I’m not sure about everybody else, but my first introduction to investment and the ASX was via the banking industry. The big four holding an Oligopoly in the financial markets and the promise of reasonably high dividends was often enough for me throw my hard earned pocket money at them. (There have been a lot of “shut up and take my money” moments in the past when that blue line on my screen moved below a certain point).
Ahhh “Negative Gearing”, buzz words you’ve probably been glad to hear less of since the commotion surrounding the federal election has finally died down. Believe it or not, these are the two words that have recently been thrown around more than the role of Prime Minister in this country – shocking, I know. So you may ask, what is Negative Gearing? Well, simply put Negative Gearing is a practice that allows investors in property to reduce their tax paid on other income, if the interest repayments on their property loan exceed the rental income received from the property (i.e. they make a capital loss). This allows property investors to realise gains if the capital appreciation of the property is greater than the capital loss from interest repayments.
Amid record revenue figures by Qantas, are tourism profits starting to take off? Newspaper headlines have stated that the Australian dollar is overvalued at current levels and therefore, on a purely theoretical perspective, it would be rational to assume tourism will greatly benefit. However, what makes sense in theory does not always eventuate. While it might appear that the tourism sector largely depends on macroeconomic trends such as; the exchange rate, technological changes and global economic growth, there is much more to this relatively volatile sector.
Gold has been used to make royal crowns and other items of value since the beginning of the ages. Since its discovery, gold has managed to maintain its relevance and stature, and due to recent economic instability it looks as though gold could be making a comeback in the minds of investors.
With the recent passing of the Brexit vote which saw an increase in the instability of the British economy, gold and junior mining stocks have been no exception to the post-Brexit effects. Brexit’s impact has been profound, credit ratings have already been downgraded with agencies like Fitch and S&P finding the British government to be a less safe option when it comes to lending. The pound has also suffered as it weakens against the US dollar. The interesting fact out of all of this however is, as a number of stocks including the Pound have been going down with fears of inflation in the coming future, gold prices and junior mining stocks have been on the rise.
As a young investor, newly introduced to the world of money management, this is how you should get started; figure out how much to put in stocks and how much to put in bonds and cash. But how do you do that? Luckily for you there’s one simple rule; subtract your age from 100 and invest that percentage of your assets in stocks, and the rest in bonds or cash. You see, there’s wisdom behind this.
As the old adage goes, death and taxes are the only certainties in life. Well, in 2016 we can safely add volatility to that list. This year has seen unpredictable worldwide affairs rock the landscape of financial markets. Be it the shock of Brexit, the U.S. election race between two tarnished spearheads, or the sporadic unspeakable acts of violence in Europe and other continents to name a few contributing events, financial markets have been swinging to and fro around the globe. When considering these factors, compounded by broadly depressed interest rates and stagnant growth, it cannot be argued that gold has once again been the safe haven for investors from all four corners.
An extremely important thought which has been bouncing around my head was; “with investing, is it better to be proactive, rather than reactive?” In my market research, there was one area which stood out to me as an opportunity in which I could be proactive and make the most of predicted future gains. That area is uranium.
The situation of the USD to uranium price has been well documented over the years with the last major event being the disaster in Fukushima, Japan 2011, which sent the price of the resource through the floor. The uranium price has stabilised recently and, relative to Australian dollars, has actually increased in value.
SMIF was founded by a group of students with a passion for investing and trading, and a desire to connect similar minded students at UWA. Now two years on, with many fresh faces on the committee, and many of the original committee transitioning on, it is an exciting time for SMIF! But first, lets check out what’s been happening this semester.
We began with bold plans, and the start of the semester marked an exciting time. Despite having committee members all over the world and in different parts of the country over the holidays, we were still able to coordinate our event plan, and reach out to new sponsors (notably, Oanda, AtlasTrend & Deutsche Bank). More information on our sponsors here; (uwasmif.com).
