Unless you have been living under a rock, it would have been impossible to not notice that Pokemon Go has taken Australia by storm.

Launched last week, Pokemon Go is a mobile game which has reinvented the popular 90’s cult franchise Pokemon. The game uses GPS to track players and through their smartphone cameras, incorporates the game’s monsters into the player’s surroundings.

The game has been an instant hit, with the app currently topping several charts on Apple’s App Store.  Nintendo shares are up 60% in the past three days since Pokemon Go was launched on the 7^th of July – illustrating the power of pop culture!

Nintendo has enjoyed a whopping AUD$12bn increase in market value. It should give a new lease of life to the conservative Kyoto-based firm, which had long steered clear of smartphone gaming.  

The app is free to download and is estimated to have been downloaded 7.5bn times in the US alone. The lucrative value of the app is seen in its in-app purchases, which occurs when a player is tempted to buy more useful items within the game.

Excuse the pun, but Pokemon Go is literally ‘changing the game’ when it comes to mobile apps. We can’t wait to see how more apps like this push boundaries and sail into uncharted territory.

By the Superfitdad

It’s the end of the Australian financial year which means, for those who have incurred personal expenses in the course of their business, it’s tax return season and, ideally, tax refund season.

Much like the truffle season in Alba or the Indian wedding season for Gold prices, this can mean a flurry of expectant spending or, at the very least, plotting about what spending might ensue, assuming things work out favourably.

And irrespective of whether you have a tax refund in the offing, any time you have a lump sum coming your way, it’s a great opportunity to start building or growing your asset base.

So, in no particular order, here are some things to consider.

1. Clear Debts (Especially Credit Card)

You might think: so what? A measly $1k on the credit card. No need to worry about that. Let’s buy some shares or a holiday or some fun – pick your poison!

NO. Not on your nelly, my friend. The reason? Unless you have an interest-free card or have transferred a balance, you’ll be paying 15-25% on the credit card debt. All your other investments will NOT be paying you anywhere near this much. At least on a consistent basis.

2. Pay Down Mortgage / Save For A Mortgage

Paying down your mortgage might not seem sexy. In fact, there an entire industry geared around enticing you to do other things with you money. Ignore them, though, and seriously consider paying down your home loan.

But being mortgage-free, early, is a pretty cool thought. If you don’t have own property yet, start thinking how you can accelerate the process.

3. Invest In Yourself

How many new skills have your learned since you were 25? For many of us it’s hard enough mastering the meagre skills we’ve been given or acquired so far. But investing in ourselves and our future by cultivating our skill-set or talent stack is probably the most important investment we can make.

To a certain extent, it doesn’t even matter what you’re learning. Whether it’s learning a foreign language, taking a course on public speaking, learning to write code, the key thing is to be challenging and stimulating ourselves to develop and grow. Do this and, almost by osmosis, your performance in all areas will soar.

4. Top Up Your Superannuation / Pension Fund

Propping up your pension with an after-tax lump sum isn’t as attractive as chucking in pre-tax and reaping the tax benefits offered by salary sacrificing, say.

And, it’s not really sexy.

BUT…

Don’t you want to have a comfortable retirement, especially given that there’s no telling how long we might live nowadays? Also, once you’ve tucked it away in your pension, it’s there for a very long time, giving it a very love-you-long-time cogitation period. Which, in plain English, means it’s got plenty of time to grow and accumulate.

5. Become An Owner

Feeling emboldened now that you’re newly flush? Hit the markets. Not the Farmer’s Markets, silly. The Stock Markets. A good way to get some exposure to the markets and become an owner (in a very tiny way, of course) of some of the world’s biggest and best companies is via index funds.

Index funds are popular because they don’t carry the same kind of costs associated with actively managed funds. [Question: have you ever met a poor fund manager? No, me neither. It’s because your fees are paying for the Jag, the Rolex and their kid’s school fees.]

Not only are index funds cheaper than managed funds – often by 1-2.5% per year – they routinely outperform the funds with managers. Strange, huh? So if you’re looking for a proven way to create and grow wealth over a long time-frame (10+ years), the stock markets and index-linked funds tread a proven path.

Or you could…

6. Buy Individual Stocks

Not for the faint-hearted, this can be an exciting ride.

If you get a tip from a mate about a firm that makes mining valves and supplies a firm who’ve just found a massive unknown copper deposit somewhere in the middle of Whup-Whup, well, you could be quids in.

You’re unlikely to get any information before hundreds and thousands of others have that same information. That hot tip your mate gave you has been through brokers and dealers and market-makers. People will be all over it.

The golden rule, though: always tick the box to have your dividends invested. Never deviate from this and you should be okay [assuming your stock pays a dividend].

7. Give It Away

Percentage of people ticking this option: a big fat zero [I’d love to be proved wrong here, by the way]. But imagine how good it would make you feel.

To help those less fortunate in a meaningful way. How absolutely magnificent.

GIVE WELL ranks charities according to how effective they are with their donations. This means you can give to charities that have the least waste and give the most to the intended beneficiaries. At the very least consider making a monthly donation via direct debit to one of the Give Well top-rankers.

8. Travel

They say nothing broadens the mind like travel.

Which is tricky because if you’re a new-ish parent, the idea of transporting your chaotic sleep-deprived existence to somewhere unfamiliar where you don’t know the name of the barista or the nearest 24 hour petrol station for the late-night banana dash. But whether you’re encumbered by kids or not, it’s never that bad.

It’s actually wonderful. The whole family seem to recognise the importance of the trip and improve their behaviour tenfold.

9. Buy Art

If none of the options listed before appeal, then there are a couple of other options to consider.

I select them because they have the potential to be appreciating assets.

If you can cultivate an appreciation of art, I think it can be useful. Finding something (as in, a piece of art) that resonates with you and can calm you when seas get stormy can be a real comfort.

10. Buy Jewellery

This is basically: a watch.

As we’ve seen there are a myriad of options and we’re in danger of suffering from a Paradox Of Choice when it comes to using our tax refund wisely.

There are other things I couldda and shouldda mentioned – But, in the interests of expedience, we’ll leave it there for now.

At the very least, buy something that will appreciate and grow or will help you or someone else appreciate and grow. As long as you do that, you’ll be winning.

By the Superfitdad

The new financial year has begun, and the tax-man is knocking at your door again. Here are some key tips to send him on his way with a smile:

Ensuring you have all the accurate information makes the tax return process that much smoother. Before you start, make sure you have all that paperwork ready to go. Hopefully you’ve kept all necessary information very organised since throughout the year…

Some of the key documents you’ll be needing are:

 Your Income:

Payment summaries

Bank statements

Shares, unit trusts or managed funds statements

Buy and sell investment statements

Records from your rental property

Foreign income details

Your Expenses:

Private health insurance policy statement

Donation receipts

Educational records and receipts

Investment property receipts

Your spouse’s income and expenses

Union membership

Work related expenses

It’s important to note that since July 1^st 2015, there have been changes to the Medicare levy and private health insurance rebates. They have frozen the levy surcharge at the 2014-2015 level for 3 years.

Deductions are awesome. They allow you to claim work-related costs against your tax, these can include sun glasses, computers, vehicles etc. Although, one must remember that these expenses must be:

Real

– you must have spent the money yourself for the product or service

Relevant

– they must be related to your job

Recorded

– in the form of a receipt

As an Raiz investor, any realized capital gains/losses through Raiz will be tax liable.  We will produce an annual tax statement for all investors by the end of July. These statements will contain all details necessary for filling your tax returns.  

 If you have any further questions about your tax statements please do not hesitate to email the Investor Success Team at support@Raizinvest.com.au or alternatively call us on 1300 754 748.

The focus of the Australian market is on the result – or rather lack of result – from the weekend’s federal election. It appears the most likely outcome is a hung parliament although we may have to wait some time until we know for certain. Unfortunately, the Australian Electoral Commission has made it clear that it won’t begin counting any more votes until Tuesday, leaving buyers and sellers in an information vacuum.

“Such uncertainty is never good for markets…. However, the Australian economy remains strong.”

As the possibility of a hung parliament looms closer, the financial market grows more and more uncertain. Additionally, the prospect of the second hung parliament within three years escalated speculation the governments AAA-credit rating will come under pressure in the coming weeks.

Such uncertainty is never good for markets, and traders may have to wait a month or even longer to start to get a picture on who will be forming a government for the next three years. However, the Australian economy remains strong. We do expect international money flows into our market will slow until the election outcome is known.

“If Brexit taught investors anything, at times of such economic uncertainty it is important to remember the golden rule; do not panic!” 

Australian Chamber of Commerce and Industry boss James Pearson believes it’s very likely that whoever does form government will now have to build strong relationships with crossbenchers “to get things done.” Sometimes a minority government can implement a higher level of discipline and ultimately work better.

If Brexit taught investors anything, at times of such economic uncertainty it is important to remember the golden rule; do not panic! Much to the surprise of market participants, equities and bonds have recovered most of the losses they experienced in the wake of the Brexit vote.

Additionally, The Reserve Bank is observing all of this unfold, potentially intervening with an interest rate cut on Tuesday, although economists think this is unlikely. We are also expecting a 0.5% month on month rise in retail sales reflecting a sustained rebound in consumer confidence following the RBA’s decision to cut interest rates in May.

In the 2004 documentary Supersize Me, Morgan Spurlock eats food only from McDonalds for a whole month. What was the result? He gained weight (a lot of it), experienced mood swings, and frequent headaches.  

“Like your diet, your share portfolio generally suffers if you just choose one stock and don’t mix it up” 

Now we all love the occasional Macca’s every now and again, but it’s probably safe to say that you should mix it up and maintain a balanced diet. Our body stays healthy that way.

Like your diet, your share portfolio generally suffers if you just choose one stock and don’t mix it up. Choosing different stock types to work together is one of the most important things to keeping your portfolio healthy.  

“By spreading out your investments, you avoid putting your eggs in one basket. If that basket breaks, you can’t have your omelette, that’s a risky situation”

For eating we call it a balanced diet, for investing we call it Diversification. This blog will tell you a little bit about diversification, how it works, and how you can achieve it.

How does diversification work?

Diversification basically means spreading your money across a variety of different investment types. Often these investments perform differently at different stages of the business cycle, or have different correlation with each other.

By spreading out your investments, you avoid putting your eggs in one basket. If that basket breaks, you can’t have your omelette, that’s a risky situation.

For example, take the example of stocks and bonds. During a bad period for the stock market, we tend to see bonds perform better than stocks. If you had a portfolio full of stocks and no bonds at this time, you’ve just missed out on the action. By diversifying you can avoid big shocks to your portfolio.

But it’s not just different asset classes that behave differently. Healthcare stocks will perform differently to Oil stocks, Oil stocks may behave differently to Tech stocks, Foreign Tech stocks may behave differently to Australian ones. There’s many different investment types to diversify.

How can you diversify? 

ETFs are a great start (What is an ETF?).  

“When you invest with Raiz, you diversify” 

With ETFs, you can spread out your investments over hundreds of different stocks. There are ETFs for local stocks, foreign stocks, bonds, and much more. 

When you invest with Raiz, you diversify. Each of the 5 portfolios offered by Raiz are diversified across 5 different ETFs, different countries, and asset classes. 

Our portfolios were designed with diversification in mind, and to give the investor the best expected return for the amount of risk they’re willing to take on. 

So don’t have Macca’s for every meal, and sign-up to invest with Raiz today.

As many of you will be aware, last week Britain voted to leave the European Union (EU). This caused much discussion and uncertainty in the markets, however this is settling down and the ASX looks like opening flat this morning.

We will not know the full extent of the economic impact until we understand the deal that the UK will negotiate with the EU. This could take a number of years, and will probably happen before they invoke Article 50 in the Lisbon Treaty which starts the divorce of the UK from the EU. We expect this initial shock to die down over this week, so don’t panic, be calm

The UK will be negotiating for the next few years on the options below:

• Being part of the EU all but in name, like Norway but this also includes payments to the EU with no seat at the table.
• They could negotiate a Customs Union model like Turkey.
• A bilateral agreement between the UK and EU similar to the Swiss model, but this also requires payments to the EU.
• A free trade agreement like Canada, but this took Canada 15 years to negotiate.
• A combination of the above while also relying on the WTO agreements.

The above options take time to negotiate, also the UK will also need to start negotiations with other countries outside of the EU (

for example it will not be able to rely on the FTA the EU has with Canada).

So the main takeaway is that UK will be part of the EU for a while longer, and we can expect the status quo from an economic perspective. So don’t panic and remember that this is the time when a disciplined investment strategy shows it’s true value.

Thanks for investing!

As you may be aware, I wrote to the Prime Minister, Malcolm Turnbull, (4 March 2016) about the ePayments Code, and how the banks were playing fast and loose with the truth when telling consumers that their internet banking login details should not be disclosed to third parties, such as Raiz.

This is an important issue as most of our users provide their internet banking details.

It was Raiz’ opinion that the banks were overstepping the mark and now correspondence I have received from ASIC would suggest the regulator, at the very least, has sympathy with our point of view.

Without going into all the details, this was positive news because of the following points ASIC made.

1.      ASIC acknowledges that the messaging from banks about not sharing your login details with third parties is from the early 1980s, when ATMs were introduced, and is out of date in the new world of apps such as Raiz.

2.      ASIC acknowledged the potential value of third party services, such as Raiz, having interaction with a consumer’s bank accounts.

3.      ASIC notes that the Government has accepted the recommendation of the Financial System Inquiry to make the ePayments Code mandatory.  If this mandatory adoption of the Code were implemented, ASIC would ensure that the Code, which protects the consumer when providing internet login details, is “operated appropriately” by banks. Although ASIC did not spell it out, we understand that what ASIC is saying is that the banks are currently not “operating appropriately” under the Code. But until the Code is mandatory they will not act unilaterally while other areas of government, such as the Productivity Commission, are reviewing related issues.

This correspondence from ASIC indicates that the regulator understands the position of Raiz and has expressed a degree of solidarity with that position in regards to the misleading information being provided by some banks. We’re looking forward to seeing how this develops and reaching a point where Australians are free to engage with services such as Raiz without concerns that they are breaching conditions set by their banks. 

George Lucas, Raiz CEO

By Clayton Daniel 

I love it when a simple mathematical illustration can explain things clearly. Think the Pareto Principle of 80/20. Pretty much a well-established fact you will get 80% results from 20% of the effort. Simple, easy to understand, and pretty accurate.

“People are split almost down the middle 50/50 between savers and spenders”

The same goes with standard deviations. We all know the bell curve, but the fact it almost perfectly summarises the population in terms of whether they are a Spender or a Saver is almost uncanny.

Based around research from a range of sources and my own experience as a former tax accountant and financial adviser, I’ve come to the conclusion people are split almost down the middle 50/50 between savers and spenders. Half the population spend everything they earn, and the other half manage to put some money aside. It gets a little more interesting when you break those two halves up even further between moderate and extreme.

Run-of-the-mill Spenders

By that I mean, the first deviation of Spenders are your everyday, run-of-the-mill Spenders. They are the type of person that runs out of money just before pay day, and are relieved when the next pay cheque comes in. They don’t really get themselves into too much trouble, but aren’t really interested in doing anything to ‘get ahead’ other than focusing on the next pay rise or promotion.

Pay-check to Pay-check Spenders

The second deviation Spenders get a little more serious as these people start to get themselves into a little bit of trouble. The first filter they gauge each decision with is ‘what do they want’? The basic premise is if they can’t afford something now, they will with next month’s paycheque. These type of people carry around the $10-$20k debt in credit cards and personal loans and don’t really think it’s a problem. The idea of putting money aside for the future is redundant as they have ‘bills to pay now’.

Train Wreck Spenders

The third deviation on the Spenders are train wrecks. The problem is, by looking from the outside in, you can never tell. These people make up the 2.5% of the population that look amazing on the outside, but peer beneath that surface and things are going to hell in a handbasket. These type of people are in astronomical amounts of credit card and personal loan debt and really only have two ways out, lots of hard decisions or bankruptcy. The problem is generally too big to admit to themselves, and instead they focus on a mythical ‘big pay day’ to solve all their problems.

The Savers on the other side of the divide may sound like they have everything together, but they too experience their own set of problems.

Save to Spend Savers

Let’s first examine the first deviation, the regular Savers. Interestingly, these type of Savers only save to spend. That’s right, the majority of Savers are really just delayed Spenders. These Savers will save for a specific purpose, be it a holiday, a new vehicle, or a home. The purpose of their savings is to facilitate the purchasing of things they want to spend money on without going in to too much debt.

Savers with Intent

The second deviation Savers have a little more intent in their savings. It’s only at this point do we finally meet people who are interested in putting money aside for later in life. They will put aside the classic 20% of their salary to build long term wealth, have no personal debt, but struggle to find the balance between reaching lifestyle goals and not spending too much money. I understand this issue, because if you are disciplined enough to stick to putting money aside, it’s hard to turn that switch off.

Dollar Saved is a Dollar Earned Savers

And finally the third deviation or most extreme Savers are the one’s solely focused on building wealth from a young age and put every single cent aside to achieve that goal. They want to save every single cent, any money spent is money lost. To them ‘a dollar saved is a dollar earned’. They are the kind of people who never do anything social, and on the off chance you get them to join you, don’t get stuck on a round of drinks with them as we both know you’ll end up carrying them.

“The mentality of each side means that once the grooves of consistent behaviour have set in, it is extremely hard to change”

So you have your Spenders on one side and your Savers on the other, and never the both shall meet. The mentality of each side means that once the grooves of consistent behaviour have set in, it is extremely hard to change. Not to say it can’t be done, but it’s hard. And if there is ever any conversation around change, it is always to move someone from being a Spender to a Saver.

“It’s as if the answer to all of life’s issues can be solved as one moves from being a Spender to a Saver….and here in lies the problem”

The problem the Spenders will attest to here, is it’s much more boring on the Savers side. And let’s face it. They have a point. It is. But I think this idea epitomises the major flaw in our corrosively boring ‘personal finance’ education. It’s as if the answer to all of life’s issues can be solved as one moves from being a Spender to a Saver.

“The answer is not to go from spending to saving, it is to exist simultaneously everywhere on the divide. To save like a vault and spend like a Rock Star”

And here in lies the problem. What self-respecting Spender is going to hang up the gloves and become a penny pincher? It’s not going to happen. In fact it rarely does happen. So do we just leave it there? An endless array of personal finance specialists, one after the other repeating this advice to no avail? Is this the only answer? Or once again, have we all just taken this advice from people with no real world experience?

“ The answer is not to feel bad about spending your own money, but instead to have an amount set aside for guilt free spending”

After managing the cash flow of people on all ends of this divide, I can tell you the answer is not to go from spending to saving, it is to exist simultaneously everywhere on the divide. To save like a vault and spend like a Rock Star. The answer is not to feel bad about spending your own money, but instead to have an amount set aside for guilt free spending. The goal is not to have ‘long term savings’ as the word ‘savings’ is super boring and un-engaging, but instead to have ‘investments’. And the goal is not to avoid travelling, but to have a ‘lifestyle bucket’ to support your need and want to live the life you’ve worked hard for.

“Automation. Automation is key”

But here is the hard part. How do you hold two opposing thought patterns - both Spender and Saver – at the same time? If you were lucky enough to read my last article for Raiz you will know the answer. Automation. Automation is key. Remove your fallible self and the inefficient use of your own time and decision capacity and outsource to automation.

Stop wasting your time managing your own money and let technology do this for you.

Clayton Daniel, Financial commentator and author of upcoming book Fund Your Ideal Lifestyle

By Superfitdad

You might not be into investments for any number of reasons. Maybe you don’t understand the vagaries of the markets and prefer to stay away from things you don’t understand. That’s perfectly understandable. Maybe you’re more into property, since “there’s no better investment than bricks and mortar.” Again, perfectly understandable.

But, I’m telling you right here and right now, if you’re in Australia (or most anywhere in the world), there’s an element of the investment markets that you simply CANNOT AFFORD TO IGNORE because you have a (in)vested interest in it.

This is something so simple and so basic that it’s almost invariably overlooked. And yet it takes just 5 minute to review it and see if you’re making a simple mistake that could end up costing you hundreds of thousands of dollars.

That’s right: fixing this one thing up – the one thing that I’m betting you haven’t looked at recently (because it’s tucked away in fine print on the statement that you barely look at, let alone understand (I’m just starting to get my head around it) – could literally save you hundreds of thousands of dollars.

Or put those dollars in your pocket.

Do I have your attention?

Good.

Now, what is it?

Your. Superannuation. Fees.

Really?

Yup, those measly 2% or 3% fees tucked away in a corner of your annual super statement, which, as we’ve established, you probably don’t read because those things are about as user-friendly it’s as if they were written in Arabic. Or Latin.

These fees can eat away at your retirement fund like a cancer, compounding and growing as your pot grows. And you’re (probably) letting it happen around you. So if you do one thing and one thing only in regard to anything I’ve ever written, it’s this:

See how much you are paying in fees and assess whether the fund manager deserves your money based on their performance.

Why This Matters?

The illustration above makes it clear just how the fees can mount up if left unattended.

Assuming you (and your employer) have saved wisely for 40 years, your fund could end up being “worth” circa $1m. Except you’ve been paying an itty-bitty 2% annual management fee to your superannuation fund manager – regardless of their performance – so all you’re left with is $630,000.

The scoundrels have taken $370,000 in fees. Compare this $630K with the guy who has been paying 0.5% as an annual management fee. He’s left with a pot of $890,000. That’s 41% more at retirement (or $261,000). That’s a lot of cruises. A lot of pina coladas.

Worth checking out what you’re paying, huh?

You might be thinking that if your fund is performing well, returning maybe 8% per annum or more, then it’s worth paying a little extra in fees. You’re damn right, it might be. But, often it’s not.

High fees don’t always come with high returns. And if you end up accepting high fees for poor or average returns, well, you’re getting mugged off paying for schmick offices and coffee waiters.

Remember this: you can’t control how the market performs. But you can control the fees you pay and your approach to risk.

Your Task Now (yep, right now, don’t put it off)

Promise me this one thing. You’ll go and check the annual management fees you’re paying and take whatever action is necessary.

 Superfitdad