Investopoly
383 episodes - English - Latest episode: 24 days ago - ★ - 1 ratingEach episode, about 15 minutes long, is packed with concise tips, strategies, research, methodologies, case studies, and ideas to help you safely and effectively grow your wealth. Stuart Wemyss, a qualified financial advisor, accountant, tax agent, and licensed mortgage broker, delivers holistic advice. With four authored books, including "Investopoly" and "Rules of the Lending Game," Stuart shares his insights through a weekly blog, which is replicated on this podcast.
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Episodes
How much should you invest in property, shares and super?
November 01, 2022 20:00 - 17 minutes - 11.8 MBA 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 va...
What’s going on with share markets!
October 25, 2022 20:00 - 16 minutes - 11.3 MBCalendar 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 invest...
To what extent does rental yield affect your borrowing capacity?
October 18, 2022 20:00 - 16 minutes - 11.2 MBThe 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 accum...
Important changes to your borrowing capacity
October 11, 2022 20:00 - 15 minutes - 10.7 MBBorrowing 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 Octobe...
Important changes to your borrowing capacity
October 11, 2022 20:00 - 15 minutes - 10.7 MBBorrowing 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 Octobe...
5 property investing mistakes I've seen over 20 years, and how to avoid them
October 04, 2022 20:00 - 16 minutes - 11.3 MBOne 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 lear...
Focusing on rental income could cost you $1m in lost wealth
September 27, 2022 21:00 - 12 minutes - 8.66 MBAn 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 ...
How should you invest your cash savings?
September 20, 2022 21:00 - 15 minutes - 10.6 MBOften 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 ...
How should you invest your cash savings?
September 20, 2022 21:00 - 15 minutes - 10.6 MBOften 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 ...
Four rules you must follow to ensure you prosper 5 years from now
September 13, 2022 21:00 - 13 minutes - 9.04 MBI 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) opportuniti...
Four rules you must follow to ensure you prosper 5 years from now
September 13, 2022 21:00 - 13 minutes - 9.04 MBI 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) opportuniti...
Overinvesting puts retirement at risk
September 06, 2022 21:00 - 9 minutes - 6.87 MBA Goldilocks investment strategy means that you are making the most of your financial opportunities without overdoing it and taking unnecessary risk. That is, your level of investing is exactly right (i.e., perfectly balanced). Underinvesting means that you risk not having enough investment assets to enjoy a comfortable retirement. Overinvesting means that you have taken unacceptable risks which may compromise your ability to achieve a comfortable retirement. The goal is to achieve ...
Average incomes can’t drive property prices perpetually higher
August 30, 2022 21:00 - 9 minutes - 6.37 MBCommentators often refer to the price of property in Australia relative to household incomes. They highlight that property prices have risen two to three times faster than household incomes. They conclude that property growth cannot exceed income growth perpetually. Obviously, this is unsustainable at a macro level. I’ve written about the factors that contributed to property price growth over the past few decades here. But many of these factors won’t repeat themselves over future decades...
Average incomes can’t drive property prices perpetually higher
August 30, 2022 21:00 - 9 minutes - 6.37 MBCommentators often refer to the price of property in Australia relative to household incomes. They highlight that property prices have risen two to three times faster than household incomes. They conclude that property growth cannot exceed income growth perpetually. Obviously, this is unsustainable at a macro level. I’ve written about the factors that contributed to property price growth over the past few decades here. But many of these factors won’t repeat themselves over future decades...
There's no need to take a lot of investment risks
August 23, 2022 21:00 - 12 minutes - 8.92 MBI believe that most people have a very similar tolerance for investment risk. Most people are comfortable achieving a long-term annual return of 7% to 10% if the risk of losing money is very low. In short, I think most people have a low appetite for risk – they prefer to take as little risk as possible and invest in a “sure thing” if the return will be enough for them to meet their goals. What is a risk profile Risk is the probability of not achieving your targeted investment returns. Th...
Why obtaining quality financial advice will become even more difficult
August 16, 2022 21:00 - 19 minutes - 13.1 MBMost people would say that finding a good financial advisor has always been a difficult task. Ten years ago, most financial planners received commissions for remuneration, so clients had to navigate endless conflicts of interest. Thankfully, investment commissions no longer exist. The challenge is now finding an advisor with well-rounded experience. Commissions are banned – it's more about experience and scope Financial advisors use to receive commissions from managed fund providers whic...
Why obtaining quality financial advice will become even more difficult
August 16, 2022 21:00 - 19 minutes - 13.1 MBMost people would say that finding a good financial advisor has always been a difficult task. Ten years ago, most financial planners received commissions for remuneration, so clients had to navigate endless conflicts of interest. Thankfully, investment commissions no longer exist. The challenge is now finding an advisor with well-rounded experience. Commissions are banned – it's more about experience and scope Financial advisors use to receive commissions from managed fund providers whic...
The RBA made 3 BIG mistakes... to the detriment of borrowers and the economy
August 09, 2022 21:00 - 17 minutes - 12.2 MBIf Australia slips into a recession, it will mostly likely be the RBA’s fault. They have completely botched the management of interest rates to the detriment of borrowers, the economy, and the bond market. Here’s why… In its defence Firstly, in the RBA’s defence, is has been navigating uncharted territory over the past 2.5 years. There was a lot of uncertainty about what damage a once-in-a-lifetime global pandemic could cause. At the beginning, no one knew how long lockdowns would last ...
Important changes to Queensland land tax
August 03, 2022 21:00 - 7 minutes - 5.05 MBQueensland announced changes to land tax in its state budget in February 2022. On 12 July 2022, it released more detail regarding how these changes will be implemented (see here). Queensland land tax to rise substantially for interstate investors Essentially, when determining an investors land tax liability, the Queensland government will consider the value of landholdings in Australia (excluding principal residence), not just Queensland, and apportion the land tax liability accordingly...
Which industry super fund do I think is the best overall? (Inc. 2022 super returns)
August 02, 2022 21:00 - 18 minutes - 12.4 MBSuperannuation returns for the 2021/22 financial year were mostly negative. However, we shouldn’t forget that the previous 18-month period (i.e., mid-2020 to the end of calendar year 2021) was stellar, so we must keep a longer-term perspective. And the winner is… The table below sets out investment returns for the largest 8 industry funds based on a Balanced investment option (data provided by research house, Lonsec). The table is sorted by 1-year returns, highest to lowest for the fina...
Now’s a great time to buy property. Here’s why…
July 26, 2022 21:00 - 16 minutes - 11.3 MBIn mid-2021, I wrote this blog: “Don’t buy a property in this market…” because, at that time, many property buyers were over-paying for property just to get into the market. I call it the FOMO premium, for lack of a better term (more about this below). My thesis was that since it’s never wise to allow fear (e.g., FOMO) to influence financial decision making, it was better to not buy property in 2021 if it meant having to overpay. We all know that the market has cooled somewhat this year. ...
Now’s a great time to buy property. Here’s why…
July 26, 2022 21:00 - 16 minutes - 11.3 MBIn mid-2021, I wrote this blog: “Don’t buy a property in this market…” because, at that time, many property buyers were over-paying for property just to get into the market. I call it the FOMO premium, for lack of a better term (more about this below). My thesis was that since it’s never wise to allow fear (e.g., FOMO) to influence financial decision making, it was better to not buy property in 2021 if it meant having to overpay. We all know that the market has cooled somewhat this year. ...
How to maximise investment property tax deductions
July 19, 2022 21:00 - 14 minutes - 9.86 MBYou must invest in residential property primarily to benefit from the power of compounding capital growth. Any tax benefits (negative gearing) are merely a positive consequence of this investment, not the reason for it. That said, of course it makes sense to maximise your taxation deductions wherever possible. Make it easy for yourself Maintaining accurate and complete taxation records is necessary to ensure all tax deductions are captured and treated correctly. I encourage my clients...
How to maximise investment property tax deductions
July 19, 2022 21:00 - 14 minutes - 9.86 MBYou must invest in residential property primarily to benefit from the power of compounding capital growth. Any tax benefits (negative gearing) are merely a positive consequence of this investment, not the reason for it. That said, of course it makes sense to maximise your taxation deductions wherever possible. Make it easy for yourself Maintaining accurate and complete taxation records is necessary to ensure all tax deductions are captured and treated correctly. I encourage my clients...
Why did apartments miss out on the recent property boom?
July 12, 2022 21:00 - 14 minutes - 10 MBIt’s been well documented that property prices rose significantly over the course of 2020 and 2021. According to the Real Estate Institute of Australia, median house prices in eastern capital cities rose between 30% to 40% over those 2 years. However, unfortunately apartments underperformed compared to houses in a big way. I wanted to discuss why this occurred and consider what growth prospects apartments might provide in the future. Apartment prices are low relative to houses The c...
Why did apartments miss out on the recent property boom?
July 12, 2022 21:00 - 14 minutes - 10 MBIt’s been well documented that property prices rose significantly over the course of 2020 and 2021. According to the Real Estate Institute of Australia, median house prices in eastern capital cities rose between 30% to 40% over those 2 years. However, unfortunately apartments underperformed compared to houses in a big way. I wanted to discuss why this occurred and consider what growth prospects apartments might provide in the future. Apartment prices are low relative to houses The c...
Beware: existing customers always pay higher interest rates
July 05, 2022 21:00 - 12 minutes - 8.51 MBBanks will usually offer higher interest rate discounts to new customers to win their business. But, of course, the banks never offer these higher discounts to existing customers, unless they ask for them. Whilst this has always been the case, it is noteworthy that interest rate discounts have increased substantially over the past 10 years. This means the gap between what interest rates existing and new customers are being charged has also widened to the extent that it is becoming more...
Economics 101: 7 key principles you should know
June 28, 2022 22:00 - 18 minutes - 12.4 MBAn understanding of basic economic principles will set you in good stead to understand financial commentary, political rhetoric and make your own assessment of economic risks and opportunities. That is not to suggest you need to become an economic expert but understanding some basic principles will go a long way. The foundation of economics: the law of supply and demand The law of supply and demand is the cornerstone of economic theory. The law of demand states that as the pr...
Should future trends drive your investment decisions?
June 21, 2022 22:00 - 16 minutes - 11.4 MBMany investors consider future trends when making investment decisions. Popular examples of investable trends include the growing demand for green energy, mainstream adoption of electric vehicles and cybersecurity. The thesis is that if you can correctly spot/predict a trend in the early stages, then you can invest in the companies and sectors that are best positioned to benefit economically. This is called thematic investing. What is thematic investing? Thematic investing is an...
Should you do anything about rising interest rates?
June 14, 2022 22:00 - 15 minutes - 10.4 MBSome investors have been spooked by the RBA hiking interest rates by 0.75% over the past two months, particularly since it has spent the past two years telling us that rates would not rise until 2024. Higher interest rates at the same time as rising prices (inflation) are a two-fold blow for household budgets.Where are interest rates heading?The banks predict that the cash rate will rise by a further 1.40% to 1.50% by March 2023. Money markets have priced in a cash rate that is more than 2.60...
6 case studies: The importance of holistic advice
June 07, 2022 22:00 - 22 minutes - 15.4 MBOur goal is to inspire our people to adopt a holistic approach when making financial decisions. That's because financial decisions often include several interrelated considerations and consequences, including financial planning, cash flow, taxation, borrowing and so on. Also, taking a holistic approach ensures no opportunities or risks slip between the gaps.Often, the best way to make a point is to tell relatable, real-life stories. Therefore, to demonstrate how valuable a holistic approach i...
"Timing" the market can be more important than "time in" the market
May 31, 2022 22:00 - 15 minutes - 10.6 MBMost people are familiar with the saying that “time in the market is more important than timing the market”. It is very true that holding a quality investment for many decades will mask imperfect timing. However, for some asset classes/investments, timing can be very important. Most markets move in cycles Most people understand that markets move in cycles. To generalise, an asset class can be over-valued (particularly during a boom cycle), under-valued (after a bust cycle) or fairly valued...
Be prepared for a few years of turbulence... and opportunity
May 24, 2022 22:00 - 18 minutes - 12.6 MBI think we need to be prepared for the possibility that the next couple of years might be a bumpy ride in terms of the economy, financial markets, interest rates and so forth. The media thrives on higher levels of uncertainty, so be prepared for plenty of doomsday predictions and lots of negativity. The silver lining is that negative sentiment almost always creates attractive long term investment opportunities, but you must be on the lookout for them. Inflation is not demand driven It has ...
Should you plan to give or receive an inheritance?
May 17, 2022 22:00 - 15 minutes - 10.6 MBA lot has been written about the good fortune of baby-boomers in that, overall, they have enjoyed a long period of economic, share market and property market prosperity. Whilst they haven’t enjoyed the full benefit of compulsory super (which only began in 1992), other assets such as property has certainly compensated for that. This means an inheritance tsunami will hit the next generation over the next two decades. Baby Boomers are expected to bequeath $224 billion each year in inheritance ...
Patience & discipline: Two vital traits of every successful investor
May 03, 2022 22:00 - 14 minutes - 9.88 MBI find it ironic that the two common financial mistakes that people make are (1) not investing i.e., procrastination or (2) doing too much i.e., turning over investments, changing their mind and so on. Of course, not doing anything is an obviously bad thing as nothing comes from nothing. I wrote about this in March. But, sometimes reacting, changing, tinkering, selling, buying and so on can be equally as bad. The truth is that investing requires a lot of patience. The quote below from Warre...
"Consistency" (not intensity) is the key to building wealth
April 19, 2022 22:00 - 17 minutes - 11.8 MBWhen it comes to building wealth, the truth is that unremarkable actions completed consistently for many years (decades) produce remarkable results. But because these actions appear unremarkable, people tend to overlook their importance. Also, sometimes, people are tempted to undertake intense and often risky “investments” as a shortcut to make up for past inaction. Unfortunately, this approach rarely pays off. Consistency beats intensity. This blog sets out the top 4 unremarkable actions t...
Should you ever sell property?
April 12, 2022 22:00 - 17 minutes - 12 MBA common property investing rule-of-thumb is that you should “buy property and never sell”. That’s because prices always trend higher over time which means you benefit from compounding capital growth. Of course, the rule-of-thumb should be adjusted to include “buy quality property and never sell” to ensure you maximise investment returns. But the reality is, that sometimes the smartest thing to do, is to sell a property, even if it is a quality asset, if it helps you move forward towards a...
Three steps to develop your own financial plan
April 05, 2022 22:00 - 20 minutes - 14.1 MBA few weeks ago I wrote a blog about the one thing that stops most people from making the most of their financial opportunities including making regular investments. It was my thesis that a lack of context is the main cause. Having a long-term plan provides you with the context required to make mistake-free financial decisions. It is difficult to work out what investments to make (and when) if you don’t know where you are heading and how your will get there. A financial plan will give you ...
2022 Federal Budget Summary: What's in it for you?
March 29, 2022 20:00 - 11 minutes - 8.13 MBThis blog summarises the initiative contained in the 2022 Federal Budget announced on 29 March 2022. Budget initiatives that might affect you Extended the home loan guarantee scheme The First Home Loan Deposit Scheme (FHLDS) allows borrowers to borrow more than 80% of a property’s value whilst avoiding the cost of lenders mortgage insurance (LMI), because the government guarantees part of the loan. The government has announced it will increase the number of places from 20,000 to 50,000 pe...
Why haven't you invested as much as you could and should have?
March 22, 2022 21:00 - 9 minutes - 6.54 MBIt is very common for people to make an initial investment e.g., buy a parcel of shares or an investment property, but fail to make any further investments for many years or decades. Why does this happen? What is paralysing their ability to make investment decisions? Perhaps you don’t have enough time We use lack of time as an excuse for not doing many things. But if we are honest with ourselves, if the matter was important to us, we’d make time. It’s easy to let our time get absorbed by t...
Super: What are your options when you retire?
March 15, 2022 21:00 - 18 minutes - 12.8 MBEven though its compulsory to invest money in superannuation, many people do not understand their options once they retire. This blog provides a summary. However, of course, everyone’s situation is different. Some super funds have different rules and there may be exceptions to some rules, so it’s important you receive personalised advice from an independent financial advisor. When can you access your super? The rules that govern when you can access super are contained in the SIS Act and t...
Will higher interest rates cause property prices to fall?
March 08, 2022 23:00 - 25 minutes - 17.9 MBVocal market commentor and fund manager, Chris Joye wrote in the AFR in November last year that Australian house prices could fall by 15% to 25% after the RBA starts increasing interest rates (here’s a copy of that article). Of course, there are many property doomsayers that perpetually (and often inaccurately) predict property market crashes. However, Chris is not one of these people. In fact, Chris’ predictions are usually quite accurate. However, on this occasion, I disagree with his pre...
Is it a good strategy to renovate or develop an investment property?
March 01, 2022 21:00 - 25 minutes - 17.2 MBThe 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. It is possible to manufacture equity in a property by making improvements e.g. renovating/rebuilding the existing dwelling or constructing multiple dwellings. This occurs when the end value of the property exceeds its cost e.g. spending $100,000 on a renovation improves its value by $150,...
Playing the long game is not always easy but it is the most powerful approach
February 22, 2022 23:00 - 19 minutes - 13.5 MBIn my book, Investopoly, I outlined 8 investing rules that if followed, will help you build wealth and avoid making costly mistakes. These 8 rules are evidenced-based which I have refined over the past 20+ years. Rule number one is; play the long game. Arguably, it’s the most important rule because I’ve observed that this is the most common mistakes investors make i.e., they don’t play the long game. Whilst this rule is simple to understand, its often very challenging to follow. Short term...
Quality is King: Most important property investing golden rule
February 15, 2022 21:00 - 18 minutes - 13.1 MBThere is one property investing golden rule that is more important than everything else. And if you nail this ‘one thing’, you are guaranteed to build wealth over the long run. This statement might sound sensationist, but I honestly cannot overstate this point. The golden rule is that the quality of the property you invest in will drive its long-term investment returns. If you invest in an average quality property, your long-term returns are likely to be average. Of course, if you want abov...
How to invest in Commercial Property: Part 2
February 08, 2022 23:00 - 20 minutes - 14 MBThis is the second part of a two-part blog about investing in commercial property (you can read part one here). Now that you have a broad understanding of commercial property attributes, the next topic to discuss is how you can successfully invest in commercial property. Why type of commercial property do I recommend? Personally, at the moment I invest in commercial offices, and recommend the same to my advisory clients. Not retail property I do not invest in retail property because the ...
Investing in Commercial Property: Part 1
February 01, 2022 23:00 - 19 minutes - 13.3 MBI believe that most people would be well-served by investing in various asset classes, including shares and property. I do not believe that any one asset class is superior. They all have their pros and cons which you can balance out in a diversified investment portfolio, which could include commercial property. Commercial property does have some wonderfully attractive attributes but it’s important to introduce it into your portfolio at the right time (stage of life) and of course, invest in...
2022 Market predictions and Planning: Part 2
January 24, 2022 22:40 - 18 minutes - 12.4 MBLast week, I shared what risks and opportunities investment markets could offer us during 2022. These market expectations helped my wife and I set our personal, relationship, business and financial goals for 2022. It is stating the obvious to so say that goal setting is important. I believe that if you aim at nothing, often that is exactly what you will achieve; nothing! Goal setting gives you more control over where your life is heading. Drive the bus. Don’t merely be a passenger on it. P...
2022 Predictions and Planning: Part 1
January 19, 2022 01:37 - 14 minutes - 10.2 MBIt is stating the obvious to say that goal setting is important. The fact is, if you aim at nothing, often that is exactly what you will achieve; nothing! Each year my wife and I set personal, relationship, business and financial goals. We almost always achieve all the goals we set for ourselves each year. I want to share the process which we’ve just completed and share what I think 2022 might bring us investment-opportunity-wise, as this will help you set realistic goals. Part 1: Investme...
2021 in review - where should you have invested?
December 14, 2021 21:00 - 19 minutes - 13.6 MBFor my final podcast for 2021, I thought it would be interesting to look back to see how various investment asset-classes performed. This is important for two reasons. Firstly, it is wise to benchmark your investment returns so that you can assess relative performance. Secondly, it serves as a salient reminder about the cost of delay and procrastination. Short-term returns are unimportant In isolation, short term returns are meaningless. That’s because your focus as an investor must be on ...