clear that we cannot reverse thousands of year of evolution so it’s better to understand the power of these instincts and take account of them at those crucial moments when decisions are made.

Source : Fidelity September 2018

Reproduced with permission of Fidelity Australia. This article was originally published at https://www.fidelity.com.au/insights/investment-articles/how-do-you-behave-in-the-face-of-fear/

This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information. You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity Australia’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise.
© 2018. FIL Responsible Entity (Australia) Limited.

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page

Like many kids growing up in the 1970s I was taught to eat everything on my plate. It was good advice, particularly as an active kid living in a rural setting. Through my teenage years, I had more discretion and the choices I made left a lot to be desired. Now, with a recognition that my metabolism isn’t that of an active teenager, I’m making more healthy decisions about what I choose to eat and what I choose to leave on the plate.

A similar discussion has been evolving around environmental, social and governance (ESG) investing. Is it better to ‘eat everything’ or can leaving out undesirable exposures improve investment outcomes?

Here’s a four-step approach that can help investors navigate the options.

1. Define your goals

   Approaches to ESG investing can vary widely depending on investors’ age and background. CFA Institute research suggests that women are more interested in ESG issues than men. And millennials are more interested than baby boomers.

   Some investors may take a purely financial approach by targeting companies with favourable ESG practices to enhance returns or reduce risks.

   Other investors may make a values-based judgement to exclude exposures to industries like tobacco, alcohol, gambling or munitions.

2. Understand your options

   Portfolio screening can take two main forms—’exclusionary’, which removes stocks or sectors or ‘inclusionary’, which up-weights ‘good actors’ and down-weights ‘bad actors’. It’s the difference between removing all the unhealthy food from your plate or reducing the portion size. Many investors may be driven by a values-based judgement to divest from companies whose activities they disagree with, even if it means suffering a penalty in the form of a more concentrated portfolio and performance deviations.

   Advocacy seeks to influence positive change through the power of voting rights, rather than removing yourself from the conversation by divesting. One of the big ESG debates is whether it’s better for asset owners to ‘vote with their feet’, or ‘vote with their vote’. Advocacy can be an effective way of maximising financial returns without compromising diversification.

   ESG integration incorporates risk exposure into the investment process. A company may be subject to a high degree of ESG risk, but if the price reflects that, then it may still form part of an investment portfolio. Many super and managed funds follow a similar approach.

   Impact investing involves allocating capital to generate both a social or environmental impact and a financial return. Also referred to as triple-bottom line investing, it remains a small component of the ESG universe, and carries more complexity in the form of niche funds accessed through private investment vehicles.

3. Decide a course of action

   Informed investors can then choose a portfolio solution that best aligns with their ESG goals and the available options.

4. Assess your strategy regularly

   The ESG investment landscape is far from static. Not only are investor preferences changing, investment options are rapidly evolving, supported by a growing recognition that it’s possible to do well while doing good.

   Much like my changing approach to healthy eating, a systematic approach to assessing your strategy can keep your goals in close alignment with your investment portfolio.

Please contact us on |PHONE| if you seek further assistance on this topic .

Written by Aidan Geysen, Head of Investment Strategy Group at Vanguard.

Source : Vanguard August 2018 

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2018 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

If you’re interested in living a low waste lifestyle, the best place to start is your kitchen. We waste food every day, but there are easy ways to lessen that impact without having to become a totally different person.

Simple shifts in daily habits can make all the difference later down the line. Store your food properly so you don’t have to throw it away so quickly. Only buy what you need – make lists, plan meals, measure ingredients. Understand how expiration dates work so you don’t throw away food that’s still good to eat. Most importantly, look for little moments in your cooking process to revise. Below we’re sharing a few ways to reduce food waste…

10 Ways to Reduce Food Waste Daily

STOCK UP ON STOCK. 

Keep veggie scraps and trimmings in a bag in the freezer when you cook. You can use this later as the base for a flavorful stock. Follow this simple recipe. You can incorporate the stock into various dishes — like grains and sauces — or you can sip it on its own.

DON’T STOP AT THE STEM. 

Make sure you use as much of your fresh ingredients as possible when cooking. Broccoli stems taste great roasted. Beet leaves make for an excellent salad. Carrot tops can be used to make pesto. Even celery leaves can be candied for a sophisticated garnish.

MAKE FRIENDS WITH THE FREEZER. 

There are so many things can be kept in the freezer so they stay fresh longer. Freeze pantry items like flour and nuts, wedges of hard cheese, pre-chopped veggies, and even soup saved in single serving portions.

SAVE CITRUS PEELS. 

Use the peels to make homemade countertop cleaner. The peels can also be candied and saved in the freezer to use later in baking, cocktails or as a flavorful homemade snack.

WHEN ALL ELSE FAILS, FRITATTA. 

Basically, every restaurant leftover can be thrown into a frittata. Use leftover veggies or veggie scraps, wilting herbs, and uneaten dinner remnants to add texture and flavor. Learn how to make a frittata here.

HANDLE YOUR HERBS. 

When fresh herbs start to wilt, chop them up and blend them with grass-fed butter, roll it into a tube with reusable wax paper and slice off pieces when you cook. You can also mix them with oil and make an infusion that doesn’t really go bad (because oil is a natural preservative), or make a pesto or chimichurri and freeze the sauce in an ice cube tray to have single-serving portions available to cook with.

REPURPOSE YOUR FRUITS. 

If you bought too much at the farmers market don’t wait for them to go bad; instead, find another way to use them. Make jam with berries, get into canning, or freeze them at peak ripeness and use in a smoothie. Frozen fruit can easily be taken from freezer to baking dish for a summery cobbler at any part of the year.

PICKLE IT. 

Use your extra veggies and pickle them, done right they will last a long time. The fermentation process makes pickles prime food for a healthy gut. Learn how to make quick pickles here.

USE THOSE COFFEE GROUNDS. 

If you make coffee every morning, save the brewed coffee grounds in the freezer and make into a homemade body scrub. This recipe only requires two ingredients.

DONATE WHAT YOU DON’T USE. 

If kitchen DIY isn’t your thing, save your fruit and veggie scraps in a bag in the freezer, when it’s full donate to a community compost.

Source : Foodmatters September 2018 

Reproduced with the permission of the Food Matters team. This article by THE CHALKBOARD MAG  was originally published at www.foodmatters.com/article/10-brilliant-ways-to-reduce-food-waste-daily

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Do you feel like ‘stressed’ is your new normal state of being? Can you remember the last time you went to bed without a care in your mind and woke up the next morning energized and excited for the day? Our modern lives, though full of opportunity, have us anxious, stressed and exhausted, and it’s almost at the point where if you’re not constantly stressed about work, finances or relationships, you might just stress about not being stressed enough!  

While a stress response is a normal function for our bodies and we definitely do need it in certain circumstances, being constantly stressed is not healthy and it’s making us sick. In fact, according to the World Health Organisation, stress is the health epidemic of the 21st Century.

How We’re Stressed 

There are three ways our bodies can be stressed:

1. Physical: this can be a trauma, injury, accident or fall

2. Chemical: this includes flu, bacterial infection, hangovers and unbalanced blood sugar levels

3. Emotional: this is the fear-inducing situations, perceived pressure at work or financially, family tragedies. 

Joe Dispenza explains that when our bodies experience physical, chemical or emotional stress, it knocks the brain and body out of balance and activates the Sympathetic Nervous System. This is the fight or flight system that helps us deal with perceived threats in our external environment. When this system is activated, other systems in the body are affected, including the way in which the body sources and burns energy to give the body a rush of adrenaline. 

This activation and mobilization of energy and particular body function is great in situations where we need to be able to react quickly – jump out of the way of speeding car or falling object – situations that are short-lived but require immediate response. However, when the perceived threat to us is ongoing – say mortgage and financial stress – the body stays on high alert for prolonged periods, using up enormous amounts of energy and leaving the body unable to return to its normal state.  

What’s The Problem With Prolonged Stressed?

“Over 90% of disease and illness today is based on lifestyle and stress, not genetics,” – Bruce Lipton 

Stress hormones shut down the immune system making us vulnerable to disease, infection and cancer. 

What does that mean for the average person living with constant stress? Bruce explains that by always being stressed “we are inhibiting our immune system every day.” This creates an environment for disease to develop… and that’s serious.  

Consider this: people produce cancer cells every day, but healthy immune systems can get rid of it. If you’re constantly stressed, creating a weakened immune system, your body will be less likely to protect you against cancer cells.  

Additionally, Dr. Josh Axe has shared that our emotions can impact our health with specific feelings driving disease in specific organs. He believes that managing our emotions is just as, if not more, important than fixing your diet for your health.  

The impact of emotions on the organs:

• Fear: reproductive organs, kidneys, and adrenals

• Frustration: liver

• Grief, sadness, depression: colon, lungs, immune function

• Anxiety: heart, small intestines

• Worry: spleen, pancreas, stomach

Techniques Proven to Reduce Stress 

By acknowledging your stress you can start to reverse its presence and impact on your life. There are a number of techniques you can implement to reduce stress and improve your health, and it starts with making a commitment to change your lifestyle.

Dr. Libby says that ‘stressed’ is the busy person’s word for fear. She shared with us that most of the time, people who are stressed at work have a fear of disappointing others or letting down the team, or a fear of failure. If you can understand the source of your fear, you can start to overcome the issue and reduce the stress.  

Dr. Libby also explains that it takes time to change the way we respond to stressful events. “We understand that for physical fitness, we need to train our body – we can’t just get up one day and run a marathon. The same is true for our mind – it requires a daily practice of ‘training’.” 

8 Ways to Reduce Stress 

1. Reducing your caffeine consumption

2. Talking to yourself about the source of your stress, try to change fear into fascination and learn more about yourself. Catch negative thoughts as they appear and replace them with thoughts of gratitude and positivity.

3. Considering your perceived pressure – most of the time we’re putting deadlines and pressure on ourselves that aren’t necessary.

4. Meditating to calm your mind and bring your thoughts internal, rather than being worried about everything external. If you like guided meditations, we’ve got plenty!

5. Working on improving your diet. We know that when people are stressed their diet decisions are generally very poor and limited to things that are convenient. Make healthy food a priority and read our article 9 Foods You Should Eat The Moment You Feel Stressed.

6. Reducing your technology use… and turning those email notifications off when you finish your work day!

7. Conscious breathing. Yes we all breathe, but being conscious about your breath and making time to take nice deep breathes will change your mood and your body’s interpretation of what’s happening in your environment.

8. Finding a practice that relaxes you and do it often. Whether it’s yoga, surfing, painting or running, whatever it is that you enjoy and enables you to take your mind off things that stress you, make it a priority and enjoy it often. 

 Stress, overwhelm, depression, anxiety, autoimmune disease, obesity, suicide, cancer, a midlife crisis, wondering what direction to take in your life… These are some of the biggest challenges of our time.

Source : Foodmatters October 2018

Reproduced with the permission of the Food Matters team. This article by JAMES COLQUHOUN  was originally published at www.foodmatters.comcom/article/stress-epidemic

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.