Investing Compass
Investing compass is brought to you by Morningstar Australia. We’ll run through the fundamentals of investing, taking a deep dive of concepts and offer practical explanations, tools and resources that will allow you to invest confidently.
Episode 47: Fair value estimate
The second of our three-part series on how to pick shares covers valuing shares to find opportunities.
Further reading and resources:
Article: Red Rooster line
Book: The Intelligent Investor, Benjamin Graham
Episode 46: How to evaluate a stock
The first of our three-part series on how to pick shares covers finding great businesses.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Investing in Shares: Discover strategies to build wealth via share investing, benefits and risks of share investing and key Morningstar resources you can leverage to identify potential investment opportunities
Episode 45: I guess you lose some and win some, as long as the outcome is income
We go through the factors to look out for in shares when trying to find sustainable income (and Shani finally gets her Drake lyrics into the episode title).
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Income Investing and Morningstar Guide to Income Investing in downturns: Discover trusted strategies to pick the right securities and build a successful income investing portfolio. Our guide to income investing in downturns shows how market falls throw into even starker relief the importance of the company balance sheet and how an understanding of it can help you create a portfolio with sustainable income
Research: Sydney Airport (ASX:SYD) Analyst Report
Research: AGL Energy Ltd (ASX:AGL) Analyst Report
Research: Telstra (ASX: TLS) Analyst report
Research: Bapcor Ltd (ASX:BAP) Analyst Report
Research: Microsoft Corp Analyst (NAS:MSFT) Report
Episode 44: Cash rules everything around me
Are you a balance sheet? Are you an income statement? Are you confused by the question?
Further reading and resources:
Book: Liar’s Poker, Michael Lewis: is Michael Lewis’s first book when he talked about his experience on Wall Street. And he was talking about what all these very wealthy traders thought rich was. And rich to them was not a number, it was being able to afford the life they wanted on the income off of treasuries. And US treasuries are considered risk free so what they were saying was that if you could live the lifestyle you wanted off of interest from treasuries you were set for life and nothing could ever impact that lifestyle.
Episode 43: Turn your head and cough – time for your portfolio check-up
We walk through our mid-year portfolio review to see if we need second jobs or are ready to retire.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Episode 42: If you can’t read the scoreboard, you don’t know the score
We explore how to measure success as an investor and advantages you have over professional investors
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Episode 40 and 41: Devine Intervention (part 1 & 2)
Why all investors need to pay attention to the impact of finfluencers.
Further reading and resources:
Book: The Future for Investors, Jeremy Siegel: to understand that successful investing isn’t about results but about how results compare to expectations
Book: The Intelligent Investor (Chapters 8 and 20), Benjamin Graham: Warren Buffett called chapters 8 and 20 the bedrock of his investing philosophy
Article: The Super Investors of Graham and Doddsville: it’s short, and you need to learn about value investing because chances are you will either become a militant adherent or make fun of them for being curmudgeonly antiques.
Book: The Outsiders, William Thorndike: it is good to now that you are investing in a real company and that being a contrarian might actually pay off.
Episode 39: Shortcut to index funds
Index funds, or passive funds are low-cost investments that are professionally managed - but there's no stock picking. We dive into the types of indexes, and speak about where they have historically performed well and added value for investors.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Report: Active Passive Barometer report: A semi-annual report that measures the performance of U.S. active managers against their passive peers.
Episode 38: Does anyone look good in platforms?
The rising cost of advice has increased the amount of self-advised investors, and also the number of platforms trying to suit their needs and fighting for their funds. In this episode, we explore different micro-investing, broker and managed investment platforms, looking at the risks and trade offs for investors to consider.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Magellan Global Fund Analyst Report
Episode 37: You down with ESG? (Yeah, you know me)
Sustainable investing is growing in popularity, yet there remains a lot of confusion on the topic. We tackle the different variations, break down whether it has impacted investment performance and the future of sustainable investing.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: AMP Ltd (ASX:AMP) Analyst Report
Episode 36: Risky Business
Ever taken a Risk Tolerance Questionnaire? Thinking about risk in the wrong way can have profound impacts on your investing outcomes.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Episode 35: Checking the barometer
We walk through considerations when deciding between active and passive strategies
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Further reading and resources:
Book: The Little Book of Common Sense Investing, John Bogle
Report: Active Passive Barometer report: A semi-annual report that measures the performance of U.S. active managers against their passive peers.
Episode 34: Living the theme
Thematic ETFs use compelling narratives to sell investments. We explore whether they are worth the hype.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Episode 33: The four words every investor should know
We tackle whether a compelling story makes a compelling investment.
Research: Tesla (NAS:TSLA) Analyst Report
Episode 32: Special episode: Inflation
Consumer prices in the US surged in April this year by the most in any 12 month period since 2008. This episode covers what’s happening at the moment, how the market are reacting and how to find robust companies that can withstand inflationary changes, or have measures in place to protect them.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Sydney Airport (ASX:SYD) Analyst Report
Research: Wesfarmers (ASX:WES) Analyst Report
Research: Starbucks (NAS:SBUX) Analyst Report
Episode 31: Are emerging markets worth the risk?
Jeremy Grantham recently said "Emerging markets in many ways are the growth that’s left in the system. They will guarantee to grow faster than the developed countries … they’re much cheaper, they haven’t been beat up, they don’t have as much speculative excess. They’re a respectable investment,”. In this episode, we explore the opportunity and risk of emerging markets, and whether they have a place in your portfolio.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Further reading and resources:
Report: Active Passive Barometer report: A semi-annual report that measures the performance of U.S. active managers against their passive peers.
Episode 30: Selecting investments to reach your goals
We go through Mark's decision-making process for how he has structured his portfolio to reach his goals.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Article: Journey through Bubbleville, Mark LaMonica: This is a three-part series that explores good-intentioned ignoramuses, self-interested manipulators and downright charlatans that have invaded investing markets. In the first part of our journey, Mark searches for signs of crazy investor behaviour. The second part explores the pay to play world of Instagram finfluencers and what happens when the teachers are only a couple pages ahead of the students. And finally, he looks at the long-term impact of getting started in investing during a bubble.
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Guide: Morningstar Guide to Selecting Investments: Knowing how to navigate your choices and weigh up different asset classes and styles of investing will ensure you’re heading in the right direction.
Further reading and resources:
Webinar: Morningstar Investing Bootcamp: Preparing your portfolio for retirement – explores the bucketing strategy for retirement in further detail.
Episode 29: Bonds
We explore why bonds are worth paying attention to.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Report: Active Passive Barometer report: A semi-annual report that measures the performance of U.S. active managers against their passive peers.
Episode 28: How passive is passive investing?
We explore the risks of the increasing popularity of passive investing.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Apple (NAS:AAPL) Analyst Report
Further reading and resources:
Book: The Intelligent Investor, Benjamin Graham
Episode 27: Lessons from market crashes
Sometimes history repeats itself. Learn about past market crashes and see what lessons may apply today. We explore the nifty 50 and .com crash during this episode.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Pfizer Inc (NYSE:PFE) Analyst Report
Research: Merck & Co Inc (NYSE:MRK) Analyst Report
Research: PepsiCo Inc (NAS:PEP) Analyst Report
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Episode 26: Have market conditions impacted how much you need in retirement?
4% has been heralded as the amount you can safely draw down each year from your retirement savings. We explore whether market conditions have changed this standard, and how you should be thinking about retirement goals.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Episode 25: What are top fund managers holding?
We take a deep dive into the top holdings of Ark's Cathie Wood, Magellan's Hamish Douglass, and Morningstar's Australian Fund Manager of the Year, Hyperion Asset Management. We stack them up against our Morningstar analysts, and see if they agree with where these managers have taken their biggest bets.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Xero (ASX:XRO) Analyst Report
Research: Tesla (NAS:TSLA) Analyst Report
Research: Magellan Global Fund Analyst Report
Research: Microsoft Corp Analyst (NAS:MSFT) Report
Episode 24: Morningstar take on Buy Now, Pay later
We zero in on Afterpay and Zip, exploring whether their current valuations are justified, and whether they'd make good long term investments.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Afterpay (ASX:APT) Analyst Report
Research: Zip Co Ltd (ASX:Z1P) Analyst Report
Episode 23: Shortcut to Diversification
We explain diversification, why it's important for your portfolio, and why too much of it can also be detrimental.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Magellan Global Fund Analyst Report
Further reading and resources:
Book: Investment analysis and portfolio management, Frank Reilly and Keith Brown (study on diversification)
Episode 22: SPACs (Special Purpose Acquisition Companies)
Is speculation getting out of control? Looking at the SPAC market may be an indication that we're in a bubble.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Episode 21: Tech stocks
Tech stocks have provided extremely attractive returns to investors, making up larger and more significant portions of market indices as they continue their growth. We look at their business models, how they differ from the traditional, and their outlook.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Amazon (NAS:AMZN) Analyst Report
Research: Apple (NAS:AAPL) Analyst Report
Research: Microsoft Corp Analyst (NAS:MSFT) Report
Episode 20: Is the market overvalued?
Market commentators have been heralding that the market is overvalued -we look at traditional indicators and where they sit compared to other significant market events like the GFC, Black Friday and the .com bubble. Then, we walk through how investors can find opportunities in these markets, and the strategies they should consider.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tools: Monitor markets – view our price to fair values for regions and markets
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Guide: Morningstar Guide to Share Investing: this guide will go through some of the ratios that we mentioned, and how to use it to find opportunities, or monitor your portfolio to understand whether it is time to sell. Of course, our analysts also take the heavy lifting out for you and do this analysis in our research reports.
Guide: Morningstar Guide to Portfolio Construction and Morningstar Guide to Selecting Investments: If you’ve gotten to the end of this episode and you’ve found that you don’t have a goal, plan or asset allocation to refer back to, it’s worth going back and setting up your foundations to succeed. These two guides walk through the process step by step and ensure that you have built your portfolio around your goals, instead of the other way around.
Further reading and resources:
Report: Morningstar study: Mind the Gap - The global Mind the Gap report digs into investor return gaps in key markets around the globe and analyses the factors contributing to each region’s trends.
Episode 19: Shortcut to Financial Statements:
We explore the balance sheet, cash flow statement and income statement. These are financial statements that you’ll find for any listed company, providing insights into their financial position and health. This episode will help you make more informed investing decisions based on what you can find on these statements.
Episode 18 – Bitcoin
Bitcoin is a controversial topic that has split investors into three camps. Those that are fiercely for it, those that are fiercely against it, and those that don’t really understand it. This episode is for the third camp - we go through what Bitcoin is, where it came from and its mechanics, and then we put it into context as an investment.
Further reading and resources:
Book: The Intelligent Investor, Benjamin Graham: Ben Graham was the man that literally wrote the textbook on investing – and he wrote Security Analysis and later the Intelligent Investor based on his observations from the stock market crash which preceded and led to the great depression. Ben Graham spent some time talking about the difference between speculation and investing. He said that “You must never delude yourself into thinking that you’re investing when you’re speculating”. The difference is simple: an investor looks at a stock as part of a business and the stockholder as the owner of the business, while the speculator views himself as playing with expensive pieces of paper, with no intrinsic value. For the speculator, value is only determined by what someone will pay for the asset.
Episode 17: Shortcut to Asset Allocation
Our shortcut to asset allocation explores this concept which has been found to contribute to over 90% of your investment returns.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Further reading and resources:
Episode 16: Morningstar take on the GameStop saga
A lot of people have made a lot of money in the last few weeks. Understand the mechanics behind GameStop, shorting and the impact of short squeezes in our special episode.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Episode 15: International Investing
This episode covers why you should have international exposure in your portfolio, then move on to how to invest internationally, covering some of the nuances around investing outside of Australia including currency risk.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide for International Investing: discover trusted strategies to identify the right overseas investment for your portfolio.
Research: Diageo PLC ADR (NYSE:DEO) Analyst Report
Research: Magellan Global Fund Analyst Report
Episode 14: Shortcut to Valuation
The price of the stock doesn't always necessarily reflect its value. Our shortcut episodes explores valuation and why it’s important to invest with it front of mind, instead of price.
Research: Morningstar Equity Methodology
Episode 13: How to Select Funds and ETFs
For our second episode on Funds and ETFs, we go through what to look for when selecting a fund and ETF by going through a practical example.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Guide: Morningstar Guide to Fund Investing: Pooling funds with other investors allows you to access professional managers, who can put your money in hard-to-access asset classes, which in turn may also diversify your risk.
Guide: Morningstar Guide to ETF investing: Exchange-traded funds are an easy and affordable way to gain exposure to a range of local and international asset classes and thereby diversify your portfolio, but like all investments, there are risks you should be aware of.
Further reading and resources:
Report: Morningstar study: Mind the Gap - The global Mind the Gap report digs into investor return gaps in key markets around the globe and analyses the factors contributing to each region’s trends.
Episode 12: Shortcut to Alpha and Beta
We cover alpha and beta - two investing ratios that can help you understand the performance and volatility of investments.
Episode 11: How to construct an investment portfolio
Ever wonder how to pick your first investment, or whether your portfolio is going to get you to your end goal? We talk through a four-step framework to align your goals to your investment portfolio.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Tool: Portfolio projection calculator: See if you’re on track to reach your goals. If not, adjust the inputs to understand how you need to change your portfolio (or behaviour) to get there.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Guide: Morningstar Guide to Selecting Investments: Knowing how to navigate your choices and weigh up different asset classes and styles of investing will ensure you’re heading in the right direction.
Episode 10: What to do before you start investing
Making sure you’re in a position to invest is like laying the foundations on a house. In this episode, we run through what you need to ensure your foundations are solid, allowing you to invest confidently and for the long term.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Tool: Portfolio projection calculator: See if you’re on track to reach your goals. If not, adjust the inputs to understand how you need to change your portfolio (or behaviour) to get there.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Further reading and resources:
Webinars: (Upcoming) Morningstar Investing Bootcamp webinar registration
Webinars: (Previous) YouTube - Morningstaraus - Morningstar Investing Bootcamp
Tool: Goal Planning worksheet
Episode 9: Christmas Gift Ideas for Investors
Our Christmas episode goes through gifts you could give an investor at any part of their investing journey, from beginners to those who have been investing for decades. We'll go through some investments with low minimums, 3 stock ideas on our December Global Best Ideas List, and some books to further your knowledge.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Research: Challenger (ASX:CGF) Analyst Report
Research: Westpac (ASX:WBC) Analyst Report
Research: Hanesbrands (NYSE:HBI) Analyst Report
Further reading and resources:
Book: The Little Book that Still Beats the Market, Joel Greenblatt: Greenblatt is an American investor and professor at Columbia Business School. He wrote this book so it was straight forward enough for his kids to understand. It introduces his Magic Formula to Investing which looks at findings shares with a high return on capital and high earnings yield. He also introduces some basic concepts so new investors can understand how they should think about evaluating the underlying companies.
Book: The Essays of Warren Buffett: Lessons for Corporate America: One of Warren’s many talents is that he can explain investing concepts in a straightforward manner. This is a big contrast from an industry that often makes things sound overly complex to try and intimidate people into thinking they need professional assistance. The Essays of Warren Buffet is just that – republishing some of his best essays that talk about investing of course but also several lessons on corporate America.
The Outsiders, William Thorndike: The book presents 8 case studies of CEOs and focuses on capital allocation decisions. Capital allocation refers to the decisions that companies make in deciding what they should do with cash that they either generate or raise from debt or equity markets. The importance of capital allocation decisions is underappreciated by many investors. At the end of the day owning a share is owning part of a business so the decisions management makes on what to do with the capital of a company is critical – because it is your capital. These decisions can be buying other businesses, investing in growth, paying dividends, paying down debt or buying back shares. The case studies in this book provide an interesting perspective on CEOs that took un-conventional approaches to capital allocation.
One up on Wall Street, Peter Lynch: Lynch was the portfolio manager for Fidelity’s Magellan fund which famously outperformed the S&P 500 for 11 straight years. One Up on Wall Street articulates Lynch’s investment philosophy which includes his famous call to invest in only what you understand. He also preaches that investors should do their homework and research an investment thoroughly and stresses that investors should focus more on a company's fundamentals than the market as a whole. Finally, Lynch encourages investors to focus on the long run and discard short-term market gyrations. All great lessons for investors who are trying to improve their knowledge.
Common Stocks, Uncommon Profits, Philip Fisher: This is a classic and talks about the 15 points that investors should look for when evaluating a company. Phil Fisher was focused on finding great companies that would compound investor’s wealth over the long term and his 15 points are a way to find well managed companies with great growth prospects.
The Intelligent Investor, Benjamin Graham: In some ways, this book is approachable, but having been written in 1949 means parts are outdated. Calling something timeless is a bit of a cliché but there are some concepts that are introduced in the book that have stood the test of time – the concept of Mr. Market and the notion that prices can vary significantly from value is the bedrock of investing. He also introduces the concept of margin of safety. Warren Buffett called chapters 8 and 20 the bedrock of his investing philosophy – do you need more of an endorsement than that?
Episode 8: Improving Investing Outcomes for Women
The importance of saving and investing is not gender-specific - it's critical for everyone. Some issues, however, disproportionately impact women - including poorer retirement outcomes, a bias in financial advice and the failure to invest. This episode covers these gaps that women disproportionately face with investing and retirement, and some practical tips to help even the playing field.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Investing for Women Part I & Morningstar Guide to Investing for Women Part II: Women are less likely to invest than men, and when they do, they invest later in life, are beset by jargon and often receive inadequate advice.
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Guide: Morningstar Guide to Better Investing Outcomes: Unlock the value of financial advice – whether you choose to use an adviser or not
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Further reading and resources:
Tool: MoneySmart Superannuation calculator: Find out your super balance at retirement, and understand how fees will impact your balance.
Tool: MoneySmart Superannuation Contributions Optimiser: understand which type of contributions will give you the biggest boost
Episode 7: How do interest rates impact investments?
We've been in a prolonged period of falling interest rates since the mid-80s, having impacts on investment returns from different asset classes. This episode covers how investors should think about interest rates and monetary policy, and the impacts of falling and rising rates on investments.
Episode 6: Unlocking the value of financial advice (even if you’re self-advised)
This episode will help people who use financial advisers understand where they can actually add value and how you can protect yourself as a consumer. For those that don’t use a financial adviser - we want you to understand how you can get some of the benefits that advisers can provide, even when you are investing on your own.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Tool: Goal calculator: Input your circumstances into the goal calculator to understand the required rate of return that is needed from your investments. This input then feeds into your asset allocation.
Tool: Portfolio projection calculator: See if you’re on track to reach your goals. If not, adjust the inputs to understand how you need to change your portfolio (or behaviour) to get there.
Tool: Asset allocation models: When trying to accomplish a goal, an investor constructs a portfolio made up of different types of asset classes such as cash, bonds and stocks. The question at the heart of portfolio construction is the decision on what asset classes to include and how much of each to include. This process is informed by comparing the risk and return requirements to accomplish the investor’s goal and the risk and return expectations of each asset class. Investors can choose between growth assets and defensive assets. The asset allocation models guide investors depending on what their required rate of return is.
Guide: Morningstar Guide to Investing for Women Part I & Morningstar Guide to Investing for Women Part II: Women are less likely to invest than men, and when they do, they invest later in life, are beset by jargon and often receive inadequate advice.
Guide: Morningstar Guide to Better Investing Outcomes: Unlock the value of financial advice – whether you choose to use an adviser or not.
Episode 5: Investing during the US Presidential Election
The US Presidential election promises to be chaotic in more ways than one. We run through how the election may cause volatility in your portfolio, what you should do about it, and whether now is the right time to invest.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Portfolio Construction: A 4 Step framework to build a portfolio that is aligned to your goals.
Episode 4: What are managed funds and ETFs?
As an investor, you will have different goals and objectives to the next person - stocks are not always the right solution. In this episode, we discuss managed funds and ETFs, which may suit investors who are just starting out, or investors looking to gain exposure to certain asset classes. We tackle some of the misinformation around these investment products and run through a few scenarios in which they may suit investors.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Fund Investing: Pooling funds with other investors allows you to access professional managers, who can put your money in hard-to-access asset classes, which in turn may also diversify your risk.
Guide: Morningstar Guide to ETF investing: Exchange-traded funds are an easy and affordable way to gain exposure to a range of local and international asset classes and thereby diversify your portfolio, but like all investments, there are risks you should be aware of.
Further reading and resources:
Report: Active Passive Barometer report: A semi-annual report that measures the performance of U.S. active managers against their passive peers.
Book: The Little Book of Common-Sense Investing, John Bogle
Episode 3: Demystifying Investing Myths
We speak about if property beats stocks, whether ESG makes you trade performance for morals, or whether professional investors always know best. We run through becoming a more rational investor by taking a step back, and analysing investments based on whether they meet your goals.
Webinar: Morningstar Australia Investing Bootcamp webinar: Investing Myths. Mark covers a few more investing myths.
Episode 2: What is a dividend?
Dividends and distributions are cash payments from investments to investors. Learn what they are, how they can fit into your investment strategy, and the trade offs between current yield and future growth.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Income Investing and Morningstar Guide to Income Investing in downturns: Discover trusted strategies to pick the right securities and build a successful income investing portfolio. Our guide to income investing in downturns shows how market falls throw into even starker relief the importance of the company balance sheet and how an understanding of it can help you create a portfolio with sustainable income.
Note: Morningstar Guide to Income Investing in Downturns contains a comprehensive illustration of the Transurban dividend example in the episode.
Episode 1: What is a share?
Share, stock, equity. What is it and how can it help you reach your goals? This episode will look at three key concepts - owning a share means owning a part of a business, shares and the stock market are two inherently different things and the long term drivers of returns: earnings growth, dividends and changes in valuation levels.
Morningstar Premium resources (requires a subscription or a free, four-week trial):
Guide: Morningstar Guide to Share Investing: Discover strategies to build wealth via share investing, benefits and risks of share investing and key Morningstar resources you can leverage to identify...
Guide: Morningstar Guide to Income Investing and Morningstar Guide to Income Investing in downturns: Discover trusted strategies to pick the right securities and build a successful income investing portfolio. Our guide to income investing in downturns shows how market falls throw into even starker relief the importance of the company balance sheet and how an understanding of it can help you create a portfolio with sustainable income.
Guide: Morningstar Guide to Selecting Investments: Knowing how to navigate your choices and weigh up different asset classes and styles of investing will ensure you’re heading in the right direction.
Further reading and resources:
Book: Common stocks, Uncommon profits, Philip Fisher
Book: The Little Book of Common-Sense Investing, John Bogle
Book: The Intelligent Investor, Benjamin Graham
