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Morningstar runs the numbers

Lex Hall  |  21 Sep 2020Text size  Decrease  Increase  |  
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We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 18 September.

72 per cent

The proportion of respondents to a Firstlinks survey who agreed with the government’s policy to allow early access to superannuation. About 26 per cent of readers disagreed with the early release of super, notes Graham Hand. However, 53 per cent thought the assessment for eligibility should have been a lot tighter. “The reasons for people answering ‘no’ included that access should have been assessed under super's existing 'hardship' provisions; that allowing early withdrawal was too short-sighted and defeated the purpose of super; that JobKeeper and JobSeeker should have been enough support; that reduced or depleted super balances will mean additional reliance on the aged pension in future; or dismay at reports of the misuse of the funds.”

The Rule of 72

The Rule of 72 is a useful way to teach children about money and compound interest, writes Morningstar behavioural finance director Sarah Newcomb. “A prime example is time perception. Our brains are simply not wired to understand and accurately calculate compound interest, which can result in huge financial mistakes. To help kids avoid these mistakes, parents can start by teaching them the rule of 72 at a young age,” Newcomb says. What is the Rule of 72? Divide 72 by the interest rate, and that tells you how many years it will take for your money to either double if it's invested or get cut in half if you're talking about paying interest or inflation.

$2.9 trillion

Australians have been pouring money into their superannuation and into managed funds and the level of assets under management has quickly returned towards record highs after the market sell-off in March this year, writes Nicki Bourlioufas. ABS data reveals that total assets held by Australians in superannuation funds rose 3.8 per cent or $106.1 billion to $2.91 trillion during the June quarter of 2020. Investments in retail managed funds increased 1.5 per cent to $409.4 billion. Both of those levels were the third highest on record. The jump in AUM came despite the federal government allowing Australians to access their super early to offset the pain of the pandemic. Almost $30 billion was withdrawn between 20 April and July 26, according to official data.

US$69.5 billion

The recent decision of the US Department of Defence to stick with Microsoft for the money-spinning US$10 billion ($13.6 billion) JEDI cloud contract underscores the colossal opportunity that cloud computing represents for service providers, writes Vikram Barhat. Research firm IDC projects investments in cloud IT infrastructure to reach US$69.5 billion, 54.2 per cent of the overall IT infrastructure spend, in 2020. Longer-term, it forecasts this spending to reach US$105.6 billion in 2024, growing 9.6 per cent annually. Further, the worldwide public cloud services market is poised to jump 17 per cent in 2020, clocking US$266.4 billion, up from US$227.8 billion in 2019, according to IT research firm Gartner.

12

The number of fully electrified vehicles BMW aims to have in its fleet by 2023, says Morningstar equity analyst Seth Goldstein. BMW is also planning to have 13 plug-in hybrids, which adds up to a total of 25 somewhat or fully electrified vehicles. “Over the long term, we believe these investments will pay off and that BMW will maintain one of the highest levels of profitability of all global automakers, even as they navigate this transition from ICEs to EVs,” says Goldstein, who assigns BMW a narrow moat rating.

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is content editor for Morningstar Australia

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