Hot Issues
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SMSFs: Our 'hardest' jobs
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ASIC issues alert over big gaps in SMSF trustee knowledge
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Super savings gap for women stuck at 30%
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Statistics for all Australians
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Super set to play bigger retirement role
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Why SMSFs want estate-planning advice
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The power of financial role models
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Assess your retirement financial resources
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Cryptocurrency audits tipped to increase this EOFY
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Time to check your risk exposure?
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Some general interest stats on SMSFs
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Check trust deed to protect super in estate planning
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Survey reveals strong opposition to retirement system changes
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Australia by numbers – Update
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Federal Budget 2018 – Overview
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Your Budget
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4 components of our 2018 Federal Budget
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Tools to help you manage your financial position are available on our site.
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New rules capture SMSFs trading big with cryptocurrency
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Common EOFY slip-ups flagged for SMSFs
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Beware residency rules if moving overseas
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99 pct of SMSFs missing global opportunities
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How to plan for a better retirement
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Australia by numbers - Update
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Determine your retirement goals
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ATO issues update on cryptocurrency compliance traps
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How likely is a global trade war?
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Gig economy spike prompts calls for super policy changes
Article archive
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Quarter 2 April - June 2018
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Quarter 1 January - March 2018
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Quarter 4 October - December 2017
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Quarter 3 July - September 2017
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Quarter 2 April - June 2017
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Quarter 1 January - March 2017
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Quarter 4 October - December 2016
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Quarter 3 July - September 2016
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Quarter 2 April - June 2016
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Quarter 1 January - March 2016
Quarter 4 of, 2016 archive
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Investor habits: The good, the bad and the ugly
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Keeping finances in the family
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The inter-generational financial squeeze
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Merry Christmas for 2016, a Happy New Year and a prosperous 2017.
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ATO set to clamp down on range of super issues
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SME retirement plans in jeopardy, research finds
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SMSFs show restraint in hot residential market
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Investment's building blocks - always worth reinforcing
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Warnings issued on traps with CGT transitional rules
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Meet SMSFs' early and late arrivals
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Beware, the ATO is on the hunt for lifestyle assets
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'Brexit means Brexit' means what?
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SMSFs tipped to be hardest hit by pension changes
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SMSF assets hit record, but funds still hoarding cash
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Markets caution advised as economic bubbles loom
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Stretching retirement income
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Some financial terms explained
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Market Update – September 2016
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Checking in on our 2016 economic outlook - and looking ahead
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Making a fairer and more sustainable Superannuation System
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Going undercover
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‘Winners and Losers’ from new super proposals
Investment's building blocks - always worth reinforcing

 

On the eve of the US presidential elections, The New York Times praised three personal finance books that share a common thread of reminding investors about the "building blocks" of sound investment and personal financial practices.

       

 

These books – by founder and former chief executive of Vanguard John Bogle, investment author Andrew Tobias and financial planner Carrie Schwab-Pomerantz – have become even more compelling reading as global markets immediately react to the election results.

In the wake of the US elections, Australian investors are being acutely reminded about how much is beyond their control – including the emotions of other investors and how world stock markets impact on Australian share prices.

Fortunately, as such books remind us, investors who follow the principles of sound investment practice have more control over their financial futures than they may think.

Investors have the power to choose their long-term goals, set appropriate strategic asset allocations and investment diversifications for their portfolios, to minimise their investment management costs and to efficiently manage their taxes. And disciplined investors can aim to keep their emotions under control by concentrating on their long-term objectives.

Heard it all before? Chances are you are a regular Smart Investing reader. (See How to climb the wall of worry, November 1.)

The Little Book of Common Sense Investing by John Bogle has been reminding us about investment's building blocks for almost a decade while The Only Investment Guide You'll Ever Need by Andrew Tobias has been at it for almost 40 years. Meanwhile, The Charles Schwab Guide to Finances after Fifty by Carrie Schwab-Pomerantz is a relative newcomer.

Consider some of the straightforward pointers from the three authors:

  • Bogle: "Successful investing is all about common sense." Don't try to pick the best time to buy and sell stocks – consistent success with market-timing is virtually impossible; diversify to minimise risks (and spread opportunities); recognise the value of compounding, long-term returns; and keep investment costs as low as possible. "The more the managers and brokers take, the less investors make."
  • Tobias: Again, taking a common-sense approach to looking after investments and other personal finances is his over-arching message. For instance, buy investments you can understand; stay away from investments that seem too good to be true; and don't carry credit card debt.
  • Schwab-Pomerantz: Calculate how much you will spend each year in retirement, calculate how much capital is needed to finance that lifestyle and, finally, determine how you are going to save enough. (A few words of caution: This book contains details of the US tax, social security and retirement systems that are not relevant in Australia. You should focus on her big-picture messages, which are particularly aimed at those over 50.)

These authors appear to successfully deal with a challenge that many personal investor writers. This is challenge of making their explanations of disarmingly simple investment and personal financial principles high readable – even for more experienced investors.

 


Robin Bowerman
14 November 2016
www.vanguardinvestments.com.au