There are many large and powerful institutions that have a vested interest in rising property prices. But all levels of government (i.e., federal, state and local) probably have the most to gain, as I’ll explain in this blog. This leads to two important observations. 

Firstly, the government is the main contributor to housing affordability pressures i.e., making housing less affordable. 

Secondly, government tax revenues are dependent upon rising prices and demand for property. I don’t want to debate whether this is right or wrong. I’m merely interested in highlighting economic and financial reality, as I think it’s helpful to inform personal investment decisions. 

The federal government revenue

The negative gearing tax break afforded to property investors has been widely debated since it was introduced in 1985. You will recall that Bill Shorten proposed to remove negative gearing in his unsuccessful federal election campaign in 2019. But its only half of the tax story.  

Using ATO data for the 2019/20 tax year, it appears that property investors claimed circa $728.5 million dollars of negative gearing income losses. But this is dwarfed by the taxable capital gains that taxpayers declared in the same year of over $20 billion. Of course these gains come from many sources (not just property investments) including share investments, sale of businesses, and so on. But property is a lumpy asset, so it tends to give rise to large CGT liabilities. Unfortunately, more granular information was unavailable. 

I’ve said in this blog many times, the most efficient way to build wealth is to invest in properties that have the attributes to drive strong capital growth over the long run, even if they produce a negative cash flow (because the rental yields are low). The wealth accumulating power of compounding capital growth will eventually dwarf any negative cash flow. 

The same is true when it comes to federal government tax revenue. The government generates a lot of (CGT) taxation revenue from rising property prices. 

State government tax revenue is highly dependent on property 

Australian states and territories generate two main taxation revenue streams from property, being stamp duty (i.e., transfer duty payable when a property is sold) and land tax. These two property taxes generate a lot of tax revenue for the states. In fact, for most states, property taxes are the single largest source of taxation revenue. For example:  

§  VIC: budgeted property revenue of $14 billion which accounts for 46.5% of the state’s total taxation revenue. 

§  NSW: budgeted property revenue of $16.5 billion which accounts for 41.6% of the state’s total taxation revenue.

§  QLD: budgeted property revenue of $6.5 billion which accounts for 34.5% of the state’s total taxation revenue. 

Transfer duty is driven by the volume and value of property sales. The states are responsible for regulating the property market. It should come as no surprise that state governments have been quite lax with regulating these markets and/or enforcing consumer protections. For example, financial advisors have very onerous obligations if they want to recommend a client invests $100k into the share market (regulated by the federal government). However, property buyers’ agents have very few obligations (virtually none) if they recommend a client invest $1m into an investment property. States want more property transactions to generate more tax revenue 

Land tax revenue is driven by land valuations undertake

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I recently appeared as a guest on The Australian newspaper’s Money Café podcast, where we discussed the FIRE moment. The acronym stands for Financially Independent, Retire Early, which involves living as frugally as possible, investing as much as possible so that you can afford to retire as soon as possible. 

A listener that works in the mental health sector wrote into the show to say that she would actively discourage people from retiring early. Instead, perhaps work less, she suggested. She believed that working was beneficial to a person’s wellbeing and mental health. 

A UK study from 2013 found that retirement increased the probability of suffering from clinic depression by circa 40% and a physical health conditions by 60%. 

Retirement might not be as enjoyable as you expect

Imagine having the whole day to do whatever you want. No deadlines. No emails. No meetings. No obligations. Sounds appealing, right? The problem is that for many people, the retirement honeymoon wears off quickly. It is not uncommon for people to deal with a variety of feelings: 

• §  Loss of self-worth. For many of us, our occupation contributes a lot towards how we define ourselves and our self-worth. Once we have retired, we no longer see ourselves as “a lawyer, a surgeon, a CEO…”, which can lead to a loss of identity which is often connected to ones self-worth.  
• §  Miss daily routine. The daily routine of travelling to work, meetings, deadlines and so on adds structure to our day. Without this structure, people can start to feel bored, aimless, and isolated.
• §  Hobbies and interests aren’t enough. Hobbies and interests can be great pastimes whilst we are working, as they allow us time to relax and socialise. However, once we stop working, we might find we need activities that offer more than just relaxation. 
• §  Expectations are different to your spouses. If your spouse wants completely different things from retirement this could create conflict. 

I think most people are underprepared for retirement.

There are two important needs that work satisfies  

Speaker and coach, Tony Robbins has adapted Maslow's hierarchy of needs to derive 6 human needs to be fulfilled/happy being (1) certainty, (2) variety, (3) significance, (4) connection/love, (5) growth and (6) contribution. 

The last two needs are often fulfilled by our occupation. 

Growth 

Growth refers to the desire to constantly improve and learn more. If you are constantly striving to learn more at work, expand your capability, do work you are proud of, strive for promotions and so on, then it’s likely growth is important to you. If so, you will need to consider how you will fulfil this need in retirement. That could include finding paid or unpaid employment you connect with, studying, taking up a new hobby, travelling the world and so on. 

Contribution 

Contribution refers to a sense of service and focus on helping, giving to and supporting others. As Tony Robbins says, living is giving. This need can be fulfilled by your occupation if you work for an organisation or business that pursues a cause that you identify with. If this describes you, you’ll need to consider how you will fill this need in retirement. Some solutions to this might include helping/looking after families and/or friends, volunteering or starting your own charity for a cau

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A common question I receive is how much should I invest in property? That is, how do you know when you have enough, and should you start investing in other assets? 

It’s a good question because it invites people to consider their goals and develop a long-term strategy to achieve them. I set out some of the factors that you should consider below. But ultimately, it really depends on personal circumstances.  

Rule of thumb is you need 20 to 25 times income 

The first consideration is the value of the investment assets you have today compared to what you need by the time you want to retire. 

As a rule of thumb, you need to accumulate investment assets equal to 20 to 25 times the annual income you require to fund retirement. For example, if you aim to spend $100k p.a. when you are retired, you need to accumulate $2 to $2.5 million of net investment assets by the time you retire. These assets could include equity in investment properties (i.e., net sales proceeds less CGT and outstanding loans), shares and superannuation. 

Lifecycle of an investor 

If you are a long way from achieving your net asset goal, then it is likely that your investment strategy will need to be more aggressive e.g., borrowing to invest. However, if you are close to achieving this goal, then your focus should be on ensuring the mix of assets are correct. 

This video sets out the typical lifecycle of an investor e.g., why it’s best to start with property, then invest in super and shares. 

What is the right mix? 

Longevity risk is the risk that you will live longer than your financial resources will allow i.e., you’ll run out of money. To protect yourself against longevity, your investments must generate a combination of capital growth and income. Income will help you fund living expenses and capital growth will protect your asset base against the impact of inflation. 

For example, if you have $2.5 million of investment assets, your average return might consist of 3.5% income and 3.5% growth. This will provide you with approximately $88k p.a. of income. If some of this income is franked (imputation credits) or from super, you probably won’t pay any tax. In addition to income, the value of your investments will appreciate by $88k, of which you’ll need to spend $12k to top-up living expenses (i.e., to give you $100k p.a.). The remaining $76k will be reinvested and compound. This should ensure your investment assets keep up with inflation i.e., no real change in value. If that happens, theoretically (i.e., mathematically), you can afford to live forever. 

Considerations…

I discuss some of the factors that I consider when contemplating whether an investor has the right mix of assets. 

Consider the impact of debt servicing costs 

Investing in more (investment-grade) property will help you accumulate more wealth over the long run. However, if you are borrowing money to fund these investments, which most people do, it means your cash flow will become more sensitive to changes in interest rates. That’s not what you want if you are approaching retirement or would like the flexibility to enable you to reduce your employment income. In this situation, you really want less debt, not more. 

The other consideration is that investing in property absorbs more of your surplus cash flow i.e., funding the shortfall between rental income and interest cost. If you contribute all your cash flow towards funding investment property holding costs, you won’t have any ability to invest in other assets (shares and super) or repay debt. This creates an opportunity cost and might cause you to be further away from retirement, not closer to it. 

Property doesn

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Calendar year to date, the stock and bond markets have produced some of the worst returns on record, which is unusual because bonds and stocks are typically negatively correlated. In fact, this has only happened two times over the past 96 years, as illustrated in this chart. Even gold, commodities and property have lost value this year. It’s really been a horrible market for investment returns. 

I discuss the key risks that have driven markets lower below, as well as highlighting the investment opportunities that exist as a result. 

How high will interest rates rise and for how long? 

I think the biggest factor that is creating the most uncertainty is what the terminal cash rate may be i.e., how high will central banks have to raise rates to reduce inflation. I don’t think the market will begin any sustainable recovery until the terminal cash rate becomes clear and ascertainable.

If the terminal cash rate turns out to be lower than what the market has priced in, then it is possible that markets could rebound strongly. In Australia, the market has priced in a terminal cash rate of 4.0%, so it’s entirely possible that the market has over-sold, since no economists expect the RBA to raise rates by another 1.40%. For example, the big 4 banks forecast the terminal cash rate to be 3.1-3.6% which is an increase by another 0.5% to 1.0% over the coming 6 to 9 months. 

In the US, its equivalent cash rate is currently set at 3.00-3.25% and the market is expecting a terminal rate of between 4.5-5.0%, so it seems the US Fed Reserve has a lot more work to do than the RBA does in Australia. 

My point is that until we see successive data that confirms inflation has begun returning to normal levels, the market cannot accurately price in an accurate terminal cash rate. 

Will there be a recession? If so, how deep? 

In response to rising inflation, central banks have hiked interest rates faster that anytime in history. 

Normally, when a central bank wants to tighten monetary policy, it does so less aggressively so that it can measure the impact that higher rates is having on the economy. This more measured approach allows central bankers to adjust their approach to ensure it doesn’t raise rates too far and cause a recession i.e., slow economic growth too much. 

Given most economic data lags by two to three months, central banks are really flying blind at the moment. That is, they won’t be able to measure the impact of current interest rate settings until the end of this year or start of 2023. As such, there’s a risk that they raise rates too fast and too hard and send the economy into a recession. How deep that recession is will depend on how much they overtightened rates. And that is yet to be seen, but it’s a risk that markets are contemplating. 

Will there be a nuclear war?

Of course, the most significant geopolitical risk is Putin using nuclear weapons in its conflict with the Ukraine. If it does, the Western alliance will have to respond and of course that could spiral into World War III.  

I am certainly not a geopolitical expert, so I cannot offer any commentary about this risk other than to say it’s a risk factor that must be impacting markets. 

What damage will energy prices inflict 

The price of domestic energy (gas and electricity) is rising around the world, especially in the UK where prices have more than doubled over the past 12 months. These price increases are likely to cause economic pain for residences of northern hemisphere countries as they approach winter. 

Residents therefore must tackle higher energy prices at th

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The very first article that I wrote for a magazine was published 19 years ago! No wonder I feel old. The article was called ‘Unlimited finance…’. My thesis was that investing in high yield properties, doesn’t magically extend ones borrowing capacity allowing them to invest a lot more.  

Some investors believe targeting high rental yielding investment properties will allow them to borrow a lot more and therefore buy more properties. And the more property they hold, the more wealth they accumulate, or so their theory goes. However, the truth is that borrowing capacity isn’t that sensitive to rental yields.  

How much does rental yield affect borrowing capacity 

I wrote a blog last week highlighting that borrowing capacity is probably the tightest that it’s been in 20 years. The reason is that lenders must add a benchmark interest rate of 3% on top of the actual rate you will pay to ensure you can afford a loan, should interest rates rise further.  

Banks will also base their affordability on principal and interest repayments over a 25-year loan term. As such, the benchmark repayments for a $1 million investment loan will be $93,000. Consequently, for an investment property to be borrowing capacity neutral, it must generate a gross rental yield of over 13%, as most lenders shave off 20-30% of rental income to allow for expenses.  

Obviously, there aren’t a lot of residential properties yielding more than 13%. As such, even higher yielding investments (e.g., 4-6% p.a.) eat into an investors borrowing capacity.  

Lower yielding properties reduce your borrowing capacity by 25% 

I spoke to an investor recently that had invested in 3 properties. The aggregate value of these properties was $1.2 million, and the portfolio had $1 million of debt. The gross rental yield across the portfolio was around 5.2% p.a. This investor thought targeting high yielding properties would allow him to borrow more and buy more properties.  

It is true that higher yielding properties do increase your borrowing capacity. Let’s look at an example. I assumed each spouse earns $100k p.a. gross, an outstanding home loan of $350k, spend $5,500 per month on living expenses and have a credit card with a $5k limit. Based on these assumptions, I calculated their borrowing capacity as follows: 

• If they achieve a gross rental yield of 5.5%, they can invest $1 million in property. 
• If they achieve a gross rental yield of 3%, they can invest $815k, a reduction of 18.5%. 
• If they achieve a gross rental yield of 2%, they can invest $750, a reduction of 25%.  

It’s all about the amount and quality of land 

Generally, a property’s accommodation size and quality will determine how much rental income it will attract. Therefore, to achieve a higher rental yield, you must spend proportionally more on building value, and less on land value. But doing so will mean that you will probably accumulate less wealth, as discussed here.  

Using the same assumptions that I used in this blog, I have calculated the amount of wealth an investor would accumulate if they invested in a property and sold it after 30 years, repaid the loan and paid any tax liability (CGT). The cash flow holding costs were also included in this calculation.  

As the chart below demonstrates, even though the investor that targeted a 2% rental yield and invested 25% less (i.e., $750k versus $1m), they accumulated almost twice as mu

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Borrowing capacity has probably never been tighter in the 20 years since I started ProSolution! This is delaying investment plans for some clients. However, my expectation is that this is temporary and an easing in borrowing capacity might not be too far away.  

How borrowing capacity rules have changed over recent years 

In 2019, the banking regulator, APRA told banks to include a ‘serviceability buffer’ of at least 2.5% above the actual interest rate to test borrowing capacity. In October 2021, it increased this to a minimum of 3%, when actual interest rates were circa 2% p.a. 

Therefore, if you are applying for a home loan today, your repayments will be tested at a rate of around 7.55% p.a. P&I over 30 years. Interest-only investment loan applications are tested at an interest rate of circa 8.35% p.a. on a P&I basis over 25 years. This means benchmark repayments for a $1 million home loan would be $84k p.a. (compared to $61k p.a. for actual repayments), and almost $95k p.a. for an interest-only investment loan (compared to $54k p.a. for actual repayments). Therefore, benchmark repayments are now over 80% higher than actual repayments for interest-only investment loans. 

To give you some context, benchmark interest rates over the past 20 years have typically ranged between 6% and 7% p.a. It is probably unnecessary for benchmark interest rates to exceed circa 7% p.a. on a permanent basis. 

Rising interest rates reduces your borrowing capacity 

The issue is that the RBA has hiked rates so quickly i.e., 2.50% over the past 6 months and the banking regulator hasn’t adjusted its benchmark interest rate guidance accordingly. The 3% p.a. buffer was prudent when the cash rate was only 0.10% p.a. but arguably excessive now. 

For example, a borrower needs to demonstrate they have over $62,000 of surplus income to qualify for a $1 million investment loan to buy an investment property: 

·      Rental income @ 3% of property’s value shaded by 70% to allow for expenses = $20,000

·      Less P&I repayments on $1m @ 8.35% over 25 years = $95,450

·      Add back negative gearing tax benefit = $13,000

·      Cash surplus required = $62,450 (which equates to an income surplus of $100k p.a. before tax)

The RBA would like to see lending volumes fall 

It is noteworthy that new home loan volumes have been unsustainably high over the past two years, as illustrated in the chart below. New investment home loan volumes have been above average too, but not to the same extent as home loans. This increase in volume was no doubt stimulated by very low interest rates. Now that interest rates have increased, I anticipate volumes will contract and eventually return to normal levels. 

CHART

No changes expected until next year 

However, I don’t think the banking regulator will make any changes to serviceability benchmark interest rates until new home loan volumes normalise i.e., home loan volumes reduce to between the two blue horizonal lines in the above chart. I expect that will happen this year and therefore leave room for the regulator to normalise benchmark interest rates sometime next year. 

I suspect the RBA would be rather pleased that house prices have been cooling over the past 6 to 8 months, as it doesn’t want asset prices to become overheated. Changing the benchmark interest rate too early might restimulate demand for borrowing, which is why I don’t think the regulator (APRA) will make changes until next year. 

How you can maximise your borrowing capacity 

In the meantime, there may be some things you can d

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One of the most interesting things I do is meet many investors every week (i.e., prospective clients). It is something that I have been doing regularly for almost 20 years, so I’ve literally spoken to thousands of investors. 

It is interesting because it provides me with the opportunity to reflect on peoples past investment decisions with the benefit of hindsight. There are some common themes. People tend to make one of a handful of mistakes. I think past mistakes provide very valuable learnings. 

Mistakes are predictable from the outset

I believe that all financial “mistakes” are completely avoidable. Virtually no financial mistakes (i.e., losses or underperformance) occur because of random bad luck. 

They are avoidable if you follow an evidence-based approach. For example, if your share investing methodology involves buying highly speculative stocks, then you only have yourself to blame if you don’t make any money after several years, because the evidence shows that speculation has a very low probability of generating reasonable returns over the long run.  

Therefore, based on my 20 years of experience, if you commit one of the mistakes below, there’s a very high probability that you’ll end up with a dud investment. Conversely, if you avoid all these mistakes, you maximise your chances of success. 

I must remind readers that I am completely independent. We do not buy property on behalf of clients, so I have no vested interest in you following the below advice. I am merely sharing what I have observed over the past two decades.  

(1) Buyers’ agents buying outside of their domicile State 

It is becoming more common for buyers’ agents to buy property interstate for clients. For example, a Sydney-based buyers’ agent might buy property in Brisbane. In my view, this is a no-no. 

One of the most important things I hope to benefit from when engaging the services of a buyers’ agent is their experience. I know that selecting the right property is part-art and part-science. 

The science part incudes all the objective considerations such as past growth, location, land size, land value, zoning/restrictions and so on. The objective assessment is driven mostly by data and a lot of this data is now available for a small cost online. I probably don’t need to pay a professional to collate such data. 

However, the art part of selecting a property is obsoletely critical. It requires local area knowledge. Things like, one side of a particular street under-performs, or a block of apartments has always experienced management problems. Or tenant turnover is too high because too many cars get broken into. These are all real examples that I have come across. If I am going to engage a buyers’ agent, I want them to have more than 10 years’ experience in buying property in a particular location. That will ensure they have experienced a few market cycles. They have learnt from past mistakes (we all make mistakes in the first years of practicing our craft). 

Given the subjective nature of property, experience is crucial to ensure you don’t make any costly mistakes. The more experience, the better. 

(2) Buying a development site without sufficient due diligence 

Some investors are attracted to developing property e.g., small-scale development such as building two or three townhouses. In theory it seems like an attractive way to make a quick profit. But it’s certainly not hands off and not without risk either. 

Unfortunately, a more recent trend I have come across involves investors buying development sites without undertaking enough due diligence. This has happened even if they used a buyers’ agent or not, which is unfortunate. Obviously, they used

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An investment property’s total investment return will consist of rental income plus capital growth. I have written about the importance of maximising capital growth many times. However, often investors are tempted to focus attention on income (when selecting an investment property) too, as they seek to minimise the cash flow cost of holding the investment property.

I propose that this is a mistake with a high opportunity cost. The reason investors make this mistake could be due to (1) not fully appreciating the consequences of their decision, (2) need to adjust their target property attributes or (3) need to reduce their investment budget.

Focusing on income means you must spend more on the building value

The value of a property consists of two components being the land plus any improvements i.e., the dwelling. Generally, land appreciates in value whereas buildings depreciate over time due to wear and tear, which I have written about here.

The table below illustrates this point. If you aim to achieve an overall capital growth rate of 7% p.a. to 8% p.a., which is a reasonable expectation for an investment grade property, then the more you spend on the building value, the greater the rate of land value appreciation you will need to achieve an overall rate of growth of 7-8% p.a. 

TABLE
In summary, investors should focus on land value whereas tenants focus on the quality the dwelling.

Opportunity cost of focusing on income

It us unrealistic to expect an investment property to return more than 10% p.a. in total over a long period of time. That is, the gross rental yield plus capital growth rate cannot exceed 10% p.a. Typically, properties that offer higher rental yields will almost always deliver lower growth. This makes sense given the building value drives income but not capital growth.

Therefore, an investor can manipulate the makeup of their return (i.e., how much income and growth they may receive) by targeting different types of property.

The chart below compares the wealth impact of various combinations of income and growth. At the extreme (left-hand side), an invest

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Often people wonder whether they should be doing more with their cash savings other than leaving them in a savings account. This blog discusses some options and highlights some considerations with each option. 

Of course, the information contained in this blog is not personalised advice as it cannot consider your unique situation and goals. As such, you should always consider obtaining personal independent financial advice before making any financial decisions. 

Maintain a buffer equal to 6 to 12 months of living expenses

I typically counsel my clients to hold between 6 and 12 months of living expenses in cash savings in case of emergencies. If your income or expenses can be volatile, you should probably hold 12 (or more) months. 

Therefore, the options discussed below apply to any cash savings you may hold in excess of this buffer amount. 

Contribute into super

You can contribute savings into super either through making concessional (up to an annual cap of $27,500 per person) and/or non-concessional (annual cap is $110,000) contributions. 

The benefits of moving savings inside super are twofold. Firstly, it’s a low-tax environment where investment earnings are taxed at a flat rate of 15% and capital gains at only 10%. If you are a high-income earner, it will save tax. Secondly, it will be automatically invested for you in line with your selected investment option e.g., balanced, growth, etc., so it’s a very simple, hands-off way to invest your savings. 

The downside to contributing money into super is that you cannot access it until you are older than 60[1] and retired (or 65 if you are still working). Whether this is a potential problem depends on (1) how close you are to being able to access super if you need it and (2) the likelihood of needing to access these monies e.g., if you have plenty of financial resources outside of super, then the likelihood is probably low.   

If you are going to move your savings into super, please make sure that your super fund is performing well. 

Invest in hybrid securities 

A hybrid security is a type of investment that combines bond and share (equity) characteristics. It usually pays a monthly income, like a bond (via a dividend payment). These dividends typically have imputation (franking/tax) credits attached to them, like a share. They will be issued for a fixed term i.e.; they mature like a bond. Subject to certain trigger events, hybrid securities can convert into ordinary shares e.g., bank hybrids will convert into shares if liquidity ratios fall below a certain level. 

Rarely are two hybrid instruments the same – they all have unique and complex terms. Therefore, I don’t invest in these instruments directly. 

You can mitigate many of these risks and the associated complexity by investing in a managed fund that manages a portfolio of hybrid equities. This will provide you with diversification and the manager will price-in/analyse any conversion risks, thereby minimising your investment risks

We often use BetaShares Active Australian Hybrids Fund (HBRD) to invest client’s monies. It has paid a monthly yield (income) of 5.19% p.a. over the past 12 months (including imputation credits i.e., that is a pre-tax return). This yield is indirectly linked to the RBA’s cash rate. It is important to highlight that the capital value of this fund can vary, but often by only 1% to 2%. However, over longer periods of time, it is reasonable to expect the capital val

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I wrote a blog in May warning investors to prepare for lots of bad news, uncertainty and market volatility. My thesis was that rising inflation, supply chain issues and rising rates would cause economic pain. Unfortunately, my prediction was correct, and we should expect the volatility to continue for many more months to come. 

It is possible that all you may see are risks and problems at the moment. But in 5 years from now, it is likely you’ll look back and see lots of (missed) opportunities because the rear vision mirror is always clearer than the windscreen. 

I’d like to share four rules which can help guide you to make great investment decisions over the course of the next year, and the rest of your life. 

Missing the best days of the market is a good lesson and a perfect metaphor

There are lots of charts that demonstrate that if you miss the 10 best days in the share market over a long period of time (say 10 years), it will have a dramatic negative impact on your overall investment returns i.e., you will earn half the returns or less. This chart is a good example. 

The lesson is that no one can pick the best days and the worst days. Therefore, if you sell your investments because you are concerned about volatility, you will inevitably miss the best days (best returns) and your overall performance will suffer. 

Another way to look at it is, that the best returns come in the years following a stock market decline. The chart below, which covers almost one century of data, illustrates this very eloquently (produced by Dimensional).  

 CHART

This concept applies to all markets and asset classes including residential property. 

Understand that volatility is normal

The event or issue that causes volatility (i.e., market uncertainty) is always unique and unpredictable. An event must be unpredictable to cause the market to fall dramatically because predictable events/issues are already systematically reflected in share prices. 

Volatility is normal and it should be expected. Volatility is a very important part of price discovery which ensures the market adequately reflects risks and opportunities. Volatility also aids investment strategies through long horizon mean reversion and/or dollar cost averaging. It is something that should be embraced, not feared. 

No one can tell you what will happen in the short term 

No one in the world has ever developed a reliable methodology to predict short-term asset class returns. The truth is that no one knows what will happen over the next few months. This chart demonstrates how random returns are. Therefore, that must be your starting assumption when making any investment decisions i.e., you don’t know what will happen in the short term. 

If you agree that we cannot predict what will happen in the short-term, then your only option is to ignore the short term and focus on the long run. 

Four rules to help you through volatile times 

A rules-based approach towards investing is easy to adopt because it guides clear decision making and avoids your decisions being unhelpfully influenced by emotions. And if the investment rules that you follow are routed in evidence-based methodologies, it further helps reduce your risks, as I’ve discussed

Our most popular free guides:

Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.

Download them here

My new book, Wealth by Design, is out now:

Buy online or in bookstores. The ebook is available now, audiobook coming soon.

Got a question for the podcast?

Email us at [email protected]

Interested in working with our team?

Discover how we can work together

Subscribe to my weekly blog:

Stay connected here

Important

This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.