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We all make money mistakes – even billionaires

The Sydney Morning Herald’s Colin Kruger posed an interesting question this week: “How many billionaires does it take to rescue a struggling, mid-sized broadcaster like Network Ten?”

His piece was a reminder that the broadcaster, which entered administration, had quite a bunch of investors: James Packer, Lachlan Murdoch, Bruce Gordon and Gina Rinehart.

According to Kruger, they “flushed their combined $1 billion investment in the broadcaster down the toilet on Wednesday with the decision to appoint administrators .”


Not so super

Puzzling what to do with your super as the July deadline approaches?

You’re not alone. According to Industry Super Australia (ISA) Australians are finding it hard to navigate the more than 600 plans offered by each bank-owned super fund.

Options to lose – how sales became choice, a report by ISA, there are 651 investment plans on average, whereas non-profit funds had significantly less with an average of 16.

Like the confusion marketing of tele-plan companies, it’s part of a technique to give the illusion of choice, when in reality they are saturating people with too many options, Matt Linden, the public affairs director of ISA says.

“Most Australians, busy raising families and paying off mortgages, don’t have the time to weigh up hundreds of investment options in the complex superannuation market,” he says.

“Rational choice requires a deep understanding of fee, asset weightings, risk and return interactions.”

According to Choice, research company SuperRatings suggests non-profit funds outperform bank-owned rivals by two per cent over a 10-year period, costing nest eggs as much as $200,000.

On top of that, says Choice: “It appears for-profit funds are ‘clipping the ticket’ by capturing margins at multiple points of the investment chain including extracting fees when changing options,” he says.

“This appears to be a deliberate business strategy to boost parent bank profits at the expense of fund member returns.”

You have been warned.

Meanwhile, as we approach July 1, boomers stuffing their super accounts drove the stock market above the 5800 mark midweek, with brokers blaming a rush to avoid regulatory changes coming into effect on July 1.


Mystery shopper

Macquarie Bank has just conducted a “mystery shopper” exercise to test how credit is affecting people’s ability to buy homes.

Their verdict: there is a bit of “credit rationing” going on.

Macquarie devised a typical homebuyer, which in their eyes earns $105,000 a year, is single with no dependants, and an owner-occupier or investor seeking to purchase their first home with a clear credit history.

They then contacted banks and lenders.

Their conclusion: Over the last two years, the borrowing capacity of an owner occupier from the major banks has shrunk 14-19 per cent, and 12-26 per cent for an investor.

Some $800 billion, or 45 per cent of total housing debt, is held by the top 10 per cent of households measured by leverage.

As for borrowers, the regulator’s constraints on interest-only loans and tighter credit standards suggest some interest-only borrowers will be unable to refinance.

Given hikes of 60 basis points plus on interest-only loans, with more increases likely, household stress is already a factor.


Three of a kind

Meanwhile, over at the Perth Mint they’ve just produced a unique three-coin set described as the Australian Trilogy. They are a “convergence of colour and light”, according to the lyrical descriptions of the mind.
“The Mint’s most precious of metals – gold, platinum and rose gold – form three spectacular one kilo Australian legal tender coins. Portraying some of our most beloved fauna, the kookaburra, kangaroo and koala, these striking coins become masterpieces with the hand setting of three significant coloured diamonds exclusively sourced from the Argyle Diamond Mine.

With a mintage of just one, The Australian Trilogy is a one-of-a-kind collection and an iconic piece of history that will be treasured for generations.”

Yours for just $1.8 million (yes, you read that right).

Don’t all rush at once.